Mining groups invested in South Africa


mining CSI South Africa’s economy was built on its mineral wealth. Now mining houses are re-investing in the communities that have grown up around their operations. (Image: Brand SA)

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Sulaiman Philip

Mining – and its unparalleled influence on the South African economy – began with the discovery of the Eureka Diamond in 1867. But it was the discovery of a rich seam of gold in 1886 on the Rand that turned the South African economy from largely agricultural to the richest gold mining area in the world within a decade.

Fortunes were made and lost on the golden Rand. For the majority of the large pool of labour that travelled to the mining camps that became towns and then cities, however, the mines were just a means to an end. The poorer end of the white labour market saw the riches of the mines as a way to supplement income from farming or to pay tax bills. For African men, labouring on the mines was the fastest way to earn enough to pay lobola and buy a piece of land to farm.

Mining is the foundation on which the South African economy was built. Between 1860 and 1910 as a mining-centred economy evolved and old farming and trading traditions died, mining houses used their wealth and political power to create a migrant labour force through the need to pay new taxes or the appropriation of land.

Then, in the 1970s Anglo American, through its Urban Foundation, began upgrading education and infrastructure in the townships. And American companies operating in South Africa during apartheid were subject to the Sullivan Code. Devised in 1977, it was a set of principles that compelled American companies to run their South African operations using American human rights and social justice principles.

By 1994, as the old political and economic system died, working conditions on the mines for the migrant labour put mining houses in the harsh glare of the resurgent, politically powerful union movement. To the unions, these philanthropic acts were window dressing that did little to change the conditions on mines or alleviate the suffering of communities once operations stopped.

Dark village

Naledi Trust is a village of 34 households close to Kroonstad in Free State. Since 2009, the community has been without electricity because it owes Eskom R47 000 – an insignificant amount to the big mining houses, but it might as well be R4-billion as far as the community is concerned.

Mohapeloa Komane, the principal of Lovedale Primary School in Naledi, grumbled that lack of electricity made it difficult for her charges to study. “For instance, some homework to do with weather forecasts was difficult to do because they needed to have watched the forecasts on television. But because they had no electricity, they could not get to watch television,” she told the Weekly newspaper.

Now, thanks to a world-first project led by Anglo American and its partner, Ballard Power Systems, the lights are on in Naledi. The mining house and the Canadian company are testing a power cell that converts fuel into electricity.

Part Anglo corporate social investment (CSI) project and part pilot project, the fuel cells in Naledi use platinum, methanol and hydrogen to generate 15kW of power used for cooking, lighting, televisions and to run the fridges donated by Anglo American Platinum.

There are business advantages for Anglo – a cheap, constant power supply not dependent on Eskom – but the Naledi test is also a major programme in the mining house’s CSI unit. If the 12-month test is successful, Anglo will begin to roll out the technology to the 600 000 South African households that Eskom does not reach.

For Anglo, if the test phase is successful, the project could lead to the development of a high-tech manufacturing business. A new rural electrification industry means jobs in manufacturing, design and installation maintenance which will support and sustain Anglo mining jobs.

But none of this matters to Doko Petrus Mvundle, a 90-year-old resident of Naledi, who simply sees a brighter future for his community: “This electricity will change our lives. I have always hoped that one day the lives of our children and grandchildren will be better than ours.”

A 2014 report measuring the performance of listed companies when it came to their spending on CSI found that the mining industry spent the most on CSI programmes. In total, the industry invested R3.9-billion a year on programmes, most of it in communities around their operations.

Next Generation’s Reanna Rossouw, a management consultancy, says that companies have started to look at CSI as an investment rather than as a hand-out. “The days of ‘feel good’ programmes are over. Boards want to know how CSI will benefit business.”

Tough economic times and the regulatory environment mean companies are looking to measure the effect of their programmes not just in terms of return on investment for shareholders but also in terms of effect on beneficiary communities.

Sustainable business

The mining industry has embraced a new way of doing business. “Organisations have entered a new era of doing business in communities to whom products and services are sold and on whom mining companies depend for future sustainability and profitability. CSI forms an integral part of the sustainable organisation of the future.”

Across the group, including its Chairman’s Fund, Anglo American spent R643-million on CSI projects, part of the R50-billion the private sector spends on CSI programmes a year, in 2014. Like other mining houses, the money was invested in projects in education, business development, health, community development, art and culture, and sports development.

For Norman Mbazima, the chairman of the fund, the company is investing in the future of the country and the company by helping to build dynamic, enabled communities. By harnessing the company’s strengths and the country’s resources, Anglo American is helping South Africans take control of their lives. “We’re committed to not only being a good corporate citizen but to making a genuine difference in the communities surrounding our operations, and in South African society as a whole. In all our efforts as a company, we work towards delivering sustainable value that makes a real difference now and for the future.”

We commit ourselves to building a humane, equitable and caring global society, cognisant of the need for human dignity for all.

The South African government enacted legislation after 1994 requiring CSI-linked support for socio-economic development. Legislation like 2002’s Mineral and Petroleum Resources Development Act changed the environment in which mines operate. It vested ownership of the nation’s mineral wealth in the state an introduced obligations for mining companies that sought prospecting rights or mining licences.

After the 2002 World Summit on Sustainable Development in Johannesburg, a framework was developed to strengthen the partnership between the government and the private sector. The JPOI (Johannesburg Plan of Implementation) called on industry to contribute towards sustainable development. For mining houses this meant that sustainable development influenced all aspects of their operations, from prospecting to post-closure.

After 2002, the International Council on Mining and Metals’ stated objective became a “need to contribute first and foremost towards improvement of the quality of life of the communities in which [mines] operate”.