Understanding Business Strategy

At its core, a business strategy outlines the actions a company takes to achieve its vision, mission, and goals. Developing such a strategy involves making critical choices, such as deciding whether to be a low-cost producer or to differentiate from competitors. In the mining industry, these choices become more operational, focusing on decisions like insourcing versus outsourcing, leasing versus self-producing, and more.

 SLP Compliance and Strategic Choices

While Social and Labour Plans (SLPs) have a minimum threshold for compliance as dictated by the Mineral and Petroleum Resources Development Act (MPRDA) and the Mining Charter, mines have a variety of options in their compliance strategies. They can aim to be model corporate citizens by offering top-tier human resource development programs and impactful local economic development projects, or they can opt for the bare minimum. Decisions such as insourcing or outsourcing, partnering with others, or keeping initiatives local are all part of what is call “variable geometry.”

 The Concept of Variable Geometry

The term “variable geometry” originates from aerospace engineering, where it describes aircraft designs that can change shape during flight. This concept has been adopted in business and organisational strategy to describe systems that can adapt and change in response to varying conditions and requirements. This adaptability is crucial in designing and implementing SLPs, where the goals and targets can often seem like moving targets.

 The Challenges of SLP Targets

This may sound controversial, but SLP targets can be ambiguous and inconsistent. For example, procurement targets from the Mining Charter 2018 do not apply to mining, so the older 2014 targets are assumed to be in effect. Forms from the 2018 Charter are not used by the Department of Mineral Resources and Energy (DMRE), which prefers the 2010 SLP guideline forms. Employment Equity targets are also in flux with the upcoming Employment Equity Act. On the local economic development (LED) front, the DMRE often focuses on tangible results like buildings and “permanent jobs” created, which are often a odds with assisting with poverty alleviation.

 Within this world of variable geometry for SLP Compliance, what are the key elements for a mine:

• Understanding the Rules: The DMRE is the key player in the SLP value chain. It wants SLPs to follow a standardised format, tracking training numbers, internships, career development, and community projects. Understanding the local office’s approach to SLP targets are essential.
• Your last SLP approval from the DMRE is your contract; that and little else is what you need to comply with.
• Mines must not implement projects without DMRE approval, as unapproved projects may not count towards compliance.
• Engaging Local Municipalities: SLP guidelines require a link between local LED initiatives and the mine’s projects. However, when local municipalities do not identify projects, mines have the flexibility to propose their own.
• HRD Strategy: There is less room for variable geometry in Human Resource Development (HRD), but meeting set targets is crucial. However, it is interesting that with HRD is quality over quantity. A mine will comply training ONE employee exactly as per MQA specifications, and conversely not comply even if it trains 100 employees outside the the MQA approvale and without obtaining a prior approval from the DMRE. This does not mean the DMRE will close that mine down, it’s just endless management and engagement with the DMRE thereafter that from a cost of management time perspective, becomes very inefficient.
• LED Projects: LED projects offer significant room for strategic flexibility. Mines need to deliver tangible local economic outcomes, whether through job creation or infrastructure development. Thinking outside the box – keep in mind the DMRE does not have a business culture, it has a compliance culture. Therefore, finding alternative approaches to poverty alleviation, even if it does not seem to conform to IDP projects or the DMRE’s mindset, should proposed to the DMRE and a case for thise projects must be made.
• The mine becomes a social entrepreneur in achieving the above.
• Flexible Targets: The 5% of salaries and wages target for training budgets is rarely met, with actual spending around 3%. There is no specific financial targets for LED project development in the Mining Charter, though some DMRE offices suggest 1% of turnover. A more realistic target is 2-3% of EBITDA, which better reflects the mine’s economic value add and typically equates to less than 1% of turnover.

In Summary

SLP strategies in the mining sector must navigate the complexities of compliance while leveraging the flexibility offered by variable geometry. By understanding the rules, engaging stakeholders, and strategically deploying resources, mines can effectively meet their SLP commitments and contribute to sustainable local development.

Just had a rewarding experience engaging with the DMRE on behalf of a client facing challenges in implementing various aspects of their SLP. Although it took a year to resolve all matters, I must say it was a pleasure working with the DMRE Gauteng office. Most of our challenges were resolved, and my client can now breathe a sigh of relief as things can proceed smoothly. Back to business as usual! If anybody needs assistance with these kind of matters, don’t hesitate to call me. #mining #slp #socialandlabourplan #miningmanager

Being audited by the Department of Mineral Resources and Energy (DMRE) in South Africa on your Social and Labor Plans (SLPs) is an important process that requires careful and professional handling. Here are some dos and don’ts to help you navigate the audit effectively:

Dos:

Prepare Thoroughly:

• Review your SLP and all relevant documentation before the audit.
• Ensure that you have all the required records, reports, and evidence readily accessible.

Be Organized:

• Arrange all documents in a clear and organized manner for easy reference during the audit.

Cooperate Fully:

• Be cooperative and transparent with the auditor. Answer their questions honestly and provide requested information promptly.

Stay Professional:

• Maintain a professional and respectful demeanor throughout the audit process. Treat the auditor with courtesy and respect.

Listen Carefully:

• Pay close attention to the auditor’s questions and requests. If you don’t understand something, don’t hesitate to ask for clarification.

Address Findings:

• If the auditor identifies deficiencies or areas for improvement, acknowledge them and outline your plans to address these issues.

Documentation Verification:

• Ensure that the documentation you provide aligns with the activities outlined in your SLP.

Follow-up Actions:

• After the audit, follow up on any recommendations or requirements provided by the auditor promptly.

Don’ts:

• Don’t Provide False Information:

• Do not provide false or misleading information during the audit. Honesty and accuracy are crucial.

Don’t Be Defensive:

• While it’s natural to be protective of your organization, avoid becoming defensive or argumentative if the auditor raises concerns. Instead, seek to understand their perspective and address the issues constructively.

Don’t Withhold Information:

• Avoid withholding information or documentation requested by the auditor. This can lead to delays and potentially negative audit outcomes.

Don’t Disregard Recommendations:

• If the auditor makes recommendations for improvement, do not ignore them. Take these suggestions seriously and incorporate them into your SLP where appropriate.

Don’t Make Assumptions:

• Avoid making assumptions about what the auditor knows or doesn’t know. Answer their questions fully and provide context where necessary.

Don’t Rush Through the Audit:

• Take the time to thoroughly review and discuss your SLP with the auditor. Rushing through the process may lead to oversights.

Don’t Speak Without Verification:

• Only provide information that you can verify with documentation or records. Speculation or guesswork should be avoided.

Don’t Delay Action:

• If there are findings or corrective actions required, do not delay in addressing them. Timely action demonstrates commitment to compliance.

Remember that the goal of the audit is to ensure compliance with social and labor plans and to assess the impact of your mining operations on local communities. By following these dos and don’ts, you can help facilitate a smooth and productive audit process with the DMRE.

I often come across numerous mining companies that appear to be making minimal efforts on their LED (Local Economic Development) projects. The reasons provided for this lack of progress are quite common:

1. Feasibility Study Hurdles: A frequent excuse is that the municipality is yet to conduct a feasibility study, causing delays in project initiation.
2. Community Commitment Wanes: In some cases, projects intended for community betterment lose momentum due to a lack of commitment, often indicative of insufficient resources.
3. Regulatory Approval Stalls: A significant roadblock is when projects await approval from the Department of Mineral Resources and Energy (DMRE), and until such consent is granted, no progress is made.

Hearing these justifications evokes a sense of disappointment, even frustration within me, as if I’m on the verge of sighing in exasperation. The question that comes to mind is: Where has the dedication of these mining entities gone?

It’s important to recognize that LED projects hold immense potential as impactful Corporate Social Responsibility (CSR) endeavors. When faced with obstacles such as lacking permissions, it’s imperative to introspect: How can we still contribute to CSR? The answer lies in transforming these potential projects into comprehensive plans. By ensuring these endeavors are sustainable and committing resources, a shift towards proactive action can be achieved.

To solidify these intentions, integrate these projects into the LED segment of your Social and Labour Plan (SLP). During the annual update of the SLP, incorporate these initiatives as tangible commitments. This process isn’t overly complicated. By doing so, you not only align with compliance requirements but also experience the gratification of contributing to meaningful CSR undertakings – a trait upheld by the majority of esteemed companies today.

I was rather surprised to come across a letter from the Department of Mineral Resources and Energy (DMRE) addressed to one of my clients. The letter outlined a requirement for my client to adjust their current ownership percentage from 26% to the Mining Charter III 30 dispensation. As the BBEE partner, my client currently holds 26% of the shares. The new stipulation would necessitate a reduction to 20%, with 5% being sold to employees and another 5% to the community.

I was under the impression that this particular requirement for existing mines had been set aside by the Gauteng High Court in September 2021. It’s possible that I may have missed an update or that the court’s ruling has been overturned. Alternatively, it could be an oversight by the DMRE to issue such letters for license renewal without considering the current legal framework. It’s difficult to ascertain the exact situation.

In light of these circumstances, I advised my client to address the issue by writing a letter to the DMRE, highlighting the potential unlawfulness of this requirement. I eagerly await the response and will provide an update here once I receive it.

Yes, the mining industry has to comply with the new Employment Equity Act.

The Employment Equity Act (EEA) of South Africa is a comprehensive law that seeks to promote equal opportunities and fair treatment in the workplace by addressing past imbalances and eliminating discrimination in the workplace. The EEA applies to all employers and workers in South Africa, including those in the mining industry.

The mining industry in South Africa is a significant sector of the economy, and it has a history of employment practices that have not always been equitable or fair. As such, the industry is subject to the provisions of the EEA, which require all employers to take affirmative action to promote employment equity and eliminate discrimination in the workplace.

Under the EEA, mining companies are required to submit employment equity reports to the Department of Employment and Labour, detailing their progress in achieving equity in their workforce. The reports must include data on the representation of designated groups, including black people, women, and people with disabilities, in various occupational categories and levels within the organization.

In summary, the mining industry is included in the Employment Equity Act in South Africa, and mining companies are required to comply with its provisions.

The Employment Equity Act (EEA) of South Africa sets out specific deadlines for compliance by employers. These deadlines are designed to ensure that employers take active steps towards achieving employment equity in their organizations.

Employers with 50 or more employees or with an annual turnover above a certain threshold are required to submit an employment equity report to the Department of Employment and Labour annually. The report must be submitted on the first working day of October each year, or by a date as prescribed by the minister in the Government Gazette.

In addition, the EEA requires employers to develop and implement an employment equity plan, which must be updated annually. The plan must set out specific goals and targets for achieving employment equity within the organization and must include a timeline for achieving these goals.

Employers are also required to conduct a workplace analysis, which must be updated every year, to identify barriers to employment equity and to develop strategies to overcome these barriers.

Overall, employers in South Africa are expected to take proactive steps to achieve employment equity in their organizations, and compliance with the EEA deadlines is an important part of this process.

Maintaining an up-to-date social and labour plan is a crucial aspect of compliance for mining companies operating in South Africa. It is a legal requirement for mining companies to submit their social and labour plan annually to the Department of Mineral Resources and Energy (DMRE) and failure to do so can result in hefty fines or even the suspension of mining operations.

However, updating the social and labour plan need not be a daunting task. There are simple steps that mining companies can take to streamline the process and ensure compliance with the DMRE. One such step is to utilize the biographical data of employees that is submitted to the Mining Qualifications Authority (MQA). This data can be used to update the labour section commitments of the social and labour plan. This would save time and effort in gathering employee data separately.

Another area of the social and labour plan that would require attention during the annual update is the local economic development plans. These plans are crucial in ensuring that the local communities around mining operations benefit from the presence of the mine. Site visitations and detailed reporting are required to ensure that these plans are up-to-date and accurately reflect the needs of the community.

It is important to note that the social and labour plan is not just a compliance requirement but also an opportunity for mining companies to make a positive impact on the communities around their operations. The plan should be viewed as a strategic tool that enables companies to identify opportunities for community development and engagement.

In addition to the annual update, mining companies should also monitor and evaluate their social and labour plan throughout the year to ensure that they are meeting their commitments and making a meaningful impact in the communities they operate in.

Overall, updating the social and labour plan may seem like a daunting task, but with proper planning and utilization of available resources, it can be a smooth and efficient process. Compliance with the social and labour plan not only ensures adherence to legal requirements but also provides an opportunity for mining companies to make a positive impact on the communities around their operations.

The Mineral and Petroleum Resources Development Act (MPRDA) is a South African law that regulates the mining industry in the country. In 2022, the MPRDA was amended to include an Artisanal and Small-Scale Mining (ASM) policy.

The ASM policy aims to promote responsible and sustainable mining practices among artisanal and small-scale miners, who are often marginalized and operate outside of the formal mining sector. The policy provides guidelines for the formalization of ASM activities, the allocation of mining rights, the management of environmental impacts, and the support of social and economic development in mining communities.

The policy emphasizes the importance of involving local communities and stakeholders in the development of ASM activities, and requires ASM operators to obtain the necessary permits and licenses, comply with environmental regulations, and adhere to social and labor standards.

The ASM policy is expected to promote the development of a more inclusive and sustainable mining sector in South Africa, while addressing the challenges and risks associated with informal ASM activities.

The policy defines artisanal and small-scale mining as mining activities that are carried out with minimal or no mechanization, using rudimentary methods and tools. Artisanal and small-scale mining typically involves low levels of investment and is often conducted by individuals or small groups, without formal mining titles or permits.

The policy recognizes the potential of ASM to contribute to local development and poverty alleviation, as well as to the country’s mineral wealth. However, it also acknowledges that ASM can have negative impacts on the environment, human health, and safety, and can lead to social conflict and human rights abuses.

To address these challenges, the policy sets out a number of principles and strategies for the formalization and regulation of ASM activities. These include:

• Encouraging the formalization of ASM activities through the allocation of mining rights and the provision of support services to small-scale miners.
• Promoting compliance with environmental regulations and standards, and encouraging the adoption of sustainable mining practices.
• Strengthening the capacity of government institutions to regulate and monitor ASM activities, and to provide support services to small-scale miners.
• Promoting social and economic development in mining communities, including through the provision of training and skills development programs, access to finance, and the development of local value chains.
• Ensuring that ASM activities are carried out in a manner that respects human rights and labor standards, and that protects the health and safety of workers and local communities.

The policy also recognizes the importance of involving local communities and stakeholders in the development of ASM activities, and provides for the establishment of local committees and forums to facilitate dialogue and consultation.

Overall, the ASM policy represents an important step towards the formalization and regulation of artisanal and small-scale mining in South Africa, and towards the promotion of responsible and sustainable mining practices that benefit local communities and the country as a whole.

Here are the five critical components most requested by the DMRE when it comes to LED planning:

1. It must be shown that the LED Project will be sustainable, and this must be outlined in the LED project plan as provided by the DMRE.
2. Stakeholder roles in the LED project must be clearly stated and agreements need to be signed between the parties involved on the project.
3. Evidence must be presented that the mine had consulted with the local municipality to align the LED project to the local IDP.
4. The ownership of the facility where the LED development is situated must be indicated and proof of the security of premises must be provided.
5. The mine’s exit strategy to the project must be clearly described.