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Variable Geometry in Social and Labour Plans Strategies

 

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.