OPINION: There’s still much uneven ground for mining to cover
IOL - OPINION / 16 JANUARY 2019 - 10:30 / WARREN ROBERTSON
JOHANNESBURG – South African mining begins 2019 with a greater measure of policy certainty than it had a year ago, and facing technological opportunities and challenges that might have been unthinkable a decade ago.
While much that has changed has been positive, mining has much uneven ground to tread as it enters the final year of the decade.
Mineral Resources Minister Gwede Mantashe. File Photo: IOL
A good end to 2018 saw the new Mining Charter, issued in September, taking care of a lot of the uncertainty in the industry – most notably around black economic empowerment ownership and the once-empowered-always-empowered debate, which landed in favour of the mines.
As Mineral Resources Minister Gwede Mantashe put it: “To entrench regulatory certainty for investors, and provide security of tenure for investments, an existing mining right holder who achieved a minimum of 26 percent – including a right holder whose BEE partner has since exited – is recognised as compliant for the duration of the right.
"This recognition is not applicable upon renewal, and is not transferable to a new owner in the case of a transfer or sale.”
Other market calming inclusions in the latest mining charter were the removal of a requirement to pay dividends equal to 1 percent of earnings before interest, tax, depreciation and amortisation for employees and communities, and the removal of the concept of “free carried interests” from the section on new mining rights.
What this all means is a mining industry that goes into 2019 with a lot more certainty than in 2018.
Without a doubt, one of the biggest issues in mining in 2019 and beyond will be how mining companies manage their big data and artificial intelligence (AI) capabilities.
The ability to organise, manage and process efficiently is likely to be a big indicator as to the profitability of a company in an era where margins are shrinking and external demands are growing.
Big Data will need to become the beating heart of every successful mining operation, from removal of the rock in the ground, to administration at head office.
As mines move in an increasingly digital direction, the manner of the work at those mines will need to change, too, and 2019 should see mining companies begin to implement necessary changes.
Robotic process automation, autonomous equipment and AI do not necessarily need to be viewed as threats to jobs, but they do indicate that people will need to undergo massive training over the next few years if job losses are to be kept at a minimum.
Successful implementation of a good Big Data system and the implementation of working AI will see those same mining companies becoming quicker on the ball and lighter on their feet.
Survival and profitability over the next decade will depend on companies being able to make wise decisions, and get ahead of the demand curve for future technology, both in terms of what they are mining, and also what reserves are kept on hand.
Those in charge of aligning mining for the future in the year 2000 could hardly have predicted that lithium, cobalt, graphite and nickel would be the minerals to back, and, as things move into 2019 and beyond, mine entrepreneurs would be wise to remember this shift.
With asteroid mining now emerging as a real potential opportunity, the very core manner in which mining is conducted will need to change. The differentiators will be a mining company's ability to implement technological innovation, identify the commodities of the future and adapt working procedures in the industry.
The main challenges to this rapid shift come from within, and without. The culture of mining has always been a conservative one.
Corporate decision making is going to need to move with the times, and unions are going to need to be flexible if they ultimately want to save members’ jobs. This all comes at a time when the public perception of mining is waning, particularly in South Africa, due to the industry's perceived contribution to the destruction of the environment, the impact on “local communities” and what's seen as mining's large usage of our most precious commodity, water.
In a significant judgment, Judge Annali Basson ruled in a case between the Amadiba Crisis Committee, the Department of Mineral Resources and an Australian mining company seeking to operate in Xolobeni on the Wild Coast that the community must give consent to the department before it could give the company mining rights.
Mineral Resources Minister Gwede Mantashe said this decision could mean the end of mining in South Africa, and that the government would be appealing parts of that decision.
While at this stage the real impacts of this decision are unclear, with inevitable court challenges and parliamentary actions yet to be resolved, the issue at the heart of the case is one that cannot simply be ignored.
Challenges in dealing with communities affected by mining activity must be acknowledged and met head on. More must be done to expand local employment opportunities and meet community demands for infrastructure. It is no longer good enough to pay lip-service to social labour plans, and the wise company will work with communities to ensure that real, lasting value is found for every rand spent.
Hopefully, sense will prevail with regard to who really has the power to award mining rights – government or community – but dealing wisely, honestly and fairly with communities should become a gold standard to lessen the risks of future challenges.
Mines also need to be open with the media, stakeholders, government and others on water-usage and environmental impacts, and should take steps to confront any issues head on themselves if they hope to improve their image and lessen the legislative burden.
Stricter adherence to voluntary standards and corporate social responsibility should see better relationships all round, as well as stronger, more stable working environments, all of which are conducive to higher profits.
Additionally, mines need to start seriously looking at reducing water usage, recycling where possible and reducing pollution and contamination of local water sources. The technology exists to make water work on a mine and not doing so is literally throwing money down the drain.
In an era of massive change in mining, conservative thinkers are going to find the going tough.
Agile thinking, new mandates and an acknowledgement and real attempt to address the issues are all going to be needed from here on – but the good news is AI and Big Data are riding in to help.
Warren Robertson is a writer commissioned by the SA Institute of Race Relations (IRR), a liberal think tank promoting political and economic freedom. Go to https://irr.org.za/
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER