Social programmes: Mining not on the money - Financial mail

Billions of rand spent by mining companies on social programmes such as clinics, schools, housing and job creation do not appear to be making improvements in the living standards of their surrounding communities.

The reasons are not well understood, but mining companies are starting to realise that they need to do things differently if a lot of this spending is not to be wasted.

At a dialogue on implementing corporate social responsibility spending hosted last week by the High Commission of Canada and Eunomix, speakers from the mining industry, finance institutions and external advisers debated some of the weaknesses in the social and labour programmes (SLPs) required to obtain and keep mining licences.

Chamber of Mines senior executive for public affairs Tebello Chabana says the chamber’s members spend R2bn/year on mine community development.

Though there are numerous examples of communities using their share of income from mining to kick-start sustainable non mining ventures, there are also studies, some of which were done after the Marikana shootings at Rustenburg, that highlight weaknesses in SLP spending.

The Centre for Applied Legal Studies at Wits University has analysed 50 SLPs. Its initial conclusions suggest mining companies do not define their impact on communities and often include social projects without targets and time-frames. Many SLPs do not mention any consultation with communities.

Eunomix, in a study into the impact of platinum mining on Rustenburg, concluded that most of the Rustenburg population had failed to benefit from the platinum boom. Problem areas included the influx of mostly young single men, a huge increase in the incidence of HIV/Aids between 2001 and 2011, higher crime levels than other comparable cities in SA, lack of access to formal schooling, and significant poverty.

Yet the spending by Rustenburg mining companies on education, health, housing and infrastructure is multiples higher than that of local government, says Eunomix.

Eunomix MD Claude Baissac says mining companies’ social investments cannot be said to be ineffective. In some areas, such as health care, there are clear benefits. But these programmes have to begin by defining why they are being undertaken and setting objectives. It is problematic when government continuously widens the definitions and goals, requiring, for example, that mining companies develop beneficiation industries.

Caroline Digby, director of the Centre for Sustainability in Mining & Industry at Wits University, says corporate social spending for mining companies in SA, unlike in other countries, is regarded as a way of restoring social justice after apartheid, and the mining charter and legislation emphasise this aspect.

Baissac says mining companies seem to be expected to compensate for government’s social spending shortfall and shoulder more onerous social-spending budgets than other industries, such as retail and manufacturing. This might be because mines are generally in rural areas, where physical and social infrastructure is poor, while other industries tend to be located in better-developed urban centres. It may also reflect a widespread opinion that mining benefited most from apartheid and has to make amends.

Former department of mineral resources (DMR) director-general Thibedi Ramontja says mining is not like any other industry. It is based on a depleting resource. Social spending should be embedded in the way mining companies operate and should not be subject to the commodities cycle.

Chabana says mining companies accept their responsibility for social spending. But legislation limits the extent to which they can co-operate. Rustenburg should have been designated as a single area for a co-ordinated social and labour programme to which companies in the area contributed funding.

An issue that most speakers agreed on was that more transparency and interaction between mines and communities would result in better-targeted projects and make it easier to evaluate their success.

John Capel, executive director of Bench Marks Foundation, a community NGO, says the organisation works in about 40 mining communities and not one feels it is benefiting from the nearby mine.

Boyce Maneli, mayor of the West Rand district municipality, where there are several gold mines, says local government is often excluded in discussions between the DMR and mining companies. Yet local governments’ integrated development plans (IDPs) are drawn up in consultation with communities and identify where the needs are and how local government will support particular projects. For example, if a mine builds a public park without any reference to the local IDP, it will not be maintained.

One of the issues the panels did not raise was the heavy-handed role central government often plays in mines’ social programmes. Government has been known to insist on mining companies funding projects to meet political agendas and claim credit for them. If mining companies were to communicate their social spending better, they could avoid this pitfall.