On the second day of the 2013 Public-Private Infrastructure Forum held in Gauteng, Monitor Deloitte director Andrew Lane unpacked his view on where mining companies must draw the line in fulfilling government’s basic role of supplying infrastructure such as rural housing, clinics, and schools for mining communities.

“I wish it was that simple because I think the topic is indicative of the situation we find ourselves in in the mining industry. It is indicative of a slightly tense relationship when people talk about drawing lines and I don’t think it’s that simple,” Lane starts.

According to the director, government is spending a lot of money on education, health and human settlements, equating to almost R300 billion in the last 12 months. “So government is putting in the effort. Access to water, electricity has improved as well as unemployment – marginally.”

The mining industry, he continues, also spends on social investment. “The top nine mining companies listed on the JSE spent about R3.5 billion in the last 12 months on corporate social initiatives (CSI).” So what then is the underlying problem?

“If you ask the mines what they think is important in terms of their communities’ needs, they have made the link to some of the root causes – education, education development, enterprise development, etc. But they are spending their money on the short term needs of the people that live ‘right outside the gate’, which means to some extent they are taking on the role of government. Rankings of perceptions however remain very different between communities, government and mines on spending in the right areas which means they are getting the results everyone is looking for.” So what’s the answer?

“We are all in the same boat and it has to stay afloat. The problem is that CSI is a very compliance-driven mindset. We do it because we have to. We have a scorecard and mining charter to comply with so we tick boxes but don’t give too much thought to what we are doing, and that leads to a lot of leakage in value. Remember, CSI is an investment into a system that has to live and work together. When we want to invest in something that will benefit the community outside the gate, there can be a return. There is value in the fact that our people don’t get killed on their way to work in the morning, that they sleep well and are well fed. If you start thinking about this from an investment point of view, and what is going to get us into a space where we all end up better off rather than one of us ends up better off at the expense of everybody else.”

Lane outlines three parameters which could change the entire dynamic between the mines, government and communities.

  1. We need to start measuring social impact he says. “How do you translate what the mines have done into a number that a government or community representative across the table understands. If we get the facts in the room and have a fact-based conversation – where the money is going, what impact it is making, the relationship between our stakeholders will come a bit easier to manage. Then we can start to have a constructive debate.”
  2. We need to engage effectively with all stakeholders. “We are all telling everybody else what to do and we are not looking back at ourselves and saying what should we do? The stakeholder environment is complex and there are a lot of hidden agendas that are not understood. It is difficult to respond to a situation that you don’t fully understand. We could have more productive debate if we engaged more effectively.”
  3. Inclusive solutions – how do you include poor people in the major value chains of the economy? Africa is a small holding agricultural continent. “We need to include poor people as economically active members, either as customers or suppliers. A lot of enterprise developments are targeted towards that.”

In a nutshell, Lane says there needs to be a way of measuring social impact and define it in a way that all stakeholders and participants, including the government and the community can understand. “We can only navigate through this situation if we understand its complexity and communicate openly and effectively so that everyone understands and benefits.”

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