SUSTAINABLE MINING IN THE 21ST CENTURY

Shifting Leadership Thinking: A South African Perspective

Cindy Mogotsi and Michael H. Rea

Introduction
Leaders of today are inundated with an insurmountable number of complex issues in the day-to-day running of any organization. No longer can they afford to focus purely on the economics of their business, but they must have the unique ability to grasp the social and environmental pressures in which they operate, and to understand the inter-play between each of these on the bottom-line. Moreover, they must accept that gone are the days when companies had only one stakeholder to satisfy: the investor. However, and despite the obviousness of the paradigm shift in which we now operate, some leaders continue to battle to balance social and environmental responsibility in the pursuit of economic gain and prosperity of the organizations they lead. In Africa, where some of the worlds poorest countries can be found, and where the continents population of roughly one billion are among the poorest people on the planet, natural resource wealth is exists in almost obscene abundance. Gold, diamonds, platinum, oil, natural gas, uranium, iron ore, coal, and any number of yet to be exploited resources are found in such great quantities that Africa should be perceived as limitlessly wealthy. However, while the continents natural resources hold great economic promise for its people, few African nations have truly benefited from their inherent wealth. GDP per Capita of African Countries
(Source: 2009 UN Human Development Report) Country Equatorial Guinea Libyan Arab Jamahiriya Gabon Seychelles Botswana South Africa Mauritius Algeria Angola Tunisia Namibia Cape Verde Swaziland Morocco Congo Egypt Sudan Nigeria Cameroon Cte d'Ivoire Djibouti Zambia Sao Tome and Principe Senegal Mauritania Lesotho Comoros Chad Ghana Kenya Benin Mali Guinea Burkina Faso Tanzania Central African Republic Uganda Togo Gambia Madagascar Mozambique Rwanda Somalia Niger Eritrea Sierra Leone Zimbabwe Malawi Ethiopia Guinea-Bissau Liberia Congo (Democratic Republic) Burundi Rank 40 58 61 62 71 73 80 93 99 101 103 110 115 117 122 127 137 140 141 143 146 148 149 150 152 156 159 162 163 164 165 168 171 172 174 175 176 177 178 179 182 183 184 185 186 187 188 189 190 191 192 193 194 GDP/Cap 19 552 9 475 8 696 8 560 6 544 5 914 5 383 3 996 3 623 3 425 3 372 2 705 2 521 2 434 2 030 1 729 1 199 1 118 1 116 1 027 997 953 916 900 847 798 714 658 646 645 601 556 487 458 400 394 381 380 377 375 364 343 298 294 284 284 261 256 245 211 198 143 115

Interesting Statistics
The 2009 United Nations Human Development Report lists the Gross Domestic Product (GDP) per Capita of 194 different countries (including additional information from www.undata. com) and ranks only 1 African country in the 50 wealthiest countries (Equatorial Guinea, #40, $19 552 per capita). Based on this data, only 7 African countries boast a GDP per Capita within the top 50% of nations, while 33 are within the bottom 25%. Africa is also home to 18 of the 20 poorest nations, and 13 African countries have a GDP per Capita of less than $1 per day.

INTRODUCTION

Sustainable Mining in the 21st Century

African governments, in countries where enormous natural wealth exists, have come to the realisation that a mineral is a national asset which should be developed for the benefit of its people. It is both part of the national heritage, as well as the key to the future success of its people. For this reason some governments have tailor made legislation to ensure that the benefits of such assets accrue to the people. African countries are fast becoming savvy at demanding social and environmentally friendly business practices, ensuring that natural assets are exploited in a sustainable and much more equitable manner. Granted, GDP per Capita is not necessarily an effective measure of national wealth. The fact that Equatorial Guinea, a small, oil rich country with a relatively small population, but an even smaller number of people who have access to a reasonably fair share of the countrys GDP, is deemed the wealthiest country in Africa in terms of GDP per Capita, is evidence that not all countries can be measured using the same ruler. Equally, one must not assume that all African countries are using legislation to ensure that resource wealth is exploited in a manner that reaps the greatest utilitarian reward for the greatest number of people. Nonetheless, proponents of sustainable development have meticulously argued that business prosperity can not be measured purely on economic performance but must take into account the ethical and governance conduct of organizations, as well as the social and environmental impact an organization has in its sphere of influence. They have successfully linked social, environmental and ethical performance to the overall financial viability of the organization, most often with the help of some tremendously public disasters (e.g., Shells Brent Spar, the Enron collapse, and BPs Gulf of Mexico oil rig disaster). They have argued that what happens in one part of the world can no longer be isolated from the global village in which we now operate, and they have therefore been able to call companies to account for their social and environmental impacts. In the mining industry, leaders are often confronted with various challenges which may or may not

be directly related to the daily operation of the business but ultimately have a profound impact on the performance of the organization. These issues, if not adequately understood, managed and integrated into the running of the business, can adversely impact its financial performance and ultimately its long term viability.

The following discussion focuses on 4 key issues in relation to sustainability namely: I. What is Sustainable development and sustainability in the business context; II. Non-financial performance and its implications for business; III. The importance of both the legal and social license to operate; and, IV. The dynamics of leading in the 21st century. These discussions shall draw upon experiences within the mining industry and some case studies shall illustrate some of the fundamentals in ensuring long term sustainability within the South African context.

Sustainable Mining in the 21st Century

INTRODUCTION

What is sustainable development and sustainability

As defined by the Brundtland Commission of the United Nations back in 1992, at the Rio Summit on Sustainable Development, sustainable development is meeting the needs of the present generation without compromising the ability of future generations to meet their own needs. In the context of the business, sustainability focuses on the ability of the organization to grow thrive and overcome challenges that it may face. In accounting parlance, we often discuss whether or not a company is deemed a going concern, whereas in more pedestrian jargon, we refer to whether or not the company has the ability to manage its triple bottom line, or its financial, social and environmental performance, with the latter two elements still being commonly referred to as non-financial performance indicators.

Figure 1: Sustainable Development

The Triple Bottom Line

ECONOMIC
Socio-economic Enviro-economic

SOCIAL

ENVIRONMENTAL

Socio-environmental

WHAT IS SUSTAINABLE DEVELOPMENT AND SUSTAINABILITY

Sustainable Mining in the 21st Century

Business implications of non-financial performance

In a recent discussion with a senior leader of a mining company about the importance nonfinancial performance targets being integrated into the key performance indicators (KPIs) of all managerial and supervisory employees, the company executive argued vehemently that anything other than production and cost containment would always be deemed a secondary, or non-key, performance indicator. This discussion highlighted some of the challenges associated with encouraging corporate leaders to interpret and understand a variety of sustainability-related issues, and the relevance of this understanding on the overall sustainability of their business. Sub-Saharan Africa is estimated to have more than 22 million adults and children (5.2% of all adults) living with HIV according to the World Health Report of 2009. In South Africa, the NorthWest Province has an estimated HIV prevalence rate of more than 22%, and the government of Zimbabwes official figures estimate a prevalence rate of 14.3% in 2010. Between 2008 and 2009, Zimbabwe experienced a cholera outbreak which resulted in an estimated 98 000 infections and nearly 5 000 deaths. In 2008, South Africa experienced a series of power outages, and power to mining houses was suspended, resulting in an estimated cost to the economy of some R50 billion (US$ 7 billion). In 2010, the issue of acid mine drainage in the Johannesburg area, resulting from contaminated water seepage from derelict gold mines, has come back to haunt government, communities and businesses. What can be demonstrated through these issues and events? In the first two instances, one must consider that all organizations draw a majority of their skills and human resources from the community in which it operates. Consequently any sickness and disease present in the community is likely to find its way into the organization. This in essence has a direct impact on the bottom line, arising from increased illness-related absenteeism, high staff turnover due to death or medical incapacitation, a resultant loss of institutional memory and core skills, compensation costs for medically boarded employees, the high cost of recruiting and training new employees, and the overall impact on productivity due to high rates of employee turnover. Thus how does an organization manage to contain costs, increase productivity and improve the bottom-line when sickness and disease is prevalent in the community, and subsequently within the workforce? The power outage that plagued South Africa, in 2008, had dire short and long-term consequences for the business community, raising global concerns about South Africas ability to be a productive and competitive supplier of precious metals, leading to an increase in metal prices in anticipation of short supply. Even once the urgent issue of electricity supply was addressed, the apparent imbalance of demand exceeding supply left a legacy of price efficiency impacts. While the impact on global metals pricing might have subsided following the immediate crisis, the long-term impact on South Africas ability to compete internationally was established in terms of forward-looking electricity pricing, which is likely to result in a tripling of the price of electricity in less than 5 years. For manufacturing or metal processing companies, where electricity is a significant component of the total cost of production, this is not only an economic concern, but a social issue, as the management of one cost is likely to impose cost containment impacts on social considerations. To contain overall costs, production will need to become far more efficient, which tends to mean far less labour intensive, which in the South African scenario is in direct opposition to the countrys commitment to overcoming rampant poverty through job creation. In a country with an official unemployment rate of 25.3% (www. statssa.gov.za), not counting under-employment, or those who have given up trying to find gainful employment, the shift towards less labour intensive means of production due to the rising

Sustainable Mining in the 21st Century

BUSINESS IMPLICATIONS OF NON-FINANCIAL PERFORMANCE

price of electricity seems counter-intuitive, and another barrier to growth and development. Recently, the term Acid Mine Drainage has entered into the lexicon of many South Africans, even those who have little or no prior knowledge of mining issues. In non-technical terms, Acid Mine Drainage, or AMD, refers to the water that has been contaminated by mining processes, to the point of being acidic, and thus harmful to people and the natural environment. Rather than being treated, the water is allowed to accumulate underground, continuing to be contaminated by the remnants of historical mining practices, and ultimately escaping from old and abandoned mines to the detriment of current plants and water sources.

water to sustain its growing population in the next 20 years, water is quickly becoming an issue that transcends the environment and encroaches upon economic stability. How companies deal with the rising significance of water as a material cost of production is just as likely to affect the social implications of doing business as the dilemmas posed by South Africas recent electricity crises. These examples not only demonstrate how nonfinancial issues are often beyond the control of an organization, but with significant financial implications for the business, but also the interrelatedness of all three legs of the triple bottom line, as well as the inadequacy of assuming that economics can be assessed in the absence of social and/or environmental considerations. Any organization that has the vision to sustain itself into the future, will pay due regard to these issues (among so many others) and will monitor, measure and evaluate the financial and non-financial parameters that may influence the performance of the business and impact all of its stakeholders and react accordingly to mitigate this impact on the business. This does not only show good corporate citizenship, but has a direct impact on the companys ability to contain costs and increase productivity and profitability, by actively identifying shortfalls and taking corrective action where it is required.

Although a solution to AMD in and around Johannesburg has been identified, the plan to implement the solution has been limited by a lack of financial support. While previous mine owners reaped the benefits prior to the closure of derelict or unprofitable mines, some dating back several decades, those living around the abandoned mines have been left to count the costs of their actions. With no legal framework, or even a reasonable expectation to locate and prosecute owners of long-closed mines, the problem is not limited to the acidity levels of the contaminated water, but rather who is responsible for cleaning up the mess, and thus who must pay for it. With South Africa being deemed a water scarce environment, and the real and pressing probability that it will not have enough potable

In the mining business, where price is set by the market and competitive advantage is gained through high efficiencies, high productivity and overall cost reduction per unit of product produced, organizations can ill afford to ignore non-financial performance. Thus, it is prudent for leadership to recognise that non-financial indicators can no longer be assumed to be non-core business issues. Rather, social and environmental performance should be integrated into the overall business model, with clear performance targets, and systems to monitor and evaluate performance. As such, these should form part of performance management for executives, management, supervisors and employees, with clear accountability to shareholders and other stakeholders.

BUSINESS IMPLICATIONS OF NON-FINANCIAL PERFORMANCE

Sustainable Mining in the 21st Century

Legal and social license to operate

Africa is endowed with a seemingly infinite inventory of natural resources, and is consequently populated with an abundance of mining activity. While billions of dollars in capital investment flows into mining operations, generating even more money in mineral-related profits, very little, if any, significant economic benefit is accrued to the communities around mines. In most cases, mining rights are secured by foreign investors at a fraction of the real value of the resource wealth buried beneath the soil, and the vast majority of all revenue is exported alongside the mined resource. Mining houses in these communities are often being accused of plundering resources at a cost to host communities who often lose grazing and crop fields, or access to limited water sources, to mining operations. Meanwhile, the communities are expected to endure unfamiliar levels of dust, noise, waste and effluent. Despite their efforts to reinvest some of mining profits in their communities as part of their commitment to social responsibility, and in an effort to create sustainable communities beyond the projected life of the mine, the companies individual efforts tend to have insignificant impacts, leading to a seemingly endless cycle of socio-economic and environmental problems. It is important to note that in the mining context, and particularly within more rural areas, companies are expected to be abundantly aware of the difference between a legal license and a social license to operate. While the legal license is formally acquired through government mineral rights procurement processes, the social license is informally granted by those most affected by mining activities (i.e., the key stakeholders), and is much more tenuous in terms of its volatility. Interestingly, the South African government has attempted to link both of these licenses through the development of its Broad Based Black Economic Empowerment Charter for the Mining Industry (the Mining Charter). In order for any company to acquire mining rights, or to convert old order mining rights to new order mining rights (i.e., now that the Mining Charter is in place), they must demonstrate that they have systems and processes in place to consider the needs of the local communities affected by their mining activities, and that they will equally minimise the negative socioeconomic impacts, while maximising the Socio-Economic Development (SED) returns to the community. In familiar terms, this is the social equivalent of an Environmental Management Plan. Thus, the legal license to operate is directly linked to their ability to deliver on SED commitments, and one might assume that if all companies are held to the same expectations, development would rapidly occur in areas of significant need. However, the projects of various mining companies, regardless of their proximity to other companies operating in the same area, tend to be similar in terms of scope and objectives, and often compete, rather than complement each other. Mine personnel responsible for SED tend to be illequipped to identify, select and manage the most appropriate projects, implementation processes tend to be disjointed, and systems for ensuring developmental effectiveness rarely exist. Thus, the investment of significant amounts of money, in the hundreds of millions of Rand annually, results in no visible impact which can put a mines social license to operate at risk, and either be caused by, or exacerbate poor relationships with the surrounding communities: particularly if they are perceived as not doing enough to address social needs within the local community.

The collaborative approach to Sustainable Development

In South Africa, platinum mining operations are centralised into 3 main clusters The Eastern, Western and Northern Limb (Figure 2 below). Each cluster takes into account the unique challenges faced by the area, the level of maturity and establishment of that area, as well as the extent of mining activity in the area. These elements dictate the scope and type of projects that need to be undertaken, as well as who is best poised to facilitate the implementation of these projects.

Sustainable Mining in the 21st Century

LEGAL AND SOCIAL LICENCE TO OPERATE

Figure 2: Cluster by Region and Common Assets

In the Western and Eastern Limb of the Bushveld Igneous Complex (BIC) of South Africa, where several mining companies can be found, the combined effort of mining houses, government institutions and communities has proven to be successful in achieving certain developmental objectives through the establishment of various forums (examples are the Eastern Limb Producers Forum, Western Limb Producers Forum, Water Forum etc.). Rather than attempting to mitigate their own, individual, negative socio-economic and environmental impacts, companies are working together, in a collaborative approach model, to establish maximum developmental impact in communities. By pooling their financial, human resource and intellectual resources, companies and other stakeholders are proving that when it comes to community development, the sum of the parts is often greater than the whole. This approach,

if explored and implemented effectively, can increase the impact of mining companies on communities positively. The various Forums consist of between 3 24 mining houses, represented by mine general managers, senior managers from the affected local municipalities, traditional leaders and other community leaders. The main purpose of the Forums is to improve the delivery rate of sustainable projects in collaboration with communities by ensuring that there is a common understanding of the problems athand, and no duplication of effort in addressing these problems. In each phase of the mine lifecycle, impacts financial, social and environmental exist at different levels, while the need to interact with, and invest on behalf of, local communities takes on very different forms. To oversimplify, the following stages of socioeconomic development occur:

LEGAL AND SOCIAL LICENCE TO OPERATE

Sustainable Mining in the 21st Century

Exploration: During the early stages of mineral seeking and viability testing, engagement with communities is limited, and socio-economic development investment tends to be limited to goodwill-seeking charitable donations. No strategic approach to development tends to occur at this stage, although part of the feasibility testing of the mine would include baseline socio-economic impact, and needs, assessments. Development: As the mine begins to take shape, following the establishment of mineral rights and land lease agreements, baseline socio-economic impact assessments give way to a combined model of immediate needs mitigation (i.e., relief aid, where necessary), and the start of long-term development programmes. Investment in the community ramps up, engagement with various stakeholders is ongoing, and the monitoring and evaluation of developmental impacts should occur almost immediately (i.e., as from the end of Year 1 of programme implementation). Maturity: By the time the mine reaches production maturity, or full production, socio-economic development (SED) should be at its sustained peak, with limited change in the overall scope and/or focus of either engagement or programme strategies. SED projects should focus on sustaining the economy in that community beyond the life of the mine. Decline: As the mine reaches the end of its life and begins to shut down operations (i.e., prior to closure), the focus of shifts towards SED investments that will meet life after mine requirements, using SED spend as a mechanism for off-setting at least some of the negative impacts of mine closure on the local economy. Much of this investment is likely to focus on re-skilling and/or preparing employees for relocation to other communities, while some will focus on the establishment of secondary and tertiary industries that are not mine-dependent (i.e., not depending on mine procurement to be sustainable). Closure: Engagement with, and investment in, communities ought not to cease immediately upon closure of a mine, but rather extend well into the short-term future to help manage the negative socioeconomic impacts of a life after mining economy. Skills development and educational support tend to be the main focus areas of SED support within the extended closure period.

Figure 3: Socioeconomic Stages of the Mining Lifecycle

MATURITY DEVELOPMENT DECLINE

EXPLORATION

CLOSURE

This model is based on the following principles: Formation of clusters based on common assets and the life of mine. Leveraging of resources between stakeholders. Establishment of a vigorous planning process for all projects. Establishment of a fundamental integrated approach to project implementation.

Sustainable Mining in the 21st Century

LEGAL AND SOCIAL LICENCE TO OPERATE

In the Eastern Limb of the BIC, mining operations are relatively new and the communities tended to be under-developed prior to the arrival of the mining companies. Relatively few actual towns existed, and most villages within mine-affected areas were primarily agrarian, with much of the population being reasonably classified as subsistence farmers. Jobs were few, and income was limited either to the heavy reliance on social welfare grants, income generated through traditional microeconomic enterprise or income generated through the selling of home grown produce. Unlike the area referred to as the Western Limb, in the Rustenburg area of the North West Province, which has well-established mines and a vastly different set of socioeconomic requirements and challenges, the social needs in the Eastern Limb have been deemed both unique and substantial. As a result, mining-related Socio-Economic Development projects on the Eastern limb tend to focus on the immediate needs of infrastructure

development, with the following 4 main focus areas: Water supply to local communities and the mines Development and/or enhancement of roads and other transportation infrastructure Electricity generation, supply and distribution Technical skills development Since the Eastern Limb Producers Forum was established in 2002, and with collaboration of business, government and the community, the development of the region has grown exponentially through an increase in municipal spending as technical skills and expertise have been established within the relevant municipal government departments. This is supported by the increase in expenditure between the years 2005 to 2010, focussing primarily on infrastructure development in the Eastern Tubatse area, as illustrated by the following graph (Figure 4).

Figure 4: Increase in Local Government Expenditure through Collaboration

Greater Tubatse Municipality MIG Achievements R40 000 000
R36 311 000.00

GTM MIG Allocations/Expenditure in R Millions

R35 000 000

R30 919 000.00

R30 000 000 R25 000 000

R20 257 003.11 R25 019 209.62 R25 524 367.34

R20 000 000 R15 000 000 R10 000 000 R5 000 000 0
RRR14 599 296.00 R12 383 250.00

2005/2006 Allocation

2006/2007

2007/2008 Commitment

2008/2009

2009/2010 Expenditure

2010/2011

2011/2012

LEGAL AND SOCIAL LICENCE TO OPERATE

Sustainable Mining in the 21st Century

What this suggests is that if government departments are adequately capacitated with skills and expertise, typically supplied in a form of technical skills transfer or capacity building from the private sector, funding for social development can not only be drawn from the government fiscal budget, but be efficiently deployed to achieve greater success, thus requiring less funding from the private sector to complete specific projects. Rather than relying on companies to do the work of local government, owing to the greater skills capacity within the private sector, effective privatepublic partnerships for development (PPPDs) tend to affect much greater developmental gain, at lower long-term cost, and with greater success and sustainability.

While in many cases this might seem altruistic or perceived to be a charitable good work on the part of the mines, the benefit is reciprocal and therefore this is far closer to mutualism (or commensalism) than altruism. While the local community benefits from the developmental impacts of enhanced infrastructure and improved services, local government gains from an increase in internal capacity and skills, particularly with respect to project management and technical skills, and the mines benefit from the enhanced protection of their licenses to operate: legal and social. Moreover, the collaborative approach tends to become much more cost effective for all parties involved, using the principle of economies of scale to reap the greatest developmental benefit from a finite stockpile of financial and technical reserves.

Figure 5: Expenditure of PPPDs within the Eastern Limb

Project Discipline Description Role of Forum Mine Contribution R' 000,000 225.0 Project Capital Value Geared R'000,000 Project Status

Water Supply

Raising of Flag Bashielo and Lebalelo Pipe Line JWF - De Hoop Dam and pipelines PWF Mogalekwane Water pipeline to communities and mines Training and support to GTM Technical Team R 37 -Upgrade and Taxi Rank 2009 2011 R 555 - Operation and Maintenance D4170 & D4180 Upgrade Burgersfort CBD Upgrade N11 Safety and Realignment

Lebalelo Water User Association Facilitation Facilitation and Concept Study

Project Complete

2 3

Water Supply Water Supply

6.0 3.0

16 000 100

Dam under construction Bulk Water pipeline to be constructed

Tubatse PMU

Professional support and Training Design and Facilitation Facilitation Role Design and Facilitation Design and Facilitation Facilitation and Pre-feasibility study

5.0

140

Roads completed

Tubatse Road and Transport Projects

2.0

250

Planned for construction Maintenance in progress Planned for construction Construction in progress N11 Road alignment and safety planned for construction

0.5 2.0 1.0 4.0

30 200 10 450

TOTAL

R 248

R 17 163

Sustainable Mining in the 21st Century

LEGAL AND SOCIAL LICENCE TO OPERATE

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The process of integration and collaboration

Working together, or collaborating, isnt necessarily as simple as it might seem, and a strategic approach to sharing thoughts, skills and financial resources must be adopted. The process of collaboration requires an integrated approach to economic, social and environmental development, and requires the following major elements:

The technical teams are accountable to the Executive Committee, and the Forum is accountable to all of the relevant stakeholders (i.e., the member organisations involved in the Private-Public Partnership).

2. Stakeholder engagement process

Formal community structures for communication have to be established with recognised community leaders and local municipality representatives forming part of the Producers Forum. In addition the mining companies have to have formal structures where mine performance and social development issues are addressed and discussed that ensuring adequate communication and community buy-in for the projects to be embarked on. Stakeholder engagement must be formal, rather than ad hoc. Stakeholders must be identified, categorised in terms of their degree of affect (how affected they are by a specific issue) and effect (how much of an effect they might be able to have on the issue), prioritised, and approached using appropriate engagement methodologies and engagement frequencies. In some cases a specific stakeholder, or stakeholder group (e.g., farmers surrounding a specific mine), must be approached either in one-on-one meetings, or group forums, whereas other stakeholders might be duly engaged via press releases and/ or publicised opportunities to comment (e.g., newspaper advertisements) A key component of the stakeholder engagement process must be the establishment of a mechanism to ensure that the Executive Committee is adequately apprised of the success of engagements. At least quarterly, the Committee should be informed of who was engaged, about what issues, in what format, and to what ends. It is the responsibility of the technical teams to provide sufficient information to allow the Committee a reasonable opportunity to identify any potential barriers to project success, and to develop mitigation strategies, where needed, prior to the situation escalating to a situation of fire fighting, or damage control.

1. A formal structure
This structure consists of all the major role players and stakeholders namely, senior operational managers from the mines, key political players such as the mayors and senior provincial government heads, recognised community and/ or traditional leaders and a technical task team. In the case of the Eastern Limb, the structure is formalised through the Producers Forum. The Producers Forums are formalised through a constitution with a Memorandum of Understanding (MOU), with provincial governments and implementing agreements with institutions such as the Department of Water Affairs, Municipalities, South African National Roads Agencies etc, for project planning and implementation. In the Producers Forum, an Executive Committee is formed from representatives who have been committed from each of the area mines. Under the Executive Committee are task teams which deal with technical aspects (e.g., land, water, electricity, and other pertinent issues). The technical team is assigned to specific projects, and it is their mandate to ensure that their projects are managed effectively. Rather than discussing what needs to be done in the community and merely contributing progressdependent funds to the local municipality to help them meet specific objectives, the Forum takes an active role in ensuring that funds are matched with skills and capacity contributions, thereby investing significant sweat equity into the common developmental goals.

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Sustainable Mining in the 21st Century

3. Leveraging of resources
South Africas Department of Minerals and Resources (DMR) requires that all mining houses invest a significant proportion of their revenue, typically in the neighbourhood of 1% of net profit after tax, to socioeconomic development. As such, all mines are aware of the need to invest in their communities, and with few exceptions are doing so. However, the sum of money invested in SED by one company, even a large company with multiple millions of Rands to invest annually, is wholly insufficient to address the plethora of education, health, welfare, and economic development needs that exist throughout South Africa. Thus, companies are better served by pooling their SED funds to increase the potential for private sector SED investments to have a significant impact on an issue such as poor secondary school test results in Maths and Sciences. However, cash is not the only resource that must be pooled for leverage purposes. While money is always useful, it is the lack of skill and/or capacity within the public sector that poses the greater developmental conundrum. Even if companies are aggressive in their preparedness to donate money to worthy projects, the funds are deemed virtually unspendable in the absence of the necessary skills to adequately project manage key infrastructure, healthcare or educational projects. Thus, the greatest contribution mines can possibly make to the overall development agenda is skills development and capacity building through the pooling of their own talent. Although costly in terms of their own operational needs, the benefit to local municipalities when an engineer or accountant is spared for a specific project often pales in comparison to the efficiency gains the company tends to experience, as the loaned professional typically becomes more motivated to succeed in all aspects of their career. However, the cost should not be minimised, and therefore the sharing of skills is the responsibility of all partners within the Forum, to ensure that the aggregated capacity can be leveraged for maximum shared benefit.

4. Institutional Alignment
In order for the integrated approach to work, there has to be a clear understanding of what the national development imperatives are, as well as where the greatest need can be most effectively be addressed by the pool of resources available within the Forum. On the one hand, companies cannot be expected to become the answers to all problems, but should rather become one source of answers for appropriate challenges. Meanwhile, the mining companies should not attempt to fix problems that either are too massive for their combined capacity, nor problems that the communities have not deemed a critical need.

In South Africa, municipalities are required to develop Integrated Development Plans, or IDPs, that provide a reasonable overview of both the socioeconomic challenges within their communities, and the specific challenges that are deemed most urgent. Typically, infrastructure, health and education tend to be the three primary focus areas of mining-affected municipalities, and infrastructure projects are the ones that are most relevant to the mining companies due to their specific in-house engineering capacity. Thus, it is important that through a Forum the needs of the communities are aligned to the capabilities of the mining companies to increase the likelihood of developmental success.

Sustainable Mining in the 21st Century

LEADERSHIP DYNAMICS IN THE 32ST CENTURY

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Leadership dynamics in the 21st century

In short, so what? Although the preceding pages possibly help to offer clarity around a small number of sustainability-related issues, particularly in the South African context, the question still remains, So what? Ultimately, it comes down to leadership, and one can not apply 20th century models of leadership to 21st century challenges, particularly not in emerging markets, and certainly not in South Africa. Historically, leadership within mining companies, and particularly at the mine level, has been far too quick to focus their attention almost exclusively on production and profit, with little regard for anything else. Sadly, this has had to change fairly quickly in the past few years, as stakeholders, particularly government and unions have become unwilling to accept poor safety records on mines. Mine managers and company executives have therefore been forced to pay much closer attention to safety issues, and to accept that mining-related fatalities and profitability are NOT mutually exclusive. Where executives might have been able to accept fatalities as long as they didnt impede production, government and other stakeholders have forced the hands of mining companies to place deeper significance on safety matters. Equally, mining executives and mine managers must accept that the long term sustainability of an organization, the global economy and the upliftment of the bottom billion in Africa and around the world, requires a shift in leadership thinking. They must accept that an organization is an open system rather than a closed one, and that each company is dependent on its social and physical environment for its existence. Thus, leaders of today must recognise that they have a duty to look beyond the shareholder, and to understand the needs and concerns of all stakeholders so that they, and their companies, might leave a sustainable legacy for future generations. Todays leaders need to understand that collaboration and competition can occur simultaneously. They must be able to distinguish between those issues that give them a competitive advantage over their peers to sustain their businesses (e.g., enhanced human resource development programmes to attract and retain scarce skilled professionals), and those issues that can be shared with their competitors to create a positive operational climate for mutual developmental success (e.g., technical skills and experience to efficiently complete infrastructure development projects). Todays leaders must be committed to the cause of sustainable development and who have an understanding that this is a business imperative. Thankfully, the dawning of the 21st century seems to have brought with it a tendency towards greater investor awareness of sustainability matters. With the establishment of indices such as the Dow Jones Sustainability Index, FTSE for Good, and the Johannesburg Stock Exchange (JSE Limited) Socially Responsible Investment (SRI) Index, and with trillions of dollars invested in green, social and/or sustainability funds, much more attention is being afforded to matters still commonly referred to as non-financial. Investors are becoming much more environmentally and socially conscious, and the pervasiveness of the internet, even into previously deemed remote African villages, has ensured that stakeholders are becoming far better equipped in their battles against mining companies. Thus, todays leaders must be equally prepared to understand and manage the social and environmental impacts of their businesses as effectively as they have traditionally managed productivity and profit. Moreover, they must be prepared to understand who their stakeholders are ALL of their stakeholders and must be better prepared to engage with them in a constructive and effective manner. Todays leaders must be prepared to accept that the 21st century requires that their thinking needs to shift towards issues of sustainability, with a greater focus on an integrated approach to doing business. Sustainability must be incorporated into the overall business process, and be aligned with ethical business practices, good corporate governance, and transparency.

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Sustainable Mining in the 21st Century

Organizations that have integrated sustainability into their daily business practices will find added value to the bottom line by being able to respond on time to issues thus saving costs and time, as

well as mitigating long term impacts that would otherwise be disastrous to a business in the absence of proper management and planning.

Conclusion
In conclusion, the success of future generations and the growth and success of the global economy rests on the shoulders of todays leaders. For this to happen, there needs to be a paradigm shift in leadership, from that of master to that of servant, understanding the diverse nature of business stakeholders, their expectations and the relevance of non-financial performance in ensuring long term business stability and viability. The changing business environment, stakeholder interest in business performance and practices, has resulted in added pressure on business leaders to account. Leadership maturity within the private and public sector is critical in developing economically and socially stable communities, which ultimately benefits the business. Through collaboration greater benefit can be attained for both host communities and mining companies. While the legal licence operate is essential for any mining company, the social license is paramount in ensuring a sustainable operation. Greater stakeholder interest in business performance, beyond financial matters, requires leadership that is committed, accountable and transparent. This requires leadership that can be honest and open to public scrutiny, recognising that the future of any organization is dictated by its ability to create a balance between its operations the environment and society.

Sustainable Mining in the 21st Century

CONCLUSION

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About the authors

Cindy Mogotsi
A research and development chemist by profession, with a BSc degree from the University of the North West in South Africa, Cindy has worked in the mining industry for the last 16 years. In 2003, Cindy acquired a Masters degree in Business Administration from the University of Wales, and acquired an MSc in Technology and Mining from the Davinci Institute of Technology in South Africa, in 2006. The first 10 years of Cindys career were spent at operations and involved leading technological research on Platinum Group Metals (PGM) extraction and analysis. The past 5 years have been invested in the field of Sustainable Development, heading up the sustainability performance area for Impala Platinum (Implats), focusing on non-financial indicator monitoring, evaluation and reporting for the group. Cindy is a non-executive director of the South African Mining Development Association (SAMDA), working closely and playing a key role in influencing policy-making in the mining sector, and is an executive director of the Group subsidiary company, Impala Platinum Limited.

Michael H. Rea
With degrees in Zoogeography (BSc), Animal Behaviour (BSc) and Corporate Social Responsibility (MBA), Michael is a sustainability practitioner with project experience in more than 40 countries, over the past 20 years. With a particular interest in socioeconomic development, Michael has emerged as a leading sustainability reporting assurance provider in South Africa, offering his clients a meaningful alternative to his key competitors: the Big 4 accounting firms: Deloitte, EY, KPMG and PwC, of which PwC (99 to 2003) and KPMG (2003 to 20060 are former employers His company, SustainabilityServices.co.za, is registered as an AccountAbility (AA1000AS) assurance provider, and assures no fewer than 10 annual sustainability reports. His recent mining clients include AREVA Mining (France), African Rainbow Minerals, Merafe Resources, Royal Bafokeng Platinum, Wits Gold, Xstrata Alloys and Xstrata South Africa.

For more information, please contact the authors at: cindy.mogotsi@implats.co.za or michael@sustainabilityservices.co.za

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Sustainable Mining in the 21st Century