Mining industry must lead the transformation charge

WE SEEM to have missed the opportunity to learn from the Marikana crisis as a wake-up call to address the structural problems in our society.

Dark clouds gathering over the mining industry reflect the depth of the looming crisis resulting from our failure to create a growing and inclusive economy. The response of the industry to the pressure on its uncompetitive “low skill, low wage” operating model, worsened considerably by Eskom’s inability to provide reliable power, could make or break the industry and take the rest of the economy with it.

Retrenchments might be seen as inevitable but the spillover effects could be disastrous. The despair of those caught up in poverty, unemployment and inequality is mounting and is likely to lead to robust resistance to any move to retrench the breadwinners of large extended families.

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There would be no winners in the death dance that could break out under such circumstances between the private sector, the trade union movement and the government. What is needed are tough conversations about how we can work together to address the root causes of our socioeconomic problems. Such conversations should lead to a new social compact on transformation that lays the framework for drawing up industry-by-industry action plans with short-, medium-and long-term goals and targets.

The mining industry is ripe for such discussions to guide the drastic action its leaders know they have to take to stay alive. The looming wage negotiations should be used as a platform for union and mine leaders as well as the government to discuss the transformation of the industry into a more sustainable and competitive one.

The first principle should be putting the preservation of the livelihoods and wellbeing of workers at the centre. The latter requires creative modelling of the size and shape of skills needed for a “high skill, high wage” competitive industry. These would need to be fine-tuned at company level, taking into account the characteristics of each resource sector. Matching the profile of the existing workforce with that of the desired size and shape would yield a picture of the extent of the restructuring needed.

Those not fitting the new model should be given new opportunities that would leave them no worse-off economically. There are pilot models that hold promise for linking the urban-rural nexus that many mineworkers have to negotiate as migrants. Viable agribusinesses, protective-clothing manufacturing and other services can be developed into sustainable businesses in the home areas of those affected.

There is much we can learn from Brazil about the value agribusiness can add to the economy. We have the opportunity to turn our vast underutilised land resources into a platform to develop a strong farming industry. High-value food crops, such as soya, sunflowers and nuts, as well as high nutrition-value vegetables, such as mushrooms, spinach and berries, could transform the rural and periurban landscape.

Fibre crops such as sisal, flax and hemp that generate significant jobs along the value chain, from cultivation to processing, are highly suitable for the Eastern Cape, KwaZulu-Natal and other areas.

Our natural, mineral and human resources could be recombined in ways that produce higher economic value and shared prosperity for all.

The government has a major role to play in the industry to partner private sector incubators/accelerators that nurture and grow entrepreneurs. Pooling funds from the Industrial Development Corporation, the Development Bank of Southern Africa, the Land Bank and the Jobs Fund, as well as collaboration with the departments of rural development and agriculture, could unlock huge value.

Collective effort is needed to transform poor provinces such as the Eastern Cape, KwaZulu-Natal, Limpopo and Mpumalanga into vibrant food baskets. This would significantly contribute to meeting our land-reform and job-creation goals.

The second principle would be to give those affected by silicosis, tuberculosis and HIV, estimated in a study in 2012 to be 25% of the workforce, the first shot at the opportunity to get out of harm’s way without losing their livelihoods. Linked to this must be agreement on the settlement of outstanding occupational diseases’ claims to free the industry of the high-liability risk profile that hangs over its attractiveness to investors.

A 2009 study indicated about 288,000 workers with silicosis had laid claims of R10bn. The industry’s approach of literally fighting poor, unskilled miners to the death as a way of avoiding the flood of claims is not only ethically wrong, it hurts the industry’s image. Investor sentiment is not neutral to this issue.

The third principle is to commit to investing in skills development to migrate the industry to a high-skills operating model and increase productivity and competitiveness. The focus must be on-the-job training for new entrants to make the transformation needed industry-wide.

Collaboration within the industry, between the industry and vocational colleges, with the government providing incentives and removing bureaucratic barriers to pools of funds, is essential to success.

Using the National Skills Fund, the Jobs Fund and black economic empowerment scorecard points for skills development could work magic in moving us up the skill and productivity ladder. We should learn from the decades-old successful German artisan training scheme, including the development of skilled master tradespeople, who are essential for carrying out highly specialised tasks that unlock productivity.

The mining industry is the appropriate spearhead for transforming our socioeconomic landscape. It is a significant contributor to gross domestic product and generates 1-million jobs, 500,000 directly. It contributes R78bn to the wage bill and R17bn to the tax base. It produces 94% of the feedstock for electricity generation, while it consumes 15% of our energy pool. It also has a historic mission to contribute to socioeconomic transformation. It was the foundation on which our economy was built and it pretty much shaped the nature of urbanisation and industrialisation.

It now has to rise to the challenge and opportunity to once more lead the charge. The odds may seem against it but that is precisely what history’s magic moments are made of — turning moments of crises into opportunities for greatness. The industry is sitting on a treasure trove of reserves and talented leadership that has proven its mettle in tough times. It is time to leverage all these strengths to tackle the challenges.

The workers, the nation and the world are waiting with bated breath for that magic moment to lift the dark clouds hanging over us. We have been here before. Yet, in 1994, we came together to surprise ourselves and the world. We can do it again and complete the journey of transformation.

Source: bdlive

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