Reputation is built on how a business has performed in the past. It is the sum of all perceptions and expectations that stakeholders have about a particular company.
Mining houses have long recognised that their reputation is determined by the quality of relationships they build with their stakeholders, and that it is essential to have buy-in from their employees as well as the local communities in which they operate.
Their tag lines indicate a new mindset that is built on socio-economic sustainability: ‘More than Mining’ (Royal Bafokeng Platinum); ‘We are One’ (Sibanye Gold); and ‘Real Mining. Real People. Real Difference’ (Anglo American).
However, mining companies are under pressure from many directions. At the 2015 Mining Indaba held in Cape Town, the South African Chamber of Mines lamented higher input costs (electricity, water, worker remuneration), coupled with fallen commodity prices, declining productivity and strike action.
At the same time, the expectations of host communities and mine workforces are rising.
‘The challenge facing the corporations surveyed is to get to grips with community expectations, community needs and to address underlying causes of the negative perceptions of communities towards mining,’ says John Capel, executive director of the Bench Marks Foundation, in a study on the effects of diamond mining on South African west coast communities.
The foundation is an NPO mandated by South African churches to monitor corporate performance against global best practice in terms of CSR and human rights.
The Alternative Mining Indaba runs parallel to the Mining Indaba. It has called for an independent fund – financed by the mining houses – that would increase communities’ access to local expertise.
According to Capel: ‘CSR cannot be mere window dressing or glossy annual sustainability reports, but must address the social, environmental and economic impacts in a way that does not externalise costs, and that leads to true empowerment and shareholding of communities. Multinational companies have significant power and influence and, with the right political will, can do a lot more in relation to communities’ well-being.’
The world’s mining giants are already spending billions on CSI annually. In 2013/2014, BHP Billiton reported a global CSI spend of more than US$241.7 million, while Glencore Xtrata invested US$114 million in community projects.
Social investment is guided by the BBBEE Codes of Good Practice; the Mining Charter; and the Mineral and Petroleum Resources Development Act
In South Africa, the mining sector accounts for around half of the country’s entire CSI spend, says Reana Rossouw, MD of Next Generation Consultants, a Johannesburg-based firm that specialises in development issues. ‘This contribution comes in various forms; some of it is legislated. To get a real sense of the size of the sector’s contribution, one can painstakingly go through their sustainability and integrated reports to see what is being spent per annum. But that this figure is in the billions is not disputable.’
In 2013, for instance, Kumba Iron Ore alone reported a spend of ZAR253.7 million on CSI in South Africa. African Rainbow Minerals spent some ZAR168.5 million.
Their social investment approach is guided by the BBBEE Codes of Good Practice that set a target of 1% net profit after tax to be invested in socio-economic development; the Mining Charter that commits companies to invest in their host and labour-sourcing communities; and the Mineral and Petroleum Resources Development Act, which demands a social and labour plan (SLP) for the geographic area where a mine operates.
The SLP identifies the potential impact the mine will have on its host community. It then outlines the measures the company will take to improve socio-economic conditions in key areas. These include health, education, basic infrastructure, job creation and community skills development.
According to Rossouw, mining houses tend to direct substantial social investment towards community healthcare ‘to mitigate negative impact from their operations, such as environmental pollution that can lead to healthcare issues.
‘Mines will invest in healthcare facilities, access to healthcare, improving quality of healthcare and provision of operational support – also because their own workers and their families attend these healthcare facilities. It benefits the community but also the employees and government,’ she says.
What’s more, it increases mine productivity. As Royal Bafokeng Platinum states: ‘A healthy workforce is important to our business because it means that our employees are fit to work at their full potential and absences due to sickness are reduced.’
In November 2014, the Mine Health and Safety Council – which represents the state, organised labour and employers – announced a ‘zero harm’ policy.
Its action plan features a time frame by which all mining-related injuries and fatalities must be eliminated, as well as occupational lung diseases (including silicosis and coal workers’ pneumoconiosis) and noise-induced hearing loss. The plan also makes provisions to reduce and prevent TB and HIV/Aids infections among mineworkers.
The sector already offers some of South Africa’s most effective HIV-awareness campaigns and prevention programmes to its employees, due to the devastating impact the disease has had on mining communities. The industry was also the first in the country to offer voluntary HIV counselling and testing, as well as to provide antiretroviral (ARV) treatment to its workforce.
Exxaro, the diversified resources group with interests in the coal, titanium dioxide, ferrous and energy markets, commissioned an assessment of the impact of its CSI and community development in 2013. Perhaps surprisingly, it was the group’s HIV awareness programme that reaped the highest social return on investment (SROI).
It includes peer educators and community awareness programmes to encourage lower-risk lifestyles, increase access to ARV treatment and reduce the related stigma.
The assessment revealed that the social return on the HIV/Aids awareness initiative was ZAR5.12. So for every rand the company invests – or plans to – it creates a social and economic impact of ZAR5.12. This figure is impressive considering the overall weighted portfolio SROI average is ZAR1.32.
Meanwhile, BHP Billiton has partnered with PATH (formerly known as Programme for Appropriate Technology in Health), a global health innovation NPO. Initiated in 2011, the US$25 million Window of Opportunity initiative aims to reduce infant and maternal mortality in four South African districts and Mozambique during the course of five years.
The premise is based on strengthening care during the first 1 000 days of life, ranging from a mother’s pregnancy to the child’s second birthday. It encompasses prenatal care, birth assistance and quality nutrition, health and early childhood development services.
PATH collaborates with public-sector and civil-society partners to improve the health outcomes for 750 000 pregnant women and young children. So far more than 100 healthcare managers have been trained and in one district alone the project helped reduce the number of maternal deaths by 65%.
Another large-scale CSI initiative based on extensive partnerships is Adopt-a-School, which brings basic infrastructure and educational resources to mainly rural schools in South Africa, Mozambique and Lesotho.
The initiative looks at ‘whole school development’ and upgrades impoverished schools – to date more than 430 facilities have been built, in addition to three entirely new schools. One of these was financed with ZAR12.7 million by Barberton Mines, a division of Pan African Resources, for the community surrounding its operations.
Teachers are also trained in curriculum development and pupils benefit from life skills and literacy intervention, among others.
School adopters from the mining industry include AARD Mining Equipment, Kangra Coal, Northam Platinum and Shanduka Coal.
Anglo American’s Chairman’s Fund is South Africa’s oldest professionally managed social-investment programme. In 2014 alone, it invested close to ZAR50 million to support 86 education projects, ranging from small grass-roots projects to large-scale service- delivery programmes with provincial and national partners.
The group’s Kumba Iron Ore subsidiary also invested ZAR10.5 million in four solar-powered internet schools. The first one – in Tembisa, Gauteng – is already fully functional. The solar power allows schools in isolated areas with limited or no access to electricity to connect to the internet. All curriculum modules will be loaded on tablets supplied by Kumba.
In his keynote address at 2013’s Mining Indaba, Anglo American CEO Mark Cutifani emphasised how it was imperative that the mining industry think beyond its historical label of an extractive industry. ‘While we may extract products from rocks, we are overwhelmingly a “development industry” that creates new social possibilities,’ he said. ‘We should be the “development partner” that supports and catalyses the creation of wealth for all.’
It is perhaps this kind of thinking that, for the tenth time, has earned his firm the reputation of being one of South Africa’s top 10 companies in terms of CSI.
In its most recent annual survey, CSI consultancy Trialogue asks corporate and NPO respondents to name the businesses they believe have the greatest development impact through their CSI.
Anglo American emerged top of both tables. And while perception isn’t always the same as real impact, the rankings prove that the firm’s CSI effort has reaped a strong reputational benefit.
