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68% of the regional economy: That’s how much platinum contributes to Rustenberg

A new report quantifies platinum miners’ contributions to the area.

JOHANNESBURG – South Africa’s big three platinum mining companies – Anglo American Platinum, Impala Platinum and Lonmin – appear to have made significant contributions to the Rustenberg area, in which they operate. But a new report by advisory firm, Eunomix, suggests more can be done to address the “underlying structural socio-economic problems” vexing the area.

According to the latest municipal data, compiled prior to the current bear market in commodities, mining contributed 68% to gross domestic product (GDP) and was responsible for 50% of direct jobs and 15% of indirect jobs in the area in 2011.

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Citing data from the Integrated Reporting and Assurance Services’ Sustainability Data Transparency Index, Eunomix said the mining and metals sector is the largest contributor to corporate social investment and development expenditure in South Africa. A total of 33 companies in the sector reported a R3.9 billion contribution, equivalent to 46.4% of total expenditure.

According to Eunomix, the three companies’ invested a combined R1.2 billion in housing schemes over the last two years which was equivalent to 60 times the municipal expenditure in Rustenberg over the same period. And it said the 18 000 dwellings built by the companies between 2012 and 2013 covered 30% of the housing backlog from 2011. But even as the companies provided accommodation for more than 35 000 workers, they did not appear to manage the different housing needs properly. “For instance, hostels and living-out allowances (renting) tended to cater to lower-tiered employees, migrants, and temporary workers, while the majority of housing projects catered to workers with higher paying jobs and/or those interested in settling down or living in Rustenburg for a long-term period, ” said Eunomix.

From 2011 to 2013, the companies contributed R370 million to investment in local infrastructure and R12 billion in enterprise development projects, which support 1 377 small and medium enterprises and almost 100 farmers, Eunomix said.

The three companies’ R43 million investment in education in 2013, was equivalent to 20% of total public expenditure in education and social assistance in the same year. More than 25 000 students participated in company-financed education programmes between 2011 and 2013, when the companies invested almost R 140 million in education and training programmes. “However, on-the-ground research revealed that there was a sentiment that platinum companies should increase this reach and focus on fulfilling some of the schools’ basic needs in terms of infrastructure and staffing,” Eunomix said.

While the companies have attempted to upskill their workers through Adult Basic Education and Training (ABET), so that they may find other work as mechanisation levels increase, Eunomix found the skills development content lacking. According to its research, a greater focus on tax and personal finance skills would be more appropriate for the Rustenberg population.

The companies’ contribution to health programmes was 14 times more than that of the local government in 2013. Although their strategies differed, all three companies invested in HIV testing and 88% of platinum workers were tested that year (see charts below). “However, some of the companies’ number of tested employees could be seen as insufficient given the high HIV prevalence rate,” said Eunomix. According to the advisory firm, the number of HIV-infected people in Rustenberg increased by 49% from 2001 to 2011.

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In spite of the companies’ financial contributions to the area, “there is space for the strategic direction of the sustainability investment to be more responsive to the nuanced issues that emanate from the structural problems…,” Eunomix said, referring to the effects of the migrant labour system, poverty, income inequality and crime among other social issues.

According to the advisory firm, companies should improve the coordination of sustainability projects in order to amplify their effects. It has also called for more cooperation between the industry and government, “not only would this ensure that companies’ community investments target the specific needs of the municipality, more cooperation between government and the industry could also contribute to increasing governance capacity and mitigate the existing trust deficit between both parties”. And it says that government must invest in the economic diversification of Rustenberg to avoid “a post-mining ‘ghost-town’ scenario”. The industry’s response to the slump in commodity prices is likely to see the miners scale back their contributions to the local community.

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