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SA mining not transforming itself at c-suite level

Despite efforts to advance the country’s transformation agenda.

According to Dr Martin Kaggwa from the Sam Tambani Research Institute*, South Africa’s mining sector is not doing enough to transform itself at an executive level.

While he concedes that mining companies have spent a significant amount of money on, and are doing a lot of positive work for historically-disadvantaged communities by way of housing and providing schooling and bursaries, he says the decision makers at most mining companies remain white males.

Kaggwa adds that although the number of women employed in the mining industry has increased, qualitative transformation of women in this sector has not taken place. Its research reflects that most of the women employed in mining are at lower levels of the job hierarchy.

“Effective transformation requires that it happens at all levels of an organisation,” says Kaggwa. “About 90% of women in mining, according to our sample, don’t go beyond the administration level.”

The Chamber of Mines says that it does not track the number of black people who hold c-suite positions among its members, but that historically disadvantaged South Africans occupy more that 40% of senior management positions and more that 50% in other management categories’ top management.

“The value of empowerment transactions since 2000 amounts to R205 billion in 2014 money terms,” said a spokesperson from the chamber. “The value of meaningful economic value transfer since 2000 amounts to R159 billion.”

But there seems to be a discrepancy between the data, depending on who is collecting it.

A 2015 report from the Department of Mineral Resources (DMR) puts the number of black people in top management at 41.4%, while a report from the Commission for Employment and Equity (2014-2015) paints a rather different picture, stating that only 27% of the industry top management are black.

Top management composition in the mining and quarrying sector

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Source: Commission for Employment and Equity Report 2014-2015

“There is a very big gap between the data being produced by the companies vis-a-vis what a person can see with their eyes,” says Kaggwa, who believes the lack of black decision makers in the mining industry is due to the white capital that has invested heavily in the sector and refuses to therefore relinquish control of it.

Says Kaggwa: “Although they may be willing to allow some space for black executives to come through, I don’t think they would be willing to lose the power over their investment, and I believe that plays a role in terms of why we have not seen a rise of black executives in mining. Even where you have a few minority black people, their influence on the executive is not as much as their white counterparts.

It always comes back to the ownership issue

That mining right holders are obliged to be 26% black-owned, might incentivise black rising stars in the mining sector to be silent partners in large companies, and thus reduce their ambitions of running the large mining companies, but Kaggwa doesn’t believe this is the reason for the lack of black representation. This is because, by owning some of a 26% stake in a company, one is not able to control decisions or the strategic direction of a company.

Secondly, had the right black people (i.e. ambitious mining talent) been given these shares, they would not have subsequently sold them – as has happened with many empowerment deals over the last ten to 15 years.

“That’s why the mining companies are saying, “we gave you a seat at the table, and you sold out, so you can no longer hold us accountable for the dilution of black representatives on the board,” says Kaggwa, referring indirectly to the ‘once empowered always empowered’ stalemate, that is now being resolved in the courts.

Another issue is related to situations where black executives get frustrated by companies not remitting dividends.

“If you get a loan in order to buy shares, and become an executive board member, you still have to service the loan and if dividends are not forthcoming over time, it means you have a burden with the benefits of that ownership. So you would not be getting enough from the mining business,” he says.

Not necessarily a mining-specific problem

But this is not necessarily a problem in the mining sector alone. Executive recruitment company Jack Hammer released a report earlier this year, which examined the makeup of South Africa’s Top 40 companies’ executive teams, showing that there had been a decline in the number of black South African CEOs‚ from 15% in 2012 to 10% last year.

That said, it is perhaps commendable that the mining sector is contributing to transformation at grass roots level, investing in the mining communities, providing education, and addressing social issues such as indebtedness.

The chamber says it has always been the first to acknowledge that there is still some way to go before we can say that we have completed the journey of transformation.

“We believe that transformation is an issue which needs to be addressed not only by the mining industry, but by South Africa as a whole. In our view, the mining sector has done more to progress the transformation of South Africa’s economy than any other component of the private sector,” says the chamber’s spokesperson.

*The Sam Tambani Research Institute was formed by the National Union of Mineworkers and the Mineworkers Investment Trust. Its primary function is to undertake research that supports the agenda for workers’ welfare.

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Mining Industry – what mining industry ? ? ? ?
The ANC have destroyed the bedrock of the SA economy – with a resultant decimation in taxes paid by Employers and employees.
There are now more ZAMA ZAMA’s than there are men employed in the legal mining industry.
Everything the ANC touches – turns to . . . . . . . . .

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