On February 9, Africa’s biggest mining gathering will kick off in Cape Town, South Africa. From Australians mining iron ore in West Africa to Chinese interested in our rare earth, more than 7,000 people will arrive at the Mining Indaba to talk about the future of the industry.
One of the topics likely to come up is why the riches of mining struggle to reach the poor. Government and mining companies make promises of empowering the poor through shares and wages; most are empty.
Before a word is said, the head of the National Union of Mineworkers (NUM) is sceptical. Frans Baleni, the union’s general secretary, says the Mining Indaba means little to the people who live next door to mines.
“You will notice that these discussions are about issues of maximizing productivity, there’s nothing much about improving the lives of communities. In these deliberations we don’t get a platform to say what we want to say,” says Baleni.
As delegates gather, a do-it-yourself solution will be underway in another part of the country. Thousands of the country’s poorest people will be buying into its richest industry.
Baroka Tribal Mining (Pty) is a community-owned company in the Sekhukhune District in Limpopo, in northern South Africa. It represents 90,000 poor people of the Baroka Ba Nkwana tribe. This community is buying a 49% stake of Bokoni platinum mine, worth $385million, from Anglo American Platinum (Amplats), the world’s largest platinum producer. It tabled the offer early in January.
Baroka’s transaction is backed by the Public Investment Corporation, a state-owned pension fund and a bank loan.
It is a deal that is a sign of the times. Following South Africa’s crippling six-month platinum strike in 2014, Amplats CEO Chris Griffith announced that the world’s largest producer was selling under-performing mines. It wants to concentrate on the more profitable open-pit and mechanized mine.
It has taken time and perseverance for Baroka since they set up in 2009. Out of their own pocket, Baroka representatives have traveled the world trying to secure investment. They went to Russia, Thailand and the United States but returned empty handed. The question of mining strikes in South Africa was often raised.
“Everything about Baroka shows that if you believe in something, you can actually get it if you are determined. We have never received royalties from any company, yet we are buying a R4 billion ($347 million) mine. We are lucky because we have government backing. That made it easier for us. Where the mine is sitting, there is 600 million tons of iron ore. There’s a large chrome deposit. We are currently sitting with 51 percent exploration rights,” says Tshepo Phiri, Chief Executive of Baroka Tribal Mining.
“Except for Royal Bafokeng, I can’t think of any successful story regarding mining communities. The government’s role tends to be limited; government tends to rely on these companies to implement the mining charter. But our advice is that the government needs to do constant evaluation of these companies and raise the red flag quite early,” says Baleni.
Both parties have a long way to go. Amplats will get credits towards black ownership which is required by the Mining Charter. The next Mining Charter update will be out on March 31 when researchers will tell how much – or how little – has been transferred to black owners. Each company is required to show at least 26% black ownership.
Ngoako Ramatlhodi, Minister of Mineral Resources, has a broad administrative discretion to unilaterally amend the charter as and when the need arises. Non-compliance with the provisions of the amended charter will render a mining company in breach of the Mineral and Petroleum Resources Development Act (MPRDA). Under section 47 of the MPRDA, the minister has the prerogative to suspend or cancel rights, permissions where the holder is in breach.
At least the Baroka Ba Nkwana tribe has not let the grass grow under its feet in the effort to convince poor people that a share of mining riches can be theirs too. Surely, this is a route to long-term stability in mining.