Issue 17
The South African Chamber of Mines
The substantial changes in the South African mining industry over the past five years are mirrored in the changes that have occurred in the industry's oldest institution - the Chamber of Mines of South Africa. In this globalising world, those who stand by and watch will not be the active shapers of the South African mining industry.
Over the past nine years, since the release of Nelson Mandela and the move towards democracy in South Africa, the South African mining industry has faced a number of significant challenges.
A traditional parochial focus in an environment of significant changes on the global mining scene coupled with declining commodity prices, rising costs, historically poor management practices and poor productivity levels all pointed towards the need for change. The restructuring that has taken place in the South Africa n mining industry, particularly the gold sector, is encapsulated in five overarching strategies that have been followed at different stages of evolution for each of the mining groups. These strategies include:
- Leadership. Changing the industry for the better-required leaders capable of globalising the local industry while at the same time helping to transform the local mines into globally competitive operating units':
- Restructuring mining houses and mines. Mining houses were restructured for more globalised operations. Foreign listings for certain mining houses have been used to tap global markets while at the same time testing South African companies against global best practice. Areas not considered core competencies have been contracted out. At mine level, the elimination of the farm-fence boundary system coupled with the elimination of duplicated infrastructure has led to much greater economies of scale and lower unit costs.
- Human capital development. Some 50 per cent of the working costs of the average South African gold mines labour costs. There was a definite need to move away from treating labour not just as a cost, but rather as an integral component of the productivity and viability of mining operations. The provision of career paths and the equipping of workers with the necessary tools to progress up a career path have been key areas of focus.
- Restructuring work practices. This encompasses the whole gamut of management practices. The elimination of unnecessarily high levels of management hierarchies to devolve decision making back to the rock-face has been one area of action. Incentivising the workplace and ensuring productivity bargaining in negotiations has been another. The better management of people, stores, materials, logistics, safety, the ore body, etc., have been critical areas of attention.
- The application of appropriate technologies. The use of technologies that reduce costs and improve efficiencies has been a change strategy.
For the South African gold mining sector, these change strategies have had significantly positive results. More globally oriented companies with new leadership, better management practices, a more skilled and more productive workforce coupled with appropriate technologies has managed to reduce total production costs by 22 per cent in US dollar terms when comparing 1998 to 1997. By the first quarter of 1999 average total production costs for South African gold mines were US$269.80 per ounce. What is critical is that the Chamber of Mines organisation has itself also changed and restructured along similar lines to reflect the interests and needs of members.
In February 1998, South African mining industry leaders came together with key Chamber advisers in a "bosberaad" (or bush meeting) at a place called Mbulwa in Kwa-Zulu Natal to determine the key issues confronting the South African mining industry, and how best to deal with these challenges. What resulted was a list of 16 key policy areas that needed to be tackled by the industry through the Chamber. These key areas are commonly referred to as the Mbulwa Minute and are reflected in the diagram on the opposite page.
ln essence, these sixteen points were considered the key policy areas that the Chamber should focus on to allow the South African mining industry to be able to mine the tremendous resource endowment of South Africa in a safe, environmentally friendly and profitable manner. With this mandate, the Chamber's core focus has become advocacy.
The Chamber has been significantly restructured. Internal committees have been revamped and reorganised to reduce time spent in meetings and to ensure greater progress on Chamber focused activities. The many Chamber affiliated companies have been spun off into stand-alone units with independent boards of directors. All non-core factions have been hived out - although Chamber officials do participate on some boards. Management layers have been reduced and the workplace has been more incentivised. The Chamber is a well known receptacle of knowledge and skills. A key management challenge has been how to channel these skills and the knowledge base to the greatest effect. The Chamber has kept its core advisory function is to advise the industry, formulate positions, to mandate and thus advocate these positions. These core advisory functions include communications, economics, education and training, health, industrial relations, legal, nuclear, safety projects and technology.
The Chamber continues to play a critical role in policy developments locally, regionally and globally. On the local policy front, the organisation has played a role in many policy debates and across a wide spectrum of processes. From the negotiation of a new Skills Development Bill for South Africa through to the negotiation of a new Energy Policy for the country, the Chamber has been involved. At a regional level, the Chamber of Mines is actively interacting with the various Southern African Development Community (SADC) governments through the Mining Industry Association of Southern Africa's (MIASA's) permanent seat on the SADC Mining Ministers technical committee. Issues such as accreditation of skills across borders, standards, geology, mining investment codes, etc. have been discussed. At the international level, the Chamber has participated in a number of forums, including interactions with other mining associations and multilateral institutions on issues ranging from official sector gold holdings to multilateral environmental agreements.
The Chamber of Mines will play an important role in the future as the South African mining industry meets the challenges of mining into the 21st century. Not only are we helping to provide a better environment for the South African mining industry in the future, but we are also helping tell the world that our mining industry has come of age and is becoming more and more competitive.
Mzolisi Diliza started his career with the Transkei Government in 197 I, working for various departments and progressing from clerk to hospital administrator. From 1976 to 1994, he worked for various corporations in South Africa in an industrial and employee relations capacity. During this period, he undertook post-graduate studies in employment promotion at Deford University. Mzolisi was appointed as the first director of human resources and administration for the Independent Development Trust in 1994. In March 1998, he became Chief Executive of the Chamber of Mines of South Africa, the first non-white and nom-mining industry incumbent ever to be appointed Chief Executive of this century-old organisation.