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Transformation in the Mining Sector

Transformation in the Mining Sector. Presentation to the PPC Mineral Resources – 14/09/2011. Introduction. Comment on the Elements of Mining Charter Analyse some human related challenges to transformation; Critique Government’s stance on transformation.

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Transformation in the Mining Sector

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  1. Transformation in the Mining Sector Presentation to the PPC Mineral Resources – 14/09/2011

  2. Introduction • Comment on the Elements of Mining Charter • Analyse some human related challenges to transformation; • Critique Government’s stance on transformation

  3. “It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and indifference defenders among those who may do well under the new” Machiavelli, The Prince [Quoted in Paton, RF and McCalman, J (2008)Change Management: A Guide to Effective Implementation, p.52]

  4. Analysis of the Mining Charter Pillars

  5. Ownership • The most emotionally and politically charged and popular element; • Broad based ownership v wider ownership spread; • Broad-based ownership is: • Politically sound – good for politicking; • Commercially a disaster – undermines meaningful participation; • Socially misleading – benefits = peanuts or crumbs

  6. Broad-based empowerment?

  7. Ownership – data reliability • “The aggregate BEE ownership of the mining industry has…reached 9 per cent” [Mining Charter Assessment Report, 2009] • How was this measured? • Was it measured on the basis of: • Equity/share in listed (Ltd); private companies [(Pty) Ltd] and Closed Corporations (CC)?; • Does the “measure” relate to percentage BEE companies in the mining industry?; • Is it a combination of both? • Does this measure relate to ALL licensed entities?

  8. Procurement • The Charter has a set procurement targets. • How will they be monitored? • How will the DMR know that the information supplied by companies are correct and reliable? • Who will establish the Social Development Fund? • In terms of which Act will such be established? [See s77 of the Constitution]

  9. Beneficiation • BBEE includes ownership of and participation by HDSA’s; • How will beneficiation offsets promote “the ownership of and participation in the beneficiation …..” by HDSA’s? • Will beneficiation offsets result in greater beneficiation in South Africa? • Beneficiation offsets, where applied, does not promote beneficiation, but undermines HDSAs ownership in the mining sector.

  10. EEC v Economically Active Population Source: Stats SA, Labour Market Survey (Q2), 2011

  11. Employment Equity • Employment Equity Act, 1998 • There is a tendency of people to think that those who are different from them think alike, act alike and are alike” – [outgroup homogeneity effect” [Anderson, K,(2010),Benign Bigotry: The Psychology of Subtle Prejudice, p. 28] • Ingroup favouritism & outgroup derogation • “There is a tendency for people to treat members of their ingroup favourably, and members of the outgroup unfavourably” (ibid, p. 42) - See Employment Equity Report 2010-2011

  12. Tendencies in numbers(Top Management) Source: Employment Equity Report 2010-2011

  13. Employment Equity • “…benign bigotry often manifests in giving one group the benefit of the doubt, while other groups that are stereotyped are held to a tight standard” [ibid, p. 44] • Merit - “We support affirmative action, however, appointments must be on merit”; • Job hopping - “If we appoint blacks, they do not stay long - ”; • Lack of Skills - “We do not have enough skilled blacks”

  14. Human Resources Development • “The belief in meritocracy, the notion that those who are hired for the jobs and accepted into prestigious universities are hired and accepted as a result of individual talent and effort, and that the most competent person is hired and accepted, is in practical terms, a myth” [ibid, p. 290]; • Skills Development Act, 1999

  15. HRD in the Charter • Target % of annual payroll: • Constitutionality? [s77] • Giving a higher weighting for HRD in relation to Ownership is not in line with HRD developments in the economy;

  16. Conclusion • Transformation still has long way to go; • Government must be consistent on BEE issues; and • DMR cannot be the lone champion • DMR should develop a database on EE, BEE etc • We have been playing a “numbers game”

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