SOCIO-POLITICAL CHALLENGES FACING MINING COMPANIES IN SOUTH AFRICA Can effective corporate social responsibility mitigate against these challenges? 25

SOCIO-POLITICAL CHALLENGES FACING MINING COMPANIES IN

SOUTH AFRICA

Can effective corporate social responsibility mitigate against these challenges?

25 October 201025 October 2010

A presentation by ERIC RATSHIKHOPHA

ACKNOWLEDGE AND ACCEPT

… Mining does not take place in a vacuum

… Mining and its operations have both negative and positive impact on the environment (physical and social)

… To do business successfully we must understand the environment in which businesses operate

…“Business cannot succeed in societies that fail...” Bjorn Stigson President, WBCSD

… Effective public institutions and the delivery of social services and infrastructure is in the interest of business A presentation by ERIC RATSHIKHOPHA

SOCIO-POLITICAL ENVIRONMENT

… Past characterised by divisions and inequality

… Racial coincidence of political and economic power

… Socio-economic challenges including education, diseases, unemployment and crime

… Young democracy facing teething problems

… Rectifying the past requires establishing and strengthening institutions to underpin democracy

… Vibrant and articulate youth, labour and other civic organisations


MINING COMPANY CHALLENGES

Challenges invariably Challenges invariably resultresult from or are from or are linked to the socio-political environmentlinked to the socio-political environment


MINING COMPANY CHALLENGES

… Skills shortages

… Regulatory requirements: “environmental, labour, safety, socio-economic (mining charter)”

… Expectations/demands from local communities …“social license to operate”

… “Social ills”: crime, diseases, corruption and bribery


MINING COMPANY CHALLENGES (cont.)

… Political and civil dynamics and associated pressures: disruption of operations; “scary” debates and demands e.g. Nationalisation

… Organised labour and business

… Issues with infrastructure and energy

… Efficiencies and responsiveness of government and public institutions


NOT ALL DOOM AND GLOOM


• Basic Education• Health• Crime• Corruption• Energy

• Democratic system• Powerful economy• Infrastructure• Innovative, non-racial

middleclass• Open society• Competitive & responsible

business sector

Liabilities

CAN CSR MITIGATE AGAINST THESE CHALLENGES?

… Without a doubt, yes! With the keyword being mitigate

… CSR: define

… A look at current initiatives reveals:

Scant, if any considerations of broader environmental challenges, plans and dynamics Compliance -driven Lack of alignment and collaboration “Ad hoc” non-integrated or unaligned to core business


CSR MITIGATION CONSIDERATIONS

“Insanity is doing the same thing over and over again and expecting different

results” Albert Einstein



The issue is not so much the “what”, but more the “how” and “why” .



… Take the socio-political environment into account, especially conceptualisation of CSR initiatives

… Approach and implement CSR as a business imperative and integrate it into business operations

… Facilitate and support effective public and service institutions for sustainable social services delivery

… Recognise the importance of regional collaboration for impact and sustainability of initiatives



… Constructive engagement and co-operation with important stakeholders e.g. Government on issues of national importance i.e. governance

… Join and support organised business organisations and utilise as a platform for collective voice

… Capitalise on successful current “pilot” projects by replicating and bringing to scale:

Health (HIV-AIDS) –Xstrata Coal South Africa Education- National Business Initiative (EQUIP), Edumap Skills Development: Xstrata Alloys Steelpoort skills development centre. Africagrowth instituteA presentation by ERIC RATSHIKHOPHA

IN CONCLUSION


“We need to make a major breakthrough in the way that boards think if we want to save capitalism...

…doing right because it is right, not because it pays, with principle, not profit, the point of departure.”

Sir Geoffrey Chandler - Former Senior

Executive Royal Dutch Shell

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SOCIO-POLITICAL CHALLENGES FACING MINING COMPANIES IN SOUTH AFRICA Can effective corporate social responsibility mitigate against these challenges? 25