Navigating Community and Corporate Co-operation in The South African Mining Sector
Our client was a mining company who had concluded a commercial transaction with a neighbouring mining rights holder. However, this transaction was subject to regulatory approval, which the company had not yet received.
The Problems:
After doing some investigation, we found that the company’s Social and Labour Plan (SLP) had also been rejected by the regulator, and so their mining license was under threat. This rejection was due to historic grievances and competition for resources, because the company was only involved in economic development with a section of the community. On top of this, the involvement of traditional leaders in recruitment and procurement practices had resulted in widespread corruption. The result was significant local resentment towards the mining company, and violent rivalry between different community leaders.
To make things worse, local government felt the mining company was challenging their local leadership role, and that it was the cause of the unrest. The company had already lost its ‘social licence’ within the community, and was now in danger of losing its legal mining licence.
Our Solution:
Our first steps included:
- Designing a conflict resolution strategy and getting management buy-in.
- Engaging with hostile local government through trusted intermediaries, and choosing local consultants who had an affinity to specific stakeholders.
- Providing negotiation skills and conflict management training to company management.
- Facilitating meetings between management, local government and community representatives.
- Facilitating multi-party discussions that led to a renewed community structure, which amalgamated the two previously hostile groups.
Once this was underway, and we fully understood the causes of the conflict, we helped revise a number of company policies that had aggravated the situation, including:
- The Social & Labour Plan (SLP)
- Procurement policies and practices, so that they aligned with the Broad-Based Black Economic Empowerment (B-BBEE) scorecard and the Mining Charter
- Recruitment practices
We also restructured the company’s external engagement team that had previously exclusively relied on the B-BBEE partner, and we organised consultations for greater community participation in the B-BBEE shareholding.
The Outcome:
The mining company’s SLP was approved, and there were no more regulatory blocks to commercial transactions. Community unrest was also averted, and key stakeholder relationships were vastly improved.
Corporate Restructuring & The Community: The South African Mining Sector
An embattled mining company had to commence a restructuring process which would involve mass retrenchments.
The Problems:
The company was by far the biggest employer in an area of high unemployment, so it was deeply concerned about the knock-on effects in the community as a result of the mass retrenchments. The company’s precarious financial position also meant that any disruption of operations (like strikes or legal challenges) would place the company in financial distress.
Our Solution:
Our brief was to work with the company’s legal and management teams to manage relationships between the Department of Mineral Resources (DMR), local government, the community, and participating unions.
Because we were embedded within the management team at an early stage, we drafted the key s.189 consultation document, and advised on the format of the retrenchment process. This notice sets out all the steps taken to avoid retrenchments, and explains why the company is being forced to take certain actions.
We also provided real time advice, in person and on the phone, to the company during its negotiations with two unions (Association of Mineworkers and Construction Union (AMCU) and National Union of Mineworkers (NUM)). Ultimately, the company received the blessing of the Commission for Conciliation, Mediation, and Arbitration (CCMA).
During the process, we became aware that there was the potential for violent community unrest directed at the mine. As a result, we recommended a meeting between the community and the Chairman of the Board, in order to address the effects of the restructuring. This meeting, and others we organised, allayed community concerns and averted violent unrest.
The Outcome:
We were instrumental in helping the company avoid disruption of operations and successful legal challenges, and to survive the restructuring process. Operations continued unchecked without strikes or community picketing, and while there was a legal challenge by one of the unions, it was unsuccessful.
Political Risk Assessment & Commercial Opportunities: Manufacturing & Retail Sector
An international company providing products and services to Central Banks commissioned CA to conduct a political risk assessment, and an analysis of commercial opportunities in Southern Africa.
The Problems:
Under prior ownership, the Company had been embroiled in a corruption scandal; it was therefore particularly sensitive to bribery risks. The Company also wanted to understand whether there were realistic business opportunities in the region, and if so, how they should proceed.
Our Solution:
To assess political and governance risks, CA conducted interview-based research with a central bank’s key stakeholders, including industry bodies, private sector operators, political figures and former senior bank officials. To understand the industry environment, the inter-relation between Government and private sector operators, and the likely future commercial trends and needs, CA interviewed the decision makers within the bank, and the key private sector organisations along the value chain. Looking at the questions from different perspectives gave CA a unique understanding, and showed us exactly where the ‘knowledge gaps’ were.
The Outcome:
CA was able to answer all the questions posed in the mandate, make recommendations – including on the client’s own competitive weaknesses – and provide the client with a potential strategy.