Jim Jones reports on how South Africa’s gold mining industry is facing up to its social responsibilities and leading the way in good governance.

“We have learnt first hand that there is no tidy definition of sustainable development and unfortunately there is no simple formula to apply. There is a host of contextual issues that have a material impact on the approaches to sustainable development and legitimate, but different, priorities for regions around the world.”

In his May 2002 address to the Global Mining Initiative (GMI) conference in Toronto, Anglo American chief executive officer Tony Trahar neatly summed up the conceptual difficulty the mining industry faced when confronting sustainable development. Mines by their very nature have finite lives. Once the valuable ore has been extracted, the mine has to cease operations. Which is where the likes of Anglo American and other large international mining groups take a philosophical leap.

Karin Ireton, Anglo American’s group manager sustainable development, puts it succinctly. “Minerals in the ground represent unrealised wealth, but we face a fundamental dilemma. Those minerals cannot be replenished. By mining them, we are transferring value, from a natural resource capital to a different sort.”

In other words, mining a diminishing resource has to create lasting, if different, value if it is to be viewed as sustainable.

South Africa’s mining companies believe that sustainable development has to become a partnership – between the mining companies, society and government – to ensure value extracted is appropriately dispersed. Mining companies cannot simply leave behind them a hole in the ground, an environmental mess and people who are skilled only in mining work. During any mine’s life, and as that life nears its end, action is needed to ensure a legacy of sustainable social and infrastructural value. This sense of a social plan forms one of the key parts of South Africa’s new (and in parts controversial) Minerals Development Bill.

Again, as Mr Trahar said in Toronto: “Good governance is critical both within the company and at national and international level. It is ultimately far easier to operate in countries where there is good governance, administrative justice and regulatory certainty.”

Social benefits

In countries such as South Africa and neighbouring Botswana – where these sound governance conditions exist – the benefits of sustainable development mining are obvious. At the most basic level, one simply has to look at the social housing, the schools and clinics in Gaborone and Francistown, Botswana’s two principal towns. The national treasury has not simply appropriated revenues from the mines and spent them on grandiose projects; there has been discussion with local communities over what can best satisfy those communities’ needs.

But what happens when the mines close? Regulation on the environmental responsibilities of the owners of mines that are to be closed has formed part of South Africa’s mining legislation for nearly a century. The social equivalent has been emerging in the past few decades. The present legal process in the UK, involving miners suffering from diseases resulting from their work in the South African asbestos mines owned by Cape plc is a case in point. Companies that may have adhered to the law years ago risk having to face demands much later. Today’s norms can be applied to yesterday’s practices.

Initiatives adopted

But there is one immediate social issues that threatens South Africa and its mining industry – the HIV/Aids epidemic sweeping through the sub-continent. While government policy towards the epidemic was for years ambivalent, the mining companies have been proactive. Gold Fields and Anglo American have headed the initiative, years ahead of what is now, belatedly, becoming government policy.

Mines, like all enterprises, have life cycles. And the trick for South Africa’s mining companies is to ensure that throughout that life cycle appropriate value is delivered to shareholders, employees and society at large.

Longer-term sustainability of the mining industry has to depend on the development of other enterprises on the back of wealth created by minerals extraction. But, as is happening in South Africa, mining needs to create communities that have a life beyond that of an individual mine. This is what sustainable development has to mean in the context of extractive industries.