Miningweb: Rethinking mining’s social investments to create lasting community impact - Corrigan

Key topics:

• Mining’s social impact debated, beyond profits to community harms.

• CSI/SLPs aim for development but face governance and capacity gaps.

• “New deal” needs stronger state, partnerships, and focused projects.

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By Terence Corrigan*

Its power to attract executives, politicians, investors and analysts has made the African Mining Indaba an annual pilgrimage of sorts for those connected to the continent’s mineral wealth.

It’s an unparalleled opportunity to showcase the industry, to network and to set out visions. With the continent having so much to offer the global economy, the atmosphere is heady and upbeat. For the most part.

The 2025 iteration featured a panel discussion on the theme “Disruption required – time for a new deal for local communities”. Departing from conversations around investment opportunities, commodity prospects and the potential of technological innovation, this one focused on frustrations with the industry. As panellist Omaojor Ogedoh of the Ziva Communities Initiative in Nigeria commented: “There have been some positive impacts – such as job creation, increased revenue and skills development, but the negative effects have been perhaps more significant, which is worrisome.”

There is a long pedigree to such thinking. Mining has been associated with some painful chapters of the continent’s history and its socio-economic pathologies. Perhaps nowhere has this been as pronounced as in South Africa. Novelist Alan Paton gave expression to this in his novel and commentary on South Africa’s race politics, Cry the Beloved Country. Reflecting on South Africa’s racially stratified society, and role of the mining industry, the activist character John Kumalo comments bitterly: “But it is not built on the mines, he said, it is built on our backs, on our sweat, on our labour. Every factory, every theatre, every beautiful house, they are all built by us.”

Africa’s mineral endowment is the bounty of its geology, and in theory, the patrimony of society as whole. There is an expectation that its blessings will be shared beyond the investors who fund its extraction, the mining companies who perform it, and even those employed on these projects. It is also put forward as the foundation of the continent’s economic progress – a sustainable economic future, in other words.

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This expectation itself has a long pedigree; so too does the industry response to it.

Corporate Social Investment

Corporate Social Investment (CSI) refers to the contribution of a firm’s resources to benefit the broader community. Taking numerous forms (and going by a variety of names), it may involve financial grants, the donation of products or services, providing training and supporting social or economic activities. It has traditionally represented a mix of philanthropic impulses and an acknowledgment of the moral obligation the company owes to the community.

Paul Pereira, veteran CSI strategist and communications advisor, traces CSI on the continent to the Kimberley diamond fields. In 1889, the chairman of the newly established De Beers Consolidated Mines (and ardent British imperialist), Cecil John Rhodes argued in the company’s annual report that De Beers had to take on a duty to the community as part of its business. The Anglo American Corporation undertook its first such activities in the years immediately following its establishment in 1917, providing relief during the Spanish Flu epidemic.

Ernest Oppenheimer, Anglo American’s chairman at the time, defined the company’s approach in 1954: “The aims of the Group have been – and they still remain – to earn profits, but to earn them in such a way as to make a real and permanent contribution to the wellbeing of the people, and to the development of southern Africa.”

Over the subsequent years, Anglo put substantial sums of money into development initiatives, much of it through its Chairman’s Fund and – in the 1970s – a department tasked with making social investments. It supported housing, infrastructure, and educational and economic projects. This was ultimately inseparable from the political context of the country, and considerable resources were directed towards assisting reformist efforts.

By the 1990s, this was well established beyond Anglo, into South Africa’s mining industry, in the country’s broader corporate sector, and beyond. CSI, in Pereira’s words, was “South African mining’s unique gift to humanity”.

A new approach

The 1990s also saw heightened awareness around these issues across the continent (and globally), driven by high profile corporate failings and the commandeering of natural resources to underwrite conflict or to feed corruption. South African business proved influential in responding, playing a prominent role in formulating corporate governance norms, notably through the successive King Codes. These have emphasised the need for companies to act according to the legitimate interests of those around them – stakeholders, rather than purely shareholders – in mitigating harm and building shared benefits for society. Sustainability, the long-term, intergenerational generation of value, was a key operative idea.

In legislative terms, the country’s mining legislation has institutionalised activities that might once have been understood as CSI. “Mining houses have largely withdrawn from traditional CSI. It’s now been integrated into their Social and Labour Plans (SLPs) through the new order licensing regime,” Pereira pointed out in an interview. In theory, this is meant to ensure a shift from discretionary philanthropy to a more thoroughgoing developmental contribution.

“Over the last 10 years, the approach has often changed to working for systemic change. In very general terms, this aims to improve a larger system rather than to primarily back singular initiatives.”

Alex Khumalo, head of Social Performance at the Minerals Council South Africa (MCSA), the country’s industry representative body, concurs. “We don’t speak much of CSI anymore. Social and Labour Plans are part of the licensing regime. It’s not a nice-to-have, it’s a requirement. The operational environment makes it difficult for us. Essentially, we have to look at municipal Integrated Development Plans and choose from them.”

Cathy Duff, director of CSI consultancy Trialogue, explained the scale and nature of the industry response. “By our estimation, mining firms in South Africa contribute around four and a half billion rand a year to social development, for their SLP community projects as well as any additional CSI. So, they’re investing a lot,” she commented.

 She continued: “This investment goes towards a few key areas. Firstly, infrastructure – roads, electricity, water systems and so on. Secondly, education, in line with all South African companies. In particular, we see a lot of spending on secondary schooling, as well as learnerships and bursaries for tertiary studies. Thirdly, enterprise development, which includes support, training and mentorship for small enterprises and cooperatives even in fields not directly related to mining. Some of these small businesses are intended to graduate to become suppliers to the mining industry, but not all. There have been initiatives to encourage local economic development through supporting things like bakeries, farming, brick making and even crafts. In the past, there was also a lot of housing projects as part of the SLPs, converting hostels to family units and providing low-cost housing for employees.”

Criticism

Nevertheless, the mining industry remains an ongoing target of criticism. Prior to South Africa’s transition to democracy, relations between the industry and the incumbent government were strained, with the latter having long viewed the former as emblematic of rootless, unpatriotic capitalism. In the post-transition era, the mining industry was seen in comparable terms; a leftist-inflected activist tradition has ensured lingering suspicion, if not hostility.

A number of high-profile mining-related tragedies served to bring this graphically to light. These include tensions culminating in the shooting by police of dozens of striking mineworkers in the platinum mining belt in September 2011, and a long-running conflict (which has at times turned lethal) around the proposed mining of titanium deposits on the Xolobeni area of South Africa’s Eastern Cape.

More common are the less spectacular matters. Foremost, arguably, are concerns around the environmental impact of mining, and the knock-on effects on surrounding communities.

Tarisai Mugunyani, mining expert at the Cape Town-based Centre for Environmental Rights (CER), described it in these terms: “We see how mining impacts the environment in multiple ways. What we see and experience is the damage that mining does to air quality, to water and aquatic ecosystems and habitat destruction. This for us is the biggest socio-economic impact. The environmental harms lead to the disruption of livelihoods, and then to wider social disruption.”

Much the same conclusion was drawn in hearings conducted by the South African Human Rights Commission on these themes by in 2016.

Equally, mining involves large capital expenditure in areas that typically have not seen it in the past. Simply put, a mine may be an unprecedented investment, and also the only one of significance in a depressed area. The exploitation of a mineral deposit comes with high hopes – sometimes encouraged by investors and politicians – that it will bring about the hitherto elusive local development. This often fails to materialise on the scale, and for the beneficiaries, that might have been expected.

Indeed, this is at the heart of the SLP requirements. Mining operations are meant to be subject to agreements between mining companies, government and communities; they rest on the assumption of collaboration; the community investment is intended to revolutionise life. It’s a complex system aimed at systemic change, and long-term value. A pathway to the “new deal”, in the parlance of the Mining Indaba’s panel.

In practice, this has generally not happened. A 2021 study of SLP implementation in the platinum belt by academics Phia van der Watt and Lochner Marais of the University of the Free State argued that the design of the system was itself at fault: “The formal system of collaboration is too complex for the available capacity and represents a reluctant partnership with high levels of distrust and a lack of accountability.”

Realities of governance

A key failing and source of frustration across the various stakeholder groups is the state of governance and the costs it imposes. The South African state has long styled itself as “developmental”, an interventionist suite of institutions driving aggressive socio-economic progress, along the lines of the rapid industrialisers in East Asia. The experience of state failing – particularly at the municipal level – have increasingly deprived such pretensions of credibility.

It is an enduring source of frustration to the mining industry (and business in general) that it interacts with dysfunctional state bodies, and is expected to fill in for their failings. Mzila Mthenjane, chief executive of the MCSA, describes the relationship as fundamentally one-sided rather than a partnership: “Much of what we are called on to do is essentially a matter of rent seeking. We are asked to invest, but there isn’t much complementary investment from government.”

Mining, already burdened by ideological suspicions, finds itself drawn into the vortex of state failure. This inevitably sours the industry’s interaction with a resentful society.

“Relationships between mines and communities are often fraught,” says Duff. “There are high expectations that a mine will step in to deal with backlogs and to provide services and work for the community. This is not always realistic. There are mechanisms to enable communication and engagement, but these don’t always work ideally. There may be competing interests in a community, or participating community leaders don’t really understand the industry and vice versa.”

Mugunyani reflects on the additional strains created by competing understandings of what constitutes the community, and the lack of capacity to engage in the processes. “Communities don’t see the benefits that they are supposed to. Why is this? Firstly, there are gaps in the way consultation is carried out for SLPs. What we see is that consultation doesn’t happen with communities, but with municipalities. Secondly, for communities to engage effectively, they need certain skills and knowledge of the law. They often don’t have these. Then there are disagreements within the community, and competing leaders. Thirdly, from a compliance point of view, SLPs are not always adhered to.”

Indeed, for Mugunyani and the CER, in its primary field of activity – environmental matters – there is deficient implementation of the law, poor coordination between government agencies responsible for it, and indifference on the part of officials. Where mining activity contravenes the law the capacity for dealing with it is sparse.

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Cumulatively, this describes a systemic failure of the system as it is intended to operate. Community investment lacks the transformative power that was hoped for. And it’s a realisation common to stakeholders with diverse, even opposing, perspectives.

What, then, could be done?

The rudiments of any turnaround – for that “new deal” for mining communities – would hinge squarely on enhancing the quality of governance.  “The reality is that the operating environment won’t improve until the functioning of local government improves,” says Khumalo. This is absolutely correct. At present, social investment has become a sort of substitute for successful governance.

Closely aligned to this is the need for genuine partnerships and burden sharing. Referring to investment in infrastructure – not a function that mining firms should ideally be involved in, but one that governance failure has pushed them into – Duff remarks: “There needs to be better collaboration between companies as well as across companies, government and communities. There is often also the problem of the state of local government. We have a recurrent issue where companies put money into infrastructure, but the mine doesn’t want to own or maintain it forever. It wants to transfer responsibility, but there may not be the capacity to take it over. Things would improve if we could enhance local government capacity and have a more meaningful relationship between the various parties.”

Mungunyani concurs, pithily remarking that “if we could see a more cooperative relationship, it would be helpful”.

Perhaps most importantly, there is a need to keep both the experience of social investment and its potential in mind. Mines have a limited lifespan; they will not exist forever, but provide a limited window of opportunity to establish a sustainable developmental track. Hence the promotion of entrepreneurial endeavours, education and so on. But there are limits to this.

Says Pereira: “In what I’d call CSI classic – that’s the old school, traditional stuff – the idea was to find key needs or islands of excellence and to try and shore them up. The strategy may be to find something that is being well done and to support it. We’re talking about care for orphans, educational or health initiatives and the like. A lot of this really has an impact.”

Trying to leverage this for systemic change, is, however, problematic, difficult to measure, and probably beyond the capacity of even the most well-meaning company. He continues: “The reality is that when you compare the scale of needs – or what the state spends – to what companies can do, there are limits. Another reality is that you cannot expect social development projects to be self-financing. It’s not possible in some of these mining areas, not least once a mine is worked out. Some companies maintain a legacy presence in places where they used to operate, but often they are forced to scale back.”

A “new deal” would ultimately be one that recognises these realities, trying to maximise the potential within the available possibilities, and guarding against harms that have been associated with the industry. In many ways, this would imply a refocus on old-school CSI, bolstering projects that build on existing expertise and organisation, addressing intrinsic needs. It would also need to be based on solid state administration, and an engaged community.

As Alex Khumalo comments, “We can’t boil the ocean”. The mining industry, he says, can contribute, but cannot compensate for the work that government needs to be doing – or indeed for the lack of real opportunities in robust local economies.

*Terence Corrigan is the Project Manager at the Institute, where he specialises in work on property rights, as well as land and mining policy. A native of KwaZulu-Natal, he is a graduate of the University of KwaZulu-Natal (Pietermaritzburg). He has held various positions at the IRR, South African Institute of International Affairs, SBP (formerly the Small Business Project) and the Gauteng Legislature – as well as having taught English in Taiwan. He is a regular commentator in the South African media and his interests include African governance, land and agrarian issues, political culture and political thought, corporate governance, enterprise and business policy.

This article was first published by Daily Friend and is republished with permission