1. Achieving Equity in
South African Mining
November 10, 2012
Salovey & Sons Consulting (Team #6)
Ryan Boyko Jordan Sloshower
Javier Cepeda Bingnan Zhang
Hilary Rogers Yi Zhou
2. Mining in South Africa - Inequitable and Untenable
Insufficient wage and benefit
Unsafe working conditions
Squalid living conditions
Unacceptable burden of disease
Unfair corporate practices
Unemployment and social problems
=
Crisis of INEQUITY
7. Action plan
Complement existing HEALTH initiatives
Align CORPORATE objectives
Promote equity through SUBSIDIZED HOUSING
Empower community through PEER EDUCATION
8. Complement existing health initiatives
Landscape Unique challenges
Chronically South African
High TB,
underfunded Declaration on TB in silicosis, and
Mining Sector HIV rates
Behind
Millennium Health Passport Highly mobile
Development
population
Goal
GeneXpert
9. Complement existing health initiatives
Gene Follow
Xpert up
Free cellphone
Rapid distribution
minutes
Local focus group Health Passport
Best practice share
Annual auditing Preferential rehiring
10. Align corporate objectives
Incentive
Compensation Fund
HSSE audit
Tax and Deductibles
Conflict of interest
CSR
Punitive
11. Promote equity through subsidized housing
Provide low cost, quality housing for 250,000 migrant workers
Benchmarks to reduce
infectious/occupational
diseases burden (HIV,
TB, silicosis etc.)
Private-public Performance based
partnership government subsidy
Increased
productivity
and worker
satisfaction
Reduce TB
12. Empower community through peer education
Step 1 Recruitment and
Step 2 Material
development
training
MoH, Peer
Peer Educators
Educators, NGOs
Step 3 Community-based On-site education
education and peer support
Prospective & Ex-
Miners, Family Current Miners
13. Implementation roadmap and costs
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
GeneXpert expansion and cellphone incentives (US$2.6 B)
Peer education (US$1.2 B)
Housing (US$4.0 B)
Tax incentive (US$0.7 B)
Projected Annual Expense (US$ M)
1,783
Total costs (base) = US$8.5 B
Total costs (high) = US$9.4 B
904
111
14. Limitations
Uncertain global economy
Contextual heterogeneity
Implementation challenges
15. Outcomes
Increase mine productivity
Alignment
Responsible business practice
Humane working conditions
Adequate housing for all migrant
workers
Health programs driven by and
responsive to community
Empowerment Strengthen social networks
TB rate reduced among miners to 1%
Integrate HIV/TB care across borders
Wage equity in mining sector
18. Salary – high industry profit, little shared by workers
EBITDA/Sale Revenue
67%
46%
38% 33%
23% 17% 11% 10%
Kumba Iron BHP (SA) Gold Fields SA Mines P&G GE Shell Toyota
Ore (SA) (SA) Avg.
Salary split between workers and management
786 Management
451 625
Workers
345 300 385
Lonmin SA Gold Fields SA Anglo Gold
Mining industry in SA enjoys very high pre-tax profitability
× Estimation shows majority of the salary benefit goes to management
Source: SA Mine, PWC, Nov 2011; Yahoo Finance; Companies’ financial reports
19. Supplement – Align business objectives
Incentive
Compensation Fund: HSSE audit: mandatory,
restructure its management and penalties on failing companies
directly accountable to DOH, 1st failure – warning
and enforce private funding 2nd failure – remove CAPEX
Tax: 1% tax deduction (US$0.1 deductible from tax (9% NI)
B) to complying companies 3rd failure – revoke license
Tax Deductible: full Conflict of interest:
deductible on HSSE/CSR CAPEX prohibit local officials from
investing in mining companies
CSR: priority in awarding
government contracts
Punitive
20. Migration
• For decades South African mines have attracted thousands of
migrant workers from neighboring states, mainly from Lesotho,
Mozambique, and Swaziland, who cross the border in search of jobs
(Lancet).
– According to SA ministry of labor, in 2006, 38% of miners were foreign migrants
– many South Africans also migrate to mines in search of labor
• Migration-related problems
– complicates TB prevention and treatment
• All of these countries feature in the ‘Top7’ for per capita incident TB (MoH)
• Each migrant worker who returns home with tuberculosis spreads the disease to an
estimated 10 to 15 people in his community,
– migration creates a housing crisis at mining sites
– migration disrupts social fabric
21. Empowerment through peer education
• Step 1: Recruitment and training
– mining unions and CBOs guide recruitment and training
– paid salary of senior miner to avoid creating hierarchy
• Step 2: Development and adaptation of educational materials
– overseen by MoH in conjunction with peer educators and NGOs working in this field
• Health Education (TB, HIV and silicosis) for prospective, current and former miners and their communities.
– Community-based education for prospective miners and community members
• Recruitment agencies provide basic education on TB and silicosis risks and other mining-associated safety risks
• Already-existing structures in communities such as HIV/AIDS support groups would serve as good platforms for
conducting such educational activities – particularly for the families of miners, who are also at risk, and for former miners
in Lesotho.
– On site education for current miners
• Mining and Safety Act Essentials
• the TB and silicosis risks associated with mine work,
• general prevention and treatment literacy for TB and HIV, as well as site-specific health services
information
• information on the health passport and cross- border policies and programs to address TB and
HIV in migrant miners.
• Legal rights and responsibilities education
– TB guidelines that mines and miners are compelled to abide by
– compensation policies
– what to do if legal rights are not met.
• As Program scales up can move into peer support groups and advanced skill building
22. Financials
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total of 10 years
Budget for health program 83,275,000 79,275,000 103,057,500 133,974,750 174,167,175 226,417,328 294,342,526 382,645,283 497,438,869 646,670,529 2,621,263,959
Budget for education program 27,500,000 35,750,000 46,475,000 60,417,500 78,542,750 102,105,575 132,737,248 172,558,422 224,325,948 291,623,733 1,172,036,175
Budget for tax cut program 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 700,000,000
Expense for housing program (worst) 0 224,000,000 336,000,000 504,000,000 672,000,000 672,000,000 672,000,000 672,000,000 812,000,000 812,000,000 5,376,000,000
Expense for housing program (best) 0 112,000,000 266,000,000 364,000,000 378,000,000 532,000,000 588,000,000 644,000,000 812,000,000 812,000,000 4,508,000,000
Average Revenue from Housing 0 (19,200,000) (28,800,000) (43,200,000) (57,600,000) (57,600,000) (57,600,000) (57,600,000) (69,600,000) (69,600,000) (460,800,000)
Evaluation cost for overall programs 500,000 600,000 720,000 864,000 1,036,800 1,244,160 1,492,992 1,791,590 2,149,908 2,579,890 12,979,341
Total budget (worst) 111,275,000 320,425,000 457,452,500 756,056,250 968,146,725 1,044,167,063 1,142,972,765 1,271,395,296 1,566,314,725 1,783,274,152 9,421,479,476
Total budget (best) 111,275,000 208,425,000 387,452,500 616,056,250 674,146,725 904,167,063 1,058,972,765 1,243,395,296 1,566,314,725 1,783,274,152 8,553,479,476
Budget annual growth rate (health&education) 30%
An nual growth rate (evaluation) 20%
23. References
Aaron Motsoaledi, TB in the Southern African mining sector and across the sub-region, STOP
TB partnership Board meeting
http://www.stoptb.org/assets/documents/about/cb/meetings/21/1.12-
0%20Outcomes/Presentations/1-12-
03%20TB%20and%20the%20mining%20industry%20in%20SADC.pdf
AIDS Rights Alliance for Southern Africa. (2008). The Mining Sector, Tuberculosis and Migrant
Labour in Southern Africa (pp. 1–19).
Baleta, A. Southern African declaration targets TB in mining sector. The Lancet, 380:1217-8.
Declaration on Tuberculosis in the Mining Sector, South African Development Community
(SADC), 2012
Department of Labour of South Africa. Labour Migration and South Africa:Towards a fairer
deal for migrants in the South African Economy. Private Bag X117. Pretoria. 2007. ISBN No:
978-0-621-37625-8.
Financial Statements of Anglo American, AngloGold Ashanti, De Beers, Exxaro, Gold Fields,
Lonmin, Gold Mines, 2011, 2012
24. References
Hamann, R. (2004). Corporate social responsibility, partnerships, and institutional change:
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http://blog.nielsen.com/nielsenwire/global/mobile-phones-dominate-in-south-africa/
“Income Taxes, Mining Taxes, and Mining Royalties”, PWC Global Mining Group, December
2010
Jamasmie C. “S. African strikes drop annual mining production 8.3%”. 8 November 2012.
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annual-mining-production-drops-8-3-25083/.
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“Mining and tax in South Africa Costs and benefit”, Mark Curtis, Feb 2009
25. References
National Strategic Plan on HIV, STIs and TB 2012 – 2016, Ministry of Health, South Africa.
Porter M and Kramer M. Strategy and Society: The Link between Competitive Advantage and
Corporate Social Responsibility. Harvard Business Review. 2006.
“SA Mine - Review of trends in the South African mining industry”, PWC, November 2011
South Africa: No HIV and TB Workplace Policy, No Mining Licence. (n.d.). South Africa: No HIV
and TB Workplace Policy, No Mining Licence. irinnews.org.
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no-mining-licence, Accessed 09.11.2012.
South Africa Economic Update: Focus on Inequality of Opportunity. World Bank. 2012.
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“Web-based Sustainable Development Report”, Lonmin Plc, September 2011
