Digging Deep Dialogue 31: Mining matters to all South Africans

Digging Deep (DD) is back in the beautiful Rainbow nation of South Africa, and the timing of our dialogue is momentous, as the 7th administration of the Republic of South Africa is ushered in a Government of National Unity. We are very fortunate enough to spend time with Mzila Mthenjane (MM), CEO of the Minerals Council South Africa . A true mining head at heart, with a touch of investment banking and very deep rooted in the success of the mining industry in South Africa. Mountains are meant for climbing, he is not shy of acknowledging the challenges but very optimistic about the future of the South African mining industry as we unpack his role as CEO, mining matters and what it means to all South Africans, promotion of local content and technology transfer, evolution of the Minerals Council and some milestones in its 134 year journey and we cap off with role of the Minerals Council in realizing NDP 2030 and youth entrepreneurship. Let's dig deep and learn more from Mzila.

DD: Welcome to the Digging Deep Dialogue Mzila, it’s a pleasure and honor to have you. Can you please tell us more about yourself and your role as CEO of the Minerals Council South Africa??

MM: Thank you very much for the interview. I'm a mining engineer by background, I graduated from the University of Witwatersrand and worked in the mining industry in different commodities such as gold, platinum and coal. I've also spent some time in investment banking working with institutions such as RMB - Rand Merchant Bank and 德意志银行 , and then in mining, I think I've been fortunate to have been associated with great South African mining companies such as Anglo American and Gold Division as it was known back then, which has over the years transformed into the Anglo American that we now know.

I have worked for GOLD FIELDS and I have also worked for Royal Bafokeng Holdings as well as being part of the team that created Royal Bafokeng Platinum Ltd , one of my pride and joys and successes in my career. In the past 10 years, I've been working at Exxaro Resources as an executive in stakeholder management. I joined the Minerals Council South Africa in August of 2023, as CEO, taking over from Roger Baxter . It has been short, but it seems like a very long period of time that I've been here. I think that's just the fact that it's been a great time that I've had in this role as CEO of the Minerals Council South Africa.

The Minerals Council of South Africa is an entity, which is a membership based organization where it has approximately 73 members who are vary from exploration to emerging miners, to junior miners, to large scale miners, across a diversity of commodities that are found in South Africa from industrial minerals, precious metals, diamonds and bulk commodities such as iron ore and copper and manganese. What is interesting about that diversity of commodities is that you know, there are many of these that also fall in the category of critical minerals as we speak today in relation to the energy transition.

In terms of what the Minerals Council South Africa does, we describe ourselves as an advocacy and lobby group with also an emphasis on impact, so advocacy and impact is what we do, and lobbying being mainly in relation to the legislative environment that we operate in and making sure that it is a favorable to mining but considerate of the need to also protect societies interest and environmental stewardship. Impact is important in that, where we are successful in our advocacy and lobbying, we are able to invest and grow as an industry that demonstrates the benefits of growth to all of society, and not just financial benefit to shareholders. So we see advocacy and impact as two sides of the same coin that are very critical.

So what is very important then for me, in as far as the description of the work that we do is really what guides us on a day to day basis and what is the purpose of the organization. Why do we wake up every morning? And I like to describe the purpose of the Minerals Council as a body that exists to co-create an enabling environment for the mining industry to thrive and that thriving is not only from a growth of the industry, but it thrives because it provides social and economic benefits, as well as demonstrates responsibility and accountability to the natural environment.

DD: Mining matters! What is the relevance and impact of mining in South Africa??

MM: So it's one of the first areas that I gave attention to when I started because previously that catch phrase was ‘making mining matter’. I think the mining industry has more than demonstrated its importance and relevance to South Africa's economy and certainly, globally speaking, mining to the rest of the world, remains critical. So we thought, we need to make that a matter of fact that mining matters. So, why we believe that mining matters is illustrated in the impact of the recent underperformance of the mining industry to the fiscus. Economically speaking the contribution of mining is significant as was seen in the shortfall in the simple metric of tax contribution. Outside of commodity prices increasing above inflation, the overall contribution of mining to GDP has unfortunately been declining because of lack of investment and growth, but in those opportunities where we've been able to capture prices, the impact of mining has been significant to taxes.?

Mining continues to be significant in terms of employment as well as meeting its social bargain to employees directly in terms of remuneration, but also indirectly in terms of participation in employee share ownership schemes as well as social investment and development in communities where our mining operations are located. So that's an important area in terms of the fact that mining is not merely for the sake of mining, but as with any other business it's a vehicle for social delivery. That leads me to the second point as to why mining is important; the minerals that we take out from the ground, make for a better life and I've recently come up with an expression that says ‘mining makes your smile’. I've been quite intrigued and I've seen the response from you already that when I say that it brings a smile, it naturally does and and it's not ‘mining makes you smile’, rather its ‘mining makes your smile’ and the reason for that is the minerals that we find in our toothpaste is what makes that smile.?

You know, the expression that if you can't grow it, you have to mine it, is one that needs to be taken a little bit more seriously. We feed and are sustained by Mother Nature, not only from an agricultural perspective, but from a minerals perspective in terms of our health and our livelihoods and that is perhaps largely underappreciated. The use of some of these metals is in very important medical procedures. I think more importantly looking forward, it is no longer a question as to whether we will be able to achieve a low carbon future without mining because the minerals that we need to enable us to build the infrastructure is going to need mining. The increasing importance of mining to livelihoods is becoming much more apparent.

The last reason I think mining matters, perhaps talks to the previous two items and what I'm observing is that mining is going to be a platform for social and economic innovation. Economic innovation in terms of the kind of technologies that will find application in mining and will make for better mining operations, much more efficient operations and which will have a positive impact on the whole mining value chain in terms of just the use of that technology. So, it will provide a platform for collaboration by different players. We will see similar innovation in terms of the social impact of mining, were having said before, it's a vehicle for social delivery, the kind of impact that mining has on on social development is that to start a mine you go where the ore body is located and so mining tends to be quite a pioneering industry, where you will start life and livelihoods where there was nothing before.?

That aspect of social impact and environmental stewardship is becoming even more important, but it's not something that mining companies are built for, and so the collaboration that will be needed for effective, efficient and sustainable social impact is going to need that as mining companies and mining people would bring in other people who have a specific knowledge and expertise and have the the science that is required for better social and human development in areas where mines are located. This is something that for me is quite exciting about mining in terms of its increasing and improving fit into society.?

DD: In promoting local content and technology transfer in South Africa, how can the Minerals Council facilitate joint partnerships between international suppliers and local mining contractors?

MM: The mining industry supply chain is one that holds significant promise and I think potential impact on local communities. The role that I see ourselves playing as the Minerals Council is how we coordinate the different players in that supply chain for better localization, because that is going to result in much better local impact. Mines are started with a view of operating at least 10 to 15 years and maybe even up to 30 years and in some instances even longer than that, all depending on the market conditions. So we are looking at how we can leverage the various linkages and relationships amongst the OEM's, both domestic and offshore, the mining operations, the existing entrepreneurial capacity where we can actually bring and embed local manufacturing.

I think what is going to be important is not to think of localization and embedding as reducing quality, but we want long term and sustainable employment and economic opportunities. Those local operations will be able to compete amongst themselves but also be able to compete with potential offshore competitors and it's going to be having that firm view on the market. I believe we will be able to establish a successful local supply chain and beneficiation opportunities.?

DD: The Minerals Council South Africa is the custodian of the mining industry and its related industries. How has the Minerals Council’s role evolved over the years and what are some of the milestones it has achieved?

MM: This year we are turning 134 years, so when you look at the Minerals Council through that lens of time, you can, I guess, make an assumption that it's an organization that has constantly adapted to the times. That is an essential element in my mind of sustainability, being responsive to change and being adaptable to change and a more recent adaptation was the shift from the legacy Chamber of Mines to a new form of organization that is the Minerals Council South Africa in terms of its look and feel. This has extended to a shift even in its location from Marshalltown to the leafy suburbs of northern Johannesburg and we've seen a significant migration of many other mining companies from Marshalltown for reasons which I think are unfortunate, because I think for me that would have made for a fantastic business tourist destination as a mining district to the extent that we were able to to turn it around in as far as its image and its legacy and what it stands for.

It’s that evolution that has provided me with a good foundation in terms of where to go from here for the Minerals Council, as I go back to the purpose in as far as the co-creation of an enabling environment for mining to thrive and this is becoming particularly important at this point in time. If you look at the increasing activity on critical minerals, South Africa remains a country that is well endowed with minerals as evidenced by the diversity of commodities that are mined by our members currently and we have a platform that we can grow in as far as looking at additional and other critical minerals that are going to be needed for a low carbon future.

That co-creation is going to need us to work very closely with the government to ensure that we get a type of legislation that enables and encourages more investment in mineral exploration and relevant infrastructure, which will enable not only beneficiation, but exporting of those critical minerals beyond the needs of South Africa itself and to neighboring African countries offshore for the use of those metals for additional infrastructure development related to energy and other utilities. Africa is one continent which remains desperately in need of interconnectivity amongst the different countries and that's going to enable such significant investment and economic development that will begin to see this continent make good social progress.

The other area of significant evolution has been the improvement in safety, and here, firstly, the physical safety terms of operating conditions in our mines despite being underground, we have achieved several breakthroughs over the past 20 to 30 years where if you look at particularly the urgency of falls of ground (FOGs), we have achieved breakthroughs almost every six to seven years in the past 30 years where we've reduced fatalities from falls of ground by 50%. The journey to zero harm, whilst we haven't quite gotten there, there's still some work to be done and we are seeing members adopting new methods of safety improvement which involve technology and training of employees. I think the most important has been leadership from the top in as far as achieving safety improvements.

The overarching progress has been a working together of government, labor and industry in tripartite through the Mine Health and Safety Council (MHSC) , where safety firstly is not competitive, but an activity where society and key players have a common interest in ensuring that the sustainability of the industry is founded and based on safe operations as well as healthy employees. A key health focus has been around TB, particularly given its association with HIV, and the industry is performing well below the national average in terms of TB, but there again zero harm remains important because we also look at it in association with other lung related diseases, given what can be at times the dusty nature of the underground workings but also from other air pollutants as well. We see the next milestone of reaching zero harm as flattening in terms of both safety and health, which is kind of approaching the end goal in a very asymptotic way and so we really need to make it a big shift to reach that next breakthrough of zero harm and I'm quite confident that we'll be able to to achieve that.

Sustainable and responsible mining consist of several elements, not just from how we mine or run the operations but being responsive to societal needs, reducing negative impacts and increasing the positive impacts. Accepting that, when you dig a hole in the ground, it doesn't look great, but then the practice of rehabilitation needs to happen. More importantly, what is coming up post mining, are successive land-use economies that provide new opportunities that would otherwise not have been there had you not had a mine in the first place. That's the kind of innovation the mining industry is evolving towards not only in South Africa, but also globally. It’s something that may come into the language of mining in terms of how that in itself speaks to circularity in mining, and that circularity is not only how you mine the minerals themselves, but I think in terms of the life cycle of the location of that mine and its economic contribution.

Since the adoption of the Mining Charter, the mining industry has systematically improved the participation of women throughout the vertical structures and across the breadth of the industry. Amongst our members, who are responsible for 90% of the production sales in South Africa and about 5% of the formal national workforce , women represent close to 20% of the workforce of approximately 480 000. This includes employment at the mining face through to the technical, management and leadership structures of mining organizations. Several of our large and listed member companies have women CEOs. Today, the imperative for transformation in mining is beyond compliance. The mining industry remains driven to harness the country’s human capability, without bias for gender, race, social or economic standing.

DD: In closing, let's be futuristic and focus on the National Development Plan 2030. How do you envisage the Minerals Council South Africa contributing to making the objectives of NDP 2030 a reality??

MM: 2030 is around the corner and I can't even say it's in six years time because it's five and a half years time, five years effectively. When NDP 2030 was developed, it was envisaged to be a 15 to 20 year plan because there's a lot that you can achieve in 20 years, but you need to have focused and dedicated leadership with peer short term plans that accumulate through towards the longer plan and the longer term. The important thing is can we rescue the NDP 2030 in the remaining five years? I think we'll need to be realistic as to whether it is a plan that we still should still refer to as the NDP 2030. Maybe if we look at what it is that we've done, where the shortfalls are and what we can do in the remaining five years, then we can maintain NDP 2030.

From a mining industry perspective, what we can contribute in the next five years that are remaining is really increasing investment not only in mining but also in the kind of services that will help mining grow. So, continuing to work on the energy and logistics sectors, because those are the arteries of the South African economy and any economy for that matter. However, not only rescuing from the damage of the past, but enhancing and elevating them to a new level of performance and enabling the economy to grow by 3% to 5%. On the back of that, I think then we will begin to see the mining industry expand not only on existing commodities and minerals, but also on the new minerals and the critical minerals that are important for the future.

So increase investment in exploration, which will then lead to future mines, then you can immediately see expansion in the mining industry and the positive impact in other areas of the economy. Employment of people is going to have a huge impact on the consumer power of our citizens increasing services and demand for services and so you'll get the retail sector benefiting from increased employment and infrastructure. That downstream impact on what I call the multiplier effect of mining will be felt very quickly in the economy and also not just the rest of the economy as we know it today.

I referred to my letter to Members that South Africa has seven magnificent attributes that it has to work on to build a better future and one of those is the young people. Embedded in our youth is that enterprising entrepreneurship which will result in a lot of the technology that we see around the world being adapted to South Africa and we will see new industries booming in the country. I am very hopeful for the next five years, in terms of the kind of positive impact that mining can have and I'll dare say that it's an impact that very few other industries can contest.

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