Compliance with the Codes of Good Practice and the Mining Charter by the South African mining industry : the role of the Department of Minerals and Energy

Abstract

The South African mining industry has been, and still is, the cornerstone of the South African economy. Even though the mining industry flourished and created significant wealth, due to previous discriminatory policies, a large section of the South African population was excluded from partaking in the mining industry. With the democratisation of South Africa, the Government adopted Black Economic Empowerment to redress past injustices. To achieve transformation, the Government implemented various polices and legislation and the impact thereof, on the mining industry had to be investigated. For this purpose a qualitative research approach was utilised and data were collected by means of literature studies and interviews. Regarding transformation legislation and policies, the Mining Charter and the Codes of Good Practice were investigated. The Mining Charter is legally binding on the mining industry and the Codes of Good Practice is binding on all organs of state and public enterprises when making decisions regarding procurement as well as granting of licences. Therefore the Codes of Good Practice has an indirect impact on the mining industry and the implications thereof on the mining industry had to be investigated. Since the Mining Charter and Codes of Good Practice are used as performance measurement instruments, the principles, theories and models of managing and measuring performance were studied. A number of respondent groups were randomly selected and the case-study approach was used. Respondents were selected based on their position within the organisation, their involvement in the Mining Charter and Codes of Good Practice and the role they play in the implementation of and compliance with legislation. Interviews were conducted to determine the impact of the Codes of Good Practice on the mining industry and it was determined that mining companies will have to comply with the Codes of Good Practice, if they wish to remain competitive and to obtain licenses. Adopting the Codes of Good Practice is a business imperative within the mining industry. No composite indicators or a combined performance measurement instrument exists. The Department of Minerals and Energy is not playing any substantial role in assisting mining companies regarding compliance with the Codes of Good Practice. Recommendations are made based on the comparison of the elements of the Mining Charter with those of the Codes of Good Practice and with the performance management and measurement theories. Findings resulting from the empirical research conducted were provided, which resulted in the development of composite indicators and the Composite Scorecard for the Mining Industry.