Cutifani: Mining its own worst enemy

Feb 07 2013 15:31
Cape Town  - Incoming Anglo American [JSE:AGL] CEO Mark Cutifani said the mining industry has failed to defend itself, notwithstanding the fact that it is the most important, significant and critical industry in the world.

Delivering a keynote address titled Mining’s Contribution to Sustainable Development at the Investing in African Mining Indaba in Cape Town, Cutifani said the mining industry needs to change its attitude towards the local communities where it operates, and move from being a simply an “extractive industry to a developmental industry”.

He spoke about the disconnect that exists between mining companies and local communities, when it comes to making a difference to the areas where the industry operates.

“Doing good things in communities often does not cost a lot. People don’t necessarily want money – if you give just 10% of your time and skills and uplift the communities that is often enough,” said Cutifani.

He said the industry has the advantage of being more important to the future of the world than any other industry, which is a huge responsibility. He called on mining to “stand up and be true to this responsibility and to promote itself”.

Cutifani said the industry operates on a version of Maslow’s hierarchy of needs, namely access to water, energy, food security and large tracts of land.

This is the basis for a successful mining operation. “We need to change our attitude as an industry and provide access to tracts of land for communities. As an industry we have expertise that we can provide in areas like education and municipal services.”

He also said that the industry is in a unique position to facilitate the entrance of other industries. The industry must aim for symbiotic relationships with communities and governments: “we must see it as part of parcel of what we do”.

He also addressed himself to governments, saying that they must put in place appropriate macro-economic policies, transparent regulation and ensure security of tenure.         

“The industry is in the real estate business. If security of tenure is threatened, then you will destroy mining,” said Cutifani. He also raised the issue of corruption as a value destroyer, but stated that people often blame politicians for corruption, forgetting that it involves two parties.

“Don’t blame politicians for corruption; as an industry we must also look at what we do.”

On the question of the future of mining on the African continent, Cutifani said there needs to be a development of regional infrastructure hubs and population centres that focus on tourism, water and mining.

“We need cooperation across country borders. We must find solutions to this and mining should be part of those conversations. It must be done by country or continent,” said Cutifani.

He lauded South Africa as a good place to do business. He challenged the media and industry to tell the real story of South Africa. “This country has defied the critics.

"The South African economy has grown every year since 1994,” said Cutifani. He drew parallels between South Africa and Australia – another resources-based economy.

He said that the South African economy has grown at a compounding growth rate of 3.2% per year, while Australia’s rate has been 3.4%. “So South Africa is only 0.2% behind Australia; people make it seem worse,” said Cutifani.

He said the press, South Africans and the mining industry dwell on the negative, and that South Africa has done better in building social infrastructure over the last 19 years than any other place on the planet.

He did, however point to the underperformance of the mining industry on the stock exchange, saying the “All Share Index on the JSE is up 60% since 2007, while the mining index has remained flat and is actually down 30% in real terms in the last six years”.

He said mining industry leaders need to change that. “Industry and government leaders must stop shouting at each other. We must put our differences aside and start talking in a way that will change the industry for good.

"The threats to take away mining licences are out of order. Let’s hope that we have learnt our lessons and engage in consultation,” said Cutifani.

 - Fin24




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