We must fix broken mining trusts

Mining is one of the most important sectors of the SA economy, contributing about 8% of GDP and employing more than 400,000 people. However, mining also has a significant social and environmental effect, especially on the communities that live near the mines. These communities often face displacement, pollution, health risks and loss of livelihoods as a result of mining activities.

To address these challenges, the government introduced the Mining Charter in 2002, which requires mining companies to allocate a percentage of their equity to mining community trusts. These trusts are supposed to receive dividends from the mining companies and use them for the benefit of the affected communities. They are also supposed to involve the communities in their decision-making and governance processes.

However, after almost two decades, the mining community trusts have largely failed to deliver on their promises. A new study reveals that they are plagued by corruption, mismanagement and lack of accountability.

The study, commissioned by Richards Bay Minerals, a subsidiary of Rio Tinto, and conducted by fund manager Tshikululu Social Investments, found that many of the trusts are plagued by poor governance, lack of transparency, corruption and interference by traditional leaders. It also found some trusts do not have proper financial records, do not consult with the communities, do not report on their activities, and do not use their funds for development purposes. Instead, some are used as vehicles for personal enrichment by trustees, traditional leaders and mining firms.

These problems are not unlike those experienced by rural communities that have gained access to land through large land reform deals. In some cases, the trusts appointed to manage the communal lands are plagued by poor governance, and too often the type of land access community members get depends on their proximity to traditional leaders.

The Richards Bay Minerals study came after the company went to court to seek an order to amend the trust deeds of the community trusts set up in 2009 as part of its BEE deal with host communities. “The trusts have not appeared to be consistently delivering meaningful and sustainable benefit to community members,” the company said.

This situation undermines the objectives of the Mining Charter and the constitutional rights of mining communities.

These trusts have the potential to be a powerful tool for social and economic development in SA, but this potential can only be realised if they are managed with integrity, transparency and accountability. The government and the mining industry must take urgent steps to reform and strengthen governance and oversight of these trusts. Communities must also be empowered to claim their rights and hold the trustees accountable.