The importance of the mining sector in Namibia and its contribution to our country’s economy can never be underestimated. The sector is an important source of foreign currency earnings as the majority of Namibia’s export commodities come from the mining sector. Furthermore, data, as compiled by the Namibian Chamber of Mines, indicates that over the last five years, the mining sector has contributed an amount of N$$24.6 billion and N$17.8 billion in the form of wages and to state coffers respectively. Over the same time, the mining sector created an estimated 16 480 employee opportunities which in turn support and enhance the lives of over 101 000 Namibians.
However, at a global level, paying a variety of taxes and employing as many people as possible is no longer the yardstick by which mining companies’ social responsibility performance is judged. Environmental, social and governance (ESG) increasingly feature in all aspects of mining and are used to determine the feasibility for modern-day investors. Mining companies are facing sharper scrutiny regarding the way they handle various environmental issues, including pollution, tailings management, habitat protection and site remediation; as well as social concerns, such as the rights of indigenous people, health and safety, security and workforce rights. The growing emphasis on ethics and sustainability is being driven by customers, investors, regulators and industry initiatives – in addition to a genuine desire among many companies to conduct their operations sustainably.
Historically mining companies in Namibia fared well on two of the ESG components, namely; Environment and Governance.
Regarding the Environmental aspect, the Minerals (Prospecting and Mining) Act, No. 33 of 1992 is the core legislation that governs Namibia’s mining sector. The Act includes some reference to rehabilitation and closure, mainly referring to the globally accepted Polluter Pays Principle i.e. the party responsible for producing the pollution should bear the cost of managing it to prevent damage to human health or the environment. The Minerals Policy (2002) provides the framework for the responsible development of Namibia’s mining sector to ensure that the sector makes a sustainable contribution to the country’s socio-economic development. All mining operations in Namibia adhere to international environmental and safety standards and certification is a requirement.
Regarding Governance, most Namibian mines’ ownership can be (historically) traced to a listed shareholder and as such, they adhere to strict governance standards that have remained in place even when ownership changed. That is the expected practice and even those operations that are not listed follow these standards, for both Mineral Resource and Reserve reporting and financial reporting.
The third aspect of ESG refers to the social theme. Mining companies have played a major role in Namibian societies particularly in and around the mining towns where they operate. Towns such as Tsumeb, Uis, Karibib, Arandis, Rosh Pinah, and Orangemund were largely sustained by the mining operations, pre-independence, while post-independence support has – to an extent - seen an upswing in Otavi, Otjiwarongo, and Swakopmund.
This scrutiny on mines’ ESG has intensified in light of the Covid-19 pandemic, which has disrupted business activities in an unprecedented way. There has been an increased demand from society for companies and corporates to assist in the fight against the pandemic at a time where company revenues are falling. Faced with a slowing global and domestic economy due to Covid-19, mining companies had to scale down operations, institute temporary mine closures and implement cost-cutting measures. Despite this, numerous reports and media coverage records exist, highlighting the contributions made especially in the form of provisions of health facilities and equipment. We know, that to date the mining sector has made a significant contribution towards fighting Covid-19, ranging from equipment, cash to setting up health facilities at their operational sites.
The pandemic has, therefore, presented an opportunity for mining operations to rethink their role and to highlight their involvement in society. Many of them have come to the party, doing their bit to support the community, their employees and government interventions as part of their social strategy.
However, the verdict as to whether these companies have done enough, especially when it comes to ensuring that these towns and societies remain sustainable post-mine-closures, is still out. It remains to be seen whether the advent of Covid-19 will spark further debate as to whether mining companies contribute enough within the social aspect in the post-Covid-19 period. The debate and any subsequent conclusions will depend on two factors: firstly, whether the mines will continue a sustained contribution towards the Namibian society in the way seen over the past few months and secondly - how well do they integrate these activities into their annual reporting – which historically has largely focused on financial matrices.
* Fabian Shaanika is RMB Namibia Sector Lead: Mining and Resources