Page 114 - Risk Report 2024

1. Functional State 2. Politics

Local service delivery failures close to mining communities Geopolitical tensions resulted in further supply chain shortages,
cause community frustration (protests, civil unrest, disruption consumable price increases, global economic impacts, and
of mining operations) and expose mining firms to increasing further tightening of monetary policies. This negatively impacted
demands to provide such services, over and above what the pricing environment for certain mining commodities. In SA
they already provide through their social and labour plans. ongoing policy uncertainty has resulted in a decline in foreign
Mining companies formally engage with communities through investment, leading to the departure of some international
recognised community leadership structures on planned companies from the country. National coalition government in
community projects (included in social and labour plans) and SA between parties with differing manifestos brings investment
key infrastructure. Firms also engage with municipal leadership policy uncertainty and will affect investor confidence. Mining
to clarify their obligations and identify opportunities for further companies are closely monitoring the political land scape
assistance. to adapt where needed, while enhancing government and
community engagement, collaborating closely with suppliers
to secure supply chains, and managing inflationary impacts.
As regards shareholders, some mining companies have been
able to turn the risks into opportunities – increasing margins
alongside investment in its local stakeholders.

3. Economy 4. Social Security
The sector in SA, as a key hub for regional mining investment Social security, quality of life, unemployment, and inequality are
and operations, is severely affected by any national economic interrelated and can significantly impact the sector. Mitigation
downturn. The sector faces several challenges, including requires a holistic approach that considers the economic aspects
reduced investor confidence, decreased access to financing, of mining as well as its social and environmental implications.
and disruptions to supply chains and infrastructure. The loss In terms of health, progressive response by the sector to combat
of SA's status as main gateway into Africa has diminished the diseases such as HIV and Tuberculosis in mining communities
sector’s competitive advantage in attracting FDI and accessing has led to improvement. The sector is a significant source of
regional markets. Collaboration, innovation, and strategic employment, particularly in rural areas. However, commodity
planning are key to navigating this risk and maintaining price fluctuations or demand shifts can lead to job losses,
global competitiveness. Sound and timeous decisions require exacerbate unemployment and potentially fuel social unrest.
integration of strategy, risk and resilience to improve efficiencies, Sustainable and responsible mining practices and proactive
agility, adaptiveness and ability to learn. The Government has engagement with local communities and stakeholders, are
recently established initiatives to support junior mining and essential to ensure the sector's long-term viability.
exploration activities, to explore new opportunities.

5. Rule of Law 6. Water
Organised criminal syndicates have significantly increased Water is a vital resource for mining operations in South
and have targeted both high value products/metals and Africa, particularly in areas where water scarcity is prevalent.
bulk commodities. The modus operandi has often included However, increased demand from residential, agricultural,
‘recruiting’ company employees and contractors which on and commercial developments in these regions has created
their part avail key information on transport routes/nodes and competition for water resources, often prioritising community
storage information. Criminals have also attempted to infiltrate needs over mining activities. Additionally, prolonged droughts
formally recognised procurement processes to promote their and aging municipal infrastructure further exacerbate water
illicit intentions, and where this is not recognised by mining supply challenges for mining operations. Mining companies
companies, targeted criminality ensues. In response, mining recognise the critical importance of water in their operations
companies, in conjunction with law enforcement authorities and for local communities. They actively manage water usage
and the Minerals Council, have had to improve their intelligence to prevent degradation of water quality and ensure sustainable
gathering and security response capabilities to ensure proactive water availability. Initiatives include implementing water
measures remain in place to mitigate this scourge. Continued treatment plants to reduce reliance on external water sources or
awareness programs regarding ethical conduct are shared utilities and promote water recycling. Overall, mining companies
within the various mining companies. Fraud risk assessments are implementing measures to monitor, reduce, and optimise
are assisting most mining companies to understand exposures water usage in response to these challenges, supporting both
and strengthen the control environment. their operational needs and the water requirements of host
communities.