Social capital: The missing puzzle piece in mining - CNBC Africa

Social capital: The missing puzzle piece in mining


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A mining community on the fringes of a mining site. PHOTO: Getty Images.

Fish still die, and the livelihoods of more than 11,000 people have been dramatically changed.

Shell will be required to financially compensate for the damage, but no amount of recompense is likely to repair the severe environmental and socio-economic damage.

Most importantly, the social capital and trust relationship between corporation and community has been roughly severed.

“Because we have finance, we tend to overlook the importance of social capital. It's easy to break social capital by throwing money at it,” Roné Viljoen from Beulah Africa told CNBC Africa.

“We're still very much in a place where we just throw money towards a lot of different things. This should be a long-term relationship.”

Globally, oil and mining industries has been under intense scrutiny due to the level of environmental and socio-economic damage that has previously occurred. This has been at the expense of the communities in which companies have been working in.

In South Africa, the August 2012 Marikana massacre which left 44 dead and over 70 injured, raised the question of lethal force by the country's police services.

It also raises the question of the social capital relationship between mineworkers and mining companies beyond labour and wages.

Social capital, according to the World Bank, refers to the institutions, relationships, and norms that shape the quality and quantity of a society's social interactions. Social capital is also the missing puzzle piece within many industries and corporations.

The social capital deficiency means that mining companies will need to start building social structures of support within the communities in which they operate in once their work is done.

Corporate Social Responsibility has become a requirement in a number of companies, but a lack of social capital can be found within the folds of the relationship between company and community or with its workers.

Viljoen explains that allocating finances towards a particular community development project or initiative is an unsustainable effort. In some cases, communities become dependant on the financial contributions a company makes, and suffers once the company leaves.

Instead, mining companies need to build structures that communities can continue building on their own once the companies have left the communities.

“In the one, the company just gives the money. In the other, you start a process that is longer term sustainable because the community can themselves run it,” she explains.

Viljoen adds that compliance-related relationships companies are required to have are not as effective if it is a mere requirement that has more to do with money than an actual interaction and engagement between company and community.

According to a Bench Marks Foundation report, Lonmin Plc, the mining company in the thick of the Marikana massacre,  had failed in its  commitments under the Mining Charter, as well as its environmental commitments.

This was done using Lonmin’s Social Development Reports the company had done of itself over a period of around 10 years. In terms of the environment, the foundation found that in 2003 Lonmin had emitted more than eight and a half times the limit of 4.8 tonnes per day of sulphur dioxide. It explained that Lonmin has since 2004 used a scrubbing plant to reduce the sulphur dioxide emissions, but other related damages have occurred.

Where community perception is concerned, which is linked to social capital relationship, the report found that the supplier community, which was responsible for selling their goods and services to the mining company, were generally happy with Lonmin in the 2004 period.

However, local communities living around Lonmin's operations were the group with the most negative sentiment towards the company's operations. 


Just as mining companies need to have a structured means of engaging with the community, trust is a critical component in the relationship aspect of social capital.

“Trust links to transparency. If we now have to put it into a union's picture of labour relations, we've come a long way in building greater trust,” said Viljoen.

“Trust takes time. If the reality is the mine is going through a tough time, you can't commit to the promises made, then be open to say it. Build trust through a transparent relationship.”

At the recent Investing in Resources and Mining in Africa conference, Peter Leon, partner and head of mining and energy projects at Webber Wentzel, explained that the level of trust in the industry was essential to its thriving.

“The problem in South Africa’s mining at the moment is the trust deficit. It affects so many things,” said Leon.

A trust deficit also tended to cloud the addressing of crucial issues such as social and economic inequalities and expectations within the industry. 


While South Africa's mining industry is in current crisis, it remains the  cornerstone of the country's economy.

It's future will nevertheless depend on more than just a peaceful labour sector and increased investment over time.

Despite the hard knock from labour sector unrest this year, the  industry continues to have a massive contribution to the county’s GDP. How the social capital relationship between company and communty will be utilised will be crucial to the sector's continuation.

“The community should always own their own development, and the mining companies only play a role in it. The beauty of mining [is] that we're so integrated with the whole community in such a great way,” said Viljoen.

“Everything should not be dependent on the company because they have to think long-term [but] they have to think of the lives of the community after the mine.”