Role of the mining industry in the South African economy

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INTRODUCTION AND BACKGROUND

According to the Chamber of Mines of South Africa (COM) the South African mining industry had since its inception made an extremely important contribution to the social development and national economy of the country (COM, Annual Report, 2006 – 2007:12). It was and still is the largest industry sector in the country and is widely being recognised as a leading supplier, producer and exporter of a great variety of minerals (refer section 1.2.6 and table 1.2). It is a major employer and source of income to employees and the state (COM, Facts and figures, 2006 – 2007:13 and section 1.2.7.2). The industry played and still continues to play a valuable leadership role in many local and worldwide safety and efficiency improvement projects (refer section 1.2.7.1). According to the Department: Mineral and Energy (DME) the South African mining industry provided the stimulus for the extensive development of an efficient physical infrastructure that greatly contributed to the development of related secondary industries in the country (DME, South Africa’s Mineral Industry, 2004/2005:1). It holds, in comparison to total world reserves, a dominant position in many mineral reserves, production and exports (refer table 1.2).
The industry developed a high degree of technical expertise and the ability to mobilise large amounts of capital for the development of new projects (DME, South Africa’s Mineral Industry, 2004/2005:1). Like other industries the industry also operates within industry-specific environmental factors and challenges. Its performance is adversely being affected by increasingly complex geological conditions, labour demands, local and global competition and the fluctuation in the R/$ exchange rate. In addition skills shortages, increasing social commitments, rising input costs, new laws, mandatory black economic empowerment and inadequate infrastructure and unreliable energy and water supplies further aggravate the situation (COM, Annual Report, 2004 – 2005:30-83). With the advent of the democratic dispensation in South Africa in 1994 many new acts had been introduced.
The Mineral and Petroleum Resources Development Act (MPRDA) was promulgated in 2003. The industry had since then to comply with all the changes, demands and challenges of the new and revised mineral acts (DME, South Africa’s Mineral Industry, 2004/2005:3-4). The South African mining industry had, for a very long period, been one of the leaders in the global mining arena. Global competition in the meantime increased significantly over the years and became a reality that should be efficiently managed in the future. More recently the opinion was expressed that the industry’s position as a cheap supplier of various minerals to world markets is deteriorating at an alarming rate (COM, Annual Report, 2004 – 2005:22). In spite of major improvement programs the industry is still loosing ground relative to the leading mining countries in the world (COM, Annual Report, 2004 – 2005:22). Mine management in general is of the opinion that existing management practices being utilised by the industry, are inadequate to enable it to manage in a comprehensive manner (refer section 4.2.1). It would appear that an all- inclusive management practice that could be utilised by the mining industry does not exist at present. It is perceived that none or not even a combination of the existing management practices would constitute a complete logically integrated management practice. With increasing globalisation and competitivity, competent management and employees are becoming more than ever before indispensable to the success of the South African mining industry.
The author of this thesis believes that the ideal management method should consist of an appropriate theory and procedure in order to be successfully applied by every employee in the South African mining industry on each level of the organisation. It should enable all the employees on all the levels in the organisation to comprehensively manage the achievement of the results required from each one of them. It implies that all the required work should be efficiently planned for, coordinated, integrated and executed by every employee on every level of the organisation. It is perceived that the industry is in dire need for such a management method. The question of whether and how such a method could be developed would form the crux of this thesis. In this chapter the commencement, development, importance and role of the mining industry in the South African economy and the factors and challenges facing the industry are briefly discussed. The management practices applied since the inception of the South African mining industry up to the present and specifically an efficient management method perceived for the future would be researched. The research problem, hypotheses, questions and objectives of the study and the key attributes of the desired theory and derived method would be specified. Finally a proposed layout of the study would be given.

HISTORICAL DEVELOPMENT AND CURRENT STATE OF THE MINING INDUSTRY IN SOUTH AFRICA

The role of mining in the development of mankind

Mankind developed the ability to identify and utilise natural resources of one kind or another in order to manufacture elementary objects such as weapons and utensils for use in its daily activities. The sophistication and efficiency of these crude objects increased over a long period of time with the invention of more advanced stone utensils (Wells, 1961:66-79). The earliest stone tools to date, discovered in Southern Africa, date from the early Stone Age period of about 15 million years ago (COM, Annual Report, 2002 – 2003). Later Stone Age artefacts such as bored stones and grindstones were used for grinding ochre and food and for digging out plant bulbs. According to Kloppers (2001:5) primitive stone tools were discovered during the late twentieth century at the Park Town area in the present city of Johannesburg, indicating that humans inhabited this area approximately 1.2 million years ago.
The early settlers brought with them the knowledge of how to smelt iron and copper ores in furnaces fuelled by wood and self-made charcoal in order to manufacture crude tools, utensils and weapons. Ore deposits, where too deep to extract from the surface, were in many places exploited by means of a simple system of small tunnels and underground excavations or stopes (COM, Annual Report, 2002 – 2004:48). Ancient tin workings had been discovered north of the Limpopo River, at Rooiberg, Leeuwpoort and Weynek in the Waterberg District. Some of these workings extended to depths of 70 meters (Jeppe, 1946:6-7). Ashton (1997:129) pointed out that mining, in its infant stages with relatively unproven methods, caused a lot of hardship to people but that it eventually resulted in much better living conditions for countries, peoples and communities. In Britain, one of the very first ‘mining’ countries in the early days, it was not regarded as unusual or unethical to use boys as young as eight years to work underground under dangerous and hazardous environmental conditions. In those days it was believed that the history of Britain’s mining industry was the history of the rise of Britain to the pinnacle of industrial supremacy in the world. Its claimed riches and greatness were built on coal, the most important mineral asset of the country (McCutcheon, 1974:v).

CONTENTS :

• CHAPTER 1 – SCOPE OF THE THESIS
  • 1.1 INTRODUCTION AND BACKGROUND
  • 1.2 HISTORICAL DEVELOPMENT AND CURRENT STATE OF THE MINING INDUSTRY IN SOUTH AFRICA
    • 1.2.1 The role of mining in the development of mankind
    • 1.2.2 The geology of South Africa
      • 1.2.2.1 The geological history of Southern Africa
      • 1.2.2.2 Main geological formations
      • 1.2.2.3 Mineral deposits
    • 1.2.3 Commencement of the mining industry in South Africa
    • 1.2.4 Development of the South African mining industry
      • 1.2.4.1 The gold mining sector
      • 1.2.4.2 The coal mining sector
      • 1.2.4.3 The platinum mining sector
      • 1.2.4.4 The iron metals mining sector
      • 1.2.4.5 The chromium mining sector
      • 1.2.4.6 The manganese mining sector
      • 1.2.4.7 The diamond mining sector
      • 1.2.4.8 The copper mining sector
    • 1.2.5 Early mining problems encountered
      • 1.2.5.1 Mining conditions
      • 1.2.5.2 Transportation
      • 1.2.5.3 The early labour situation
    • 1.2.6 Importance of the South African mining industry to the world
      • 1.2.6.1 Mineral deposits
      • 1.2.6.2 Mineral resources
      • 1.2.6.3 Production
      • 1.2.6.4 Export
    • 1.2.7 Role of the mining industry in the South African economy
  • 1.2.7.1 Role in the development of the economy
  • 1.2.7.2 Contribution of mining to the national wealth
    • 1.2.8 The mining environment
  • 1.2.8.1 The internal environment
  • 1.2.8.2 The external environment
    • 1.2.9 Challenges facing the mining industry
      • 1.2.9.1 Health and safety
      • 1.2.9.2 Containment of input costs
      • 1.2.9.3 Managing union demands
      • 1.2.9.4 Provision of sufficient competent labour
      • 1.2.9.5 Responsible environmental management
      • 1.2.9.6 Compliance with legal and statutory requirements
      • 1.2.9.7 Managing comprehensively
      • 1.2.10 Management practices in the South African mining industry
  • 1.2.10.1 Introduction of the management discipline in the mining industry
  • 1.2.10.2 Management styles in the South African mining industry
  • 1.2.10.3 Perceived deficiencies of existing management methods
  • 1.3 THE RESEARCH PROBLEM
  • 1.4 DEFINITION OF THE RESEARCH PROBLEM
  • 1.5 HYPOTHESES
  • 1.5.1 Primary hypothesis
  • 1.5.2 Secondary hypotheses
  • 1.6 THE RESEARCH QUESTIONS
    • 1.6.1 Primary research question
    • 1.6.2 Secondary research questions
  • 1.7 OBJECTIVES OF THE STUDY
  • 1.7.1 Primary objective of the study
  • 1.7.2 Secondary objectives of the study
  • 1.8 KEY ATTRIBUTES OF THE DESIRED THEORY AND METHOD
  • 1.8.1 Key attributes of the desired theory
  • 1.8.2 Key attributes of the desired method
  • 1.9 THE RESEARCH PROCESS
  • 1.10 ORGANISATION OF THE STUDY
  • 1.10.1 Chapter 1 – Scope of the thesis
  • 1.10.2 Chapter 2 – Literature review
  • 1.10.3 Chapter 3 – Research design and methodology
  • 1.10.4 Chapter 4 – Presentation and discussion of the research results
  • 1.10.5 Chapter 5 – Development of the theory of the comprehensive, practical and integrated management method
  • 1.10.6 Chapter 6 – Development of the procedure for the application of the theory of the comprehensive, practical and integrated management method
  • 1.10.7 Chapter 7: – Conclusions and recommendations
  • 1.11 CONCLUSION
• CHAPTER 2 – LITERATURE REVIEW
  • 2.1 INTRODUCTION
  • 2.2 REVISION OF THE LITERATURE
  • 2.2.1 Requirements for a comprehensive, practical and integrated management method
  • 2.2.2 Methodology of revision
  • 2.2.3 Demarcation of the literature
  • 2.2.4 Framework for revision
  • 2.3 MANAGEMENT
  • 2.3.1 The concept of management
  • 2.3.2 What managers have to do
  • 2.3.3 The concept of leadership
  • 2.3.4 What leaders have to do
  • 2.3.5 The difference between managers and leaders
  • 2.4 THE EVOLUTION OF MANAGEMENT
  • 2.4.1 The development of the management discipline
  • 2.4.2 The study of management
  • 2.4.3 The management discipline
  • 2.4.4 Management work
  • 2.4.5 Management levels
  • 2.4.6 Managerial skills
  • 2.4.7 Management roles
  • 2.4.8 The environment in which management operates
  • 2.4.9 Management and stakeholders
  • 2.4.10 Management as a profession
  • 2.5 MANAGEMENT PRACTICES
  • 2.5.1 Management approaches
  • 2.5.1.1 The classical management approaches
  • 2.5.1.2 The contemporary management approaches
  • 2.5.1.3 Evaluation of the management approaches
  • 2.5.2 Management techniques
  • 2.5.2.1 Total quality management
  • 2.5.2.2 The learning organisation
  • 2.5.2.3 Work breakdown structures
  • 2.5.2.4 Activity-based management (ABM)
  • 2.5.2.5 Evaluation of the management techniques
  • 2.5.3. Management programs
  • 2.5.3.1 Managing by objectives (MBO)
    • 2.5.3.2 Managing by exception (MBE)
    • 2.5.3.3 Managing by decision models (MBDM)
    • 2.5.3.4 Managing by styles (MBS)
    • 2.5.3.5 Managing by competitive edge (MBCE)
    • 2.5.3.6 Managing by coaching and development (MBCD)
    • 2.5.3.7 Managing by information systems (MBIS)
    • 2.5.3.8 Managing by matrices (MBM)
    • 2.5.3.9 Managing by work simplification (MBWS)
    • 2.5.3.10 Managing by organisational development (MBOD)
      • 2.5.3.11 Evaluation of the management programs
      • 2.5.4 Ubuntu; an African management philosophy
      • 2.5.4.1 Meaning of Ubuntu
      • 2.5.4.2 Value base of Ubuntu
      • 2.5.4.3 Evaluation of Ubuntu
  • 2.5.5 Summary of the management practices
    • 2.6 DISCUSSION OF THE MANAGEMENT DISCIPLINE
    • 2.6.1 The overall view of the management discipline
    • 2.6.2 The management functions
      • 2.6.2.1 The planning function
      • 2.6.2.2 The organising function
      • 2.6.2.3 The leading function
      • 2.6.2.4 The controlling function
      • 2.6.2.5 Coordination
      • 2.6.2.6 Summary of the activities of the management functions
  • 2.6.2.7 The classification of management work
  • 2.6.2.8 The Allen classification
  • 2.7 OVERVIEW: PAST, PRESENT AND FUTURE PROSPECTS
  • 2.8 CONCLUSION
• CHAPTER 3 – RESEARECH DESIGN AND METHODOLOGY
  • 3.1 INTRODUCTION
  • 3.2 OBJECTIVES WITH THE EMPIRICAL RESEARCH
  • 3.3 MOTIVATION FOR THIS RESEARCH
  • 3.4 TYPE OF DATA REQUIRED
  • 3.5 SOURCES OF THE DATA
  • 3.6 AREA TO BE COVERED BY THE SAMPLE
  • 3.7 DETERMINATION OF THE SAMPLING METHODS
    • 3.7.1 The purposive sample design
    • 3.7.2 The simple random sample design
    • 3.8 QUESTIONNAIRES USED
    • 3.8.1 Initial study
    • 3.8.2 Redesign of the questionnaires
    • 3.8.2.1 Mine Manager’s Certificate of Competency
    • 3.8.2.2 General management
    • 3.8.3 Assessment
    • 3.8.3.1 Assessment scale
    • 3.8.3.2 Example
  • 3.8.4 Classification of the questions
  • 3.8.5 The pilot study
  • 3.8.6 The simple random selected sample
  • 3.8.7 Personal discussions
  • 3.8.7.1 Assessment criteria
  • 3.8.7.2 Assessment criteria in relation to the four management functions
  • 3.9 GATHERING OF THE DATA
  • 3.9.1 Period over which the data would be gathered
  • 3.9.2 Methods to gather the data
  • 3.10 PROBABLE RESTRICTIONS TO THE EMPIRICAL RESEARCH
  • 3.11 CONCLUSION
• CHAPTER 4 – PRESENTATION AND DISCUSSION OF THE RESEARCH RESULTS
  • 4.1 INTRODUCTION
  • 4.2 PRESENTATION OF THE RESEARCH RESULTS
  • 4.2.1 Responses received
  • 4.2.2 The deficiencies identified and the suggestions proposed by the respondents
  • 4.2.2.1 Deficiencies as identified by the respondents
  • 4.2.2.2 Suggestions proposed by the respondents
  • 4.2.3 Conclusions arrived at by the researcher during the discussions
  • 4.3 PREPARATION AND EVALUATION OF THE DATA
  • 4.3.1 Responses to the questionnaires
  • 4.3.2 Management approaches in use in the South African mining industry
  • 4.3.3 Area covered by the research
  • 4.3.4 Main minerals covered by the research
  • 4.3.5 Evaluation of the sampling results
    • 4.3.5.1 Results of the first three phases of the sampling
    • 4.3.5.2 The bulk self rated sample
    • 4.3.5.3 The random selected self rated sample
    • 4.3.5.4 The random selected rated sample
    • 4.3.5.5 Grouping of the data of the three samples
    • 4.3.6 Evaluation of the management functions
    • 4.3.6.1 Evaluation of the planning function
    • 4.3.6.2 Evaluation of the organising function
    • 4.3.6.3 Evaluation of the controlling function
    • 4.3.7 Evaluation of the management discipline
  • 4.3.8 Evaluation of the management levels
  • 4.3.8.1 Classification of the management positions
  • 4.3.8.2 Evaluation of the management levels
  • 4.3.9 Determination of the management competency gap
  • 4.3.10 Evaluation of the Mine Manager’s Certificate of Competency and General Management responses
  • 4.3.10.1 Evaluation of the responses of the Mine Manager’s Certificate of Competency
  • 4.3.10.2 Evaluation of the responses of the General Management random selected sample
  • 4.3.10.3 Comparison of the average competencies of the Mine Manager’s Certificate of Competency and General Management responses
  • 4.4 CONCLUSION
• CHAPTER 5 – DEVELOPMENT OF THE THEORY FOR THE COMPREHENSIVE, PRACTICAL AND INTEGRATED MANAGEMENT METHOD
  • 5.1 INTRODUCTION
  • 5.2 REQUIREMENTS OF THE NEWLY DEVELOPED THEORY
  • 5.3 THEORY SELECTED FROM EXISTING MANAGEMENT LITERATURE
  • 5.3.1 The management concept
  • 5.3.2 What managers do
  • 5.3.3 Management and stakeholders
  • 5.3.4 The environment in which management operates
    • 5.3.4.1 The global environment
    • 5.3.4.2 The macro-environment
    • 5.3.4.3 The micro-environment
  • 5.3.5 The multiple interface management concept
  • 5.3.6 The management systems concept
  • 5.3.7 The administrative management approach
  • 5.3.8 The scientific management approach
  • 5.3.9 Activity-based management
  • 5.3.10 Management planning processes
  • 5.3.11 Management classification
  • 5.3.12 Formulation of objectives
  • 5.3.12.1 Specific objectives
  • 5.3.12.2 General objectives
  • 5.3.12.3 Formulating challenging objectives
  • 5.3.12.4 The alignment of objectives
  • 5.3.12.5 Optimisation of objectives
  • 5.3.13 Past attempts to develop a logic for and a system for classifying management work
  • 5.4 DEVELOPMENT OF THE COMPREHENSIVE, PRACTICAL AND INTEGRATED MANAGEMENT THEORY
  • 5.4.1 Premises on which the comprehensive management logic is based
  • 5.4.2 Requirements of the comprehensive management logic theory
  • 5.4.3 The comprehensive management logic
  • 5.4.4 Basis of the development of the comprehensive, practical and integrated management theory
  • 5.5 DEVELOPMENT AND CLASSIFICATION OF THE COMPREHENSIVE MANAGEMENT LOGIC THEORY
  • 5.5.1 Development of the comprehensive management logic theory 211`
  • 5.5.2 Development and analysis of the comprehensive management work
  • 5.5.3 Development of the work flow of the comprehensive management method
  • 5.5.4 The comprehensive management classification
  • 5.5.5 Relative importance of the main tasks of the comprehensive management work
  • 5.6 PROPOSED MANAGEMENT PLANNING STRUCTURE FOR THE MINING INDUSTRY
  • 5.6.1 The planning process
  • 5.6.2 The planning structure
  • 5.6.2.1 The strategic plan
  • 5.6.2.2 The long-term plan
  • 5.6.2.3 The medium-term plan
  • 5.6.2.4 The short-term plan
  • 5.6.2.5 Operational plans
  • 5.6.2.6 Corrective action plans
  • 5.6.2.7 Contingency plans
  • 5.6.2.8 Supporting plans
  • 5.6.2.9 Project plans
  • 5.6.2.10 Fixed plans
  • 5.2.6.11 Main advantages of the planning structure
  • 5.7 CONCLUSION
• CHAPTER 6 – DEVELOPMENT OF THE PROCEDURE FOR THE APPLICATION OF THE THEORY OF THE COMPREHENSIVE, PRACTRICAL AND INTEGRATED MANAGEMENT METHOD
  • 6.1 INTRODUCTION
  • 6.2 DEVELOPMENT OF THE IMPLEMENTATION PROCEDURE OF THE COMPREHENSIVE MANAGEMENT THEORY
  • 6.2.1 Plan
  • 6.2.1.1 Determine the results required
  • 6.2.1.2 Formulate the objective
  • 6.2.1.3 Determine the best method
  • 6.2.1.4 Develop the organisational structure
  • 6.2.1.5 Schedule the tasks of each selected alternative method
  • 6.2.1.6 Finalise the budget for each selected alternative method
  • 6.2.1.7 Select the best alternative method
  • 6.2.2 Implement the plan
  • 6.2.2.1 Obtain approval for the plan
  • 6.2.2.2 Provide financing
  • 6.2.2.3 Provide equipment and facilities
  • 6.2.2.4 Provide people
  • 6.2.2.5 Commission the approved plan
  • 6.2.3 Control the performance
  • 6.2.3.1 Measure performance
  • 6.2.3.2 Evaluate the performance
  • 6.2.3.3 Correct the deviations
  • 6.2.4 Compile the written plan
  • 6.3 PRACTICAL EXAMPLE
  • 6.4 IMPLEMENTATION OF THE METHOD
  • 6.5 CONCLUSION
• CHAPTER 7 CONCLUSIONS AND RECOMMENDATIONS
  • 7.1 INTRODUCTION
  • 7.2 RESEARCH RESULTS
  • 7.2.1 Literature review
  • 7.2.1.1 The all-inclusive management theory
  • 7.2.1.2 Current management practices
  • 7.2.2 Empirical research
  • 7.2.2.1 The research design
  • 7.2.2.2 The research results
  • 7.2.2.3 Evaluation of the sampling results
  • 7.2.3 Development of the theory
  • 7.2.3.1 The new developed theory
  • 7.2.3.2 The comprehensive management classification
  • 7.2.3.3 The planning process
  • 7.2.3.4 The planning structure
  • 7.2.3.5 Development of alternative methods
  • 7.3 COMPARISON OF THE COMPREHENSIVE, PRACTICAL AND INTEGRATED MANAGEMENT METHOD WITH THE ADMINISTRATIVE MANAGEMENT APPROACH
  • 7.4 RECOMMENDATIONS
  • 7.4.1 Recommendations with specific reference to the South African mining industry
  • 7.4.2 Recommendations for further research
  • 7.5 CONCLUSION

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