South African Mining Companies Research Articles

Statistical analysis of gold production in South Africa using ARIMA, VAR and ARNN modelling techniques: Extrapolating future gold production, Resources–Reserves depletion, and Implication on South Africa's gold exploration

South African gold mining is one of the main contributors to the country's economic growth and employment creation. Assessment of future gold production is pivotal for positioning the country's supply security and contribution to the projected global demand. In this study, we modelled and forecasted South African and global gold production trends (1990–2022) using the Autoregressive Integrated Moving Average (ARIMA), Vector Autoregressive (VAR), and Autoregressive Neural Network (ARNN) techniques. The study also evaluated the impact of annual productions on the collated reserves (2008–2021) and the contribution of resource–reserve conversion in sustaining gold reserves within the South African goldfields. The ARIMA (1,1,0) model, based on root mean square error (RMSE), mean absolute error (MAE), and mean absolute percentage error (MAPE), outperformed both ARNN (1,1) and VAR (2) methods. The forecast of the ARIMA model showed an increase in South Africa's gold production, with a compounded annual growth rate (CAGR) of ∼0.6%. The model also predicted an increase in global gold production, with CAGR of ∼2.2%. The analyses of reserves–production trends showed that most South African mining companies have been depleting their gold reserves due to production and were minimally converting resources to reserves, averaging at ∼2%/year from 2017 till present. The minimal conversion may also reflect the challenging mining conditions (such as mining depths and underground flooding) and the mining industry's socio-political dynamics. We demonstrated that, if the resource–reserve conversion factor is maintained (at ∼2%/year and above), the forecasted production may sustain the current reserves (at > 2000 t Au excluding tailings) but deplete ∼27 % of the resources to reserves by 2040. However, if the conversion factor continues to decline (to <1 %), the forecasted gold production will reduce the reserves to < 500 t Au with ∼3% of the resources converted to reserves.

Introduction

It is my pleasure to introduce Volume 25, No. 2 of Enterprise and Society. In this issue, we are pleased to present a special section on “Corporate Responses to Racial Unrest,” guest-edited by Michael Thate and Tyesha Maddox. The section commences with a scene-setting introduction from the guest editors, followed by three papers. The first is from Keith Hollingsworth on the aftermath of the Atlanta race riot of 1906, followed by Mattie Webb on an exercise in the art of the possible, waging the battle against Apartheid in South African workplaces. This section is rounded off by Sethulego Matebesi’s exploration of responses to civil society mobilization among South African mining companies. Taken together, these four essays break important new ground and indicate promising lines of future research.

Mining corporate boardrooms still a male club? Experiences and challenges faced by South African women

Calls for transformation in the mining sector are legislated. Whilst the composition of boards in terms of gender diversity and equal representation has improved, little is known on how women directors experience boardrooms. This research investigated the experiences of South African women in male-dominated mining boards. It questions why women remain marginalised in boardrooms, even when they are qualified as the men in their respective fields. The experiences of South African women on male-dominated mining boards were investigated by means of a multiple case study using a qualitative research methodology. Interviews were conducted with 16 women and 12 men serving across six JSE-listed South African mining companies. The findings show that irrespective of their qualification and experience, women's, contributions are often ignored, and they are assigned to more social roles. Regardless of race, all women experienced gender stereotyping. Strategies are required to ensure that board cultures embrace female talent, where women can effectively contribute to decision-making and maximize their talent. It is argued that gender and identity should be studied in relation to post-colonial history in African countries. Women have multiple, varying identities, and their experiences require a unique investigation that would enable strategies to overcome barriers, through the implementation of an appropriate diversity management programme.

Relationship between executive remuneration and performance of South African mining companies

Orientation: Managers are supposed to manage companies to maximise shareholders’ wealth. Instead, there are long-standing perceptions that managers are rent extractors who maximise their own wealth, implying a misalignment between executive remuneration and company performance.Research purpose: The purpose of this study was to determine the existence of a relationship between executive remuneration and the financial performance of South African-listed mining companies.Motivation for the study: Executive remuneration significantly increased over the past five decades relative to company financial performance. The mining sector was selected due to its susceptibility to external factors and shocks leading to volatility in the financial performance of mining companies.Research approach/design and method: This study was a quantitative archival study, using data from 2015 to 2021, by applying the hierarchical linear modelling technique at a 95% confidence level and a 5% significance level.Main findings: The study found a weak to strong relationship between executive remuneration and company financial performance. Furthermore, an analysis of executive remuneration revealed an increase in short-term incentive payments and a decrease in the fixed salary as a proportion of chief executive officer remuneration.Practical/managerial implications: Because the study found a strong link between executive remuneration and earnings-based financial performance metrics, governing bodies should ensure that financial performance metrics include cash flow-based financial metrics as company earnings are highly susceptible to management manipulation.Contribution/value-add: This study contributes to the existing literature on executive remuneration and will be useful to researchers, shareholders, boards of directors, remuneration committees and policymakers.

Artisanal mining and its drivers in the South African context

In South Africa, Zama Zama mining is a colloquial term referring to artisanal mining. This type of mining is illegal, seeing that these mining activities are conducted without a mining license. Zama Zama mining is often associated with several social ills, for example, issues related to the miners’ health and safety, environmental deprivation, child labour and the occurrence of violence and conflict within the sector. South African mining companies and law enforcement officials tend to view the solution to these problems to lie in policing this sector but are achieving little success. This article suggests an alternative, more proactive approach by exploring the drivers of artisanal gold mining in South Africa and ascertaining the responsibilities of mining companies in mitigating the drivers. A re-examination of Zama Zama mining's marginalisation could replace the current reactive ways pursued through policing and criminalising the sector with more sustainable and proactive approaches to address the sector's problems.

The Nexus Between Environmental Management Accounting Practices and Financial Sustainability of Cement and Mining Companies in South Africa

The main purpose of the study is to investigate the relationship between environmental management accounting practices (EMAP) and financial performance of South African cement and mining companies. To attain the major objective of the research, three hypotheses were tested based on data from 45 JSE-listed cement and mining companies from 2010 to 2021. Multiple regression analysis with the assistance of IBM SPSS Statistics 24was also used to test the hypotheses. The study found that two accounting measures namely return on assets and net profit margin had no significant relationship with EMAP. However, the study also revealed that one accounting based measure namely return on equity had a positive and significant relationship with EMAP. This signifies that EMA is still at its primary stages in South Africa. In addition, the results also suggest that EMA is important to accomplish sustainability. The results provide managers with empirical evidence of EMAP that increases financial sustainability in the context of an emerging economy such as South Africa.

Environmental, Social and Corporate Governance (ESG) on the Financial Performance of Listed Mining Firms in South Africa

Purpose: This study aimed to determine the relationship between the environmental, social, and governance factors (ESG) and the financial performance of mining firms within South Africa. Prior research has focussed primarily on the ESG components and lacked further investigation on the sub-components of ESG as it applies to specific sectors. Design/methodology/approach: Convenience and judgment sampling were used to draw a sample from a publicly available database. Based on a criterion for robust analysis, 13 of 41 JSE listed mining companies were selected. This study used a two-way random effects panel regression analysis to determine the relationship between ESG variables and firm financial performance on JSE-listed mining firms, in South Africa from 2008 to 2020. Findings: There was no statistical relationship between overall ESG score and firm performance. However, only the Governance score illustrated a statistically significant relationship with financial performance. Within the sub-components, the following had a significant negative relationship with firm performance: emissions; environmental innovation; working conditions; and shareholder responsibility. However, human rights and CSR strategy significantly positively correlated with financial performance. Research limitations/implications: This research was conducted specifically on South African mining companies, and therefore cannot be generalised to other industries or markets in developing and developed countries. Managers and policymakers within the mining industry should consider the practical implications and interpretations of the findings and may offer incentives to implement improvements regarding emissions, environmental innovation, and working conditions. Originality/value: This research delved deeper into the sub-components of the ESG pillars to get a better understanding of each sub-component on firm performance.

Influence of environmental management accounting practices on the environmental sustainability of South African cement and mining companies

Most companies in emerging economies need to be more conscious of environmental initiatives such as environmental management accounting practices (EMAP) that can effectively improve environmental sustainability. Therefore, this study investigates the effect of EMAP on the environmental sustainability of listed South African cement and mining companies. To achieve the aim of the study, 45 Johannesburg Stock Exchange-listed cement and mining companies were sampled based on data extracted from the annual integrated reports, financial statements, environmental and sustainability reports from 2012 to 2021. IBM SPSS Statistics 24 was used to analyze the relationship between EMAP and environmental sustainability. The results show that two environmental sustainability proxies, water consumption and recycled water, are significantly and positively related to EMAP. However, carbon emissions (p &amp;amp;lt; .061) insignificantly influence environmental sustainability. This suggests that some EMAP used by the sampled companies are inadequate to amplify environmental sustainability. The paper is essential to provide empirical evidence that managers of the cement and mining companies in South Africa need to devise better and new EMAP to reduce carbon emissions.

Statistical modelling to predict silicosis risk in deceased Southern African gold miners without medical evaluation

The Qhubeka Trust was established in 2016 in a legal settlement on behalf of former gold miners seeking compensation for silicosis contracted on the South African mines. Settlements resulting from lawsuits on behalf of gold miners aim to provide fair compensation. However, occupational exposure and medical records kept by South African mining companies for their employees have been very limited. Some claimants to the Qhubeka Trust died before medical evaluation was possible, thus potentially disadvantaging their dependants from receiving any compensation. With medical evaluation no longer possible, a statistical approach to this problem was developed. The records for claimants with medical evaluation were used to develop a logistic regression prediction model for the likelihood of silicosis, based on the potential predictors: cumulative exposure to respirable dust, age, years since first exposure, years of life lost prematurely, vital status at 31 December 2019, and a history of tuberculosis diagnosis. The prediction model allowed estimation of the likelihood of silicosis for each miner who had died without medical evaluation and is a novel approach in this setting. In addition, we were able to quantitatively evaluate the trade-offs of different silicosis risk classification thresholds in terms of true and false positives and negatives. Significance: A statistical approach can be used for risk estimation in settings where the outcome of interest is unknown for some members of a class. The likelihood of silicosis in deceased miners without medical evaluation in the Qhubeka Trust can be accurately estimated, using information from finalised claims. Strategies for classifying the silicosis status of deceased miners without medical evaluation in the Qhubeka Trust can be assessed in a rigorous, quantitative framework.

Water-related sustainability reporting practices amongst South African mining and non-mining corporations

Globally, water resource management has emerged as an important research area and is acknowledged as a crucial factor in achieving sustainable development goals. Despite its significance, water-related sustainability disclosures regarding water and water-related risks among companies are alarmingly weak. Many companies are not effectively measuring, managing, and disclosing their water-related risks. Hence, this paper aims to analyze water-related reporting and disclosure requirements of a sample of ten South African mining and non-mining companies with a high water profile, listed on the JSE Socially Responsible Investment Index. The companies’ level of compliance on water disclosure was assessed based on their reporting in the integrated and or annual reports. The findings revealed that sampled five mining companies performed poorly in terms of disclosure across the frameworks of awareness, disclosure, management, and leadership. On the other hand, the selection of five non-mining companies grasped the severe effect of the water crisis on their businesses and performed better in all the framework categories. The average score for the selection of mining companies was 65% compared to the 93% for the non-mining companies. Stakeholders need to focus on water governance processes that require improvement to enable the stakeholders to make better decisions on water management; subsequently, this is an area that needs to be addressed in future research.

A cost-benefit analysis of implementing a 54 MW solar PV plant in a South African platinum mining company: A case study

A reliable and secure supply of energy is a prerequisite for adequate output and economic growth – especially in a platinum mining company. With exponential tariff increases, inadequate power supply leading to power cuts, and a carbon tax introduction, this study compared the costs with benefits by implementing a 54 MW solar photovoltaic (PV) plant. Two scenarios were compared over the same 20-year period in a case study of a South African platinum mining company operating in the platinum belt of Rustenburg. The first scenario was grounded upon the decision to proceed with the conventional manner of sourcing electricity from Eskom, South Africa’s power utility. The second scenario assessed the implementation of a 54 MW solar PV plant. The findings reveal that the company could generate 2 439 753 MWh of clean energy over 20 years with an investment of ZAR 910 857 920, giving a ZAR 563 205 994 (11%) carbon tax saving and a ZAR 5 614 426 335 (10%) reduction in electricity costs. Further, installing the solar PV plant could reinforce the company‘s dedication to protecting the environment and creating job opportunities through the employment of staff to install and maintain the plant.

Water-Related Sustainability Reporting Practices Amongst South African Corporations

Globally, water resource management has emerged as an important research area and acknowledged to be a crucial factor towards achieving the sustainable development goals of organisations. Despite its significance, water-related sustainability disclosures regarding water and water-related risks among companies are alarmingly weak. Many companies are not effectively measuring, managing, and disclosing their water-related risks. Hence, this paper aimed to analyse water-related reporting and disclosure requirements of South African mining and non-mining companies with a high water profile, listed on the JSE’s Socially Responsible Investment Index. Using the qualitative approach, the companies’ level of compliance in terms of water disclosure was assessed. The findings revealed that mining companies performed poorly in terms of disclosure across the framework’s awareness, disclosure, management, and leadership categories. Stakeholders need to focus on water governance processes that require improvement to enable the stakeholders to make better decisions relating to water management.

The impact of the integrated reporting framework on corporate social responsibility (CSR) disclosures – the case of South African mining companies

PurposeDespite initially being lauded as a revolutionary approach for companies to account to all stakeholders, the shareholder orientation of the international integrated reporting (<IR>) framework gave rise to questions about whether integrated reports would still sufficiently disclose pertinent corporate social responsibility (CSR) information. This paper aims to investigate the extent to which the <IR> framework has impacted the CSR disclosures contained in integrated reports of South African mining companies.Design/methodology/approachThe study deployed a mixed methods research approach, involving thematic content analysis of the CSR disclosures contained in the integrated reports of mining companies with primary listings on the Johannesburg Stock Exchange. The resultant qualitative data were subsequently analysed using a T-test of difference.FindingsThe study observes that the release of the <IR> framework appears to have had a limited impact on the CSR disclosures in the integrated reports of most companies included in the study. However, where significant differences were identified, the CSR disclosures of some companies were positively impacted after the release of the <IR> framework, whilst others were negatively impacted.Research limitations/implicationsAs South Africa is acknowledged as a leader in the global <IR> movement, the paper’s observations have global relevance and suggest that the fundamental principles of <IR> should be reconsidered to improve the alignment with stakeholders’ information needs, as originally conceived.Originality/valueDespite the shareholder orientation of the <IR> framework, the global mining industry is acknowledged as being at the forefront of implementing CSR interventions to mitigate the adverse impacts of their operations on stakeholders, supporting a stakeholder orientation. As the adoption of <IR> continues to gain traction around the world, this paper’s contribution is that it represents one of the few papers to use the global reporting initiative G4 indicators to specifically examine the impact of <IR> framework on the CSR disclosures on the South African mining industry, where both <IR> and CSR reporting are quasi-mandatory disclosure requirements.

Linking sustainability reporting to sustainability performance through regulation

Greenwashing tendencies within a highly regulated mining industry may be a challenge. Therefore, underpinned by stakeholder theory, this study evaluates whether sustainability reporting (SR) by South African mining companies is linked to actual sustainability performance (SP). The study is confined to three sustainability dimensions namely, community development, employee welfare, and environmental protection. The objectives of the study were to create linkages between SR and SP; and to understand the SR-SP factor structure. Descriptive statistics, exploratory factor analysis, the pairwise t-test, a structural equation model and Cohen's D were employed. Regulation on its own has a small effect on reducing greenwashing, therefore, arguably there is a need to explore other stakeholder-centric regulatory mechanisms to reduce the perceived SR-SP gap. Future research could investigate the effects of greenwashing from a multi-stakeholder perspective.

THE STRATEGIC COMPETITIVENESS OF THE SOUTH AFRICAN MINING INDUSTRY IN THE AGE OF THE FOURTH INDUSTRIAL REVOLUTION

The South African mining industry has a history of a range of major challenges, including high operating costs that have had a negative impact on mines’ profitability and financial sustainability. The advent of Fourth Industrial Revolution technologies has opened up new opportunities for the mining industry, among other things, to improve its cost-effectiveness and future competitiveness. Most South African mining companies have begun to adopt Fourth Industrial Revolution technologies; however, quite a large number of their projects have not been successful. The main objective of the paper is to conduct an integrative literature review to determine why some of the companies in the minerals, mining, and processing industry have not been successful in implementing Fourth Industrial Revolution technologies. The findings of the study outline areas of organisational and technological capability on which the industry could focus when developing future innovation strategies.

Public disclosure of mine closures by listed South African mining companies

AbstractThe demand for transparency in the mining sector has increased since the 1980s. Our study focused on the public reporting of four South African mining corporations and their disclosures on mine closure. South Africa was identified based on its history of mine abandonment. We found that reporting on mainstream environmental and financial matters, companies disclose little about the social aspects of mine closure. External reporting norms have evolved, with a widening scope of reporting themes presented in strategically parsimonious language. Reporting themes speak to where companies, and transparency initiatives, receive greatest external interest and much of the content in company sustainability reports appear to service this demand. This pattern is manifestly challenging for the social aspects of mine closure, where reporting is minimal and reveals little about the timing of proposed changes to the mine lifecycle, the anticipated societal effects, and how the company will address these.

A conceptual framework of organisational alignment to improve South African mining companies

A conceptual framework of organisational alignment to improve South African mining companies

Evaluating the temporal dimension of legitimisation strategies

PurposeThe purpose of this study is to examine how social disclosures by one of the world’s largest producers of Platinum Group Metals are used to maintain and repair legitimacy in the context of South Africa’s prevailing socio-economic conditions and in response to the immediate challenge to legitimacy posed by violent worker demonstrations taking place at its operations in Marikana during August 2012. This is done to highlight how legitimacy strategies take account of the temporal characteristics of a threat to legitimacy and how these, in turn, may constrain the need for far-reaching organisational change.Design/methodology/approachSuchman’s (1995) outline of legitimacy theory and Laughlin’s (1991) model of organisational change provide a frame of reference for a detailed thematic content analysis which identifies the use of different strategies by an organization to respond to threats to its credibility and how these impact, resulting changes to business philosophies, policies and systems.FindingsThe study highlights the temporal dimension of legitimisation strategies. Social-related disclosures provided by the case entity in response to labour unrest are aimed at addressing both the episodic and continual threat to legitimacy resulting from the unfavourable event. These also have the effect of limiting the extent of internal changes to select business policies and sub-systems. Carefully managing legitimacy allows the case entity to avoid the need to reformulate its business ethos.Research limitations/implicationsThe study deals only with a single case organisation. Although the emphasis is on highlighting themes and principles, results are not necessarily applicable in different contexts. Related to this, although the study deals with a major South African mining company, it does not prove the relevance of local cultural differences to the legitimisation process.Originality/valueThe study dispenses with the use of proxies, such as frequencies of disclosures, to demonstrate how organisations use non-financial reporting to secure legitimacy. Instead, it offers a detailed account of how different sub-sets of legitimacy are being mobilised in corporate reports response to long-term and episodic legitimacy considerations. In addition, the study offers one of the first interpretive accounts of how strategies used to manage legitimacy may constrain the potential of a material external shock resulting in internal organisational change. Finally, the study offers one of the first examples of the operation of legitimacy and organisational change theory from the African Continent.

Corporate social responsibility reporting by South African mining companies: Evidence of legitimacy theory

This paper offers evidence on the relevance of legitimacy theory for explaining changes in the frequency of corporate social responsibility (CSR) disclosures by South African platinum mining companies following violent strike action during 2012 at Marikana. The results show that all of the South African platinum mining companies provide additional information dealing specifically with the strike taking place at Marikana. This is more pronounced for the company directly involved in the incident. The research also finds evidence of a reaction to the social event by other companies in the South African Platinum Industry which alter the nature and extent of general CSR disclosures to maintain legitimacy. In this way, the study offers evidence in support of the relevance of legitimacy theory for explaining changes in CSR reporting. The findings of this study complement existing research which has ignored the South African market. Although there has been some work on legitimacy theory in the context of environmental disclosure by South African companies, the study is the first to examine a significant social event using legitimacy theory as the frame of reference.

Assessing the potential impact of the Marikana incident on South African mining companies: An event method study

This study examines the potential impact of industrial unrest and the outbreak of violence at Marikana on 16 August 2012 on the share prices of mining companies listed on the Johannesburg Stock Exchange (JSE) using an event methodology. Contrary to expectations, the Marikana incident does not appear to have had a widespread and prolonged effect on the South African mining sector. This may be the result of the strike action already having been discounted into the price of mining shares, implying that the market was only reacting to the unusually violent (but short-lived) protest. Alternately, the results could be indicative of investor confidence in the corporate social responsibility initiatives of the South African mining industry as a whole. This paper is the first to examine the potential impact of the Marikana incident on the share prices of mining companies listed on the JSE. It should be of interest to both academics and practitioners wanting to understand how share prices react to exogenous events. It is also relevant for corporate-governance researchers concerned with the relevance of social and governance practices in a South African setting. This research is faced with the limitations associated with most statistical research: that causality cannot be ascribed to tested relationships. Notwithstanding these limitations, it is argued that these findings are important, given the significant coverage of the Marikana incident and the ongoing debate on the need for corporate social responsibility.