By Dr Thulasizwe Mkhabela
The South African economy is at a crossroads where synergies through backward and forward linkages are needed like never before. Gone are the days when sectoral focus without having an economy-wide outlook would suffice. The need for a cross-sectoral approach cannot be more apparent than in the case of mining and agriculture.
Interestingly, mining and agriculture are often juxtaposed against each other as competing for existence, especially by proponents of each sector and political players with vested interests. It is not surprising that there is often perceived competition between the two sectors as they are both vying for the same limited and non-renewable resources such as water and land.
However, with careful planning and forward thinking, the two can co-exist harmoniously and engender sustainable economic trajectories in affected communities. Mining can be viewed as a sunset industry, while agriculture can be seen as evergreen into the foreseeable future.
On the one hand, the mining industry has been the mainstay of the South African economy for at least 50 years. However, the bright spark from this industry has been waning and the decline is expected at an accelerated pace given that natural resources as minerals are non-renewable. Thus, the mining industry can be seen as a declining sector, notwithstanding its continued importance to the South African economy.
During the 1970s and 1980s the mining industry reached its pinnacle contributing a whopping 21% to the gross domestic production (GDP). In 1987, employment in the industry peaked at more just over 760 000 people, declined to slightly more 538 000 in 2012 and had declined to just more than 490 000 people employed by 2015.
Agriculture, on the other hand, remains an evergreen sector despite having a similar trend to mining in terms of its contribution to the South African GDP. For example, agriculture slipped in ranking to fall from seventh to 10th place, contributing 2% to the GDP in 2016.
However, proponents of the agriculture sector contend that the sector’s contribution to GDP measurement is adversely skewed against the sector in that in does not take into consideration the backward and forward linkages agriculture has in the economy. For example, the hospitality, food, and beverage sectors are accounted for as stand-alone contributors to GDP disregarding the fact that these are joined at the hip with the agricultural sector.
Therefore, it is safe to say that the agriculture sector’s value transcends the captured contribution to GDP. For example, the sector employed about 868 000 people in 2021, posting a 17.3% increase compared to 2013.
There is no doubt that all mining activities come to an end at some point when the mine reaches the end of what is known as the Life of Mine (LOM) in mining circles. Thus, it is imperative for all mining houses and operations to put in place alternative economic activities in mining affected areas to supplement the benefits from mining activities and both economic and social sustainability beyond the Life of Mine.
Failure to do this results in over-dependence on the mine for social, employment and other economic purposes which invariably results in towns and mine-affected areas experiencing severe economic depression and atrophy when mining activities cease. This often results in the phenomenon of “ghost towns”, where employment and economic activities plummet and large portions of the population and local businesses migrate to areas with better economic and social prospects.
The process of ensuring that that the economy is diversified in mining areas is also legislated by the Department of Mineral Resources and Energy (DMRE) through the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) as amended which stipulates that mining companies, as part of compliance with their license to operate must put together and fund a social and labour plan (SLP) to stimulate economic activities and support both its labour and communities within the mine’s sphere of influence (where the mine operations are situated and adjacent labour-supplying areas).
These initiatives are often referred to as social transition or social closure during the closure of the mine. It is important that these interventions are implemented from the inception of mining activities throughout the LOM to ensure sustainability and longevity beyond the operations.
Agriculture, although not a panacea, offers mining houses an appealing option for social transition. So long as there are people there will always be market for agricultural products, either as intermediary inputs for further value addition or as consumption products in themselves.
Agricultural activities also easily lend themselves to assisting with the rehabilitation of land that has been denuded by mining activities, while being economic and social activities in themselves. However, as a caveat, agricultural interventions should be coupled with other economic activities such as tourism, SMME and entrepreneurship support programmes such as enterprise development for holistic development.
Host communities that have grown dependent on mining operations will experience considerable socio-economic impacts at a mine closure. Hence, it is important for all stakeholders involved to ensure that social transition activities are initiated early and only done as a compliance exercise closer to mine closure.
Mining houses are encouraged to enlist the support of development consulting companies with the requisite expertise to supplement their internal social performance endeavours.
Dr Thulasizwe Mkhabela is an independent agricultural researcher and policy analyst with extensive experience on South African and African agricultural and development issues, including stakeholder engagement and social transitioning in mining. He is also a director and senior researcher at Outcome Mapping: [email protected].
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