Mine Community Trusts - who benefits?

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Wednesday, 17 January 2018
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This article was originally posted on LinkedIn on 19 June 2017:

The Mining Charter (June 2017) makes reference to the need for mine communities to be awarded shares. Whether or not this version of the charter passes the legal challenges it will no doubt face in coming weeks and months, it cannot be disputed that community development for mine-affected communities, whether through a mechanism of share ownership or not, is vital. However, the proposal that the communities’ share be held in trust, raises concerns. One wonders how this will differ from the funds currently held in trusts for mine-affected communities, and more importantly whether the communities will actually have a say in the matters related to their trusts and who will ultimately benefit from these trusts.

Just recently I brought up the topic of mine community trusts for a prominent South African gold mining company’s affected communities at the company’s AGM. It was not a matter that was brought into the AGM sphere out of the blue, I had been asking questions, as a shareholder, about these trusts since October 2016. Responses from the CEO and EVP Sustainable Development had been vague, promising to investigate, and in March 2017 I was referred to the trust administrator, whose responses have been even vaguer bordering on non-existent. Responses at the AGM from the company’s chairperson, a prominent political and community activist, and the chairperson of the social & ethics committee were quite defensive, claiming that the trusts are set up as independent and that the company has no control over what happens. “What bollocks!” one is tempted to say out loud. If the trusts are independent, administered by an administrator and governed by trustees who have no connection to the community, who is keeping an eye on things? The situation with these trusts are that the community members (both under the shadow of the headgear and from labour sending areas) are not represented anywhere, not in its administration nor in its governance, and the company who formed these trusts now claim they have no control over the trusts and the outcomes as the trusts are independent entities. So one wonders who has control over the trusts? The predominantly white Johannesburg legal firm that is appointed as the administrator? The white consultant, not from the area, who has been appointed to deal with some of the community issues? The trustees who are not from the area and not representative of the beneficiaries? How would anyone, whether a community member or a company shareholder, know what is really going on?

The basic questions which have not been answered by the company’s board (despite promises at the AGM to do so), senior management or the trust administrator are:

1)     Are there any annual or quarterly non-financial reports that is available to be scrutinized by community members? If so, how do they access these?

2)     What are the amounts spent thus far on host community projects, what are the amounts spent thus far on labour sending community projects? What amount spent on administration and trustee fees to date?

3)     What sum of money is reserved for this current year for host community projects, and what sum of money is reserved for labour sending community projects?

4)     What infrastructure projects are implemented via the community trusts in host community as well as in labour sending areas?

5)     How do ex-mine workers directly benefit from these trusts?

6)     Community members felt that the education trust could be used to also upskill ex-mine workers instead of concentrating only on the youth and bursaries. Linked to (6) above, is this being addressed? And if so, how?

7)     Why are community members not represented on the management of the trust, i.e. as trustees?

8)     How often are there meetings with communities discussing the affairs of their trusts, both in host communities and in labour sending communities? Do the trustees allow members of the communities to be present at trustee meetings? What access do community members have to trustees and to the administrator if they have queries?

9)     What are the criteria used for selecting projects when considering proposals from local community organizations? How many such projects have been approved and what is their nature?

If this is how a company that claims to be a responsible corporate citizen handles the trusts created for the development of its affected communities, one shudders to think how future trusts will be handled. 

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