Without innovation, the mining industry risks being taken over by conglomerates who can innovate. This view was expressed by the incoming CEO of Anglo-American, one of the world’s largest mining companies and parent of DeBeers, when he assumed the CEO role almost four years go.
He said, “Our industry is damned by the fact that our spending on innovation, research and development is one-10th that of the petroleum industry. If we don’t start to bring innovation back and do a hell of a lot better on our cost structures and deliver returns, the major diversifieds will be subsidiaries of General Electric or some other conglomerate that has still got innovation in their vocabulary. We either pick the ball up and innovate or somebody will do it for us.”
So, four years later, how is the mining industry embracing innovation? I was in Cape Town this week for the annual mining Indaba conference. There were high spirits. Commodity prices have reached a three-year peak and the global economy is growing. These are reasons to be cheerful, after one of the worst downturns for the industry in living memory. Most of the big mining majors have shed their CEO’s during this period. Marius Kloppers, Tom Albanese, Cynthia Carrol, Sam Walsh, to name a few.
Some of these individuals were in Cape Town, scouting for the next job. Most notably, there were many more exploration companies in attendance than in previous years– which bodes well for the sector. Mining has very long horizons, so if you aren’t exploring today, you won’t be producing in ten or fifteen years.
I chaired a session at the conference on the theme of mechanisation in the industry. My panel comprised the CEO’s of Zambia’s and Botswana’s Chamber of Mines, as well as the CEO of Royal Bafokeng Platinum and a Director of Government Relations at Anglo-American. We concluded that mechanisation was being adopted slowly in Africa, perhaps too slowly. We worried that Africa’s mining sector might become uncompetitive if it doesn’t adopt some of the technologies that are being introduced to mines in North America and Australia. These include driverless vehicles, robot excavation and location awareness technologies that improve the safety of each employee, which in turn reduces downtime and insurance costs.
Data-gathering and analytical tools are being introduced throughout the sector also, enabling miners to proactively manage environmental and energy inputs and emissions, such as carbon, water, fuel and waste. Company managers can now get a real-time view of their entire operations.
With the growing level of remote automation and computer-driven management, many operations managers might well ask “Couldn’t I run do this job remotely, from our headquarters in London or Toronto or Perth? Which begs the questions, how many local jobs will technology replace? Already drones are being introduced into mining operations and replacing humans with impressive results. Specifically, drones have replaced humans for many dangerous jobs, such as transporting hazardous waste; or monotonous jobs, such and monitoring and reporting.
My panellists in Cape Town concluded that the impact of innovations on unemployment will depend on government policies. To date we have witnessed a tendency on the part of African governments to bury their heads in the sand in an effort to protect jobs. Moving forwards what we need to see instead, is a commitment to protect the workers, not the jobs. Governments must be willing to pay for re-training or retiring of displaced workers. Nordic countries have demonstrated that this gives workers a much greater sense of security and makes them more supportive of technological innovations than workers in Tanzania, Zambia or the United States, for example.
Mining must embrace innovation. It’s good for safety and good for the environment. It’s the only way the industry can remain competitive. We must face a future with fewer people employed in mines. This requires honest acceptance and then concerted efforts to design and execute local economic development and diversification plans, so that communities can find employment in alternative industries.
Marcus Courage is CEO of africapractice, a pan-African strategic advisory group, specialised in political risk, public affairs and strategic communication. www.africapractice.com
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The recent study on youth entrepreneurship in Botswana has identified difficult access to funding, land, machinery, lack of entrepreneurial mindset and proper training as serious challenges that continue to hamper youth entrepreneurship development in this country.
The study conducted by Alliance for African Partnership (AAP) in collaboration with University of Botswana has confirmed that despite the government and private sector multi-billion pula entrepreneurship development initiatives, many young people in Botswana continue to fail to grow their businesses into sustainable and successful companies that can help reduce unemployment.
University of Botswana researchers Gaofetege Ganamotse and Rudolph Boy who compiled findings in the 2022 study report for Botswana stated that as part of the study interviews were conducted with successful youth entrepreneurs to understand their critical success factors.
According to the researchers other participants were community leaders, business mentors, Ministry of Trade and Industry, Ministry of Youth, Gender, Sport and Culture, financial institutions, higher education institutions, non-governmental institutions, policymakers, private organizations, and support structures such as legal and technical experts and accountants who were interviewed to understand how they facilitate successful youth entrepreneurship.
The researchers said they found that although Botswana government is perceived as the most supportive to businesses when compared to other governments in sub-Saharan Africa, youth entrepreneurs still face challenges when accessing government funding. “Several finance-related challenges were identified by youth entrepreneurs. Some respondents lamented the lack of access to start-up finance, whereas others mentioned lack of access to infrastructure.”
The researchers stated that in Botswana entrepreneurship is not yet perceived as a field or career of choice by many youth “Participants in the study emphasized that the many youth are more of necessity entrepreneurs, seeing business venturing as a “fall back. Other facilitators mentioned that some youth do not display creativity, mind-blowing innovative solutions, and business management skills. Some youth entrepreneurs like to take shortcuts like selling sweets or muffins.”
According to the researchers, some of the youth do not display perseverance when they are faced with adversity in business. “Young people lack of an entrepreneurial mindset is a common challenge among youth in business. Some have a mindset focused on free services, handouts, and rapid gains. They want overnight success. As such, they give up easily when faced with challenges. On the other hand, some participants argue that they may opt for quick wins because they do not have access to any land, machinery, offices, and vehicles.”
The researchers stated that most youth involved in business ventures do not have the necessary training or skills to maintain a business. “Poor financial management has also been cited as one of the challenges for youth entrepreneurs, such as using profit for personal reasons rather than investing in the business. Also some are not being able to separate their livelihood from their businesses.
Lastly, youth entrepreneurs reported a lack of experience as one of the challenges. For example, the experience of running a business with projections, sticking to the projections, having an accounting system, maintaining a clean and clear billing system, and sound administration system.”
According to the researchers, the participants in the study emphasized that there is fragmentation within the entrepreneurial ecosystem, whereby there is replication of business activities without any differentiation. “There is no integration of the ecosystem players. As such, they end up with duplicate programs targeting the same objectives. The financial sector recommended that there is a need for an intermediary body that will bring all the ecosystem actors together and serve as a “one-stop shop” for entrepreneurs and build mentorship programs that accommodate the business lifecycle from inception to growth.”
Botswana Housing Corporation (BHC) is said to have recorded an operating surplus of P61 Million, an improvement compared to the previous year. The housing, office and other building needs giant met with stakeholders recently to share how the business has been.
The P61 million is a significant increase against the P6 million operating loss realized in the prior year. Profit before income tax also increased significantly from P2 million in the prior year to P72 million which resulted in an overall increase in surplus after tax from P1 million prior year to P64 million for the year under review.
Chief of Finance Officer, Diratsagae Kgamanyane disclosed; “This growth in surplus was driven mainly by rental revenue that increased by 15% from P209 million to P240 million and reduction in expenditure from P272 million to P214 million on the back of cost containment.” He further stated that sales of high margin investment properties also contributed significantly to the growth in surplus as well as impairment reversals on receivables amounting to P25 million.
It is said that the Corporation recorded a total revenue of P702 million, an 8% decrease when compared to the P760 million recorded in the prior year. “Sales revenue which is one of the major revenue streams returned impressive margins, contributing to the overall growth in the gross margin,” added Kgamanyane.
He further stated professional fees revenue line declined significantly by 64% to P5 million from P14 million in the prior year which attributed to suspension of planned projects by their clients due to Covid-19 pandemic. “Facilities Management revenue decreased by P 24 million from P69 million recorded in prior year to P45 million due to reduction in projects,” Kgamanyane said.
The Corporation’s strength is on its investment properties portfolio that stood at P1.4 billion at the end of the reporting period. “The Corporation continues its strategy to diversify revenue streams despite both facilities management income and professional fees being challenged by the prevailing economic conditions that have seen its major clients curtailing spending,” added the CEO.
On the one hand, the Corporation’s Strategic Performance which intended to build 12 300 houses by 2023 has so far managed to build 4 830 houses under their SHHA funding scheme, 1 240 houses for commercial or external use which includes use by government and 1 970 houses to rent to individuals.
BHC Acting CEO Pascaline Sefawe noted that; BHC’s planned projects are said to include building 336 flat units in Gaborone Block 7 at approximately P224 million, 100 units in Maun at approximately P78 million, 13 units in Phakalane at approximately P26 million, 212 units in Kazungula at approximately P160 million, 96 units at approximately P42 million in Francistown and 84 units at approximately P61 million in Letlhakane. Emphasing; “People tend to accuse us of only building houses in Gaborone, so here we are, including other areas in our planned projects.”