New Normal in Unchartered Territory

2020-06-04T07:32:46+00:00 May 29th, 2020|Country in Focus, News|

By Andrew van Zyl, director and principal consultant, SRK Consulting

South Africa’s mining sector will be navigating a path to the ‘new normal’ as the phasing in of mining operations begins – and this will comprise mainly unchartered territory.

The closure of certain mining operations has been unprecedented and caused a jolt to the mining sector, which was even before Covid-19, under extreme financial pressures. Image credit: Leon Louw

The closure of certain mining operations has been unprecedented and caused a jolt to the mining sector, which was even before Covid-19, under extreme financial pressures. Image credit: Leon Louw

However, there are some immediate opportunities to build on, and a legacy of expertise in infectious diseases which can support mining’s efforts to regain its footing.

Immediate impact

The closure of mining operations – with the exception of those deemed of strategic importance – has certainly been an unprecedented jolt to a sector already under various commercial and other pressures. The financial recovery from this point will be complicated by lower demand in the short term, which will further impact on cashflows. Bridging finance may be necessary to sustain business viability in many cases, and interim funding to provide liquidity is foreseeable.

What will give South African mines a little more space to manoeuvre is the sharp drop in the value of the rand as markets deserted a number of developing country currencies. The resulting rand‑ earnings windfall – although it may be short-lived – will be a welcome contribution to propping up lost earnings and subsidising the myriad urgent initiatives related to tracking and containing future Covid-19 infections in the workplace.

The nation-wide lockdown has also given businesses, including mines, some opportunity to plan for how operations might proceed in the ongoing context of potential Covid-19 outbreaks. In this sense, the virus can be seen as yet another risk which must be understood and mitigated – in a sector which suffers from no shortage of operational and commercial risks. Its extensive risk management capability puts it in a good position to develop the necessary protocols to identify infections in good time and to prevent them from spreading.

Many processing plants had to be put on care and maintenance during the national lockdown as a result of the outbreak of the Covid-19 pandemic. Image credit: Leon Louw

Many processing plants had to be put on care and maintenance during the national lockdown as a result of the outbreak of the Covid-19 pandemic. Image credit: Leon Louw

Likely responses

This will involve intensive disinfection routines, frequent testing, speedy contact-tracing procedures and effective isolation facilities. It will no doubt also call for innovative management of staff movements, which may include keeping shifts together as far as possible to avoid transmission between different shift-teams.

Building on its experience of managing other health risks, the sector has already involved a range of experts such as epidemiologists – and will have to develop the necessary systems to focus on who is most at risk and how those groups are best protected. Random testing of asymptomatic employees is likely to receive more attention as a method of minimising infections.

The reality, however, is that localised outbreaks of Covid-19 infections are possible in the future, and these will need to be effectively controlled. These will become an ongoing risk that mining companies – indeed all sectors – will have to manage as part of our post-Covid working environment. This may require mines to develop plans for the part-closure of certain sections, to contain outbreaks while allowing general production to continue. It could be that stop notices may even be issued – much like Section 54 notices – that require mines to prove that certain procedures have been followed in the event of a Covid-19 infection being discovered.

Risk management

The question is whether mining companies will be able to manage the health requirements like social distancing when workers venture underground into confined spaces. Image credit: Leon Louw

The question is whether mining companies will be able to manage the health requirements like social distancing when workers venture underground into confined spaces. Image credit: Leon Louw

Effective risk management is really the only way that mines have ever operated successfully, and this bodes well for their ability to deal with the latest threat to health and safety. It should also be appreciated that large organisations like mines are in fact better placed than many others to adapt. This may seem counter-intuitive, given their large numbers of employees often gathered in confined spaces. Mines will usually have the resources and the scale to explore innovative solutions, and to apply these in iterative and responsive ways. Many smaller businesses, which experience similar exposure to the risk, lack the flexibility and resources to protect themselves.

Mines have already pioneered testing and treatment for a range of reasons. Alcohol and drug testing, for example, is conducted to ensure responsible operation of machinery. Other testing has been to manage Tuberculosis outbreaks and facilitate treatment for HIV-positive employees while maintaining confidentiality. There has even been, in some instances, roll-out of treatment to families in the case of HIV infections. Community engagement is an important aspect of treatment protocols, and the mining sector has programmes for active engagement that can be adapted for this new threat.

Stakeholder engagement

The management of the Covid-19 risk will also demand from mines a high level of stakeholder engagement, especially when it comes to managing infection outbreaks in the mine community. When government lifts its lockdown regulations, the responsibility for applying and managing isolation protocols in public spaces is likely to fall on the main employers in an area – when isolation is required for people who have contact with infected mine employees, for instance.

In these situations, mines will need to communicate their Covid-19 messages with clarity and trust. They will also need to understand how their stakeholder communities perceive the issues and risks at hand, in order to effectively communicate the reasons behind the need for isolation and other controls. For example, it will not be possible to show whether an employee was infected by a community member or vice versa, but there will be pressure on the mine to prevent the infection from spreading. Should there be rolling lockdowns as a result of localised infection outbreaks – potentially leading to the mine being temporarily closed – the mine may be blamed for the economic impact on surrounding businesses. This could lead to immense pressure from the local business community, which could threaten the mine’s social licence to operate.

Without a foundation of prior collaboration and sound communication channels, it will be difficult to ensure community buy-in and cooperation in addressing infection outbreaks and their impacts.

Supply chains

While mines themselves have various options to pursue in managing Covid-19 risks on site – and to an extent in their surrounding communities – there are aspects of their supply chain that will prove less controllable. It is not clear, for example, how or when the bi-lateral arrangements between countries will be reinstated to allow free movement of goods and people. Moving copper cathode from Zambia or the Democratic Republic of Congo to the port of Durban represents the kind of logistical challenge that requires high-level national decisions.

It is likely that South Africa will be forced to select the countries we can travel to – but this selection may often be at the expense of other countries. We might only be able to travel to the EU, for instance, if we keep our borders with other sub-Saharan countries closed. Similarly, we could be forced to choose between travel to China, on the one hand, and to the US or Europe, on the other – depending on policies they decide to adopt. This could have significant impacts on the trading ability of South African service providers who are active in Africa. Certainly, the opening of borders globally is likely to be an uneven process fraught with trade-offs and bureaucratic delays – with inevitable flare-ups of infections impacting on countries’ decisions regarding cross-border access.