Ed's letter

Change is in the air

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Welcome to another edition of Mining Prospectus, with change in the air, as we approach the half-way mark on 2016, is there hope for 2017 being the turnaround year for the battered mining industry in Southern Africa?

Speaking to some of the finest minds over the last couple of months, there is an impression that things can get better, with a few fundamental changes to the system.

The first being the awarding of government contracts, which are far too often politically motivated, and not based on who can do the best job, for the lowest price, whilst not compromising on quality.

This ethos runs true in the mining sector, which is rife with constant labour troubles. This is because the government of our time has a key alliance with a trade union. That alliance was essential in bringing about meaningful change in South Africa, but is arguably getting in the way of economic progress in recent times.

For any economy to truly strive, one needs to be able to hire good people easily, and also get rid of bad employees without a plethora of red tape. We often talk about attracting FDI, but this is a key concern that overseas investors are looking at. France is losing a lot of contracts, with large companies relocating to London, with more lack labour laws.

A fair proportion of the mining workforces in strong union industries are often bloated and unnecessary. What you need in 2016 is a smaller group of skilled workers, with more mechanisation, which unfortunately means job losses.

Alternatively, you could use the truck assembly model. Many of South Africa's truck assembly plants have not fully mechanised, rather giving every factory worker a small job, within the bigger job of building each truck. The Kaizen philosophy, which companies like Isuzu trucks use, points out the need for a tidy and organised work-area and strict time schedule.

The Kaizen philosophy, defined as a style of continuous business improvement made in small increments, originated in Japan. The idea focuses on improving processes and products while using employee creativity to help define the way procedures and systems can be improved.

It is refreshing to see some of South Africa's largest mining companies investing in onsite renewable energy solutions, taking a lot of the guess work out when operating in rural parts of Africa, with intermittent electricity.

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