Designing a new value proposition for mining communities

A mining community can shut down a commercial mine with a single match. Yet in many countries in Africa, the relationship between mines and host communities is fraught and can be destructive and hostile.

A global mining major asked Genesis to assist with the conceptualisation of a new value proposition for mining communities for the mining industry.

This was a major project that required extensive research on and around mining communities. Our research showed that while South African law provided communities with a relatively generous material offer, the relationship between mines and communities was in terrible shape. This ignited thinking about process and legitimate representation – rather than material content – in other words, how the relationship is handled, not only how much is given.

We diagnosed a number of challenges in the status quo: poor representation, opaque benefits for certain groups, a frustration with traditional leadership, ad hoc, disparate and limited projects, a culture of paternalism, compliance-led mentality, and a reliance on charity to placate communities.

We then designed a new community-value proposition based on shared-value principles that mixed redesigned processes with new benefits in five pillars. The first pillar was dedicated to process: securing legitimate community representation, the formation of a development partnership with the community and with other interested stakeholders. This would be followed by the creation of a community vision, community master plan, and allocation of roles to everyone, including the community.

The new value proposition was based on shared value rather than charity, on impact rather than compliance, and on a reciprocal agreement between community and mine rather than a unilateral relationship of charity. It focused more on economic development and education than social infrastructure provision, allowed communities to be legitimately represented and to have a say in designing their future.

It recommended investment in value chains that were not even linked to mining, or even in the local area, as long as the value chain was growing and competitive. It also recommended the pooling of community equity holdings into a diversified national fund, to smooth out the volatility of over-concentrated investments in one mine.