Mineral Rich Area of South Africa - Case Study Example

?Topic: Mineral rich area but local people are poor: A case of Marikan South Africa Executive summary Areas that are mineral rich are often comprisedof poor people living around especially the workers in the mines. There are many reasons that can be attributed to this scenario which is quite common in different parts of the globe. As such, this paper is designed to evaluate a situation where the members of the community are not direct beneficiaries of the resources that are extracted in their area. The report focuses on the case study of Lonmin Mine in Marikana area, South Africa. This area is rich in platinum and a giant mine operates in there. However, research has shown that local members of the community are not benefiting much from the resources that are mined in their area. It has also been found that the working conditions of the employees are not favourable since the mine has been recently hit by a spate of strikes over pay issues. It has also been found that people who were protesting over improved working conditions were harshly treated and 34 lost their lives after the police opened fire on the protestors. In principle, organizations that extract natural resources in different places should plough back to the members of the community. It has been recommended that the company involved in this case should make efforts to empower the employees in particular so that they can also directly benefit from the natural resources that are obtained from their areas. This can be done through increasing their wages as well as creating community share trusts. This action is designed to fulfil the corporate social responsibility (CSR) concerns of the company. Overview of the topic In most cases, natural resources like minerals are exploited for various reasons. Minerals contribute towards economic growth and development if they are sold to other countries. Through exploitation of mineral resources in a particular area or country, employment is created and the welfare of the people is likely to be improved. There are many benefits that can be derived from extracting natural resources in a certain area. Development of infrastructure can also be promoted if a natural resource that is of commercial value is being mined in a particular area. Essentially, informed companies should make an effort to ensure that their activities also positively contribute to the growth and development of the areas they would be operating in. This can also help to create trust among the local members since they would stand to benefit from the wealth obtained from their backyard. However, this is not the case in some places that are rich in mineral resources since the people living around the area where the minerals are being mined live in abject poverty. This is in stark contrast to minerals millions of dollars extracted in these people’s background but they do not benefit from these resources. This is ironical because local residents in the communities where the precious minerals are mined are poor and they do not directly benefit from the wealth extracted from their backgrounds. This calls for organizations involved in this business to be more accountable and socially responsible for their activities. Essentially, the concept of “CSR maintains that businesses are part of the larger society in which they exist and are accountable to the society for their operations,” (Strydom, 2004 p.11). This means that organisations should strike a fine balance between the needs and interests of customers, needs of the environment and the need for businesses to realise their financial goals. This goes hand in hand with the concept of business ethics which tries to make a distinction between something that is morally good from bad (1994). Apart from inequalities in the distribution of wealth obtained from extraction of natural resources in a particular area, it can be seen that the local community members are also exposed to dangers such as environmental pollution that are directly caused by the activities of the company extracting the resources in that particular area. Different chemicals are used and waste is often disposed in nearby areas and there are likely chances that it can impact negatively on the health of people. Environmental degradation also takes place and it impacts on the welfare of the people living in the area where all these activities are taking place. Against this background, it can be noted that a holistic approach ought to be taken in order to address the imbalances in distribution of wealth caused by giant mining companies operating in certain areas where the local citizens continue to live in abject poverty. This paper is going to illustrate the magnitude of this problem through the use of a case study of Lonmin Mine, Marikana in South Africa. This country is classified as an emerging economy comprising of rich mineral resources but the people living in areas where these minerals are mined are generally poor. Key findings Research has shown that the employees working for Lonmin Mine, a giant platinum miner in the Marikana are of South Africa live in poor conditions as a result of the fact that they are paid low wages. Apart from that, the mining conglomerate is listed on the South African stock exchange and it rakes in millions of Rands in profits annually. However, the working conditions of the ordinary employees remain poor. The events that took place in 2012 at this mine hit the headlines globally when 34 protestors were shot dead by the police. The main reason behind these protests was to press for improved working conditions as well as an increment in wages. Balduaf (2012), says “The shooting of 34 protesting mine workers by South African police has shocked a nation whose leadership sprung from the organized labour movement, and sees itself as the ultimate protector of workers' rights.” This clearly shows the extent to which the workers are poorly remunerated in this part of South Africa besides the fact that platinum has high prices on the international market. Definition of the project Evidence shows that workers in mines in particular continue to live in poverty besides the fact that they work for companies that earn lots of profits from the sale of the natural resources they extract from “poor communities.” Creamer (2012) states that “South Africa had been reduced to a minerals-rich, but mining-poor country, which fantasied about minerals beneficiation for which there was no special business case, Free Market Foundation executive director Leon Louw has told a post-Marikana mining discussion.” The country is endowed with precious minerals but ironically, the citizens especially the workers in this mine in question are poor. It can also be seen that the country itself is not benefiting much from its rich mineral resources that are in abundance. Effort should be made that the local members also benefit from the trade of minerals that have been extracted in their areas. This will help to improve their welfare and they can also contribute to the development of the country if they are empowered to become active participants in the extraction of their resources. The natural resources found in South Africa belong to South Africans but this is not the case since it can be seen that only a few well connected people are immensely benefitting from them. Justification of the problem It is clear that without changing the business mindset, the people in South Africa will continue to live in poor conditions besides the fact that their country is very rich in terms of mineral wealth. This idea is supported by Creamer (2012) who states that: “We have to change the mindset that we’re a mining country. We’re not. We’re a mineral-rich, mining-poor country.” Instead of tapping the wealth to improve the living conditions of the local people who should benefit from the minerals, it can be seen that there are no policies that are designed to empower the members of the community so that they can be masters of their own destiny. The activities carried out by Lonmin Mine should benefit all the stakeholders at the end of the day. The majority of the employees are drawn from the local communities but these people are at the receiving end. Their wages are poor and the working conditions are also bad. This does not reflect that one of the most precious minerals, platinum is mined there. This also means that the workers’ families are also poor since they depend on the breadwinners who are poorly paid by their employers. The other issue that can be noted in this case of Marikana is that there is little development it terms of infrastructure. The social amenities in the area as well as infrastructure are in bad shape as noted by (Balduaf, 2012). This has triggered tension in the area where the local people have resorted to use direct confrontation with the responsible authorities so that their concerns can be taken into consideration. However, this is a bad approach to address such delicate problems since they affect the welfare of thousands of people who live in this area. A long lasting solution should be found so as to address the plight of the residents especially in the above mentioned area. Reflective analysis and conclusion In some cases, resources in a particular place do not benefit directly the employees or the residents living in that area. There are many reasons for this anomaly. The multinational companies in particular that would be operating in such places are only concerned with reaping huge profits from their operations at the expense of the local members. These companies also show little concern for the welfare of the employees who are often relegated to low wages. This leads to poor living conditions and it can be seen that this business practice is unethical. Rousouw (2004) states that business ethics should not be compromised for financial gains. This is likely to discredit the company in the long run and it can be affected by factors such as protests and strikes. These actions are counterproductive and it can be noted that a long lasting solution should be put in place in order to address this problem. In conclusion, it can be seen from the research above that the local people in South Africa are not enjoying the benefits of the profits reaped from the minerals extracted in their backyard. This has resulted in poor working conditions and the employees live in poverty besides “living” on top of rich mineral resources. A holistic approach should be taken in order to address this scenario. Al stakeholders should be involved in the operations of a company that is involved in mining in a foreign land. Therefore, it is recommended that: A policy should be enacted by the government that is meant to empower the local members of the community so that they can also benefit from the resources found in their areas. This can be done through community ownership trusts where the employees can also get money from the revenue generated from the operations of the company. It is also recommended that a minimum wage policy that is in line with the poverty datum line in this country should be enacted. This will result in the employees getting wages that can improve their welfare. This can also improve the living conditions of their families. It is also recommended that the ownership laws in terms of mines should be revised so that they can also include the local members. This will help to empower the residents such that they can benefit from the wealth obtained from the natural resources in their respective communities. This will also help to ensure that the investors in a certain place are accountable for their actions. When local members are involved in the extraction of the resources in their area, they are likely to influence others to positively work towards the development of their communities since they are the ones who will benefit. References Balduaf, S, 12 August 2012, “The real danger for South Africa after Lonmin mine shooting,” Viewed 22 November, 2013 from: . Creamer, M 22 November 2012, “Post-Marikana South Africa mineral-rich but mining-poor – Leon Louw,” Viewed 22 November 2013, from: . Rossouw, D 2004, Business Ethics: 3rd Edition, Oxford University Press: Cape Town. Strydom, J 2004, Marketing. 3rd Edition, Juta & Co Ltd, Cape Town. Weiss, JW 1994, Business ethics: A managerial, stakeholder approach. 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