Why Mining Companies in Africa Need Next-level Leadership
The mining industry faces complex challenges, especially in Africa. Leaders will need to dig deep to deliver.
There may be industries that have similar degrees of complexity to mining. But being the chief executive or chief operating officer of a mining company exploring or extracting in an emerging economy, Africa in particular, is surely one of the most challenging roles in business today.
What are the ambits of concern, the areas where acumen and focus is vital? What attributes are needed by those in the C-Suite of, or a senior manager in, a mining company? How will they drive Africa’s mining industry towards new horizons?
Let’s be clear: mining is, first of all, a business. The management team of any operation, whether regionally spread or localised, must prioritise profits. This means that leaders need to understand global capital and commodities markets, know how to hedge their volatility, manage the cost side, and have the acumen and motivation to chart growth, whether this involves acquisitions, beneficiation, diversification or exploration.
Recent industry performance data shows the scale of the challenge. Hit by dips in commodity prices, in aggregate the world’s top forty mining companies’ 2023 revenues fell by 7% versus 2022; the impact, together with rising costs, caused their combined earnings before interest and tax (EBITDA) to drop by 26%.[1] Forecasts for the full year 2024 reflect only pockets of positivity. The prices of five key metals and minerals – coal, copper, gold, iron ore and nickel – flatlined on an inflation-adjusted measure between 2019 and the end of 2023, and whilegold has leaped since March this year on the back of global geopolitical uncertainty and stubbornly high interest rates, the overall industry is in a phase of circumspect consolidation. Industry players will need to be innovative, strategically sound and tactically astute.
Planning is everything, but plans are nothing. When Dwight Eisenhower, Supreme Commander of the Allied forces in Europe during World War 2, said this, he meant that risk is pervasive, and in any ambit of human endeavour, including running a business, unforeseen hurdles are inevitable. Literally, nothing ever goes as planned.
This creates immense challenges in mining which, by nature, necessitates long-term plans, huge capital investments, intricate logistics, and, often, the involvement of thousands of people. The industry’s best leaders have two apparently contradictory character traits to deal with mining’s inherent uncertainties. One is to dislike risk – not as in being risk-averse, but, rather, wanting to understand all risks as much as possible before taking decisions. The second is having a growth mindset. This forges a leader’s flexibility, the ability to pivot, to learn from previous mistakes or from the experiences of other companies that underwent similar cycles or problems and to identify a different path. In that sense, a growth mindset allows a leader to embrace risk even as he or she dislikes it.
Given Africa’s economic and political uncertainties, and the complexities of doing business in many African countries, handling risk with a growth mindset may be one of the most critical attributes of mining company leaders on the continent.
But if this portrays a mining leader in Africa as a burly, bearded, unsmiling earth-mover and shaker, think again. Today, more than ever, leaders need to have a range of soft skills, which, actually, are better described as flexibility or power skills: the ability to motivate, to welcome two-way communication, being attuned to cultural nuances, and open to collaboration. These can be summed up asemotional intelligence (EQ) – and without EQ a leader will be at a major disadvantage in navigating the complexities of mining in Africa.
The minefield of environment, social and governance (ESG)
The pun is intended, because the expression is apt. Consider the fraught area of relationships with governments and regulatory authorities. A very recent, relevant illustration is the Zambian government’s announcement of its intention to create an investment vehicle controlling 30% of all critical minerals and resources output, while also directing miners in these sectors to channel at least 35% of procurement spend locally. In general terms, Zambia’s Ministry of Mines and Minerals Development will also review its policies around the export of unprocessed metals. In a very specific illustration, the ministry’s mining licensing committee has also just rejected Canadian junior operation Midnight Sun Mining’s application for a license renewal to extend exploration rights at the company’s flagship Solwezi copper project. Midnight Sun Mining has had the exploration license since 2017, and – contrary to Zambian law – has been given neither notice nor reasons for the cancellation of its license.
In such contexts – curveballs thrown at miners previously encouraged by investor-friendly moves of Zambian President Hichilema’s government – how could mining companies thrive in Zambia unless their leaders are expert negotiators, intent on partnerships, and possess the EQ to empathise with the government’s position in seeking to grow the country’s economy and uplift its people?
Or consider the requirements of sustainability, and the imperative of harmonious relations with communities in areas of operations. Here, the mining company CEO needs to be a visionary. He or she should be able to imagine each location of the enterprise’s mining operations beyond the present. A year from now, will neighbouring communities feel good about the company, and will they have access to improved opportunities, including jobs on the mine? Five years from now, what will the surrounding landscape look like – will it be a place where people can still thrive? Twenty or more years ahead, will the profits have been worth it all, or will reclamation come at such a heavy price as to mean the operation was at the expense of future generations?
These questions may seem idealistic. But they get to the gist of ESG, and they will help leaders navigate community relations, government regulations, and decisions requiring trade-offs between profits and environmental concerns. When shareholders expect returns, it isn’t easy to take a long view. That’s why it’s called leadership.
Ever met a Luddite leader?
A futuristic obsession with new technologies is unhelpful, because these shift through different phases of maturity, and getting onto what global consultants Gartner call the at the wrong time, or investing too early in unproven technologies, may prove to be a waste of resources. Instead, what’s key is that leaders buy into the benefits of technology’s advancement, and stay abreast of trends. From this realistic but future-focused view of technology leaders can drive three things: they can second a skilled information and operational technology (IOT) team into the business, they can formulate a digital transformation plan, and they can budget for technology and equipment investments that are appropriately phased to stay competitive or give the enterprise a competitive edge. Basically, the mining leader needs to ask him or herself, ‘How will I leverage technology to improve all aspects of the company’s operations?’
If technology is vital, it nonetheless remains true that a mining company’s main asset is its workforce, without which the metals and minerals would remain underground. And so a major challenge for mining leaders is to somehow refresh the industry’s talent.
The battle for skilled and motivated employees spans industries, sectors and geographies. In some respects the talent pool is wider than it has ever been, with globalisation, connectivity and e-learning opening pathways for younger generations. But, worldwide, the mining industry lags in appeal. Multiple surveys reflect the industry’s struggles to attract qualified professionals. Without an aspirational pull for technical talent, the falloff in university geoscience and mining engineering enrolment has been heavy: over 60% lower in Australia since 2014, and almost 40% down in the United States, as two examples.
The implications are clear. Australia will need 24,000 new mining workers by 2026, but projections are that it will recruit only half of this number , with a similar proportionate problem impacting Canadian and U.S.-based miners. It’s difficult to pinpoint figures for the talent shortfalls in Africa’s mining industry, but they are likely to be even more problematic given the breadth of mining operations across multiple nations and the lower levels of tertiary education compared to developed economies. Indeed, “shortages of workers with the necessary skills represent a key obstacle to the development of beneficiation and downstream industries in Southern Africa,” is one of the main conclusions in a recent skills and jobs report published by the African Union. [2]
Smart leaders look to solve this problem both tactically and with an eye on the future. Skills transfer programmes, for instance, bring expertise to meet current operational needs, now, while also training local workers for the long term. Partnerships with educational institutions foster science, technology, engineering and mathematics (STEM) skills while also contributing to social upliftment programmes, like Anglo American’s initiative in over 100 schools in areas of its South Africa operations.
Labour and skills, output and productivity, energy constraints, market uncertainty and capital needs: these will always be top of mind for mining leaders. Many such challenges are, if not unique to Africa, heightened on the continent, where infrastructure is underdeveloped and policy uncertainty often prevails. But needs must – and the world needs what lies deep under the mother continent’s ground.
Back to Eisenhower and another of his famous sayings: “Leadership is the art of getting people to do what must be done.”
In the mining industry, there’s a lot to be done. Are you a leader who is stepping up?