The role of social and cultural arrangements of the host communities in mining entry strategies

Abstract

In South Africa it is being debated whether the mining industry is in sunset or sunrise. The answer depends on whom you ask. The mining entrants who want to come into the industry, and the current incumbents who want to expand the life of mine, are faced with a challenge of not only securing the mining rights from government, but also to secure a social acceptance often referred to as the social licence to operate (SLO) from the host community. This study looks at the role of role of social and cultural arrangements of the host community as the non-market forces that impact mining entry strategies in South Africa. It is also a given that every new mine operation or expansion will be faced with disruptions, and threats of closure by the social and cultural arrangements of the host community. This research reveals that these social and cultural groups cannot be ignored in any market-entry strategy in the mining sector in South Africa, as this would risk the refusal and withdrawal of the social licence to operate. A qualitative, exploratory research methodology was undertaken. A total of 15 semi- structured in-depth interviews were conducted with mining executives of various mining companies in various mineral sectors; including, chrome, coal, gold, iron ore, platinum, minerals sands and vanadium in six provinces in South Africa. Purposive sampling, convenience and snowball sampling methods are adopted for this research. The interviews are conducted online, and audio recordings are then transcribed and analyzed through a coding process and thematic analysis using the atlas. ti data management system. The key findings of the research reveals that the demands of the social and cultural arrangements, which often lead to mine closures and business disruptions (refusal or withdrawal of the SLO), can be addressed by adopting four elements as the mining entry strategy; namely, social partnerships, meeting of social needs, cultural recognitions, and cultural understanding.