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Research Report Final Draft FEB 2010

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Research Report Final Draft FEB 2010 DEDICATION To God the almighty, my family, colleagues, friends and the staff from the University of the Witwatersrand School of Architecture and Planning. Thank you for all the assistance and guidance which enabled me to complete this study. A special dedication to my mom who did not get the opportunity to experience the complete product of this study. May your soul rest in peace, “ U lale ngoxolo mama!” i ABSTRACT Mining is an economic activity that has the potential to develop a region that is impacted by its operations. The extractive industry also impacts negatively on the surrounding communities as it may introduce certain undesired practices which may effect the environment, disturb existing social practices, and promote gender inequality and the unequal distribution of economic benefits. The end of mining activities can become the end of a community’s economic existence resulting in misery emanating from economic hardship or migration to another region that offers economic opportunities. The majority of mining jurisdictions in the developing world still lack appropriate regulatory and management mechanisms that will enable their extractive industry to contribute to the economic well being of the region. The extractive industry has to be regulated in a sustainable manner that will ensure that its negative effects are well managed and reduced. This requires proactive solutions by all those who are affected by mining operations to co-operate in developing strategies aimed at steering the extractive industry to contribute towards sustainable Local Economic Development (LED). This research report investigates mining and sustainable (LED). It also pays attention to international and local approaches in achieving sustainable LED in mining regions. A case study of the Rustenburg Local Municipality (RLM) has been conducted in order to ascertain the role of mining in contributing towards sustainable LED. The RLM is a municipal area which has mining as a dominant economic activity. The municipal area is currently experiencing an increase in economic activity as a result of its mining sector, mainly the mining of Platinum Group Metals (PGM). The municipality is struggling to develop an appropriate mining and LED strategy for its jurisdiction as a result of inadequate co-operation with stakeholders in the mining sector and insufficient capacity in the municipality. Owing to inadequate cooperation stakeholders in the mining sector are developing their own community development programs with limited consultations with one another. ii The research report found that the development of sustainable LED strategies should involve all stakeholders; this process should ideally be headed by local authorities as their responsible with managing and administering development projects in their jurisdiction. The RLM municipality has the potential to develop sustainable LED strategies aligned to its mining sector. This requires the strengthening of cooperation between stakeholders and capacity building in the municipality. The development and implementation of sustainable LED does not only depend on being spearheaded by the public sector as the research reports findings reveals that private sector driven sustainable LED strategies are possible. iii ACRONYMS & ABBREVIATIONS ABET Adult Basic Education and Training AIDS Acquired immune deficiency syndrome ANC African National Congress BDM Bojanala District Municipality BEE Black Economic Empowerment BLCF Business Linkages Challenge Fund Bt Billion tonnes CEO Chief Executive Officer CDB Chinese Development Bank CSDP Community Sustainable Development Plan DBSA Development Bank of Southern Africa DEAT Department of Environmental and Tourism DFI Development Financial Institution DFID Department of International Development DPLG Department of Provincial and Local Government DTI Department of Trade and Industry GNU Government of National Unity DG Director General DPLG Department of Provincial and Local Government DME Department of Minerals and Energy DTI Department of Trade and Industry EC Eastern Cape EMG Emerging Markets Group ES Equitable Share EU European Union EZ Enterprise Zones FDI Foreign Direct Investment FESI Friedrich Ebert Stiftung Institute FSGDC Free State Goldfields Development Centre FTSE Financial Times Share Index GDP Gross Domestic Product GDT Gencore Development Trust GGP Gross Geographic Product GEAR Growth Employment and Redistribution GLC Growth Local Committee GNU Government of National Unity HIV Human Immune Virus HR Human Resources HRDP Human Resources Development Program ICT Information and Communications Technologies IDC Industrial Development Corporation IDP Integrated Development Plan iv IDT Independent Development Trust IFM International Ferrochrome Metals IIA Integrated Impact Assessment ILO International Labor Organization LED Local Economic Development LTD Limited KZN Kwazulu-Natal MIG Municipal Infrastructure Grant Moz Million Once MPRDA Minerals and Petroleum Resources Development Act MSA Municipal Systems Act Mt Metric tonnes MTEF Medium Term Expenditure Framework NEF National Empowerment Fund NFLED National Framework for Local Economic Development NGO Non-Governmental Organization NSDP National Spatial Development Plan NUM National Union of Mineworkers PFMA Public Finance Management Act PGDS Provincial Growth and Development Strategy PGM Platinum Group Metals PPP Public- Private Partnerships RBA Royal Bafokeng Administration RBEB Royal Bafokeng Economic Board RBH Royal Bafokeng Holdings RBN Royal Bafokeng Nation RDP Redistribution Development Program R&D Research and Development RPMR Rustenburg Platinum Mines Rustenburg Section RLM Rustenburg Local Municipality SADC Southern Africa Development Community SANCO South African National Civic Organization SC Subsistence Committee SD Sustainable Development SDI Spatial Development Initiatives SEA Strategic Environmental Assessment SED Socio-Economic Development SHM Strategic Health Management SIA Social Impact Assessment SLP Social Labor Plan SME Small Medium Enterprise SMME Small, Medium and Micro - Enterprise STD Sexually Transmitted Disease TB Tuberculosis US United States v UK United Kingdom UNAIDS United Nations Acquired immune deficiency syndrome UNDP United Nations Development Programme VCT Voluntary Counseling and Testing VIP Ventilation Improved Pit WB World Bank WEF World Economic Forum WHO World Health Organization ZAR Zuid – Afrikaansche Republic vi TABLE OF CONTENTS 1. CHAPTER 1...................................................................................................................1 1.1. INTRODUCTION...................................................................................................................................1 1.2. RATIONALE AND PROBLEM STATEMENT............................................................................................3 1.3. RESEARCH QUESTION .........................................................................................................................6 1.4. HYPOTHESIS........................................................................................................................................7 1.5. METHOD OF INQUIRY..........................................................................................................................7 1.6. CHAPTER OUTLINE...........................................................................................................................11 1.6.1. Chapter 2: Literature review....................................................................................................11 1.6.2. Chapter 3: Mining and LED; international and local examples............................................11 1.6.3. Chapter 4: A case study of the RLM.........................................................................................11 1.6.4. Chapter 5: Conclusion and recommendations........................................................................12 2. CHAPTER 2.................................................................................................................13 2.1. MINING AND SUSTAINABLE LOCAL ECONOMIC DEVELOPMENT (LED)........................................13 2.1.1. Sustainable Development (SD)..................................................................................................13 2.1.2. Local Economic Development (LED)........................................................................................14 2.1.3. LED within the South African context.......................................................................................16 2.1.4. LED Approaches in South Africa – Pro-growth and Pro-poor initiatives..............................19 2.1.5. Mining and Local Economic Development (LED)...................................................................20 2.1.5.1. Problems associated with the extractive industry...........................................................................20 2.1.5.2. Potential solutions to the problems associated with the extractive industry.................................27 2.1.5.2.1. Mine and Regional Development ..............................................................................................28 2.1.5.2.2. Mining and Human Capital Development.................................................................................30 2.1.5.2.3. Mining and Health Issues ...........................................................................................................31 2.1.5.2.4. Mine Closure ...............................................................................................................................32
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