AAMEG Africa Awards 2020: Corporate Social Development Nominee – Orion Minerals
By AAMEG | 5 November 2020
CREATING A NEW CSI MODEL FOR INDUSTRY-WIDE APPLICATION
Bankable – Fully Permitted – Ready to Build
Orion is focused on exploring and developing globally significant multi-commodity base metals deposits located in outstanding mineral belts and Tier-1 mining districts such as the Areachap Province of South Africa and the Fraser Range in Australia.
The ASX (primary) and JSE (secondary) listed junior mining company targets projects capable of meeting growing demand for key industrial metals – such as copper, zinc and nickel – which have strong market fundamentals because of declining global resource inventories, falling grades at major mines and lack of investment in new mines. In the five years since the Company came to South Africa, it has been able to locate, acquire, drill out, complete a highquality Bankable Feasibility Study and fully permit a world-class modern mine, to international best practice standards. It now has a fully licenced project – the Prieska Copper-Zinc Project – one of the few projects in the world of this scale that is shovel ready, ready to go into construction.
Orion, through the Minerals Council South Africa’s Emerging Miners Leadership Forum, has been instrumental in the revision of South Africa’s minerals policy and legislation to ensure improved broad-based social participation in the benefits offered by the mining industry; and participated in promoting domestic tax regime revisions that will encourage exploration, attract foreign direct investment and ensure more benefits flow to the economy during the exploration stages. It has pre-emptively established community engagement and formal collaboration forums with local government and commercial enterprises ahead of any mine development investment decisions, in a manner that will ensure lasting benefits to the host communities. Its CSI is not contingent on, but in full preparation for, eventual mine development and operation.
Orion’s innovative operating model has found support among local, regional and national governments, who have hailed it as a blueprint for the socio-economic development of communities and an example of how junior exploration companies can make an impact even before the production of first metal.
Few companies have achieved so much in such a short time frame and far fewer have been able to purposefully demonstrate the benefit of bringing a host community – and country – along on the journey from prospecting to permitting.
Orion is a catalyst for socio-economic development, inspiring other exploration companies and changing the way host governments see junior mining.
Orion’s innovative operating model demonstrates that next-generation explorers can be the impetus for positive social, environmental and economic development, especially since mineral exploration often occurs in remote and indigent communities. The ability to significantly leverage the exploration stage of a mine’s life cycle for the benefit of host communities ensures that sustainable benefits accrue to host communities even during active exploration, regardless of whether or not the exploration activity ultimately results in an operating mine.
This pioneering approach promotes an innovative operating model for junior exploration companies, enabling them to catalyse lasting and beneficial impacts on the social and economic wellbeing of host communities, even while in the exploration and feasibility study phases of mine development. Orion is actively challenging the historical precedent that junior exploration companies, at best, aim to have a minimal adverse impact on their host communities and the natural environment in which they operate. Junior explorers generally focus on minimising potential impacts, not maximising potential benefits, for their host communities.
The nature of mineral exploration is that only a small proportion of mineral prospects graduate to becoming operating mines. For Orion, effective community and social investment is about ensuring exploration activities are also a catalyst for positive social change. This approach is demonstrated by the way in which Orion has developed the long-forgotten potential of South Africa’s vast Areachap Belt located in a remote part of the country’s Northern Cape Province.
Since acquiring the Prieska Copper-Zinc Project, Orion Minerals has firmly integrated strong environmental, social and governance (ESG) principles within its project plan – insisting on strong community engagement and investing in corporate social development (CSI) while early technical studies were still underway. Often CSI is a bolt-on at the end of the project planning, but for Orion the community is integral to the process.
Orion’s engagement with host communities began when prospecting got underway and when there was no regulatory imperative to do so. Its decision to go above and beyond what is usually “expected” from a junior mining company has enhanced the company’s reputation as a responsible corporate citizen.
Insisting that the development of a social licence to operate should start from the day a company lands in a host country meant that Orion actively canvassed community views and encouraged participation from the start. Early initiation of CSI has enabled it to more actively listen, accurately evaluate community and municipal challenges and integrate potential solutions into its business model.
No other junior miner that we know of has approached CSI in this way, and the model should become a template for other junior explorers.
Orion believes that it is imperative to develop a social licence to operate from the day you hit the ground.
The Prieska Copper Mine (PCM) is an existing, closed mine situated approximately 53km south-west of the town of Prieska in the Northern Cape Province. The mine falls within the authority of the Siyathemba Local Municipality, with a population of around 23,000 people – about 2% of the total population of the Northern Cape. Over 69% of the population are of working age but the municipal area has an unemployment rate of 24% and a youth unemployment rate of 30%. The Northern Cape is South Africa’s largest and most sparsely populated province – as well as its smallest provincial economy, relying heavily on mining and agriculture.
Prieska was historically mined between 1971 and 1991, with the closest town, Copperton, established in 1972 – housing around 3,000 workers and their families, with extensive facilities. The mine was closed in 1991, and the towns in the area were effectively shut down – today most of the buildings have been demolished.
This meant that on arrival, Orion had to prioritise engagement with the communities near the project. This began with multiple town-hall meetings across the region, between communities and the Orion team, led by their CEO and Managing Director Errol Smart. These engagements have continued into the present, ensuring that communities are updated on project progress, community benefits and the positive impact of Orion’s development on the economic revival of the province as a whole.
Orion formalised its commitment to community participation in 2019 by setting up the Orion Siyathemba Stakeholder Engagement Forum (OSSEF). Nominated community representatives have been allocated almost half the seats on the OSSEF, with the remaining 20 seats filled by representatives of local government, Orion’s local shareholders, employees and Company management. Key community representative roles were identified based on community needs. The forum will serve as a platform for community interest groups to engage with the company, communicate community ideas and inform residents of developments at the project.
Orion has established a community liaison office, which collects expressions of interest from potential suppliers and accepts resumes from prospective employees. The new generation mine at Prieska will require a highly skilled workforce and Orion is prioritising local employment wherever possible. The operation will also encourage entrepreneurship and the establishment of mining-related businesses in the region.
To prepare the community for mining activity, Orion provided free one-week training on mining industry familiarisation to more than 350 community members. The training, aimed at raising public awareness of the mining industry and the employment opportunities the industry creates, was the first step in equipping residents with skills that will enable them to participate in future mining-related job opportunities.
Orion is encouraging enterprise development in the region and has introduced an online supplier portal that is accessible to anyone with a mobile phone. Local entrepreneurs and suppliers of goods and services can register on the database online via the portal, with the database being used to procure suppliers and services as the Prieska Project develops. Around 200 businesses from the municipal area have registered on the portal.
Orion is continually investing in skills development and the facilitation of local enterprise development. In 2018, it arranged an educational seminar for small, medium and micro-sized enterprises (SMMEs) and non-governmental organisations (NGOs) in Prieska, with over 70 representatives from the Prieska business and NGO communities attending.
Collaboration and Engagement
Setting new benchmarks for junior explorer participation
Orion continues to set new benchmarks in South Africa for community engagement by a junior exploration and development company. It maintains strong communication channels with its communities via the OSSEF, as well as holding regular public meetings in the areas surrounding Prieska and support for a range of community initiatives.
It collaborates with other companies operating in the Siyathemba municipality to encourage community wellbeing, through the Siyathemba CSI Collaboration Forum. Wellbeing and activity are important in areas where there is high unemployment, and sport has been prioritised in a drive to get more young people involved in healthy activities and keep them away from drugs and gangs.
The benefits of collaboration were critical when the COVID-19 pandemic hit South Africa and Orion needed a way to reach communities during South Africa’s period of lockdown. With the aim of improving community welfare, Orion facilitated the establishment of the Siyathemba CSI Collaboration Forum. The forum consists of representatives from the major private and state enterprises active in the municipal area, including Orion, Mulilo Prieska Solar Community Trust, Copperton Wind Farm, Garob Wind Farm, Sonnedix, GWK (an agricultural cooperative), Alkantpan Test Range and the South African National Roads Agency (SANRAL).
The forum was able to mitigate the devastating impact of the lockdown on many parts of the community – ensuring food parcels reached destitute families, hand sanitisers were donated to old age homes, and the pressure on families with young children was alleviated by the printing and distribution of children’s playbooks, accompanied by crayons donated by another forum member. Orion also helped a local entrepreneur in Marydale to establish a small mask-making business by providing seed capital for the purchase of material.
On a municipal level, Orion has had a collaborative Memorandum of Understanding (MoU) in place with the Siyathemba Municipality since October 2017, which is used as a formal framework to establish mutually beneficial ventures including water infrastructure, residential development and environmental protection. It is a first for an exploration company and it allows Orion to align its social and labour plans with municipal development aims.
Through collaboration with other companies in the region, and through work with the Minerals Council South Africa, Orion is looking for ways to attract additional investment into the Northern Cape. It is participating jointly with the Siyathemba municipality and the provincial government to fast-track the establishment of special economic zones – hubs of economic activity which will stimulate economic development and attract investment.
More broadly, Orion has a leadership role in establishing junior mining as key to South Africa’s post-COVID-19 economic recovery. Represented by its CEO and MD Errol Smart – Chair of the Junior and Emerging Miners’ Leadership Forum at the Minerals Council South Africa, as well as on the Minerals Council Board – Orion participates in special working groups set up to coordinate government and industry action plans. Errol has taken a leadership role in these forums and as a result of this work, there is potential for major structural reforms including regulatory and mooted corporate and mining taxation incentive schemes.
The depth and quality of Orion’s community programs are impressive given the Company’s size.
Orion has a market capitalisation of AUD 97.87 million (as at 13 October 2020) and is yet to start mine development but is fully committed to wide-ranging CSI in preparation for the development of the mine and revitalisation of the region. Its CSI activities span:
- Formal stakeholder engagement to ensure community voices are heard
- Community liaison and information office, putting Orion at the heart of the community
- Encouraging economic participation through supplier registration
- Preparing the community for mining activities through free training
- Sponsoring community sports initiatives to inspire mental and physical community health
- Partnering with Bicycles for Humanity Western Australia to increase mobility and foster small businesses
- Joint investment initiatives aimed at improving the health and welfare of the local community
- Collaborate with local authorities to coordinate project CSI with national and regional developmental projects
- Promoting junior mining at a national level in a bid to revive investment in the sector, which will bring with it increased CSI activity
Orion is passionate about empowering other emerging miners and ensuring that they are included in the ownership structure of the Prieska Copper-Zinc Mine. Proactively looking for South African partners ahead of the Mining Charter 2018 compliance deadline of 2024, Orion announced an initial black economic empowerment structure in April 2019 and further strengthened those partnerships later in the year. The flagship Prieska Copper-Zinc Mine is now 30% owned by historically disadvantaged South Africans, including 5% by staff and 5% by host communities. To the best of our knowledge, there is not another junior explorer in Africa that has empowered its workers and its community by putting structures in place to facilitate funding and assisting in the sourcing of finance from development finance agencies.
The Northern Cape has a high unemployment rate and job creation is a key community priority. Orion estimates that it will employ 840 people once it is operational with local community members provided with an opportunity to work at the mine as far as possible. The empirical multiplier effect potentially creates 2,500 associated jobs.
Beyond employment and social upliftment, resource management is imperative. From the outset, water conservation and the use of renewable energies were central to the company’s plans to minimise the environmental footprint. Orion has agreed to revive the municipal water treatment plant and to provide water to the community as part of its MoU with the Siyathemba Local Municipality. It has also entered into a collaboration agreement with juwi Renewable Energies to investigate the feasibility of generating and supplying 35MW of electricity for the Prieska Project from a hybrid power system using integrated wind and solar technologies.
Prieska’s presence expected to increase the district GDP by 20.3% at optimal mining and, when combined with multipliers, may increase local economy by 30%.
Delivering sustainable and tangible benefits to host communities and playing a leadership role in ensuring the relevance of the junior mining industry beyond the life of a single project
The Orion CSI model has the potential to become a community engagement and social investment model that other junior miners would consider adopting. It proves that listening, receiving constructive feedback and collaboration makes a difference regardless of the size of a CSI budget. It is more about what you do than how much you spend.
The establishment of the mine itself will create employment opportunities in a significantly underemployed region of South Africa. The upskilling and skills transfer that comes from equipping a new generation, 4IR-enabled, mining operation will empower unemployed youth. It will also encourage entrepreneurs to supply goods and services, birth small businesses and generate critical secondary employment.
Water treatment and renewable energy projects will survive way beyond the life of the mine but perhaps most importantly, Orion will have supported its host region’s emergence as an important new long-term mining hub, that offers economic and employment opportunities for all South Africans