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Dolf Scheepers
 
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Mining Security a Broad Overview

29 April 2014, 05:30

Mining Security a Broad Overview

INTRODUCTION

The provision of security services to mines in South Africa has become much more complex in a country consistently portraying complexity, labour and community intolerance as well as political rivalry in various sectors, particularly in the run-up to the 2014 elections and the period immediately thereafter.  The events at Marikana in the Northwest Province as well as the extreme militancy in the areas of Kathu in the Northern Cape in 2012 definitely affected mining security services and employee/security staff relationships.  South Africa is a world leader in mining and therefore we should also be the leaders in mining security and security technology.  Our country is famous for its abundance of mineral resources, accounting for a significant proportion of world production and reserves, and South African mining companies are key players in the global industry.  Naturally they require key security role players to support their operations.

The mining sector spans the full spectrum of the five major mineral categories – namely: precious metals and minerals, energy minerals, non-ferrous metals and minerals, ferrous minerals, and industrial minerals.  Apart from its prolific mineral reserves, South Africa's strengths include extremely high levels of technical and production expertise underpinned by comprehensive research and development activities and deserves to be supported by like-minded security professionals – not only the guard at the gate scenario, but tailored solutions meeting the demands of protecting an industry which is renowned for its technical and production expertise. The country has world-scale primary processing facilities covering carbon steel, stainless steel and aluminum, in addition to gold and platinum. It is also a world leader of new technologies, such as a ground-breaking process that converts low-grade superfine iron-ore into high-quality iron units.

On the other side of the coin, is the private security industry in South Africa, a leading provider of specialist services to the mining industry, a world-class industry well experienced in the challenges of the mining and other related refinery and smelter or sorting industries. In what is estimated as a R40 billion industry, world-class practices have been developed in line with mining houses – especially high risk refineries, smelters, plants and diamond sorting houses.  The size of protection services in mining is not known, but industry specialists estimate the monthly spend on security to be around R180 million (including in-house) with the possible deployment of up to 23 000 security officers at about 290 mines – unconfirmed and indeed a challenging future research task.

When reviewing the mining security function in support of this world class industry sector at a glance, then three main factors are to be considered:

  • The private security industry and its unique challenges

  • The influences in mining operations necessitating and challenging private security

  • Solutions to the Challenges

PRIVATE SECURITY IN SOUTH AFIRCA

The private security industry in SA continues to be a fast growing industry, one in which the perception that crime is the growth path for the industry, is maintained.  How relevant is this, as there seems to be new building blocks representing growth being developed – such as safety?

In the past two years the industry numbers have decreased, and registered active businesses have decreased by 3,6% to 9 031 in 2013, of which:

  • armed response businesses decreased by 7,48%

  • assets in transit decreased by 12,17%

  • active guarding businesses decreased by 12,17% to 6 407

Interestingly the registered and active manned guarding figures increased from 427 147 in 2011/2012 to 445 407 in 2013.

A thorough analysis indeed indicates a decrease in the manned guarding business growth with minimal consolidation amongst active companies.  The decline in the number of armed response businesses is indicative of smaller entities dropping out of business although that part of the industry is definitely growing due to the impact of residential robberies and burglaries.  The cost of transporting assets (AIT) has increased drastically due to the military style onslaught on cash and valuables in transit in the past and forced numbers of businesses to drop.  New technology at huge costs seems to be an effective deterrent to the cash in transit heists.

Electronic security components will gradually replace certain (few) manned guarding functions but probably not at the expected high rate – at least not for as long as manpower solutions are erroneously thrown at all security problems as a short term fix .  In mining security the real growth in electronic security is on plant, sorting house and refinery levels, whereas junior miners entering the SA mining environment to a large extent still focus on manned rather than electronic security solutions, especially in the manganese, platinum, coal and chrome environments.

A market growing rapidly is the crowd facilitation or riot/strike handling services through the employment of armored personnel carriers.  This came about since the demand and fear increased in the lead up to and following the Marikana event in the NW Province in 2012.  Private security businesses spend millions acquiring armored vehicles, many old and dilapidated but the demand overwhelmed all realism.  Mining houses paid a minimum of R20K per day, per armored vehicle with crews of up to 12 people, some in the vicinity of at least R2 mill per month.  In many circles this is perceived to be the market to grow, but if realism would prevail, the new trend should rather be focused on dialogue, negotiations and persuasion rather than the aggressive firing of shotguns.  It was indeed this type of military style adoption that lead to the Marikana massacre.

A definite fact is that the revenue turnover did not necessarily grow in the private security industry and neither have the net profit margins.  This is due to higher than CPI related wage increases. Annual security costs increased only on the lower CPI ratios in many instances, whilst wages increased on average by 7% per annum and higher over the past three years.  Security costs increased only by an average of 5  - 6% which puts stress on security companies to survive.  A concerning growing trend is that revenue growth and net profit growth are moving way apart to the negative.

Many mining houses still employ high numbers of in-house personnel with clear distinctions in productivity levels between the in-house and the private security services, more especially on the lower levels.  Many an in-house security manager faces challenges with employees and motivational levels, as they have little career opportunities to offer them.  The days of prestigious, highly trained and professional units such as Goldfields Security is something of the past.   The labour hire concept in an organized format prevails -  There is still a belief in large in-house contingents, in security departments utilizing outsourced guarding in many instances on the lowest levels, without outsourced supervision (actually no supervision) – almost the labor hire concept in an organized format.  How can an outsourced private security company provide a service to a mine if the private security company provides for example 100 security officers supervised by a junior Grade B Supervisor (not a Manager), and no afterhours supervisory or staff deployment capabilities – all the leadership functions of such a guard force are in the hands of the in house security staff?  This is still evident and most definitely not ideal – reminds one of the traditional “conca” guard with the blanket, knobkerrie and lonely dog, certainly not the recipe for the rendering of a service that is designed with various products and related services and skills!

Questions to be asked and answers to be sought, are whether the security industry has developed sufficiently within mining houses to effectively safeguard their assets?  If security businesses have sufficient funding to meet the technology requirements for mining security but also if mining houses utilize security as a bare essential or an insurance necessity, and if they really value the cost of private security?   Are mining houses prepared to introduce advanced protection measures or is the focus on the age old “guard at the gate” ?  Many a mine utilizes the lowest levels of trained guards in an attempt to contain cost with little to no career opportunities, resulting in high staff turnover and security guards regrettably and wrongly becoming involved in crime as supplement for their income.

The private security industry is busy transforming in terms of Broad Based BEE with many a Historically Disadvantaged South African (HDSA) trying to start a private security business, but with a high “fall out rate” due to lack of experience and funding.  However, unless a specific project is launched to introduce a small role player from a local community, BBBEE is to a large extent only one of many tender adjudication criteria – price seem to be most important in new tender processes (80/20 or 90/10 criteria matrix).  It seems as if mining houses are more frequently prepared to introduce new inexperienced service providers based on the lower price.  A recent (2014) example is a major diamond mining house awarding a contract to a small sized business with no top and very little mining security experience.

With the transformation taking place in some private security companies come opportunities to develop managerial levels.  Many a HDSA manager employed in the private security industry requires managerial, language, life and product knowledge skills, which they were excluded from in the past, either through previous positions in the security industry or poor educational systems. Many an “old guard in-house Security Manager” still favor traditional military or SAP style managers, which in essence allow little room for opportunities for a new generation HSDA security manager. It is the higher educated HSDA Security Managers that are employed at mining house head office levels rather than mining site levels.

Leadership versus management is lacking in basically all industry sectors of South Africa and most definitely also in the private security industry.  There are too many “wannabe” managers and too few true leaders in the security industry.

In summary, the success of security services in SA is amongst others challenged with:

  • Continued in-house security services, which if not properly managed, negatively influence efficiencies

  • Understanding that cultural diversity is a reality that must be acknowledged as it influences relationships and understanding of certain issues, such as family, matters

  • Language barriers originating from substandard education systems result in poor English, poor customer care, poor writing skills, huge frustration and wrong perceptions

  • Lack of qualified drivers, believe it or not, or drivers buying licenses illegally adds to high accidents rates, vehicle accidents, safety incidents and hampers personal development and growth

  • The security industry is perceived negatively as it has become a stepping stone for many in the industry. The pool to select from is shrinking

  • Willingness to transform, engage in local development and levels of ploughing back into communities - a sustainable Socio Economic Development Plan (SEDP)

  • Leadership skills are deteriorating and require upliftment

  • A mechanism to independently act in special operational circumstances supplementing the traditional guarding in crime prevention and safety enforcement

22 April 2014

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