CEO of diversified mining group Exxaro, Mxolisi Mgojo told a recent forum at the Gordon Institute of Business Science (GIBS) that the organisation intended to alter its business model in order to create new revenue streams in a manner that addresses the country's need for water, food and energy security.
While coal would remain at the core of Exxaro for the immediate future, Mgojo said the company was still working on the right strategy to ensure it remained relevant in the future. "The question is how to maximise this base in order to become, and remain, relevant in the future through the creation of new economies that address societal needs," he told the gathering.
Mgojo said businesses should not remain what they are, lest they become redundant in a rapidly changing world: "Businesses should not be afraid of cannibalising themselves and breaking their own business model so that they can create a new one," he explained.
Mining innovation and technology
Innovation in the mining industry was no longer a nice-to-have, and investments in technology were not for their own sake, but rather necessary to make organisations sustainable, Mgojo said. In order to help current mining businesses understand and create a culture of innovation, technology is necessary to make business robust and resilient: "We must take the things of the future and bring them into the present by creating a culture of innovation. We must embrace innovation because it is part of what we are today, and what we have to be in the future," he said.
Operating a coal business of today, while searching for the company of the future was at times "schizophrenic", Mgojo admitted, but argued the two could co-exist: "Creating a digital organisation by bringing in data analytics and big data, while leveraging from the future means using innovations to help improve productivity and efficiency to drive costs down today."
Mgojo said it was important to acknowledge that South African mining companies had lost their lead in the industry to other countries, and the only way to recapture their edge would be through modernisation. "We have to come to the realisation that mechanisation is a necessity if we want to compete globally. The question is how can we create and develop our capability as a country going forwards."
South Africa's position as an investor destination
The serious discord happening in government between the various departments and organs of state, which do not see the importance of driving one single agenda, is "the most unfortunate thing that is currently happening in South Africa," Mgojo said. "Each department is like a different country with different objectives."
The CEOs of South Africa realise they must step up to the plate and bat, actually take ownership and not wait for the government, but rather lead the charge," he said. Mgojo, who accompanied a delegation that included Finance Minister Pravin Gordhan to investor presentations in New York over the past week, said many investors are looking to invest in emerging markets. However, "there is too much uncertainty and ambiguity" in South Africa for them to commit to the long term, he explained. "They like the country from a yield perspective, but will play when it suits them. We have to work hard to create the right environment for investors to encourage inflows of foreign direct investment."
We have to take our collective strengths and use them in a systematic way to take the country to the next level and differentiate ourselves," he continued. "We are so conscious of the socio-economic challenges in South Africa, and it is imperative that we respond in a manner that addresses these challenges. It has become the real challenge of the country and not one single organisation can solve it on its own."
Mgojo issued a challenge to government to improve its efficiency in order to release more money for social upliftment: "We need to strengthen the organs of state so that they are not wasteful. A lot of money is being wasted. I would like to put a challenge to government not to ask the private sector for more money, but rather look at how they are managing their own affairs."