The mining industry has the potential to grow if there is more investment in exploration projects. (Michele Spatari/Bloomberg via Getty Images)
It is a popular public opinion that the construction mafia — also called the procurement mafia — is associated with the built environment, but their influence stretches to any industry where a criminal element can extort a third party to either prevent acts of violence or for their goods and services to be used instead of others.
The mining sector is no exception. Tactics such as damaging mining infrastructure, sabotaging shipments en route to port and taking employees hostage to demand jobs are among the methods employed. The behaviour and tactics of mafias in the mining sector have evolved since they emerged in KwaZulu-Natal in the mid-2010s.
Up to 2022, it has been estimated that up to R63 billion in mining projects were delayed or cancelled because of mafioso activities. Although the mining industry has become increasingly organised to stop mafia activity and arrests have increased, in 2023, South Africa was ranked seventh worst out of 193 countries in Global Initiative’s organised crime index. It continues to be such a problem that the Minerals Council of South Africa has stated that “massive financial losses” have been incurred because of mafia activity.
EPCMs and the construction mafia in a different guise
Although the term “construction mafia” has its origins in South Africa, queries and feedback from our clients in the mining industry indicate that the tactics used by the construction mafia are found across the continent.
Beyond direct transactional relationships between businesses and local construction mafia groups, South African mining companies have faced problems when leveraging the services of engineering procurement construction management (EPCM) providers.
The EPCMs are typically responsible for designing, establishing and managing key procurement contract relationships, and construction management, including budgeting, project execution and contract management. Organisationally, EPCMs have dotted-line management relationships with contractors employed directly by the client.
The primary advantage of using an EPCM is that a client can change the scope of a project already under way, in addition to leveraging highly skilled professionals who can increase productivity and lower costs. For mining companies operating in Africa, EPCMs can provide valuable skills in markets where none can be found, and local knowledge and context are invaluable for a mine operator needing to leverage local suppliers and supply chains to support their operations.
For the EPCMs to be effective, they need to be empowered with significant and specific authority. But, as observed in an investigation Webber Wentzel is conducting in relation to a mining operation in North Africa, severe problems can emerge at the EPCM level if the responsible parties do not understand who they are getting into business with.
A pattern of conduct has been noted whereby the operator of a mine enters a working arrangement with the EPCM provider, which has significant authority to conduct business on the mine owner’s behalf. Over time, the EPCM gains such control of the mine’s procurement processes that the mine owner is alienated from key decisions, in effect becoming the de facto manager of the mine. The EPCMs have the potential to create a self-reinforcing web of corrupt activity, demanding kickbacks for appointing specific local contractors.
The abuse perpetrated by the EPCM echoes the crimes committed by the construction mafia and the instability that can grip a mining operation without significant oversight. In South Africa, beyond construction mafia activity, mine owners must be aware of developments within the organised labour movement, with recent hostage-taking incidents highlighting a contest between rival unions that has a negative effect on operations.
The best defence for a mine owner’s business against the mining mafia and other forms of illegal activity by third parties is due diligence, vetting and research. Quality findings that arise from such processes give mining operators the full context of who they may be choosing to work with, the risks that exist and, crucially, what relationships a particular supplier may have with those they choose or recommend for contracting. Criminality has a habit of finding weaknesses in systems and processes that vetting can uncover.
Equally important is the defence of having professional forensic investigations undertaken when irregularities are reported. This will enable companies to swiftly react and assist in mitigating the effects that the mining mafia may have on any operations. This will also enable the organisation to set an adequate tone for both internal and external role-players.
The amount a mining company spends on proactive and reactive measures represents an upfront investment. Experienced professionals will ensure the necessary steps and compliance are done relating to consequential legal processes, such as the Prevention and Combatting of Corrupt Activities Act or the Prevention of Organised Crime Act.
Proactive and reactive measures should be assessed on an ongoing basis outside of a project’s beginning so that changes in the status quo are detected and accounted for.
The 2025 Mining Indaba theme, Futureproofing African Mining, Today, serves as a call to action for the industry to strengthen its resilience against these threats.
Lionel van Tonder is a director and Aaqilah Nagdee a senior associate at Webber Wentzel.