Mineral Resources: Minister's Budget Speech


31 May 2011


 Address by Honourable Susan Shabangu on the ocassion of the 2011/2012 budget vote of the Department of Mineral Resources National Assembly Parliament

1 Jun 2011

Honourable Chairperson,
Members of Parliament,
Ladies and gentlemen,

I am honoured to present this budget right on the very first day of the landmark month of June when we remember the sacrifices and the gallantry of the June 1976 generation that literally laid down their lives for the freedom and democracy that we enjoy today.

I also would like to welcome Honourable Deputy Minister Godfrey Oliphant, to the department. His presence has made it possible for the Ministry to, amongst others, have a continued presence in the strategic engagements of the Portfolio Committee.

We dedicate this budget vote to the youth of 1976 who irrevocably changed the course of our history. We should not forget that it was in the same month of June, this time in 1955, that our movement, the ANC, together with its partners in the Congress Alliance, adopted the Freedom Charter as a blueprint for a just society that today underpins the foundation of our democratic society. It is indeed this perennial document that forms the bedrock upon which the transformational changes currently sweeping the mining industry are predicated.

The budget we are announcing today gives concrete expression to our determination to ensure that minerals and mining industry continue to contribute towards addressing the fundamental socio economic challenges facing our country including job creation and sustainable development.

We present our budget at a time where we have to contend with a mix of geo-political and financial dynamics which have led to the rise in the price of commodities, especially the precious metals. There has been a substantial increase in the price of gold which is favourable for our marginal gold mines. This will invariably help the gold sector with regard to further expansion projects as well as job creation and retention.

We are a department of state that has a mandate to regulate the country’s mineral resources in such a way as to effect transformation, safety and sustainability as well as to achieve growth.

In order to achieve the objectives which we have outlined in our strategic planning document we pleased to present a budget of R1,036 billion for the 2011/12 financial year, which represents an increase of R40 million from the previous budget of R995 million.

This budget is allocated for departmental programmes as follows: R247 million  for Administration to amongst others implement the Department’s Human Resource Plan with the following elements, talent management, retention and development skills, in the following occupational areas: electrical and mechanical engineering, geology, metallurgy, mine survey, mineral law and economics, environmental science, mine safety, occupational hygiene and medicine inspections. 

R147 million for Mine Health and Safety, R160 million for Mineral Regulation while R480 million is allocated to Mineral Policy and Promotion. This budget includes an amount of R438 million earmarked for transfers and subsidies to departmental agencies, public and private enterprises. Of this allocation, the Council for Geoscience will receive an amount of R153 million while the Council for Mineral Technology and Research (Mintek), The South African Diamond and Precious Metals Regulator and Mine Health and Safety Council will each receive R167 million, R39 million and R5,3 million respectively.

An amount of R18 million has been budgeted for as a subsidy to marginal mines for pumping extraneous water from underground holdings. This is in addition to an allocation of R17 million included in the transfer to the Council for Geoscience to conduct research, develop and implement strategic solutions for mine water management. The department has managed to align its budget with its programmes and has accordingly completed the compilation of detailed monthly spending plans.

The department continues to manage its budget in line with good financial management principles and in compliance with the Public Finance Management Act. In this regard, we managed to spend 99.98% of our allocated budget for 2010/11. I want to pay tribute to my officials for placing great store in robust and continuous monitoring processes to achieve this feat.

As we said last year, we will continue with the implementation of our cost containment measures in a bid to ensure that the taxpayers derive maximum benefits from our programmes. We will do so as we do everything in our power to stem the tide of rising costs of goods and services which remain a huge challenge.

Accordingly, and in pursuit of a clean audit report, we have implemented a series of measures to address matters that were raised by the Auditor-General in the last financial year.

Last year I informed this house that the Director-General had undertaken a visit to all regional offices with the express purpose of reviewing administrative processes and clean up the data that was sitting on the NMPS system and subsequently design a system to improve efficiencies. In this regard I imposed a moratorium on new prospecting applications as we simultaneously went about correcting and improving our regulatory and administrative processes.

The audits that took place during the moratorium, was done through inspections and reviews, which were part of the overall plan, a process rather than an event , of improving administrative processes to achieve the optimal utilisation of mineral resources.

The outcome of these audits pointed to cases ranging from, among others, administrative errors such double granting, lack of proper administrative system, fronting; non- payment of prospecting fees; non-compliance with approved Environmental Management Plans (EMPs); as well as right holders who could not be traced.

Furthermore, the administrative processes in the department have now been imbued with efficiency, transparency and accountability. This has been done through amongst others, the online licensing system called South African Mineral Rights Administration (SAMRAD). Since the launch of the system on 18 April this year, over 627 applications have been successfully lodged.

South Africa’s mining sector is the backbone of the country’s economy, with a current conservative in-situ value estimated at US$2.5 trillion with an economically exploitable lifespan of 150 years. Moving from this premise together with our social partners, organised labour, business and other sister State departments, we have developed a growth and transformation strategy which identifies binding constraints to the sector’s growth potential and recommends action required to optimise the sector’s extractive capacity, attracting investment and job creation potential and these have been captured in the New Growth Path of the country thus ensuring that the growth of the mining sector is not an island but placed within the context of the broader growth of the country.

This was a process that not only unpacked the realistic growth potential of South Africa’s mining industry but has also recognised the recent poor performance of the country’s mining industry and exposed key competitiveness and transformational issues that hold back the growth and transformational potential of the sector. This strategy also contains a set of recommendations on solutions that can realistically unleash the sector’s real growth, employment and transformation potential to enable mining to be as a key “sunrise industry” for South Africa.

Last year I announced in my Budget Vote speech the work that was underway to establish a State Owned Mining Company (SOMCO). I am pleased to report that we have launched the African Exploration and Finance Mining Company in February this year. This is a nucleus of the State Owned mining company. The President has launched its first coal mining project and this company will subsequently supply Eskom with coal by June this year. 

In order to improve general competitiveness level of our economy we are steaming ahead with addressing domestic issues, such as infrastructure bottlenecks, challenges in the regulatory framework, human capital constraints as well as other capacity shortcomings as identified by the sectoral mining growth strategy which was adopted by organised stakeholders in the mining industry in June 2010.

There is general stakeholder agreement that in order to optimise the contribution of the mining sector to the economy, the focus must be on the entire minerals value chain, not just exclusively the mining sector. Countries of the south such as China and India have got this balance right as evidenced by the proliferation of their beneficiation industries. They are doing this to the extent that they are taking the world’s market share and job prospects from countries such as South Africa.

We already have a large supplier base that provides goods and services into the mining sector (defined as side-stream beneficiation) and also a large downstream beneficiation sector that exists where the commercial opportunities are available. We need to move beyond the traditional and established form of beneficiation of locally mined minerals.  Working together and in partnership with the Department of Science and Technology and other science councils such as Mintek and CSIR, we will collaborate on issues related to research and development (R&D). 

Towards this end we have now reached a stage where we are taking the Beneficiation Strategy for the country through the cabinet process.

Critical to this is the creation of a policy regime that offers positive incentives like a deeper skills pool, a favourable tax climate, lowering the cost of capital and a realisation and the need to address urgently the inherent limitations imposed on the mining industry by amongst others the paucity of our rail and energy infrastructure.

Last year, I announced the results of the impact assessment of the Mining Charter, which revealed serious instances of lack of meaningful transformation as well as the 2009 targets as contained in the Mining Charter were not met. Whilst that is, we are pleased that there are individuals like Ms Daphney Mashile Nkosi who have overcome formidable odds including personal tragedies to launch sustainable mining projects. A few weeks ago we participated in the launch of a manganese project in Kgalagadi which has already created 1 400 jobs. These are the formidable products of a company with a 60% women ownership.

I am pleased to announce that with the collaboration of our stakeholders we have improved the construct of our charter to include definitions and set up clear targets thus eliminate ambiquities and multiple interpretations accompanied by a clearer scorecard with clear measures to enable consistent assessment of progress towards 2014. This process was finalised in September last year. The mining industry is expected to submit the first set of compliance reports from mining companies by the end of June 2011.

The review of the Minerals and Petroleum Resources Development Act (MPRDA) is underway, this is aimed at improving the current construct of the Act to remove ambiguities, make provision for consultation processes, streamline the licensing processes. In this regard we will be strengthening the law in areas where it allows the Minister to invite applications for mining rights in areas that were previously granted, issued, revoked or even expired. The amendment would include strengthening of regulation of the environment in respect of minerals and mining.

We continue to consult with all the affected and interested stakeholders. The Bill is currently serving before the Cabinet Committee and will soon serve before Parliament.

In addressing these issues, we have identified the need to entirely review the Mine Health and Safety Act. This review will strengthen enforcement provisions; to reinforce penalties; to provide clarity in certain in certain definitions and expressions; and to effect certain amendments to ensure consistency with other laws, particularly the Mineral and Petroleum Resources Development Act, 2002 (MPRDA).

We are currently at the tail end of consultation on this issue and we anticipate that these amendments as well as new regulations will soon be tabled in Parliament.

Honourable Chairperson,

We are well aware of the problems currently besetting the diamond sector, including lack of access to rough diamonds. We are in the process of finalising our country’s diamond strategy which will go a long way in addressing the structural challenges facing the sector within the context of the beneficiation strategy. The Deputy Minister will elaborate further on these challenges. Working together with other government departments, State Owned Entities, as well as experts in the diamond sector we aim to finalise this strategy before the end of current financial year.

As we said last year we have had to contend with the consequences of more than a century of mining in our country. One of these is the legacy of derelict and ownerless and un-rehabilitated mines. These mines pose significant environmental, health and safety risks to neighbouring communities. We have embarked on a programme to permanently eliminate the environmental damage by putting the land impacted by the mining activity back to a sustainable usable condition. Accordingly, five Derelict and Ownerless mine sites were rehabilitated in 2010/11 financial year. These sites are the following areas: Jebolo, Owendale, Strelley, Prieska rehabilitation (where there was actual rehabilitation); as well as Prieska Wall Construction. 

We have also developed a new set of comprehensive measures to ensure that we do not have a repetition of the status quo. Going forward, companies will be requested to review their financial provision for rehabilitation so as to ensure that rehabilitation takes place post mining.

In February, I decided to impose a moratorium on shale gas exploration in the Karoo. I am pleased that cabinet has confirmed this decision.

In this regard, I have since appointed a task team of senior government officials led by my department to conduct further research on these crucial issues and help formulate a government policy. We will be looking at international experience and deal with this in a manner that ensures that we achieve the necessary balance between energy security requirements and sustainable development.

The promotion of Health and Safety in the mining industry remains one major areas of our work. I am concerned about the report of the second quarter which indicates an 8% increase in fatalities, which translates to 53 fatalities compared to 49 this year.

Can the mining industry say things are in order when the corrective measures that have been taken palpably demonstrate minimal impact as people who continue to die in this industry? Still, is it correct to continue to mine unabated if people continue to lose their lives at this unacceptable rate?

You will recall that the Amendment Act no 74 of 2008, contained provisions for the administrative fines to be reviewed. These guidelines introduce financial penalties which may be imposed upon employers for the violation of the provisions of the MHSA.

It will empower the inspectors to impose fines without neglecting the promotion of Justice and Access to Information.

We are doing all these steps whilst we are enhancing our internal capacity in the department. This includes the establishment of regional compliance and investigation units. The latter will be exclusively focusing on conduct mine inspections and audits, and the investigation units will be conducting investigations and inquiries.

This will be strengthened by the appointment of legal advisors at the regional offices to assist with both investigations and inquiries, and assist us to enhance recommendations for prosecutions where necessary. Also the learner inspector programme assisted with improving the vacancy rate as 19 learner inspectors have been placed at the Regional Offices.

My department will embark on interventions which include among others, stoppage of unsafe mines in line with our legislation to ensure that corrective measures are implemented and maintained; receiving quarterly reports from the mining company boards on corrective measures that are being taken to improve mine health and safety issues; as well as the implementation of the recommendations by the task team to deal with massive falls of ground at platinum mines.

I am satisfied, after having studied the report and I am now in a position to release it to Parliament.

Over and above the activities we are embarking upon as a department, the Mining Qualifications Authority (MQA) has allocated almost R260 million to support the Mining and Minerals Industry with Skills Development. This figure excludes mandatory grants of approximately R350 million given back to the industry.

There is need to continue our partnership with FET colleges through the MQAs FET artisan development initiatives particularly in areas where there is significant growth in mining. Already there is noticeable progress in a number of mining areas which include Upington, Rustenburg, Palaborwa, Sekhukhune and Vhembe with regard to artisan training.

On our side we will continue to monitor these programmes to ensure that the intended beneficiaries (about 500) who are studying engineering courses, geology, metallurgy as well as environmental studies, at almost all our institutions of higher learning, do indeed benefit from these initiatives.

Finally, I want to thank senior officials and the rest of the DMR staff for their continuous commitment and dedication in advancing the cause of the department. I want in particular to thank the Director-General, for the 14 years of dedicated service to the department.

When he arrived here, exactly fourteen years ago he inherited a department that was totally untransformed. I am pleased that the picture has completely changed and unfortunately the colour of his hair has also changed. As we bid farewell to him as he goes on early retirement where he will look after his garden, we will nevertheless continue to tap into his knowledge and experience as we continue to transform the industry. 

I thank you. 

Issued by: Department of Mineral Resources
1 Jun 2011

Address by Honourable Godfrey Oliphant (MP) on the occasion of the 2011/2012 budget vote of the Department of Mineral Resources National Assembly Parliament

1 Jun 2011

Honourable Chairperson
Minister Shabangu
Ministers and Deputy Ministers present
Honourable Members
Leaders of the trade Union Movement
Leaders of the business community
Ladies and gentlemen
Comrades and friends

It is amasing how time flies and perhaps the Nobel Laureate for literature Nadine Gordimer is correct in observing that “time is change; we measure its passing by how much things alter.”

It has been a remarkable seven months since I was deployed by the President and our movement, the ANC, to this critically important portfolio in Mineral Resources. I would like to express my gratitude to these two great institutions for having confidence in my ability to discharge these responsibilities.

In the Department of Mineral Resources (DMR), I have joined a team of dedicated professionals who go about executing their tasks with the diligence and fortitude that the demands of our time impose on them. This is perhaps what Ayi Kwei Armah had in mind when he wrote in the Beautyful Ones Are Not Yet Born that:"Alone, I am nothing. I have nothing. We have power. But we will never know it; We will never see it work. Unless we come together to make it work."

I have also been humbled and impressed by the warmth with which I was received in the department which can only bode well for the successful execution of our immediate and urgent tasks. In this regard, I want to thank the Minister for her leadership and guidance during this exciting period. To the DG, Advocate Sandile Nogxina: Thank you Mde nge ntonga.

Let me take this opportunity to welcome two comrades, Duma Nkosi and Mandla Rasmeni, to the offices of the director general and deputy minister respectively. These two servants of the people were right here in Parliament during the period of the drafting of the MPRDA. I have no doubt that they will add a lot of value to our work as a department. They will be right in the thick of things as they serve as a nexus between the legislature, the executive and the department.

It is within the context of recognition of our achievements that we have invited two erstwhile and doyen leaders of the trade union movement comrades Cyril Ramaphosa and James Motlatsi to attend today’s budget vote. These stalwarts were founder members of the NUM. Through this gesture we are honouring their role and contribution to the achievements of our democratic mining jurisprudence.

As we start this month to reflect on our programmes that reflects our support for young people and to assess how far we have gone in implementing the vision of the Freedom Charter.

As the mining industry, it is our duty to ensure that we do not fail these young people and that the 1.5 million of them who started grade one this year finish grade twelve without disappearing from the system.

Indeed, last week we were told that a huge number of those who walk the streets looking for work are youth between ages 16 to 35. This is a call to action for us who went through the June 1976 struggle to do our utmost to honour the youth through providing them with opportunities for decent work.

As we meet today we are a mere month away (July 18) from celebrating our international icon, President Nelson Mandela who very much like President Oliver Tambo is the unifier of the nation and the organiser of victory.

President Mandela, himself a former mineworker was in fact elected in 1989 as the honorary life-president of the National Union of Mineworkers.

The mining industry therefore will need to play its part in marking the activities associated with the noble values of sacrifice and selflessness that Madiba has come to symbolise. Nelson Mandela’s name should ordinarily be appropriated by, among others, the democratic trade union movement and progressive forces that have at their frontline cadres who share the same values with him.

I believe there is no better tribute we can pay to President Mandela than to get the mine workers and mine bosses to work together to improve the living conditions of people within and without this industry.

Indeed, in 2007 this house resolved that the living and working conditions of mineworkers be investigated and improved, support the initiatives by the NUM to build a workers museum and that this democratic Parliament should give consideration to naming some of its buildings after JB Marks, the leader of the African Mineworkers Union.

Honourable chair! We are called upon to see to the implementation of this resolution. When we visited India recently we were reminded by one of the cabinet ministers from the Silicon Valley who said, “It is indeed an honour and a privilege to live during the same time as Nelson Mandela, the greatest revolutionary of our time.” We salute you Sthwalandwe Seaparankoe.

Honourable Chairperson

The Minister has already outlined the budget that has been allocated to the department, after all budgets are but an expression of policy in numbers. However, the Minister’s budget statement represents a programme of the ANC-led government to use the vast mineral resources of our country to contribute to the overall objective of lifting our people out of the grinding poverty and underdevelopment that currently afflicts them.

Revitalisation of the Diamond Industry for Growth and Job Creation

As instructed by President Zuma, in his state of the nation address, it is our belief that we can use the possibilities offered by the diamond industry to meet the twin imperatives of job creation and economic growth.

South Africa is one of the few countries in the world who are involved in the entire spectrum of the diamond value chain, whichincludes exploration, mining, rough and polished trading, cutting and polishing, jewellery manufacturing and ultimately retail. This is understandable as South Africa is a major diamond producer and ranks sixth in the world in terms of volume (carats) and fourth in terms of value.

It is however, worrying that we remain a small player in the downstream sector of the diamond value chain, with a disproportionately small and underdeveloped beneficiation industry. The situation has been further exacerbated by the impact of the recent global recession, which forced many businesses (particularly the small businesses) involved in rough and polished trading, cutting and polishing as well as jewellery manufacturing either to close shop or reduce production substantially. As a result, thousands of people have lost their jobs.

However, the 2011 outlook for the diamond industry is very positive and we have witnessed a strong recovery in rough diamonds prices and demand. This bodes well for the downstream diamond beneficiation industry. We produce enough rough diamonds to satisfy the demand for our downstream diamond beneficiation industry. Other diamond cutting and polishing centres around the world (India, Belgium and Israel) continue to thrive partly due to their dependence on diamond supplies from South Africa.

The country’s diamond beneficiation industry remains significantly small and its development has an immense potential to stimulate further economic activities and to create thousands of new jobs. It is precisely for this reason that we have, through consultations with the diamond producers, Diamond Task Team of the Chamber of Mines, State Diamond Trader, South African Diamond and Precious Metals Regulator, United Diamond Association of South Africa and others, sought to gain a better understanding of the factors that have constrained the sustainable development of our country’s diamond beneficiation industry.

The findings of our consultative engagements have revealed that there are four broad categories of challenges that need to be addressed systematically in order to reposition and revitalise our downstream diamond beneficiation industry for sustainable growth and development. Briefly these challenges are:

Lack of access to finance

Diamond beneficiation is a capital intensive industry that requires funding, particularly for small players. This is so because of the costly nature of the industry’s raw materials, equipment and the time-honoured persistence by the main rough diamond producers for their clients to pay cash on (or even before) delivery. As a result, no substantial trading and cutting business can flourish without a supportive banking environment. Lack of capital prohibits business growth and access to modern technology.

In South Africa only two commercial banks (Nedbank and ABN Amro) are currently providing funding for the sector and mainly focus on the Diamond Trading Company (DTC) preferred clients (sight holders) which are normally large established companies. The local small and medium-sized manufacturers have no or very limited access to sources of finance. The IDC has provided funding to some companies in the sector. However, the majority of beneficiating entities do not have access to funding.

We are currently studying different Diamond Funding models (Antwerp Diamond Bank, Israel Banks and State Bank of India) in order to propose to local financial institutions and, especially the IDC, to consider developing a South African Diamond Funding model to support our local beneficiation industry.

Skills shortage

Shortage of advanced cutting and polishing as well as jewellery manufacturing skills remains a major barrier to the development of a competitive diamond beneficiation industry. Those who possess the skills in this highly specialised field have an obligation to impart this skill to a younger generation.This means that training is critical in developing younger talent.

To this end, we are working with the Further Education and Training (FET) sector, through the Ministry of Higher Education and Training, Mining Qualification Authority (MQA) and other industry stakeholders to develop a curriculum that will respond meaningfully to the skills needs of the diamond beneficiation industry.

Most of our bilateral agreements with different countries around the world include a component on skills/technology transfer. We are also exploring this avenue in our quest to develop skills to underwrite the development of a sustainable and globally competitive diamond beneficiation industry. In fact, one of the countries that have become the world centre of cutting and polishing diamonds has already committed to sending its skilled and trained polishers and cutters to the country to assist in terms developing our skills locally.

Lack of access to markets

Currently there are five major polished diamond wholesalers in the country. Since most of the beneficiators in this country do not have access to overseas markets, they have to sell their polished diamonds to these wholesalers. The wholesalers, however, are alleged to have the propensity to drive down the prices of polished diamonds thereby squeezing the margins of the diamond beneficiators. This has a negative impact on the profit margins of beneficiators, thus rendering their business unsustainable.

The African Growth and Opportunity Act (AGOA) provide access to markets in the US, which consumes more than 50 percent of all diamond jewellery in the world. This is an opportunity for local diamond beneficiators to grow their markets internationally. In addition, a free trade area exists with the European Union (EU), which provides for duty free access into the EU.

Together with local diamond beneficiators, we will be exploring means to leverage on these instruments in order facilitate access of local beneficiators’ goods into these lucrative markets.

Lack of security of supply

With the exception of sight holders, most beneficiators do not have access to a constant supply of rough diamonds of a consistent quality. This challenge has a significant impact on diamond beneficiators as it precludes long term planning and leads to other secondary challenges, such as difficulty in accessing finance. Limited access to rough diamonds is often cited as one of the main reasons why the local downstream beneficiation industry has not really taken off.

Through the research we have been conducting, we now have a fairly good sense of how much rough diamond supply is required to enable firms that had closed down or scaled down their operations due to lack of access to rough diamonds to resume their full scale production. We are working with the State Diamond Trader and producers to ensure that there is constant supply of rough diamonds.

In particular, we are engaging Alexkor and other producers in which the State has a stake with a view to developing a long-term solution to the challenge of the supply of rough diamonds for the downstream beneficiation industry. South Africa produces enough rough diamonds to feed its downstream beneficiation industry and both the privately and publicly owned institutions must rise to the challenge of ensuring that there is sufficient rough for the local beneficiation industry.

We are most grateful to the Task Team of the diamond industry and the DMR which, when it was approached to provide short-term relief to the plight of small cutters and polishers, rose to the challenge and made certain carats available for the cutting and polishing industry. This gesture of goodwill is appreciated and indeed demonstrates the level of maturity of the relationship that the state and industry have built over time.

To supplement locally produced diamonds we are exploring the possibilities of importing diamonds from other African diamond producing countries. In particular, through our membership of the African Diamond Producing Countries (ADPA), we are looking at importing diamonds from, among others, Angola, Democratic Republic of Congo and Zimbabwe.

We have noticed that small beneficiators typically beneficiate few stone per year, and due to their small size, usually focus on polishing high value gem quality stones. There are small scale diamond producers in the country who mostly mine alluvial deposits. These deposits generally yield quality gem stones. We are engaging these producers to avail a portion if not all of their production to the State Diamond Trader. This will ensure that the Trader has steady but low volume stream of diamonds that can be used to satisfy the demands of the small diamond beneficiators.

Creating a sustainable and globally competitive diamond beneficiation industry capable of creating meaningful employment opportunities requires us to work closely with other government departments and state institutions. In this regard, I am happy to report that we are currently engaging the national treasury regarding the implementation of our call for the repatriation of proceeds generated by exports of unpolished diamonds (section 69A of the Diamonds Amendment Act of 2005). We believe that some of the financial regulations have had the unintended consequence of not helping with the competitiveness of the diamond beneficiation industry and consequently this practise must be reviewed.

We need to review the business model of the Trader to allow it to continue implementing its core mandate of promoting equitable access to and local beneficiation of the country’s diamonds. An institution established to carry out the developmental agenda of government function effectively if its business model is entirely driven by free market principles.

Derelict and owners mines

South Africa has a long history of mining, however it has only recently developed and implemented comprehensive legislation to regulate environmental management and mine closure processes. Consequently, a large number of historical mining operations have been abandoned by their operators with little or no regard to the management of the impact on public health and safety and the environment. In 2009 the Department developed a strategy for the management of the residual mining legacies.

Formal mine closure only became legislative requirement in 1956 with the promulgation of the Mines and Works Act, and the regulation of environmental management of the mining sites only came to being with the promulgation of the Minerals Act of 1991 and the Minerals and Petroleum Resources Development of2002. In many cases, mines have had adverse impact on the health and safety of local and remote communities and the environment.

Public health and safety impact include physical features of the mines such as open shafts, unstable slopes on dumps and pits, collapse features and abandoned mine infrastructure. Other hazards such as contaminated water and soil, mining chemicals, explosives, radioactivity, windblown dust and, in the case of coal mines, spontaneous combustion of coal and coal wastes. In addition to the hazards relating to people accessing abandoned sites, mining can have a devastating impact on surface and groundwater resources, air quality and on sensitive and protected ecosystems. There are cases where mining forms part of the historical heritage and a balance therefore needs to be found between rehabilitation and the preservation of historical sites.

The negative impact of these derelict and ownerless mines presents themselves in two broad aspects, surface and underground impacts.Surface impacts generally involve land disturbance, air, water resources pollution and aesthetics while underground impacts involve pollution of underground water resources, spontaneous underground fires and creation of sinkholes.While surface impacts might be easily rehabilitated and managed, managing underground impacts is more complex and in some cases impossible to contain in cases where they have developed over years.

To this end, the Department has identified Mpumalanga as one province which has the prevalence of such complex surface and underground mining impacts.We have since established that the challenges in this province traverse beyond the functional area of the department and have taken the lead in bringing together all affected stakeholders such as, among others, DWA, Emalahleni Municipality, DEA, and in some cases Transnet.

In this regard we have just initiated a process that would culminate in the development of a macro plan to address the challenges in Mpumalanga in a coordinated manner; we will do this whilst we embark on rehabilitation. We are also mindful other sites are also presenting immediate risks to nearby communities and we therefore have to deal with them with the same vigour.

Acid mine drainage

Of late you would have been reading about this imminent threat to our water supply. This is a serious threat. But what exactly is AMD?

Acid rock drainage forms due to reactions between sulphide minerals, oxygen and water, catalysed by bacteria. The mining of sulphide-rich materials exposes sulphide minerals to the elements, accelerating the natural process, forming acid mine drainage.

The sulphuric acid generated in these reactions can mobilise other components of materials, often resulting in high concentrations of toxic heavy metals in the rivers and streams which drain mining areas.

The DMR, working together with other government departments and state- owned entities will continue to deal with the urgent challenge of Acid Mine Drainage. Key areas where acid mine drainage related problems have been identified in our country include the Witwatersrand Gold Fields (gold mining areas of Gauteng and Free State), various coal fields with serious impact reported in Mpumalanga and the O’Kiep Copper District in the Northern Cape. Other areas where sulphide-rich materials are mined still need further investigation. We have therefore done the following to address this challenge:

Government has commenced with the construction of a number of canals including Grootvlei and the Klipspruit area between Florida Lake and Fleurhof Dam which is currently under construction. We are in this respect currently implementing the report that was drafted by a team of experts led by the Council for Geoscience. Working together through an inter-governmental team we are implementing the recommendations which among others include the pumping and the treatment of water in the three prioritised basins (Western, Central and Eastern basins).

Health and safety

The Minister has tackled the issue of health and safety and in addition we need to recognise there is a need for collaboration within the mining industry in the context of the South African National Aids Council (SANAC). We should use this window of opportunity to tackle the scourge of HIV and AIDS in the mining industry. The mining industry was a pioneer in establishing centres of excellence in fighting this scourge. Let us therefore work together to ensure that this is sustainable beyond the confines of the mining environment so that those infected and affected continue to receive treatment perhaps in concert with the public health system once the worker leaves the mining industry.

Finally, I want to thank the staff in the ministry and the department as well as my family for continued support.Working together, indeed, we can do more. I would like to close by quoting from Jacob Riis, a journalist and social reformer and I quote: When nothing seems to help, I go and look at a stone-cutter hammering away at his rock perhaps a hundred times without as much as a crack showing in it. Yet at the hundred and first blow it would split in two, and I know it was not that blow that did it, but all that had gone before together. -Jacob A. Riis, journalist and social reformer (1849-1914)

I thank you.

Zingaphi Jakuja
Cell: 082 766 3940

Issued by: Department of Mineral Resources
1 Jun 2011




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