Minister of Mineral Resources Budget speech, response by DA
16 May 2017
Minister of Mineral Resources, Mr Mosebenzi J. Zwane, gave his Budget Vote Speech on the 16 May 2017.
Honourable Chairperson of the House
Deputy Minister of Mineral Resources, Cde Godfrey Oliphant
Chairperson and Members of the Portfolio Committee on Mineral Resources
The Whip of the ANC Study Group on Mineral Resources, iNkosi Mandela
Members of the media
Ladies and gentlemen
It is indeed an honour for me to table the 2017/18 Budget for Vote 29: Mineral Resources.
This year we honour one of the greatest stalwarts of our movement, Comrade Oliver Reginald Tambo. It is befitting therefore that we dedicate our collective efforts even more to realising Comrade O.R’s vision of a South Africa “in which black and white shall live and work together as equals in conditions of peace and prosperity."
Comrade O.R’s vision of peace and prosperity can only be defined within the agenda of radical socio-economic transformation.
It is my belief that sustainable and radical socio-economic transformation of the South African economy will be achieved once all South Africans share in the wealth beneath our soil.
This wealth translates to 96% of known global reserves of PGMs, 74% of chrome, 80% manganese, 25% of vanadium and 11% of gold reserves, to cite a few.
We have been allocated a budget of R1.779 billion in the 2017/18 financial year. I wish to assure the House that this allocation will be well-spent, as corroborated by the unqualified audit reports of the Department and all its entities.
A sizeable amount of the total budget, being R 914 million, is transferred to entities reporting to the Department. They are undertaking critical work in areas including Research & Development, skills development, beneficiation and rehabilitation.
I am pleased to inform Honourable Members that the Department and its entities have continued to efficiently and effectively manage the funds allocated in such a manner that accomplishes the objectives of government. The Department continues to pay its suppliers within 10 to 20 days, which is below the Government-wide standard of 30 days, and is critical to the development of small and medium enterprises. The Department will continue to implement government initiatives which support small business development and transformation.
Mining remains at the centre of our country’s economy. Not only does it account for 7,9% of GDP and employ almost 460 000 people, but it is the basis upon which other industries such as finance and manufacturing, have been built. We are of the firm view that mining will continue to play a key role in our economy over the next 100 years and beyond. We therefore need to work together with all stakeholders to ensure that we grow this economy and benefit all South Africans. After several years of stagnant and volatile commodity prices, we are looking forward to new and sustained demand and profitability in the sector. The mining sector has long been a pillar of economic growth and development in South Africa, and is set to cushion the broader economy from a slowdown this year. South Africa’s mining production increased by 15% year-on-year in March, and is set to continue growing as the global mining sector emerges from its winter.
We will continue to use the regulatory tools at our disposal – the Mineral and Petroleum Resources Development Act (MPRDA) and Mining Charter, to drive growth and transformation in the sector.
The review of the Mining Charter, which was gazetted in April 2016 for public comment, is almost complete. Although we had initially intended to have the process finalised in March 2017, further consultations have been undertaken and we are confident that the Charter that will be gazetted will be reflective of the careful consideration given, substantive inputs received and meaningful engagement with stakeholders.
We have aligned our budget, priorities and plans to the priorities of the nation, as expressed through the State of the Nation Address by His Excellency the President of the Republic, Jacob Zuma, as well as our long-term socio-economic vision - the National Development Plan
We are making decisive interventions to ensure increased black ownership and participation in the sector. In order to substantially boost the community development impact from mining through better implementation of Social and Labour Plans (SLPs), more emphasis is being placed on alignment of SLPs with the Integrated Development Plans of local municipalities.
Furthermore the Department has already had engagements on aligning and consultation of SLP projects which must be implemented. Our aim is to work together with the communities, municipalities and companies to ensure SLPs bring greater benefit to communities.
In the North West for instance, we became aware that the contribution of small diamond and slate producers towards their SLPs had a sub-optimal impact towards communities where these companies operate. To this end, we have engaged these companies and municipalities to identify meaningful projects which can be implemented, and these companies have made financial commitments in the Maquassi Hills, Mmamusa and Lekwa Teemane municipalities, in line with the Premier of the North West Province’s Villages, Townships and Small Dorpies (VTSD) Economies and Entrepreneurship Outreach Programme.
We also encourage closer collaboration between mining companies operating in the same area in the development and implementation of SLPs, to ensure higher-impact projects.
Mining is not just the prerogative of the few. This year we are taking more of our services to the people – we will be going to all nine of our provinces, and engaging with South Africans, particularly women and youth, on their involvement in the mining sector, not only as owners and managers in mining operations, but as suppliers, service providers and beneficiators. We have some of these new entrants, young and black, with us here today, we commend you. You are job creators, and growth drivers and we will continue to support you as government.
In the North West province, where we are part of efforts to bring more upcoming entrepreneurs into the mainstream economy, we are facilitating the unlocking of opportunities between companies that are not utilising their dumps and SMMEs. These SMMEs will enter into commercial agreements with the mining companies and re-work the dumps to realize economic benefits.
We continue to experience stability in the sector, with the peaceful conclusion of the October 2016 platinum wage agreements with the three major producers as an example. This represents a significant step in the continuation and strengthening of relationships built between the labour unions and mining companies since the signing of the Presidential Framework Agreement for a Sustainable Mining Industry in 2013. We encourage stakeholders to continue in this manner as they hold wage negotiations in the year ahead, and also work with communities, as stability is critical for the long-term sustainability of the mining sector.
Attracting investment and growing the sector remains one of our key focus areas. Since the announcement made at the Mining Indaba in February, of an integrated, multi-disciplinary geological mapping programme worth R20 billion over 10 years, the Council for Geoscience (CGS) has developed a plan of action to grow South Africa’s share of global exploration investment.
As part of assessing the potential of the shale gas resource, CGS and Petroleum Agency South Africa (PASA) are conducting a scientific programme that will include the plan for its sustainable development. This will attract new investment in shale gas and the broader upstream petroleum sector. Three vertical shallow boreholes up to one kilometre will be drilled in Beaufort West to assess the ground water levels and movement. The Petroleum Agency is also focusing on shale gas resource evaluation and new research initiatives, which include investigating near-surface hydrocarbon occurrence. As a responsible Government, we continue to engage with communities and stakeholders and will take them along as the process unfolds.
Health and safety continues to be important for the long-term sustainability of the sector. It is therefore in the interests of employers, organised labour and Government alike, to ensure this matter continues to receive the attention it deserves. We wish to congratulate those mining houses that have gone for more than one year without a fatality. We wish to encourage them to continue to mine responsible, and encourage others to achieve the same milestone.
This year marks 20 years since the establishment of the Mine Health and Safety Council, the tripartite structure which has worked tirelessly to reduce the numbers of fatalities, injuries and occupational diseases. We will continue to work with CEOs of mining companies and organised labour to improve performance of the sector in this regard.
The Council for Geoscience is collaborating with the Mine Health and Safety Council in a project which seeks to bridge the gap in the monitoring of mine seismicity within South Africa between the underground mining networks and the South African National Seismograph Network.
This project enables us to not only monitor seismic activities that involve rock falls in mines, but improve our predictive capacity in order to save the lives of mine workers. The growth of deep mining in the platinum sector calls for the extension of the programme from the gold sector to the platinum belt.
We are working to deal decisively with the issue of illegal mining, and are prioritising the rehabilitation of derelict and ownerless mines in this regard. The Deputy Minister will elaborate further.
In line with South Africa’s foreign policy, the African continent remains a key area of focus. We collaborate with other States within the framework of the African Mining Vision and the SADC Protocol on Mining, among others. We are intensifying our work with Zimbabwe, Zambia, Angola, the Central African Republic, Nigeria and other African countries in terms of technical cooperation in mining. We also wish to learn from their experiences in the area of upstream oil and gas development as we seek to conquer new frontiers of petroleum development. Work is already underway in Nigeria and CAR.
Mintek has also spread its skills development initiatives beyond our borders. It has continued in assisting several countries on programmes to develop technical competency and laboratory facilities. Most of these engagements occur within government-to-government bilateral agreements. Recently the Department of Mines in Malawi sent delegates to Mintek for a period of one month to be trained on an introductory course in the cutting and polishing of semi-precious gemstones and jewellery manufacturing. By the end of the training the learners were able to manufacture marketable products. A similar programme was done for the Women in Mining Sector of Mali. Mintek has also had active engagements with the Central African Republic, Mauritius, Nigeria, Sudan, Tanzania and Zambia.
In the past year, we have also strengthened our collaboration with BRICS countries and other economies.
Our aim is to create mutually beneficial relationships, with a focus on mineral value chain integration, investment promotion, geoscience, skills development and innovation.
The Kimberley Process Certification Scheme (KPCS) which was established in 2003 to stem the flow of conflict diamonds, now has members accounting for approximately 99.8% of the global production of rough diamonds. South Africa continues to be an active member committed to ensuring that diamonds as a resource are used to empower and benefit the people rather than fund exploitation and wars. We are proud to announce to you that South Africa has been appointed as Chair of the KPCS’ most strategic working group, that of Monitoring, over the next three years. This will be the first time in the history of the Kimberley Process, born and conceived in Africa, that an African country will be holding such a strategic position. We wish Dr Sipho Manase all the best as he represents the country and the African continent more broadly in this role. We will further strengthen regional collaboration in the space of diamond mining through the Association of African Diamond Producing Countries.
As outlined by the President of the Republic, His Excellency Jacob Zuma, beneficiation of our minerals remains one of our top priorities as Government, in line with the Nine Point Plan to grow the economy.
Mintek will continue to provide technical and marketing support to the two Beneficiation Centres recently set-up in Upington and Prieska in the Northern Cape. In total, Mintek supports a total of 46 project sites in pottery, glass beads, jewellery, gemstones, cultured granite, sand & stone in provinces including the North West, Limpopo, Eastern Cape, Free State and KZN. These supported projects have created 460 employment opportunities which are mostly in the remote parts of our country.
The Mintek Technology Demonstration site at Randfontein provides a platform for the intelligent integration of various Mintek technologies to remediate highly polluted sites such as Robinson Lake. The various Mintek technologies target the treatment of acid mine drainage and the removal of toxic and radioactive elements such as uranium and heavy metals from the Robinson Lake sediments. This technology integration platform will provide applicable technologies for the remediation and potential restoration of any highly polluted sources such as dumps, lakes and rivers.
For sustainable and radical socio-economic transformation of the mining industry to be achieved, we have to continuously invest in the relevant skills.
Mintek is involved in a number of skills development initiatives in partnership with other institutions in order to increase the skills base of ordinary South Africans who have been negatively affected by mining. Through a Memorandum of Agreement with the MQA, Mintek is training 300 learners in Mpumalanga in Surface Mining over a period of six months. The training consists of both theoretical and practical components, and includes learners from Chief Albert Luthuli, Thaba Chweu, Umjindi, Emakhazeni, Thembisile Hani and Mkhondo municipalities. This programme will greatly assist in uplifting these communities.
One of the success stories of our entities’ bursary programmes is Ms Tshiamo Legoale, a geologist employed in Mintek’s Small Scale Mining and Beneficiation Division. She is my guest here today, as she won the right to represent South Africa in FameLab, an international competition for young scientists. Ms Legoale, please rise, you have done us proud.
It is not only the task of Government to transform the economy, but the work of all of us, black and white. Let us therefore join hands and move the mining industry forward. As we leave this place, we are confident that we have your support as we together go and change the lives of all our people for the better.
I hereby table this Budget before the House.
I thank you.
Address by the Deputy Minister of Mineral Resources, Mr Godfrey Oliphant, MP, on the occasion of the Debate on Budget Vote 29: Mineral Resources, E249, Parliament, Cape Town
Chairperson and Members of the Portfolio Committee on Mineral Resources
Minister of Mineral Resources
Ladies and gentlemen;
It is on this day in 1977 that Mama Winnie Mandela was banished by the Apartheid Government to Brandfort in the Orange Free State. Thanks to the ANC Government no such atrocity will ever be perpetrated against our citizens. This year of Oliver Reginald Tambo let us remember how he emphasised the beauty of our country, together with its rich tapestry of cultures that we must appreciate in our democratic South Africa.
General State of the Economy: The health of our mining sector is very critical to the economic growth and development of our country, especially now that our country’s economy is operating under severe strain. It is our national duty to pay careful attention to all and each sector of the economy to ensure economic recovery, to boost job creation, and to create an environment conducive to sustainable development and poverty alleviation. There is no doubt that our country has all and every potential to be prosperous and globally competitive.
It is therefore up to us, the political leadership, to work with our fellow citizens, to inspire all other leaders in business, in labour movements, and in the civil society at large to mobilise for meaningful, sustainable, and effective development of our national resources for the benefit of our nation.
It is important to note that the global economy, at present, is subjected to a mix of global social and geo-political forces rendering its growth and stability vulnerable. Such systemic instabilities affect our small open economy negatively. As such we need to double our efforts to mindfully navigate the prevailing stormy seas of the international political economic environment.
In particular, we need to pay sustained attention to the structural fault-lines of our national economy so as to minimise vulnerability, volatility and underperformance. The radical economic transformation agenda must therefore mean inclusive growth and flow through of financial benefits to the broader society especially, the owners of the mineral wealth of our country.
Economics of Mining industry: Following a harsh downfall on commodities prices over the past few years, it is now generally expected that commodity prices are on a slow recovery path. Provided the global GDP growth remains stable, it is likely that prices will stabilise and investment and production stability will resume in due course. Of course commodities face different market conditions, and it is unrealistic to generalise and expect uniform trends across all commodities.
Whilst some challenges remain within our mining industry, we have much to work with. The catalogue of current issues that require both political and technical leadership includes a range of items such as the need to boost exploration and prospecting investment, matters of health and safety of the workforce, rehabilitation of the environmental legacy, illegal mining, mineral beneficiation and the revitalisation of the mining regions across the country.
The over-arching issue for our country, and indeed a far more strategic issue, is the need to revive the reputation of our mining industry and its global branding. I would like to deal with these issues in some detail in this House, of course within my time limit.
Back in 2014, President Zuma highlighted the urgency of dealing with the mining sector’s challenges. It is clear that the prosperity of the nation and our social welfare are greatly affected by the developments in the sector. This is particularly so if we consider the vast opportunities and the great potential that the mining sector has to offer. Careful analysis of our modern economic history would show that this sector has had a pivotal role in the modernisation of the SA economy.
It is therefore a national imperative that we focus on the ways and means of unlocking the inherent potential of the sector at the same time that we deal with the outstanding structural issues facing the industry.
Transformation: In spite of sustained emphasis on transformation over the past two decades and notwithstanding the general agreement on the need for the broadening of ownership as well as deepening of operational involvement by the black majority in this sector, our achievements leave much to be desired.
Sustainable transformation is a complex challenge that requires full and meaningful commitment from all stakeholders. Yet, until and unless this issue is effectively resolved the industry will continue to face an internal risk and volatility.
The medium to long term prosperity of this sector demands of all stakeholders to embark on a transformation path that is conducive to fairness, stability and business success. I am also pleased to report that the DMR together with the IDC and PIC have held several seminars to promote Broad Based Black Economic Empowerment in the sector. Accordingly, we should by June 2017 roll out a festival of mining activities around the country and I am excited about the prospects.
Beneficiation Imperative: At the same time, it is self-evident that our national interest calls for a systematic and integrated mineral beneficiation drive. It is generally agreed that we cannot continue to mine and export ore and other raw materials for processing elsewhere. We can surely expand the benefits we can derive from the beneficiation of our natural resources. There is therefore a need to increase value addition to our minerals before they are exported, in line with government’s stated mineral beneficiation and industrialisation priorities.
It is stating the obvious that a sustained focus on viable beneficiation strategies will present enormous investment opportunities in the country for both South African and foreign investors. As I have emphasised in the past, we need to re-examine notions of beneficiation, and broaden our definition in line with the realities of socio-economic and financial benefits that both ‘up-stream’ and ‘down-stream’ opportunities offer in each and every commodity.
Clearly, such opportunities differ from commodity to commodity, and no single template would fit all the commodities. Today South Africa enjoys a considerable range of opportunities for integrating our mineral beneficiation and industrialisation programmes in order to enhance the pace of social development and economic growth. Such an approach to mineral beneficiation and industrialisation calls for a much higher degree of coordination within the public sector and across the private and public sectors.
Health and Safety of Workers: It is a fact that South Africa’s mining, in a number of commodities, is getting deeper and deeper under-ground every year. The trade-off between safety and short-term productivity and profitability becomes more and more pressing. Conventionally, the safety of the workforce has received secondary attention - short term profit is put first! This needs a paradigm shift, something that needs urgent and ongoing attention.
The mining sector has increasingly being giving more attention to health matters as a result of the promulgation and implementation of the Mine Health and Safety Act as amended. However, the sector should continue putting more effort to reduce on the number of occupational diseases reported by the mining sector mainly with Pulmonary TB, Silicosis and Noise induced Hearing Loss, injuries and fatalities. Honourable Members: the “Golden Rule” of our mining culture needs to be for all stakeholders to reaffirm their commitment to implementing effective measures to realise the goal of “zero harm”. The achievement of this target will also enhance the global reputation of our mining industry.
Today, over 15 months later, we are still dealing with the Lily Mine disaster. The families of Pretty Nkambule, Yvonne Mnisi and Solomon Nyerende would be justified to say that both as a country and the mining industry, we have failed them.
Our commitment, however, is that we shall not give up the efforts to retrieve the container and recover the bodies of the three comrades. All we need is the cooperation of all affected parties and the suspension of our differences in this matter. Let us unite around our proud South African flag until this matter is resolved. The inquiry on this matter is on-going even though it has taken unreasonably long. We will await the outcome and act accordingly thereafter.
Honourable Members, when it became clear that the Lily Mine management and the Business Rescue Practitioner were unable to fulfill their promises and financial obligations I went around with the President of the Chamber of Mines, Mr Mike Teke to raise funds towards the ex-gratia payment for the families of three trapped miners and the 75 rescued mineworkers on that fateful day. I am pleased to report that the three families have since been paid R200 000 each and 58 out of the 75 mineworkers also received an initial R10 000 each with a R40 000 balance still outstanding per worker. The remaining 15 employees were contractors whose banking details are still being processed.
We want to thank the Rand Mutual Assurance for the R100 000 contribution they made; the Chamber of Mines of South Africa who contributed R600 000 and the IDC who contributed R800 000.
I must emphasise that the amounts given to the families and mineworkers were ex-gratia payments only in addition to other benefits and entitlements due to them. More work still needs to be done in this Lily Mine matter and we shall not rest until we find a mutually acceptable solution.
Illegal mining: Illegal mining continues to cause socio-political as well as economic concerns. Such activities result in loss of life, environmental degradation and a significant loss of revenue to the country and the mining sector. Mining without a permit or right is illegal in terms of the MPRDA, and as we have reported widely, the Department has taken decisive actions to deal with this matter.
We also conducted consultations and a workshop which included all stakeholders and the zama-zamas in particular. The workshop resolutions are being processed and implemented where appropriate.
Rehabilitation of Derelict and Ownerless Mines: The rehabilitation of derelict and ownerless mines together with the concurrent rehabilitation of the existing mines offer a mix of challenges and opportunities. It is a historic fact that the democratic government inherited a long-standing environmental heritage of neglect, which spanned over 100 years of a conspicuous legislative vacuum. As the honourable members are aware, there are thousands of derelict and ownerless sites in our country. Whilst such sites are a clear liability, at the same time, I would like to believe that the rehabilitation of these sites might well offer opportunities for creating jobs and livelihood.
It is evident that a national programme of environmental rehabilitation of the old mines could well generate many job opportunities, potentially running into 1000s of jobs. Furthermore, in many cases, the rehabilitated areas could be further used for agriculture and other economic activities.
As importantly, in order to avoid any further accumulation of such mining sites, it is vital that we engage our mining companies to implement concurrent rehabilitation practices. This practice will also further enhance job creation opportunities in the mining sector. I am glad to note that there is a growing number of mining operations that have begun with such practices. Of course, many more need to join the programme of concurrent rehabilitation of the mining sites.
Honourable Speaker, we look forward to the support of this House, and that of the Portfolio Committee on Mineral Resources, as we discharge our mandate in the current Administration.
I am glad to report to this House that in my analysis of the various regions and provinces, it is encouraging to note the vast potentials in nearly all provinces and regions. For example, whilst diamond mining in Namaqualand has come to end, but the region has the largest single zinc deposit called Gamsberg. Clearly, part of the solution to the decline of the region lies in the rapid replacement of the old activities with the new ones. This in turn calls for a much higher level of coordination between the private and public sectors. In particular, when we can integrate our mining and mineral beneficiation activities, and further coordinate them with all the associated infrastructural requirements. It is well within our reach to create hubs of mining and mineral beneficiation, and even agricultural development around the country.
It is our collective national obligation to make sure that our substantial mineral wealth is utilised to generate socio-economic benefits and bring about integrated development for our nation. Our communities across the country look to us to achieve this. To this end, we need to draw lessons from our past century of mining, to avoid the undesirable consequences, and to promote a mining industry that is socially progressive, environmentally sustainable, and economically competitive.
Given the developments in the recent past in our mining sector, it is clear that we need to place our sustained emphasis on creating an enabling environment along the lines articulated in the NDP. We have much to be optimistic about, and our mining industry has the potential for yet another robust and expansive phase over the next few decades. It is up to us all to join forces in enhancing collaboration and cooperation for the benefit of our nation. Our success will need to be driven by our commitment to a constructive use of the existing experience to unlock the potential inherent in our considerable national resources endowment.
I thank you.
Dreadful ANC mining policy has cost SA 65 000 jobs in 1 year
The following speech was delivered in Parliament today by the DA Shadow Deputy Minister of Mineral Resources, Adv. Hendrik Schmidt MP, during the Budget Vote on Mineral Resources.
The Department seems to remain rudderless in the exercise of its business as mineral regulator. We recently witnessed an umpteenth new Minister but also the appointment of a new Director-General (DG).
The appointment was made after an acting DG was required to steer the Department for an extensive period of approximately a year. This situation seems to be standard practice in the management of affairs by the ruing ANC government where Ministers, and now recently DG’s, appear to be discarded more often than not after having served the ANC’s narrow purpose.
According to Stats SA, mining’s contribution to GDP has shown negative growth of -0.4% measured year-on-year. Employment in the mining industry has also fallen by approximately 65 000 workers during 2016.
Rising unemployment is detrimental to our mining economy insofar as unskilled and semi-skilled labour is concerned. Whilst the demands on the government increases with every unemployed person, it also increases the burden on mining companies and local government who have to ensure that services continue to be rendered.
It is, therefore, imperative that government adopts the correct mining policies and that regulatory compliance is ensured.
Security of tenure and a stable mineral regime are the most important factors in ensuring that the mining sector expands, thereby contributing to reducing unemployment.
Self-defeating slogans such as “Radical Economic Transformation” without any meaning being ascribed to it, need to be tempered with international best practices where mining companies are interested in investing their capital.
An ANC government with strong socialist and communist tendencies has made these objectives impossible, and ultimately responsible for many adversities. These include:
• Amendments to the MPRDA, which have been outstanding for more than 3 years after Parliament approved amendments with the DA strongly voting against it. To aggravate the situation, more amendments are currently serving before the NCOP. This will add to the legal uncertainty. The President referred amendments to the MPRDA back to parliament for reconsideration more than 2 years ago.
• Disastrous changes to the Mining Charter are expected to be promulgated soon, missing the deadline for the amendments announced by the Minister earlier this year, by more than 3 months.
• The results of the Mining Phakisa undertaken last year are still to be made public with not a single stakeholder (including parliament) knowing what the final agreed results are.
• Rehabilitation of ownerless and disbanded mining sites which require an approximate R50billion will, at the current rate of expenditure, take more than 100 years to complete.
• According to the well-known Fraser Institute, South Africa continues its disgraceful demise with regards to its favourability as a mining destination as well as its ailing legal regime in attracting investment.
These are but a few examples of the dreadful ANC leadership exposed in the mining industry which, if anything, has succeeded in leading us to junk status!
When the DA takes over national government in 2019, we will ensure that the mineral resources of our country will benefit all of our people, not just the connected elite.
I thank you.
Mining recovery conceals a gloomier picture: James Lorimer MP DA Shadow Minister of Mineral Resources
Mining is seeing the proverbial green shoots of recovery. Improvements in international commodity prices mean that some mines have started making money and there is some optimism in the industry.
Unfortunately though, that conceals a gloomier picture. The commodity price increases look shaky – the difficulties of running a mine are escalating and capital is extremely hard to come by. Communities are increasingly angry that they are being disregarded. Rushing down on the industry are the twin salvos of new legislation and a new mining charter, both of which will be disastrous.
We all know that despite our sumptuous mineral endowment, mining investors rate us very low on the list of places to put their money.
What does that mean?
It means our capital investment in mining is half what it was in 2007 and 31% down on 2013. Right now people involved in mine financing tell me capital investment has dried up almost completely.
Because of that, in the last four years, our industry has lost 65 thousand jobs. Remember that for every actual mining job, there’s estimated to be one other in surveying, logistics or engineering.
The problem is the same as it has been under the ANC – poor legislation, poorly administered.
This department is a hopeless loser. It can’t pass legislation, anything it does get through is bad, it can’t administer properly and it keeps taking ridiculous decisions that result in it losing in court.
Take Section 54 safety stoppages. The industry complains. I complain in this House. They are being too broadly applied and there are adverse consequences for production and employment. The ANC tries to bludgeon me into silence, claiming I don’t care about workers. Nonsense, I care about safety and jobs, because if you don’t have a job, you and your whole family are vulnerable.
We know what we’re doing, says the administration. Anglogold takes the department to court. The department loses spectacularly. Section 54 has been too tightly imposed.
I assume since that loss the department is being more careful and production is up 15%. Looks like I was right all along and the ANC was wrong.
Another one that I brought up in two previous budget speeches was the Aquila case. Double granting of rights between a company which sank hundreds of millions into exploration only to find this government has granted rights over the same land to a shady government mining company which doesn’t mine. I was assured, in two budget votes, in this House, that the Department of Mineral Resources (DMR) has this in hand. Wrong. The DMR lost that case too.
So I will take anything I hear from the ANC in this debate with a large shovelful of salt, everybody else should too. The fact is, this administration suffers from a credibility crisis.
It lost in the North Gauteng High court over the Diamond Act, and the Constitutional Court is now considering that appeal. No matter which way it goes, we can be sure that this government’s attempts to fix the diamond markets, to the advantage of a few ANC aligned cronies will enrich a few but lead to the small mining, cutting and polishing sectors not recovering from the pit of destruction where the ANC’s stewardship has thrown them.
This department even loses in court against its own staff. Officials in its own Gauteng provincial office won against it in court when there was a senseless plan to reorganise it – people think that plan was for the benefit of some favoured cronies.
And this has been the pattern of the ANC’s stewardship of the mining industry since the beginning. It has focused on transferring mine and rights ownership on a racial basis. That’s valid, given our unequal past. But only up to a point. The ANC ignoring that policy comes at a cost.
The cost is lower profitability and predictability for the investors and less investment and fewer jobs. The ANC has sacrificed the interests of the many who work or who could work in mining for the interests of the few, a handful of BEE tenderpreneurs and other cronies of the ANC leadership.
So this administration fails in court. It also fails even to get to court.
Enforcement against illegal miners is laughable.
Miners in Welkom estimate ten thousand zama-zamas are underground on any one day!
Illegal chrome miners in Limpopo take an estimated million rand a day from sites that are easily visible and accessible. Police raid, but talk about problems with enforcement capacity and the mining goes on. The same sort of thing happens in the enforcement actions against illegal sand mining. To its credit, after some nagging, the department is starting to act in this area, but the actions are mostly pathetic.
For example, at Agate terrace near Port St Johns, the authorities act against sand miners and it stops for a day. When the authorities are gone it starts up again. Where are the miners in court and the confiscated equipment? There is a lack of will to enforce on the part of the department. The department is not serious and is not credible.
When the Hawks proudly told us they had taken action in illegal mining cases worth R200 million, it had to be pointed out to them this was less than five percent of what this government tells us is mined illegally every year. That’s hardly a disincentive against a trade that costs the country R6 billion a year in lost opportunities.
Instead of concentrating on how to stop illegal mining, the department spends its days drawing up more and more legislation and regulation that will make it more complicated and less profitable to mine.
So if it is unwilling and unable to enforce its writ, how does the DMR spend its time?
That’s a good question with a depressing answer.
Ideological foolishness has combined with procedural delays to give us a Mineral and Petroleum Resources Development Act (MPRDA) which is still winding its way through the National Council of Provinces (NCOP) process, three years after first being passed by this House. The department has tried to insert some changes to make up for the flaws in its bill in a way that will probably make the whole thing unconstitutional when it is finally passed.
At least two organisations that I know of are lining up to challenge the bill in court and that’s even before we get to the two substantive issues that the President warned were problematic and which the ANC decided not to change because the President was wrong. We’ll see, but I do believe this was one of those rare occasions when the President did have good legal advice.
This compounds the credibility problem as prospective investors wonder why South Africa cannot get it together to get a new mining law in place despite having introduced it four and a half years before.
Then there’s the Mining Charter. After months of ignoring the industry, this administration is at last talking to them. And that has led to a delay in it being revealed to us. The initial version three of the charter would make legal mining a burden that is hardly worth bearing. That is aside from trying to make every BEE deal done so far retrospectively illegal and trying to make miners disobey the Companies Act. The whole Charter concept is flawed – how can you even begin to talk about legislative certainty when you change the whole way the industry is structured, every five years?
If that assault on credibility was not enough, we have a Minister who is getting ever deeper into the mire regarding his association with the Guptas. Perhaps the Minister would like to comment on the allegations today by former Minister Ramatlhodi. Ramatlhodi says he was removed as Mineral Resources Minister after he refused to take away all of Glencore’s mining licences in order to get them to pay penalties to Eskom. Minister Zwane replaced him. The question is then: did he threaten to remove Glencore’s licences in the saga which led to them selling their mine to the Guptas? Minister, you have a chance to answer here and clear this up. I hope you use the opportunity.
This makes my point eloquently: if the department and its leadership are suspected of collusion with cronies, investors are unlikely to feel they are in safe hands and will stay away.
It is for lack of time, not for lack of ammunition, that I now turn from this government’s mess to our alternative.
The DA’s focus would be on one of the positives that we believe mining delivers to South Africa. Empowerment, foreign exchange, local infrastructure development and tax revenues are all hugely important but we believe they are overshadowed by the greatest good which mining delivers which is employment. Mining jobs are no longer low-paying jobs and are one of the few places unskilled or semi-skilled people can get decent work. Mining hugely benefits those who are employed by it and thus it makes sense to grow the sector by any means possible.
That means doing the opposite of what this government does. We need to make it easier to mine rather than more difficult.
We should have fewer, clearer regulations that don’t keep changing. The simple fact is that if government makes it more expensive to mine, there will be less mining. If there is less mining, there will be fewer jobs.
If it is easier to mine, it is cheaper to mine, and if it is cheaper to mine, there will be more mining and more jobs. Get that right and the rest is detail. It is time the ANC changed direction for the sake of South Africa’s nine million unemployed.
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