Abolition of Lebowa Minerals Trust Bill: discussion; Mintek: briefing

Meeting report

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This Report is a Contact Natural Resource Information Service
Taking Parliament to People, and People to Parliament
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The aim of this report is to summarise the main events at the meeting and identify the key role players. This report is not a verbatim transcript of proceedings.

MINERALS AND ENERGY PORTFOLIO COMMITTEE
13 October 2000
DELIBERATIONS ON THE ABOLITION OF LEBOWA MINERAL TRUST BILL AND BRIEFING BY MINTEK

Documents handed out:
Amendments Agreed to and Rejected Amendments - (see Appendix 1)
Committee Report from 10 October meeting
Excerpt from NA Rules - June 1999, pg 68-69

SUMMARY
Committee members briefly reviewed the report from the meeting held on 10 October. The presenter from Mintek informed the committee about processes involved in beneficiating minerals and South Africa's potential within resource-based industrialisation. After a short question period, the meeting was adjourned and will reconvene on 1 November to finalise any outstanding issues and to draft the final report.

MINUTES
Committee Report of 10 October 2000
Chairperson Nkosi asked members to look through the committee report from last meeting and communicating to the committee clerk any outstanding issues. He noted that UDM's choice to not participate in the proceedings has been recorded.

Mr A Nel (NNP) had a concern that the phrase "The Committee would like it stressed that the projects currently funded by the LMT Board will be taken over by the Department of Minerals and Energy, and that all efforts must be made not to impact negatively on the economy of the former Lebowa" is giving an opinion that not all parties agree to. Chairperson Nkosi suggested putting this concern in writing to be included in the report to the Department. He then called the member's attention to the omission of Clause 5 which is substituted with:
"The Minister may -
after consultation with the relevant Portfolio Committee of Parliament, make regulations regarding the nature of proof required in terms of section 3(1)(c)
make regulations regarding any matter which is necessary in order to achieve the objects of this Act"
Chairperson Nkosi stated that this change is just for clarity's sake. He then alerted the members that 3 November is the tentative date for the bill to be debated in House. On 1 November the committee members will meet to finalise any outstanding issues and to compile their final report to be presented to the Department.

Presentation from Mintek
Dr. P Jordan introduced himself as a CEO of Mintek, which is based in Randburg, Gauteng and deals with the beneficiation of minerals. Although South Africa is not strong agriculturally, it's potential in resource-based capital goods gives it an advantage in the business sector. Dr. Jordan pointed out that most businesses established after 1994 are energy-intensive, and that South Africa has the second to the third cheapest electricity in the world. He emphasised that Mintek's role in the mineral industry focuses on intermediate products such that raw materials are beneficiated to extract the useful minerals, which are then passed on to component manufacturers and sub assemblers who use these minerals to create the finished product. Mintek processes mined minerals in order to refine them and create marketable alloys. They also work to develop new capital goods which, as a spin-off of resource natural goods (a sector in which South Africa is strong), are critical in the processes of industrialisation and "mastering the economy". Dr Jordan noted Mintek's methods of processing magnesium which is very safe and gives off no environmental waste. He also spoke of their cost-effective furnaces and physical metallurgy projects.

At this point Chairperson Nkosi asked for clarity regarding the core issues in mineral mining for South Africa, particularly those things Mintek is doing to decrease harmful effects to human health. What structures are already in place to do with toxic waste and mining, and how are different companies coming together to deal with these problems? There was also a concern from one of the members about the potential loss of gold resulting from each mine having its own refinery.

Dr Jordan responded that because the mining plants are so small and have extensive security already installed, the whole area is very secure and they are not predicting any loss of gold as a result of theft.

Mr E Lucas (IFP) then commented that South Africa is currently exporting raw material and importing finished products because it is cheaper to do that instead of assembling product within the country. What effect does this have on employment?

Dr Jordan agreed that this practice does not help the already high unemployment rates in the country and that it is unwise to export raw material in any case. Mineral prices are very volatile and unstable, while the price of finished products are more predictable. He then continued with his presentation.

Positioning South Africa for resource-based industrialization may be achieved by increased exploitation of the capital goods industry. Because the price of minerals is very unstable and sensitive to market fluctuation, the minerals industry is very dependant on transport costs. The cost for general freight services, particularly within country, is increasing and far above international norms. Dr. Jordan pointed out that it is less expensive to transport minerals to Japan than it is to transport between internal South African refineries. It is important to ensure that general freight services are reasonable and that Port duties, which are also currently above international standards, are as low as possible. Port duties are rated according to the value of the cargo instead of the distance transported, and are therefore much higher after beneficiation. This is a major disincentive for beneficiators like Mintek. Dr. Jordan noted that PortNet holds a monopoly on transport services and basically controls the entire sector.

Mr E Lucas then asked for comparison on the cost of what South Africa imports to what beneficiated internally. Also, can mining plants be moved closer to the site of mineral deposits so that transport costs are decreased.

Dr Jordan replied that this has already happened to some extent. All new plants, i.e. the Mintek's iron ore project, are established directly on mining sites.

Chairperson Nkosi reminded members that their committee focuses more on economy and less on mining issues. There is a need to build some kind of infrastructure that will assist the sustained future of the economy. He then thanked Dr Jordan for his presentation and closed the meeting.

The copyright in this material subsists with the Contact Trust. Further distribution or copying of this material is prohibited without the prior agreement of the Contact Trust.
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Appendix 1
AMENDMENTS AGREED TO
ABOLITION OF LEBOWA MINERAL TRUST BILL

[B 49-2000]


LONG TITLE

I. In the long title to omit "to the Minister of Minerals and Energy and"

CLAUSE 1

1. On page 2, after line 6, to insert:

"prescribe" means prescribe by regulation;

CLAUSE 3

1.
On page 2, in line 21, to omit "to the satisfaction of the Minister." and to substitute:

as prescribed in terms of Section 5.
CLAUSE 4
1. On page 2, in tine 27, to omit '^tretrenchment" and to insert:
handling
2. On page 4, in line 4, to omit "retrench" and to substitute with;
deal with
3. On page 4, in line 4, after "1995" to insert

(Act No.66 of 1995)

CLAUSE 5
1. On page 4, after line 29, to insert:

(2) The Minister may, after consultation with the relevant Portfolio Committee of Parliament, prescribe the nature of proof required in terms of section 3(I)(c).
REJECTED AMENDMENTS

CLAUSE 3
I.
On page 2, from line 19, to omit paragraph (c) and to substitute;

(c) The Minister must constitute an impartial tribunal consisting of the Minerals and Energy Department and the Beneficiaries Forum to facilitate
the question of claims of ownership of mineral rights under the mineral jurisdiction of the former Lebowa Mineral Trust.

2. On page 2, after line 21, to insert:
(d) That should such claims be established in terms of subsection 3(1)(c) the Minister must grant to such a person or persons the right to such minerals.

3. On page 2, after line 26, to insert:

3.3 Should the Minister for any reason not be able to transfer such rights in terms of sub section 3(1)(d) then the Minister shall pay compensation to the owner of the established claim.