SAMDA and ANCYL on the Establishment of a State-Owned Mining Company

Meeting report

Introduction
The Chairperson said that the Committee was beginning an important and very serious process, one that dealt with matters of life and death, in that the Committee would be acknowledging the contribution of miners and the mining industry to South Africa since the discovery of minerals in the country in the 19^th century. It would also be important to discuss in an open and frank manner the future of the industry and the contribution that it must make to society. The mining industry had served as a catalyst for the industrialisation of South Africa and the creation of jobs, since there were currently approximately 300 000 employed in the industry. Moreover, South Africa had recently been declared as the world’s richest country in terms of mineral reserves. According to a recent report from Citigroup, the country’s mineral reserves were worth approximately R18 trillion. However, South Africa had been declared as the world’s most unequal society. Moreover, poverty could be seen even in areas where minerals were to be found. Poverty indeed was all over the country. This was therefore a situation that was unsustainable, since there was no way to justify great wealth amidst a sea of poverty. It was completely unsustainable. Members of the Committee held a serious responsibility to correct that anomaly to ensure that the country’s mineral wealth was exploited in such a manner as to raise the standard of living of the general population. In response to this situation, the African National Congress in 2007 at its watershed conference in Polokwane had resolved that South Africa must establish a state-owned mining company, so that the country could harness the necessary resources to correct these socio-economic backlogs that had been determined at the international level. The Committee sought to determine the role that a state-owned mining company could play, and wanted members of the public to present their views to the Committee on the role of the state-owned mining company, its structure and governance. He emphasised that the Committee wanted to listen to the public before drawing any conclusions. It might well be that other members of the public would want to address the Committee on something else. They might want to suggest other interventions. 

The Chairperson extended a special welcome to a delegation from the Namibian Parliament.

The Chairperson welcomed the South African Mining Development Association, the African National Congress Youth League, the Legal Resources Centre, the Northern Cape Women in Mining, and the South African Women in Mining Association (SAWIMA). He acknowledged the role of women in an industry traditionally seen as a male domain.

South African Mining Development Association (SAMDA) submission
Mr Nchakha Moloi, Chairperson: SAMDA, outlined SAMDA’s submission, and explained why there was now a debate on nationalisation and state ownership. He gave a brief history of state ownership in South Africa in the mining industry, and indicated the current state participation in the mining industry. He said that there was a case for state ownership, among other options. He defined nationalisation: the action of forming or becoming a nation; the action of rendering national in character; or changing something from private to state ownership or control. He gave reasons: the road to socialism was a means for a state to achieve specific policy and socio-economic objectives in the current economic system.

Mr Moloi explained the background. Section 130(1) of the Transvaal Gold and Base Metals Law 1908 (Transvaal, No.35 of 1908) stated that ‘...no right may be acquired under this Act by a coloured person (includes Africans as defined in the Act); and the holder of a right acquired under the Law No. 15 of 1898 or a prior law or under this Act shall not transfer, or sub-let, or permit to be transferred or sub-let, any portion of such right to a coloured person....’

Mr Moloi quoted Section 23(1) of the Development Trust and Land Act 1936 (Act No 18 of 1936) provided that ‘Notwithstanding anything in any other law the following provisions shall apply to land in respect of which the mineral rights are held by the Trust or a Black or in trust for a black tribe or community: (a) no person shall prospect for minerals on such land without the written permission of the Minister: Provided ...sub-section (3) Save as is otherwise provided in this section, the Trust shall in respect of mineral rights held by it, be in the same position as any private holder of mineral rights.’

Mr Moloi spoke of the origin of the debate with reference to the Freedom Charter (1956), Ready to Govern (1992), the Reconstruction and Development Programme (1994), and the ANC Draft Mineral and Energy Policy Discussion Document (1994). He explained choices made during the constitutional negotiations. CODESA had prioritised political power. The economic transformation had largely not been achieved and some pillars of the apartheid machinery remained intact.

Mr Moloi explained the history of state participation. The state had historically reserved ownership of mineral rights with respect to precious metals and precious stones. Until recently the state had held an interest in De Beers Finsch mine and Cullinan plus Venetia, although this was disputed. Gold mines had a special tax dispensation (formula tax) in recognition of the historical state interest. The Minerals Act 1991 (Act No 50 of 1991) recognised private and state ownership of mineral rights. The state had significant PGM interests through the former Lebowa Minerals Trust. Iscor and Sasol were examples of the larger corporations in the mineral sector that were owned by the state. Some of the major mineral deposits in South Africa had been discovered largely through state institutions.

Mr Moloi outlined a compromise and indicated the state of transformation. The gross value of Black shareholding within the top 25 Johannesburg Stock Exchange listed companies was R97bn or 5.27% of the total market cap. The Public Investment Company (PIC) had shares worth R50.1bn in 10 companies or 2.76% of the total market cap of the top 25 companies. Only seven companies had implemented Employee Stock Ownership Plans (ESOPs) with a value of R12bn or 0.53% of the total market cap of the top 25 companies. Anglo American dominated the Black Economic Empowerment (BEE) transactions given its strong position in coal, gold, iron ore, manganese and diamonds. Women remained largely underrepresented in the industry. Progress with other pillars of the Charter was not promising either.

Mr Moloi outlined forms of state ownership: public-private for example, a public-private joint venture such as Botswana Debswana; a governmental operator, for example, the National Copper Corporation of Chile (CODELCO), a large state-owned and operated company; and a governmental monopolist, for example, Zambia’s Zambia Consolidated Copper Mines (ZCCM); and governmental-owned operations, in which private players were subcontracted to operate , for example, Mexico’s Mexican Petroleum (PEMEX).

Mr Moloi said that royalties presented an opportunity to channel funds. They could be allocated to specific objectives, for example, the rehabilitation of abandoned mines and community development. Mr Moloi referred to addressing industry constraints, capturing more wealth for Black Economic Empowerment (BEE) enterprises locally, and potentially abroad; the ability to capture value creation – Botswana had the option of 15% participation in all new mining operations and valuation was cost based; and alignment of public and private sector involvement, which could address industry bottlenecks. There was room to address security of supply concerns by governmental control of strategic minerals such as coal, the ability to capture greater value creation, the ability to leverage private sector expertise, greater access to private sector funds – capital and global markets, greater state control over mining resources, the potential to address security of supply concerns, and for alignment with the private sector.

Mr Moloi said that possible reasons for a state-owned mining company included the secure supply of minerals of strategic significance, such as energy commodities (coal and uranium) priced competitively; the support of side stream industries by ensuring an adequate supply of raw materials for the purposes of value addition programmes; advancing the objects of the Freedom Charter; and ensuring an effective role model of transformation so that the broader industry could begin to emulate such a model, thus speeding up growth and transforming the economy, fighting poverty, building social cohesion and state legitimacy, pursuing the values of international cooperation, building a developmental state, contributing optimally to the state fiscus, which was required to address a backlog of historical socio-economic imbalances, and consolidating all the interests of the state in mining for their more effective management.

Mr Moloi detailed the current extent of state participation, which included mining entities such as Alexkor and Foskor. He explained the geological potential. South Africa was a minerals treasure trove with significant deposits of a wide range of minerals.

Mr Moloi explained key considerations and gave clarity on why the state might want involvement in the mining industry as owner. Such considerations included how this state-owned company would avoid the Alexkor dilemma; how it would be resourced, particularly with regard to the pursuit of exploration projects; how, other than the consolidation of prospecting projects and assets as well as mining investments of state-owned enterprises (SOEs), the state might intend to acquire operating mines and strategic minerals; how it would be funded; whether it would be geared to run exploration projects, operate mines, and make strategic mining and mineral investments; whether it would work alone or rely on strategic partners, BEE or otherwise; whether it would pioneer beneficiation as a strategic area of business focus; whether it would achieve what the current mining houses could not do; whether it would be involved in the supply of mining capital goods, services and consumables; and how it would advance or facilitate the transformation of the mining industry, particularly BEE enterprises.

Discussion
The Chairperson thanked SAMDA and said that its input confirmed the Citigroup’s report. It had to be asked where South Africa had gone wrong and why poverty levels were continuing to rise. He observed that when SAMDA had been tracing the history of the regulatory framework, it had quoted some old legislation which had specifically excluded black people in the country from owning mines. SAMDA had also referred to the Freedom Charter in attempts to find solutions. There was a term which was used loosely ‘historically-disadvantaged South Africans’ which had been used in good faith in the CODESA interactions, whereby white women were included, but which in practice had been abused in the industry. He asked SAMDA if white women were excluded by law, according to SAMDA’s knowledge and research. If not, he asked if there were any examples at which the Committee could look, so that SAMDA’s input could assist the Committee in addressing this question in future. He also noted that SAMDA had recognised the challenges confronting Black Economic Empowerment (BEE). It seemed that South Africa was in a vicious cycle. The newspapers and other media confirmed that there were these serious challenges. The Chairperson also asked about SAMDA’s reference to the need to avoid the Alexkor dilemma. Alexkor was state-owned. How would the state-owned mining company be different from Alexkor?

Mr C Gololo (ANC) thanked SAMDA and requested a copy of the presentation. He asked in which companies the Public Investment Corporation had shares. He asked if SAMDA would support the state-owned mining company.

Ms N Mathibela (ANC) thanked SAMDA for the eye-opening presentation. She asked why the state-owned mines had failed. She asked about the issue of land, which she had not heard mention of in the presentation, because it was the issue of land which held back, in most cases, the black-owned companies.

Mr R Sonto (ANC) observed that the DA had had the lion’s share of the presentation because of the seating arrangements: the ANC had been disadvantaged. He said that nationalisation was a road to socialism. What was wrong with that? Socialism was literally a ‘scare word’ to the capitalists. What was wrong with a state that was commune in nature, especially a state that fed the nation? Mineral and petroleum resources were the common heritage of the population. The state was the custodian thereof. What would be improper of the state as the custodian of the mineral and petroleum resources formed itself in a way to provide and co-ordinate those two resources.

Mr H Schmidt (DA) asked why the African National Congress Youth League was in Parliament, but then apologised for asking the wrong question, and retracted it. He then asked for clarity on Motjoli Resources.

Mr E Marais (DA) said that the statement that women remained under-represented in the mining industry was applicable to most industries. He asked how SAMDA envisaged addressing this situation. He said that beneficiation in a BEE company could be applicable only to the directors of the company. He asked how beneficiation should be extended to all employees.

Ms J N Ngele (ANC) joined her colleagues in commending the presentation. Her questions had already been anticipated. If women were under-represented, what about the community?

Mr V Magagula (ANC) asked SAMDA what model it was using in its mining. SAMDA had spoken more about state-owned mining, in which it agreed with Parliament. However, it had not said much about nationalisation. He asked what SAMDA proposed with regard to nationalisation.

Ms F Bikani (ANC) said that it was frustrating to Members not to receive documents. She asked SAMDA what research had been done to ensure that there was engagement, advocacy and involvement especially for small-scale miners and what effective involvement SAMDA had had to ensure proper economic development for stakeholders. She asked further what steps had been taken to ensure that we worked towards a common goal of state ownership of mines and what the advantages would be.

Ms Noukqubela Mazwai, SAMDA, said that there were specific laws that prohibited the involvement of black men and women. She had been involved in the industry for 24 years as a contract miner. She remembered that she had defied legislation by going underground where she was not supposed to go to undertake mining construction for mining companies. If it were not for the partnership with the National Union of Mineworkers, she did not think that she would have stood in the meeting that day. She said that the legislation had also prohibited women from being involved in specific roles such as mining engineers or geologists. However, there were women who owned mines. So it would be necessary to consider and decide who was really historically-disadvantaged. There was nothing wrong with the current legislation, which was creating an enabling environment. The challenge was in the implementation. A special committee would have to be created to discuss this as part of the review of the Charter that the Government was undertaking, since the Portfolio Committee had not been involved. SAMDA had been involved in issues concerning review of the Charter.

Mr Moloi said that Alexkor was a state diamond mining company on the borders of Namibia. It had for a long time faced a serious land claim. The state had allowed Alexkor to depend on itself. The company had not invested in new exploration or in machinery. The land claim had been resolved, and the communities given a significant stake in Alexkor. Hopefully, the company would now have the opportunity to flourish. Alexkor had always been restricted to working as a mine. It had never had the opportunity to acquire assets elsewhere in South Africa. All companies needed to diversity. Climatic change had caused Alexkor’s marine operations to decline in recent years. The solution would be for Alexkor to be allowed to diversify its portfolio. 

Mr Moloi said that the there were instances where state-owned mining companies existed side by side with the private sector according to the same rules. SAMDA’s view was that if a state-owned mining company existed in South Africa, it could operate alongside the private sector, and in joint-ventures with the private sector. There would be absolutely no problem with a state-owned mining company.

Mr Moloi said that state mining companies had failed on the same basis as private mining companies had failed. It was a matter of management, resources and assets. Sometimes, as in Zambia and the Democratic Republic of Congo, there had been external factors.

Mr Moloi said that land and minerals had always been ‘inter-twined’ in South Africa. Dispossession of land had always been linked to mining. The whole history of the system of hostels and migrant labour had arisen where people were denied land and forced into homelands, and then forced to be purveyors of cheap labour to the mining industry. It was a wholly linked and ‘inter-twined’ strategy.

Mr Moloi said replied to Mr Sonto’s question on what was wrong with socialism: ‘I don’t know’. Maybe the kind of economic system prevailing in South Africa was a good system. The Government was moving towards a developmental state that provided for the people: SAMDA was happy with that. There was confusion as to the definition of socialism. The question was what one wanted to achieve. It was important to ensure that there were benefits to the communities and high quality services.

Mr Moloi said that it was essential that beneficiation provided highly skilled jobs to the communities, with better pay and working conditions.

Mr Moloi said that even with many years of reserves of mineral resources, eventually these reserves would be depleted. It was essential to ensure that South Africa used its mineral wealth to industrialise. It was important to develop high value-added knowledge industries. It was unacceptable that miners spent their whole lives operating a drill and then when they were retrenched they faced unemployment because there were no drilling jobs in their communities.

Mr Moloi said that the communities had to share in the benefits and be involved.

Ms Bridgette Radebe, SAMDA, replied that Motjoli Resources was a ‘junior’ resources company involved in mining exploration. It was fully Black-owned and operated. It was a model BEE company. It balanced the interests of Government as set out in the law and the interests of the community. It was a leader in the industry and gave guidance to SAMDA.

Ms Radebe said that if one thought that the cost of education was high, one should consider the much higher cost of illiteracy. The BEE challenge, as SAMDA understood it, was concerned with values. When a company was granted prospecting rights, before that company engaged in a transaction with a financier, it was necessary for it to understand the intrinsic value of those rights.

Ms Radebe said that the PIC was a governmental employee pension fund that owned 5% of Anglo-American. This made it the largest shareholder in that company. It also held 5.5% of SASOL RSA. SASOL RSA owned 100% of SAFOL Mining.

Ms Radebe said that for SAMDA community involvement extended beyond the communities that were located near mineral resources, as a result of the skills that were generated through mining. These benefits could extend beyond the life of a mine.

Ms Radebe said that the model was straightforward: one balanced one’s mining activities with operating profits and compliance with the law, and the interests of the community after the lifespan of the mine. This what SAMDA referred to as the balancing act.

Ms Radebe said SAMDA appreciated that a knowledge-base was the first thing to establish if SAMDA was to empower its members to help them make informed decisions.

Ms Mazwai added that when SAMDA did its research to identify the ‘junior’ mining sector, it discovered that there were more than 10 000 small scale mining entities. These comprised people who either did not have the necessary skills and expertise or who had the necessary skills and expertise but lacked capital. The historic challenge in mining was exploration funding. SAMDA was addressing this challenge. SAMDA understood that Government was going to introduce a tax on royalties. She hoped that taxes on royalties would be reinvested to develop skills. There were historically disadvantaged universities which lacked faculties of mines. There were other research organisations which needed money; and the potential state-owned mining company would need money. There was much that could be done out of that royalty tax. It was important not to allow the National Treasury to just take all the money from mining royalties. Without money to explore, as Mr Moloi had indicated, many of these BEE deals were becoming useless. It had to be asked why it was the case that wherever there was mining people were still poor. She herself came from a rural community where members of the community had fought for royalties to be paid back and that was how she herself and others had become involved in mining. The royalties had never been paid but now the law had changed, but the communities were still not benefiting. SAMDA wished that the state would have ensured that strategic minerals were managed by a macro entity that ensured benefits to the majority of the people, maybe by state ownership, while not excluding the participation of other mining companies. It had to be asked how many would in 2014 have net value. The BEE partnerships lacked real ownership, because they were involved in debt. The issue of BEE in the legislation was very useful. Implementation had many challenges. ‘There was a 2014 deadline by the Charter.’ However, by October 2009, hardly 15% of BEE was in the hands of BEE ownership according to the Charter. So what would happen by 2014? The legislation was good, but it was necessary to ensure implementation. The good thing about SAMDA was that its members included black people, owners of mines, who had been in the mining industry for a long time.

A Member asked why the communities around the mines were becoming poorer than ever before, yet SAMDA was saying that they were benefiting.

Mr Sonto referred to the abject poverty in the communities, while the state was saying that it should make the rules stricter. He asked what SAMDA would say to the option of a state-owned mining company.

Ms B Tinto (ANC) asked if SAMDA was planning to assist the South African Women in Mining Association (SAWIMA).

Mr Schmidt said that there was a counter argument that the mining companies interacted with the integrated development plans (IDPs). These benefits were made in general, but were not directly linked to a particular mining company doing business in an area. Secondly, he said that SASOL was successful because of private enterprise, not because of being state-owned. Those state-owned companies, like Transnet, that had not been privatised, were in dire financial straights.

The Chairperson noted that Australia was imposing a resources tax pegged at 40%. He asked SAMDA if South Africa should consider a similar tax. He said that the terms that were confusing SAMDA, like socialism, were very important, because they determined the structure of the economy. If the economy was not correctly structured, there would be problems. Socialism suggested a command economy. Capitalism suggested a liberal free market economy such as had given the many problems faced at the present time. Then there was the loose term ‘mixed economy’. It was necessary to interrogate these philosophical systems.

Mr Moloi said that SAMDA’s presentation was objective in reviewing what had happened elsewhere and the prospects for South Africa if it instituted a state-owned mining company. SAMDA did not have a preference either way. Its view was that it was aware that there were successful state-owned mining companies. There were certain companies in which the state owned a share. There were certain companies in which the state was a partner. This was the reason SAMDA had used SASOL and ISCOR as examples. The timing of their privatisation was significant. He acknowledged their success under private ownership. Whether a company was state-owned or privately-owned, if it was properly managed it would succeed. It was important to implement the legislation to ensure that the intended beneficiaries received their benefits.

The Chairperson said that SAMDA had raised fundamental issues which had provoked many questions.

Ms Bikani said that the presentation had not really made it clear who the members of SAMDA were, whom they represented, and how they benefited the industry.

Mr Moloi replied that the Chamber of Mines represented established mining companies. SAMDA represented the emerging mining companies, but extended its work to the wider community, in terms of its research, knowledge and experience.

The Chairperson thanked SAMDA and expected it to visit the Committee in future.

African National Congress Youth League submission on establishment of State Owned Mining Company
Mr Julius Malema, President, African National Congress Youth League, was accompanied by Mr Floyd Shivambu, who headed the political education and research unit of the League and was a spokesperson. Mr Malema said that socialism did not mean a command economy; it meant a democratic economy. When you mentioned a command economy, people became afraid. The capitalist economic system was an evil system that promoted individualism and personal accumulation of wealth and maximising individual profit as opposed to benefiting the majority. This was the difference between the two. ‘I am not saying I am a socialist, neither am I a capitalist; I am a national democrat, a very progressive nationalist. I pursue the interests of the national democratic revolution.’

Mr Malema said that South Africa was the richest country in the world, because of its mineral deposits and reserves. There was no credible research report in the entire world that disputed that South Africa was rich with strategic, precious and industrial metals. South Africa was known throughout the world as a treasure trove which boasted an abundance of mineral resources, producing and owning a significant proportion of the world’s minerals. South Africa’s wealth had been built on the country’s vast resources – nearly 90% of the platinum metals on earth, 80% of the manganese, 73% of the chrome, 45% of the vanadium and 41% of the gold. Only crude oil and bauxite were not found in South Africa. The recent report outcome by Citigroup had confirmed that South Africa was the richest country in the world with mineral deposits that were worth more than $2.5 thousand billion.

Yet the richness of South Africa co-existed with high levels of poverty, unemployment and massive inequities. The single most important issue facing South Africa 16 years after the transition to democracy was breaking the grip of poverty on a substantial portion of its citizens. There was a consensus amongst most economic and political analysts that approximately 40% of South Africans were living in poverty, with the poorest 15% in a desperate struggle to survive. This meant that approximately 18 million out of 48 million people had not experienced the benefits of our newly found freedom.

Young people were the most affected by the massive poverty, unemployment and inequality.

A substantial number of South Africans were poor and dependent on Government-funded social grants.

There were historical and real economic reasons that the majority of the South African people continued to live in abject poverty in the sea of richness.

Joblessness was one of the major contributions to poverty, starvation and many other social ills. The South African economy continued to exclude a substantial number of the people, while benefiting a few previously advantaged individuals. It was now common knowledge that the ANC Youth League had called for the country’s mines to be nationalised as part of its political programme for total economic emancipation in our lifetimes. Nationalisation should be considered because it was the most practical way to open up opportunities for all South Africans, create more jobs and develop the South African economy through beneficiation and industrialisation of minerals. The ANC Youth League’s document for nationalisation of mines included a concrete proposal that the state should establish a state-owned mining company.

The ANC Youth League was aware that there was a difference between nationalisation and the establishment of a state-owned mining company. Parliament and the Department of Mineral Resources should correctly go ahead with efforts to establish a state-owned mining company, while nationalisation of mines would be resolved on a different platform.

The state currently owned PetroSA, but it did not mean that all the petroleum, gas and fuel industry was nationalised. The same applied to South African Airways, the South African Broadcasting Corporation, and other state-owned enterprises. It was for this reason that the ANC Youth League was present to submit substantively on the establishment of a state-owned mining company, while it would discuss and resolve nationalisation in the ANC, since it was on the agenda of the ANC.

The ANC Youth League’s view was that a state-owned mining company should be established, and that the state should take a much greater role in the extraction, beneficiation, production, industrialisation, and trade of mineral resources. However, it also believed that a state-owned mining company could achieve the following: increase the state’s budget for social development purposes, for example, health, education, rural development, the fight against crime, and create jobs; lay a very firm basis for the country’s minerals to be beneficiated and industrialised locally; change the South African economy from over-dependence and reliance on exporting of natural resources and importing of finished goods and services; create new economic centres of development outside Johannesburg, Durban and Cape Town; and improve the working conditions and salaries of mine workers.

The Government revenue generated from taxes would not be able to build better lives for all South Africans. Government could not solely rely on taxes to deliver better services to the majority of the people. South Africa would not be able to deal with the housing backlog, provide free access to education, provide better healthcare, safety and security, and generate employment, particularly of the youth, if we were not in control of the key and strategic sectors of the South African economy. The wealth of South Africa should benefit all who lived in South Africa.

It was an open secret that ordinary workers in mines were the least beneficiaries of mining in South Africa, either as recipients of salaries or as stakeholders in mining. South African mineworkers were underpaid and worked under difficult conditions in mines that were unsafe. Their workplaces and socio-economic existence exposed these workers to fatal diseases and accidents. Nationalised mines should be beacons of safer working environments and better working conditions, because nationalised mines would not be engaged in the narrow pursuit of profits at the expense of the community and human development.

With state ownership and control of mineral resources, South Africa would be able to attract industrial investors, who would contribute to the growth of the economy, transfer skills, education and expertise to locals, and give them substantial jobs. It could never be correct that an absolute majority of the minerals that South Africa produced should be exported to other countries, with little effort to build internal capacity to beneficiate those minerals.

Nationalisation of mines would lead to greater local beneficiation, industrialisation, growth of the economy, and jobs for the majority of the people. The industrial strategy adopted by the Government would never succeed unless we had state control and ownership of the natural resources. We needed metals, iron ore, gold, platinum, coal, chrome, manganese and many other minerals to industrialise. South Africa’s skills development levels should be dynamically, though not exclusively, linked to the industrialisation of mineral wealth.

Although related to the above component, it was important to highlight the fact that the South African economy as it currently stood bore strong features of all colonial economies. Primarily, all colonial economies were positioned as sources and reserves of primary goods and services for the colonisers’ economies.

After political independence, many, if not all post colonial economies continued to function and operate in the same manner in which colonists designed them – exporters of primary commodities and importers of finished goods and services. This pattern had a direct impact on the sustainability of post colonial economies as they were heavily reliant on the demand for their goods and services by former colonisers and bigger market economies.

Nationalised mines ought to lead to a spatial development framework that should necessarily decentralise development. Areas such as Sekhukhune, Rustenburg, Burgersfort, and Emalahleni had far greater economic potential because of the mineral resources underneath their soil. These should be deliberately developed, beneficiated and industrialised to enhance and harness the economic and human development of those regions.

All mineral rights should be transferred to the state-owned mining company, which would from time to time establish partnerships with private corporations, in which the state would hold a minimum of 60% shares and for the remainder of the 40% the private corporations should pay royalties and taxes. The state should impose a moratorium on the provision of mineral rights and a new mechanism should be developed on how new licences should be issued to the state-owned mining company. The state-owned mining company should be established under the direct supervision of the Department of Mineral Resources. Mr Malema emphasised that a state-owned mining company should not be under the Department of Public Enterprises. a state-owned mining company must be fundamentally responsible for the following tasks: owning and controlling South Africa’s mineral resources; maximising the nation’s economic gain from the mineral resources; contributing to South Africa’s social and economic development; developing and maintaining strong environmental and safety standards; and developing the mineral resources in a careful and deliberate manner; and developing strategies for skills development in the mining sector, including the establishment of mining colleges for low, intermediary and high intensive skills development for all people.

The state-owned mining company would be established through an Act of Parliament which should clearly define its tasks, responsibilities, and mechanisms for accountability. The state-owned mining company (SOMCO) should necessarily gather all the state’s interests in mining.

A minimum of 60% of the mineral resources extracted by the SOMCO should be locally beneficiated and industrialised, and 50% of such beneficiation and industrialisation of minerals should happen in the mining communities.

Mr Malema emphasised that strong accountability mechanisms should be instituted to guide those who worked for SOMCO not to redirect its resources to their own individual benefit.

There should be a strong community involvement and national accountability forum on the management of the mining resources. There should be an annual stakeholders’ mining conference to discuss the direction and content of the SOMCO activities, including its finances, and community development programmes.

Those involved in the running of the SOMCO should be closely processed and monitored to ensure that they were honest. Assessment of SOMCO should include all employees of the company.

The SOMCO would within a broader minerals strategy ensure that all the beneficiation and industrialisation of minerals benefited all people. Importantly the SOMCO should attract the best skills, expertise and knowledge on how best minerals would be extracted, produced, beneficiated, and traded for the mineral resources of South Africa.

The SOMCO should necessarily operate differently from how most state-owned enterprises (SOEs) such as Eskom, Transnet, and South African Airways, operated. The fundamental difference would be that it would not be run like a private business corporation whose extent of progress was solely measured through the amount of profit generated. The SOMCO’s progress should be measured by its ability, capacity and coherent determination to create jobs, maximise the country’s gain from mineral resources, and contribute to socio-economic development and assistance of communities where mining occurred.

The Department of Mineral Resources’ Annual South African Minerals Industry (SAMI) said: ‘As a major mining country, South Africa’s strengths include a high level of technical and production expertise as well as comprehensive research and development skills.’

South African Universities continued to produce mining engineers and skilled strategic leaders of both the private and public sectors. Developing countries such as Venezuela looked up to South Africa for expertise and skills in mining. The state should channel these capacities to useful outcomes in the SOMCO. State-owned PetroSA was a good example, because it was state-owned and did business in a highly competitive environment. PetroSA was currently building a 400 000 barrel per day oil refinery. Moreover it was state-owned.

For sustainable socio-economic development and historical justice, this Parliament should responsibly use the political power that it held on behalf of the people to exert progressive change. The 16 years of South Africa’s democratic dispensation had come with many challenges, but also many lessons on how better the state could change people’s lives for the better.

South Africa remained one of the most unequal societies in the world with massive unemployment and poverty challenges and the key to unlocking these lay with the will of the people which had temporarily been entrusted to this Parliament. We therefore had a responsibility to change society for the better and ensure that all South Africans shared in the country’s wealth.

Mineral resources were non-renewable resources and the further that we extracted them; the further we depleted South Africa’s potential wealth and strategic economic importance and significance in the world economy. It was therefore the responsibility of this Parliament to ensure that mineral wealth was used in an environmentally friendly fashion and an economically durable manner for the benefit of all people. All the big mining corporations that currently benefited from South Africa’s wealth were built on the foundation of poor people’s sweat and blood as cheap labourers, slaves and underpaid workers in the mines.

As when Parliament passed the Minerals and Petroleum Resources Development Act 2002, the League believed that this Parliament would be decisive in enacting legislation to establish the SOMCO.

The people of South Africa should share in the country’s wealth. The mineral wealth beneath the soil, the monopoly industries and the banks should be transferred to the ownership of the people as a whole.

Discussion
The Chairperson said that Members had heard a very clear and concise submission from the ANC Youth League. It contained also very clear proposals as to how the League saw the governance establishment and roles that a state-owned mining company could play.

Ms Ngele said that the President of the ANC Youth League had spoken. She asked what would happen to existing mines if a state-owned mining company was established.

Mr Schmidt acknowledged that Mr Malema spoke on behalf of the ANC Youth League, but said that, according to his submission, Mr Malema also claimed to speak on behalf of the ANC. He asked how Mr Malema foresaw resolution of the issue of the nationalisation of mines. Has it been discussed with the ANC. He said that Mr Malema had two arguments, one in support of a state-owned mining company, and one in support of nationalisation. Would the state-owned mining company relate only to existing assets or would it embrace new ventures. Was Mr Malema’s nationalisation proposal prospective or retrospective, in other words, to begin new ventures or to nationalise existing mining houses. Mr Schmidt asked on what basis Mr Malema claimed that a state ownership of mineral resources would attract investors more than current privately-owned enterprises.

Mr V Magagula thanked Mr Malema for presenting such a wonderful document. ‘We are very happy to have such a wonderful ANC Youth League.’ It was three years since the ANC’s resolution to establish a state-owned mining company, yet the resolution was not yet implemented. Soon the ANC would be having another conference. It was important to move fast.

Mr Marais said that he could identify with the ‘democrat’ part of Mr Malema’s self-definition. He asked how Mr Malema saw the path of directing beneficiation through to the ordinary mine worker.

Ms Mathibela thanked Mr Malema and said that the President of the ANC Youth League had a very sharp mind. She thought that he would get us out of the poverty that we were in and the sufferings that we saw outside. She praised the ANC Youth League’s document for its assertion that a state-owned mining company would increase the fiscus of the country in order to improve health and other services. She hoped that the League would ‘keep it up’.

Mr Sonto said that the presentation talked to the core of the issue of levelling the social playing field. He thanked the League for that. He asked how the proposed moratorium affected current operations without disturbing them. Secondly, he asked how universities could produce and retain the skills that were needed in the mining industry.

Mr Gololo thanked the League and commented that exploration and research were very expensive. This was well-known. The national fiscus was not in a position to fund these. He suggested following the Australian model of taxation of the mining industries. In Australia these were taxed at a rate of 40%. He suggested letting the companies operate freely in the sector while the country reaped the benefits.

Ms Bikani thanked the ANC Youth League for its presentation, which she saw as a plea to Parliament to play its role. The Committee should take note of all the issues that had been raised since the budget vote. Most of these issues were reiterated in the document. One of the key objectives of the Department of Mineral Resources was to ensure that state-owned mining became a reality. It was essential to ensure that those who currently benefited the least did eventually benefit. The Department must produce its beneficiation strategy and it should be adopted by October 2010. The Committee should begin to look at the processes of implementation in its oversight.

Mr Malema said that the state-owned mining company must be given all the mineral rights, and the company would decide with whom to partner at whatever level. That partner must bring an added value to the state. The state must own 100% of the mineral rights. As and when the state-owned mining company issued a licence, that licence must be on condition of partnership with the state-owned mining company. In that partnership the state should not own less than 40%. That 40% must include all the BEE policies which had been spoken of. That 40% must include women, the disabled, and must pay tax and royalties. It was essential that the profits remained in South Africa and benefited the people of South Africa. The ANC Youth League did not support maximising profit for personal accumulation. The League was autonomous but an integral part of the ANC. Mr Malema sat on the national executive of the ANC and knew that nationalisation was on the agenda of the ANC. It was only he who could tell Members that, because they did not sit there.
Nationalisation would be resolved as a policy issue in the 2012 centenary conference of the ANC. It was important to become closer to that reality.

Mr Malema said that one should not tamper with what people owned now. The financial resources were not available. This was why one was looking for extra income. The state-owned mining company would seek partners to develop new mining ventures at previously unexploited sites. Partner and state must meet each other half way. The partner must bring capital.

Mr Malema said that the only thing that ordinary people received from mining at present was disease and air pollution. Those who profited did not care. They were mining through licences. The ANC Youth League advocated renewal of licences on the basis of sharing and willingness to partner with the state. The state was the most reliable partner.

The state-owned mining company would not be a company that would request money from the National Treasury. Mr Malema called for assembling all those interests under a state-owned mining company which would not be driven to maximise profit.

The state-owned mining company would be more than ready to sell at a reasonable price, but one which will attract more investment. If South Africa sold coal at reasonable prices, it would be an attraction to industrialists. Whatever South Africa produced, it would not sell it an abnormal price. Attracting investors would produce jobs by promoting industrialisation. South Africa lacked such activities because its minerals were so expensive.

A state-owned mining company would put the interests of its workers first. There was no way to sell them out, since their votes were required. Intervention was needed and it must be in the interests of the working classes including the unemployed workers. Mr Malema was talking about working-class consciousness.

Mr Malema said that the annual mining indaba was a useless private endeavour and was highly expensive to attend. He praised the President for declining to attend. It was just a money-making scheme.

Mr Malema said that the state-owned mining company would be required to give a precise financial statement at the end of each year. The Minister must have the power to intervene. Those who were lazy must be removed. It was necessary to exploit what lay under the soil to provide the state with additional income.

The Department of Mineral Resources must cease issuing individual licences. Mr Malema deplored the misuse of the autonomy of universities by the owners of the means of production to inculcate wrong-thinking and teaching people to be individualistic and compete rather than instilling community values. It was necessary to transform the education system to teach the relevant skills that would boost our economy. The private sector was doing very little.

Mr Malema asked what the Oppenheimer family had invested in education in Kimberley. The Oppenheimers, he said, should be ashamed. It had distanced itself from the social problems of the ordinary people.

Mr Malema said that private companies were not necessarily successful. Every day private companies were closing down. PetroSA was a state-owned company that was doing very well. Eskom, despite its problems, had not closed down.

Mr Schmidt spoke of the lack of implementation by the Department of Mineral Resources, for it had failed to apply the Government’s policy. It was necessary to ensure that what was on the Statute Book was implanted by Government. He said that the solution proposed would lead to more problems. It was better to ensure monitoring of implementation of existing legislation.

Mr Malema said that BEE had not resolved the problems of the broader society. It was necessary to have a broader intervention for the benefit of everybody. South Africa had a democratic government, and private partners should be encouraged. There should be development in terms of skills and services. This is what one wanted from a state-owned company. Those who were afraid of nationalisation were afraid of words. He referred to the pessimism in the past of some of those who praised Mr Mandela now.

Mr Floyd Shivambu dismissed claims that there would be disinvestment as false alarms, in view of South Africa’s vast mineral resources. Where else would these investors go? He noted that investment was continuing in Zimbabwe, even under the Indigenisation Act under which within five years 51% must be owned by indigenous entrepreneurs or by the state.

Mr Malema said that people were dishonest when they said that South Africa was deterring investors. It was important to note that investments were being made in countries in a state of civil war. Investors were looking for money and just wanted to make a profit. It would not be worth their while to run away, since the Chinese were waiting to enter and invest. Mr Malema speculated that if the Chinese invested in South Africa, the country would move forward.

The Chairperson had allowed SAMDA and the ANC Youth League more time because of the importance of the subject. He noted that Members would be undertaking a study tour to Chile and to Venezuela. He also noted that the President had declared this an activist Parliament, which must do things differently and faster. The Chairperson said that the Committee would be decisive, and he thanked SAMDA and the ANC Youth League.

Legal Resources Centre, the Northern Cape Women in Mining, and the South African Women in Mining Association (SAWIMA) submissions
Due to the need to discuss each submission in greatest detail, the Chairperson postponed the submissions from the Legal Resources Centre, the Northern Cape Women in Mining, and the South African Women in Mining Association (SAWIMA) until Friday, 27 May 2010.

The meeting was adjourned.