The Chairperson, in his opening remarks, mentioned the dire situation facing the platinum sector, saying that a number of producers had closed down their operations, in view of the significant drop in platinum prices since supply presently exceeded demand. This would have an impact on employment, particularly in rural mining areas, and one producer had already signaled an intention to lay off 1 500 workers. This was of serious concern to the Committee and it would be meeting with platinum producers. The Research Unit was also preparing a study on platinum prices over the past five years, and by-products and employment statistics. A Member commented that if there was not demand for platinum and gold, this would have significant effects and much longer-term visions would be needed for the country, including more focus on beneficiation to prevent
The Committee’s programme for its forthcoming study tour to the
Members also considered the Committee’s Report on the Study Tour to
Chairperson’s opening remarks
The Chairperson introduced and welcomed the new Committee Secretary, Mr King Kuene.
The Chairperson mentioned that the situation in platinum sector was dire, and a number of producers had to close down their operations to regulate market prices. The price of platinum had significantly dropped, signifying overproduction. This move would come at a cost, especially as
Mr H Schmidt (DA) said that the SIMS Report indicated that 92% of the R2.6 billion of wealth depended on Platinum Group Metals (PGM), and if PGMs were in trouble, then this signified a much larger problem than platinum only, and affected future resources. If there was an alternative to PGM, then this would involve a much longer-term vision for the future of mining.
Mr E Lucas (IFP) said he thought there were serious consequences to cutting down production, and commented that price normalisation was artificial. Following global trends would lead to a price control on the product, and monopolisation. He said
The Chairperson said that the Committee would await the results of the research.
The Chairperson asked the Committee Secretary to brief the Committee on the preparations for the oversight visit to
Mr King Kuene, Committee Secretary, noted that preparations were under way. It was intended that the Members fly to
The Chairperson asked Members to ensure that they brought with them the Minerals and Petroleum Resources Plan, the Mine Health and Safety Act, the Mining Charter and the document on Housing and Living Standards in the Mining Industry.
Mr Schmidt asked if it was intended that Members would be staying in
Ms F Bikani (ANC) pointed out that the time would be reduced by new roads having been constructed.
The Chairperson said that these points would be borne in mind, and suitable accommodation would be found, if possible, outside
Adoption of the Annual Report
The Chairperson suggested that Members go through the Annual Report of the Committee, covering the period April 2011 to end March 2012, page by page.
Members noted the need to be more careful in making sure documents discussed in their meetings were tabled in Parliament, as there had been issues with that in the past year.
Members asked that the Secretary to check on the attendance records, pointing out some mistakes in this regard.
Minor amendments were made also to wording and grammar.
Members adopted the Committee’s Annual Report, as amended.
Study Visit Report
The Chairperson reminded Members that they had previously given preliminary consideration to the body of the report and the recommendations, but they were free to make additional recommendations. The Members had commented that the report had fallen short in the area of findings, and a new bullet point was added for “Stable Legal Conditions”.
He also pointed out that in
The Committee had also agreed on the Recommendations, although the Chairperson asked that the phrase “state owned mining company” be removed from a particular portion of the report. He also noted that the Boards should be accountable to Parliament, not the Department.
Ms Bikani said she disagreed with the bullet points, as she believed that a state-owned mining company should be established through an Act of Parliament.
The Chairperson agreed that was the case, and that the Committee would also recommend that the state-owned mining company should be run or controlled by a competent board.
The Chairperson felt that the following recommendations should also be made:
-State Owned Mining Corporations (SOMCO) should cooperate with domestic and foreign investors in exploration of new minerals
-There should be a set target for contribution to Gross Domestic Product (GDP)
-SOMCOs should play a cooperative role on the beneficiation of South Africa’s Minerals
-SOMCOs must take charge or control of strategic minerals, or develop those minerals of infrastructure.
The Chairperson noted there was a debate about “taking charge” versus “taking control.”
Ms Bikani said that minerals were divided into four categories: infrastructure minerals, energy minerals, high-tech minerals, and platinum or PGMs. She also pointed out that further subdivisions were usually recognised. Infrastructure minerals would be further subdivided into agri-minerals (phosphate), industrial minerals (cement), iron ore, manganese, chrome, and nickel. Energy minerals were divisible into coal, uranium, PGMs, oil, and natural gases. High technology minerals included titanium, zircon, rutile, and magnesium. Platinum metals included both Platinum and PGM reserves.
Ms Bikani said that she thought that SOMCO should be established for consultation in relation to strategic metals. This should be and be wholly owned by the state, but should be allowed to enter partnerships if the terms were favorable to SOMCO, ensuring original ownership with particular interest in certain minerals.
Ms Bikani said she did not understand the section of the Report dealing with the Mineral and Petroleum Resources Development Act (MPRDA). She noted that the Report indicated that “proper review and appointment of the MPRDA should be enacted to align it with the Constitution”. However, she thought that the MPRDA needed work in order to align with the concept of a state-owned company.
The Chairperson said that SOMCO must be established in line with an active plan, and said there needed to be a constitutive Act of Parliament to do so. If the SOMCO was to fall under MPRDA, then the latter Act needed to be amended.
Mr Schmidt said that the DA could not support the recommendations made by the Committee. The point of view expressed was contrary to what was stated in the study visit report, regarding the broad outline of a company. He asked how the government would enforce the control of strategic control of mining companies that were investing. He was not so much commenting on how the report expressed this, but said that the DA did not believe that this policy was the right way to go. The DA therefore would not be able to support these recommendations. There were too many uncertainties as to how the local communities would be able to benefit and recapitalize from a SOMCO.
Ms Bikani said she could not understand why Mr Schmidt would not support the report, as it merely reflected the study tour. Government would not necessarily follow the recommendations being made by the Committee. Essentially, the Committee was making recommendations for a course of action, based on what they had seen in
Mr M Sonto (ANC) said the comments in this Report should not worry Mr Schmidt, as there was no mention of nationalisation. This was merely a report of the Committee to Parliament and the recommendations that it contained were intended to allow South Africans to benefit from strategic minerals in the country. He said the recommendations addressed the triple challenge of unemployment, poverty, and inequality in
A Member said that even prior to the investigations into the Chilean system, the Committee had agreed tht it was necessary to learn more about state owned mining. Nationalisation was never even mentioned. She said the report was on state-owned mines, and their successes and failures were. She could not understand how this would be interpreted as a report on nationalisation.
Mr Schmidt said he was fully aware that the visit was about state-owned mining companies. However, he asked for an example where this system had worked. He asked why a state-owned company was never as efficient or productive as a private mining company. He and his party firmly believed that this was not the right route to follow, as
Ms Bikani had some problems with this point of view. She said that she and her colleagues did want to see a state-owned mining company. Every action had counter-actions, but that did not necessarily mean that this Committee should not transform the past history of mining in
Mr Schmidt said a stable regulatory program was needed, which would encourage simple, stable, and fair regulation. Fiscal stabilisation meant equal risk and rewards, sufficient infrastructure to export mining products, and a sovereign wealth fund for mining communities .The most important issues were to ensure that policies would be implemented properly, and that the money would be going directly into the community. He said the MPRDA provided a structure already, and it was possible to fix and tweak that in such a way that it would ensure the success of mining communities.
The Chairperson said the Committee could come back to the politics and debate the issues further.
The Chairperson asked how money made out of a SOMCO would be distributed, suggesting that this could be set in the legislation, so that 40% was reinvested into the SOMCO, 20% was set aside to fund national health insurance, 20% to fund free education, and 20% to funding of rural development, which took into account the rural mining communities.
Mr Schmidt quipped that perhaps all the findings and recommendations should be excluded, as they were not in line with his opinions.
The Chairperson said in the last meeting, Mr Schmidt had given an indication that he was happy with the findings. Findings of a report needed to set out what would be feasible in
Mr C Gololo (ANC) said it was understood that
A Member said that this was partially correct, but the ANC was fairly non-committal, so there would be no problem from the ANC side about adopting the report. The debates on SOMCO were still to be held.
Mr Schmidt noted it was one thing to have emotion, but another to have some form of reference. He stressed that there needed to be a discussion on how SOMCO would work. He was looking for a convincing argument, or report as to why it might work, and was prepared to listen, but wanted real answers.
The Chairperson said SOMCO would work because it would be established through an Act of Parliament, rather than merely as a departmental entity. Revenue would be re established and renewed, giving self-sufficiency to the mining communities. There was sufficient capital as 70% of Industrial Development Corporation (IDC) involved mining. A SOMCO would not pose extra costs to government, repeating that the money was already available. The design of the company, however, must be different, and it must have a competent board, that ideally would not need to report to the Committee. The whole basis that the Committee was setting out was to establish an entity different from those already in existence.
Mr Sonto agreed with Mr Gololo that the Committee needed to adopt the report. He also agreed that the debates were still to be held, so Mr Schmidt was anticipating matters. The report simply set out findings, and based on those, the Committee had made recommendations as to what was suitable for
Members thought that the topics had been exhaustively discussed, and the majority of Members adopted the Report. Mr Schmidt asked for the objections of the DA to be recorded.
The meeting was adjourned.
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