Marikana discussion; Beneficiation strategy implementation by Department of Mineral Resources

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Mineral Resources and Energy

12 September 2012
Chairperson: Mr F Gona (ANC)
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Meeting Summary

Marikana: The Chairperson said the Portfolio Committee would address the crisis in the platinum mining sector in the week of 17 September. An NGO called Benchmark had conducted research into the living conditions of mineworkers at the Lonmin mine before the current crisis started. This NGO would brief the committee on 19 September 2012. The President had appointed an inter-ministerial task team. The Committee would allow the task team to do its work. Thereafter the Committee, along with the Portfolio Committee on Labour, would conduct a fact-finding mission to the Lonmin mine. The situation was volatile. In addition the “fire” was spreading to other mines and developing into a national crisis. An ANC member believed that they should remain in Cape Town as the miners were suicidal. There was an inter-ministerial task team appointed by the President, which was talking to the parties on behalf of government. The CCMA was there and church representatives who had called on politicians to stay away because their presence would make matters worse.

The opposition parties expressed their view that the Portfolio Committee had to have some kind of a discussion on the Lonmin crisis. It was three weeks after 34 miners had been killed by police during protests, and the Committee thus far had had no discussion on the matter. They pointed out that most of these miners had probably voted for a certain party, and now the representatives of this party refused to speak to them, because the miners were suicidal. They saw it as all the more reason to go to Lonmin/Marikana to see for themselves what was happening and to speak to the representatives. Opposition party members pointed out that while government was silent, other voices were filling the vacuum. There was a certain youth leader, wearing the colours of the ruling party, inciting more unrest amongst miners.

The matter was put to a vote and the ANC outvoted the opposition. It was then agreed that the Portfolio Committee would follow the programme as put forward by the Chairperson.

Beneficiation strategy: The DMR looked at the basis for mineral beneficiation, mineral beneficiation and national economic priorities, South Africa’s comparative advantage, existing interventions to promote mineral beneficiation and implementation of the strategy. In 2008, SA was ranked the biggest producer of manganese, gold, chromium, and alumino-silicates, and the second biggest producer of vermiculite, vanadium, zirconium, titanium, and fluorspar in the world. Existing interventions to promote mineral beneficiation included:
▪ Mintek was in the process of researching steel technologies.
▪ The State Diamond Trader and the South African Diamonds and Precious Metals Regulator promoted equitable access to, and local beneficiation of diamonds and precious minerals.
▪ The CSIR was researching advanced battery technologies for stationary and mobile applications.
▪ The Department of Science and Technology was leading the national hydrogen and fuel cell technologies research, development and innovation strategy (HYSA).
▪ The Advanced Metals Initiative was a DST-led project to devise a novel titanium metal manufacturing process to make materials from which aeroplane bodies could be manufactured. This was considered better than current options as it was lighter, thus saving fuel, and more durable, resulting in a longer lifespan.
The target date for the completion of the consolidated implementation plan was the end of October 2012.

Members said DMR recognised SA’s comparative advantage in minerals wealth, but had it assessed its competitive advantage soberly in the light of current global economic forces? Members asked if SA had the electrical energy supply to support the strategy; if the DMR was working on skills training so that by the time the strategy was ready for implementation, the requisite technical skills were available; if enough research had been done on the impact of shale gas exploitation on the Karoo environment.

Meeting report

Marikana/Lonmin situation
The Chairperson said the Portfolio Committee would address the crisis in the platinum mining sector during the meetings of the week of 17 September 2012. The Committee would invite the DMR as well as mining companies to assist it to unpack and understand the dynamics of the unrest in this sector. It did not want to wake up to a situation which was more uncontrollable at some stage. It would then deal with the crisis, after receiving the reports.

The Chairperson said there was an NGO called Benchmark, which had done research on the living conditions of mineworkers as well as the communities at the Lonmin mine, before the current crisis started. This NGO would brief the Committee in the week of 17 September 2012. The Committee, along with the Portfolio Committee on Labour, was putting steps in place to conduct a fact-finding mission to the Lonmin mine. The President had appointed an inter-ministerial task team. The Committee would allow the task team to do its work. This Portfolio Committee would then decide on a date to go and see what could be done. The situation was quite volatile. There were still deaths every day as the miners were killing each other. In addition the fire was spreading to other mines. The Portfolio Committee would receive the report next week. The Portfolio Committee would then visit the area in person. The week of 17 September 2012 would be the last week of the current term, after which it would be the period of parliamentary recess. The Portfolio Committee would go on recess if nothing happened. If something happened, the Portfolio Committee Members would have to roll up its sleeves and get their hands dirty in this situation, because it was developing into a national crisis.

Mr C Haung (COPE) said that it was a concern that the Portfolio Committee had not had a discussion on the Marikana situation and the trouble was spreading.

Mr E Lucas (IFP) said the seriousness of the situation had to take precedence over everything else. There were other elements at work, and if there was not swift action, it might be too late soon. The people were being fed incorrect information.

The Chairperson said he was not sure what Members were suggesting. The fires were burning there and they were being fanned on a daily basis. He wanted to know if Members were suggesting that Parliament had to go to Marikana to put out the fires. If so, how? The Executive had been there, the inter-ministerial task team was there, churches and NGOs were involved, and the situation seemed to be moving forward. The Portfolio Committee needed to discuss matters in order to understand exactly what was going on. In the beginning it was a labour issue, which the Portfolio Committee could not intervene in, because there were relevant official bodies to take responsibility for that. Currently, it was evolving into something else, but exactly what, was unclear. If Members wanted to appear before the angry crowd, they could do so at their own risk. Workers were taking security personnel hostage. He was cautious about plunging Members into the situation.

Mr Lucas said that was exactly the reason the Portfolio Committee had to be involved. The church wanted politicians to stay away, but other people were taking advantage of the situation, which was a concern. This was important. Members had to put their brains together. He did not want to be in the firing line either, but he felt that the Portfolio Committee had to be more engaged.

Mr Haung felt there had to be a debate about the issues at the mine, after which the Portfolio Committee had to go and take a look. He understood that there were security risks for parliamentarians. He felt that a solution could be found through discussion. As soon as the situation was less volatile the Portfolio Committee could go and take a look.

Mr H Schmidt (DA) said the Portfolio Committee had been on various oversight visits to the North West. He wanted the Portfolio Committee to invite the National Union of Mineworkers (NUM), the Association of Mineworkers and Construction Union (AMCU) and whoever else the workers had as representatives to a meeting in Rustenburg, where a reasonable sample of representatives from the various parties could come and put their case. He was concerned that the Chairperson was biased in favour of NUM. The Portfolio Committee could then see what transpired. The Portfolio Committee had to stop burying its head in the sand and start establishing for itself what was happening.

Mr C Gololo (ANC) said in his opinion it would be premature for parliamentarians to go to Marikana. The President had established a commission. The Portfolio Committee had to allow the commission to do its work. To go there under the current circumstances would be suicidal. The Portfolio Committee was a lawmaking body and had to remain in Cape Town and had to see what it could do from Cape Town. There were people who were appointed to be on the ground in the situation.

Mr M Sonto (ANC) said the concern raised by Members was correct in that Parliament had to be seen to be doing something, but it had to calculate carefully how to do what at which point. He differed with Mr Wang who said there had to be a debate first, because it would leave room for false assertions, allegations and insinuations. His proposal was that the Portfolio Committee had to invite the strategic role-players to come and brief it, so that the Committee could have a common understanding and not an understanding as different political parties. The Committee could be briefed by the Commission established by the President. Where were they? What was happening? He was against the Committee going to Marikana to meet the crowd. The crowd was suicidal. If the crowd had a leadership, the Committee would meet with the leadership. If the crowd had no leadership, the Committee would meet with the unions and mine management to develop an understanding about what was happening.

Mr Schmidt was concerned about the statement that “the crowd was suicidal” and therefore the Portfolio Committee did not want to talk to them. The crowd in Marikana voted for one particular political party. This was exactly the reason to go there. What did each party say? Parliament had to do something.

The Chairperson said there was a standing decision amongst Members of the Portfolio Committee as well as the Portfolio Committee on Labour that the two Portfolio Committees would go to Marikana. The question was, at which juncture? The timing was important and the Portfolio Committee had to be clear about what it wanted to achieve by going there. The discussion had to be informed by these factors.

Ms F Bikani (ANC) agreed with Mr Sonto and said when the Portfolio Committee went to Marikana it had to be informed by the all relevant stakeholders about what was going on there. She thought the next step had to be a joint Committee meeting with Labour to conclude when to go and what the expectation would be.

Mr J Lorimer (DA) said the issue for him was not so much when to go there. His concern was that it was almost three weeks since the Marikana massacre and the Portfolio Committee had yet to have a discussion about what happened there. He supported Mr Sonto and Mr Schmidt’s proposals that role-players had to be invited and a discussion on the matter happen as soon as possible and it needed to be put on the programme immediately. He suggested that the agenda for the next week’s meeting be postponed in order to have a discussion about Marikana.

Mr Lucas said the Portfolio Committee had to meet a delegation from the unions, workers and employers. He added that there was something else that could not be ignored. The youth leader who was talking to the miners was wearing ANC colours and this was dangerous. It created a certain perception. There had to be a way to curtail it. It had to be stopped in the interest of SA.

The Chairperson said he did not disagree, but did he have to remove the role players from the ground in order to have meetings with them? Did he have to bring them to Parliament in Cape Town and thereby delay them reaching a resolution? This delay could cause the situation to deteriorate and the mine shut down. If Lonmin closed down, 30 000 workers would be out of jobs. Would it be beneficial to take the team out and bring them to Parliament? He felt it best to leave the processes underway to take its course. The churches had asked the politicians to back off. The Portfolio Committee could go there when the situation had returned to normal. It was dangerous to take over negotiations. The Portfolio Committee could not promise the workers R12 500. There were negotiating teams from the DoL and the CCMA. The CCMA was on the verge of withdrawing from the negotiations, because the parties did not stick to agreed principles. Management agreed to talks with worker leaders if workers returned to work and production resumed. Workers were supposed to return to work but did not. Better timing was needed and it was not going to be next week.

The Chairperson declared the Marikana matter closed so that the meeting could move on to the presentation on the progress on the development of the beneficiation plan of the DMR.

Mr Lorimer did not agree with closing the matter. He did not agree with putting the discussion off to a later date in the week of 17 September 2012. He proposed a vote on the matter, because he believed there was no agreement for putting off the visit until later.

The Chairperson said there was a standing decision that the Portfolio Committee would go to Marikana together with the Portfolio Committee on Labour when the situation had returned to normal. Next week the Portfolio Committee would be briefed by Benchmark on the underlying factors in the Marikana situation.

Mr Lorimer reiterated that a proper discussion on the situation at Marikana was needed at next week’s meeting. He understood that it had been put off until an undetermined date. He proposed a vote on this.

The Chairperson allowed the Committee to vote and the ANC outvoted the opposition parties in favour of the Chairperson’s position that the Portfolio Committee could not go to Marikana immediately.

Mr Lorimer said he was pleased that this was on record.

The Chairperson said Mr Lorimer was playing to a particular gallery and he would not join him in that.

Mr Sonto said the matter was on the agenda. It just needed a sane calculation on the part of the Portfolio Committee on when to intervene.

The Chairperson told Mr Lorimer that he expected a walk-out by the DA after what had just transpired. He said Mr Lorimer refused to go along on oversight visits. It was only because of political interest that he was so concerned about Marikana.

Mr Lorimer said he did accept what the Chairperson was saying and did not believe other Members of the Committee did things only with the purest of motives. He only went on visits he found of value. Opposition party Members did not plan oversight visits. They had no say in the Committee programme, because it was all done by majority vote.

Ms Bikani asked what the opposition politicians wanted to achieve at Marikana: raise the people’s hopes on nothing? What the ANC Members agreed on was that the Portfolio Committee had to prepare properly and devise a strategy before going to Marikana, in order to be prepared for whatever conditions they might encounter there.

Mr Lucas said the situation was serious and if the Members could not agree on anything in the meeting, how were they going to agree on anything at Marikana, while people were suffering. Rome was burning. It was heart-breaking.

Mr Wang said there were different views in the Committee. He suggested that the Committee go on a fact finding mission and took a look. The Committee did not have to speak to the frontline role players involved in negotiations. It could speak to people who could report to it. At the moment it seemed like, once Rome had fully burnt down, the Portfolio Committee would go there and take a look. That was not the role of Parliament.

The Chairperson said the Committee could not meet with just anybody. The negotiators were the leadership core of the different stakeholder parties. They were busy with negotiations currently. They were not available to brief Parliament. Why did Members just read the newspapers if Members wanted to speak to just anybody. The Portfolio Committee wanted to speak to the people directly involved. The Portfolio Committee had to be practical. The opposition politicians had forced the matter to a vote and were outvoted. The matter had to be closed. This was democracy.

The Chairperson handed the floor to the Director General of the Department of Mineral Resources.

Implementation Beneficiation Strategy: progress report of Department of Mineral Resources (DMR)
Mr Thibedi Ramontja, DMR Director General, said the matter of beneficiation was a very important matter for the country and the industrialisation of the country. It was an important process they had embarked upon. A team was working on the matter.

Mr Mosa Mabuza, DMR Deputy Director General:
Mineral Policy, spoke on the following topics: Broad Vision, Basis for Mineral Beneficiation, Mineral Beneficiation and National Economic Priorities, South Africa’s Comparative Advantage, Existing Interventions to Promote Mineral Beneficiation, Implementation of the Strategy and Concluding Remarks.

Broad Vision
The broad vision was to increase the fraction of the mineral production industry that was involved in beneficiation against the total industry, thereby increasing the ratio. It aimed to enhance the export value of minerals, facilitate economic diversification, and create opportunities for new enterprise development as well as opportunities for decent job creation and poverty alleviation.

Basis for Mineral Beneficiation
In 1994, the Government White Paper stated that three quarters of the country’s exports consisted of mining and mineral products, and the industry employed 750 000 workers, but these figures could be higher if raw materials were processed into intermediate and finished products locally, before export.

The White Paper: A Minerals and Mining Policy for SA (October 1998) said the aim of the policy was to develop SA’s mineral wealth to its full potential so that the entire population could benefit from it. Section 26 of the Mineral and Petroleum Resources Development Act (MPRDA) of 2002 said that the Minister may initiate or prescribe levels of beneficiation of minerals in the Republic.

Mineral Beneficiation and National Economic Priorities
The mineral beneficiation strategy had synergies with the New Growth Path (NGP) of the Department of Economic Development, launched in November 2010, the Industrial Policy Action Plan (IPAP) of the Department of Trade and Industry, as well as the National Development Plan (NDP) of the Planning Commission (see document).

South Africa’s Comparative Advantage
In 2008, SA was ranked the biggest producer of Manganese, Gold, Chromium, and Alumino-Silicates, and the second biggest producer of Vermiculite, Vanadium, Zirconium, Titanium, and Fluorspar in the world.

Existing Interventions to Promote Mineral Beneficiation:

Mintek was a statutory science council mandated and resourced to undertake the beneficiation related research. Current projects included Hercules, the production of a low cost stainless steel used in structural applications like construction as well as research into the production of ultra-fine grain steel for automotive applications. These were just two of many Mintek research projects.

Diamonds and Precious Metals
The Diamonds Act as amended established the State Diamond Trader (SDT) and the South African Diamonds and Precious Metals Regulator (SADPMR) in order to promote equitable access to, and local beneficiation of diamonds and precious minerals. The SDT was empowered by law to secure 10% of the run-of-mine (ROM), by value from producers for locally based beneficiation. SADPMR was established to enforce tenets of legislation that were designed to promote local beneficiation (such as an export levy)

The CSIR was undertaking research into advanced battery technologies for stationary and mobile applications.

The Department of Science and Technology (DST) was leading the National Hydrogen and Fuel Cell Technologies Research, Development and Innovation Strategy (HYSA). The premise of this strategy was catalysis and the chemical process of catalysis consumed platinum. The DST aimed to capture 25% of the global catalysis market by 2025.

Advanced Metals Initiative
This was a DST-led project to devise a novel Titanium Metal manufacturing process to make materials from which aeroplane bodies could be manufactured. This was considered better than currently available options, because it was lighter, saving fuel, and more durable, resulting in a longer lifespan. SA had the second largest deposits of titanium in the world.

An energy commodities value chain as well as an iron and steel value chain had been developed and approved.

The Energy Commodities Value Chain consisted of supply side interventions, skills development, partnerships, infrastructure as well as research and development.

The Iron and Steel Value Chain consisted of supply side interventions, industrial financing, skills development, partnerships, research and development, infrastructure development and demand side interventions.

The right strategic partnerships internally in the country as well as internationally, were critical in SA implementing the strategy with success.

The Plan was currently still under development. It was an elaboration of the plan adopted in June 2011.

Concluding Remarks
The target date for the completion of the consolidated implementation plan was the end of October 2012.

Mr Gololo said this plan was ambitious and he wished the DMR well in the roll-out of the plan. If implemented successfully, it would deal with many of the problems plaguing SA, such as poverty and youth unemployment. It would contribute to the economic growth of the country. It was a welcome plan, but was still a work in progress. Had the department identified provinces where young people would be trained for beneficiation projects? Which were the target areas? Were they the North West, Gauteng and Mpumalanga where most of the mining activity was?

The DG replied that the plan had not reached the stage yet to specify exactly where training would happen. The DMR would engage with the relevant organs of state such as the Department of Trade and Industry and the provincial governments. DTI declared special economic zones. DMR would engage DTI on the matter.

Mr Gololo asked how small scale miners would be accommodated within the beneficiation process.

The Director General replied that small scale miners would be integrated in the process. Beneficiation was not only for large factories. It was for small business as well, even businesses in backyards. Jewellery businesses could be small.

Ms Bikani was excited about the strategy. She asked if there was an advocacy plan in place to engage emerging small scale miners. She commented that the language used in the presentation was high level for small scale miners. In relation to strategy itself, how accommodative was it considering the development of the state owned mining company?

The Director General replied the State-owned Mining Company would play a critical role in this strategy. The small scale miners would play a role in supplying the industries which would be established through beneficiation.

Mr Lucas said SA was one of the countries most abundant in minerals, but it exported them and imported the finished goods. This was a step in the right direction. SA had to be aware of the threat of the developed countries which had been manufacturing. It had to look at the cost. The major advantage that SA had was that there were newer technologies out, which it could use, while the other manufacturers still used old technology. Government talked about an increase in rail lines. The steel was available within SA. The country had to use this to its advantage.

Mr Lucas said the new technological development with batteries which could store solar power was wonderful.

The Director General replied that his ex-boss was a university professor who was engaged in cutting-edge research in the battery technology. The Committee could approach him to come and give a talk about his work. The Professor believed the battery was the future of energy and he had a vision for batteries in SA.

Ms Bikani noted with regard to the Energy Value Chain, that the moratorium on shale gas exploration had just been lifted. One pillar of the value chain was research and development. Was enough research done to determine the benefits of shale gas versus older forms of energy such as coal? Had the impact on the environment been thoroughly assessed?

Mr Lucas added that the environment had to be borne in mind.

The Director General replied that the current research was not enough. The DMR needed to partner with the DST on the research aspect. Each of the five value chains needed more research by Mintek and the CSIR. If five value chains were identified, research was needed in each of them. Research did not bear fruit immediately, but only years later. Research institutions and universities had to align themselves with the broader developmental directions of the country.

The Director General added that the environment would be protected. In the case of shale gas it would strike a balance between exploiting the commodity and protecting the environment. The environment was part of SA. Future generations should not look at the current government as the one who sanctioned the destruction of the Karoo.

Mr Schmidt said the benefits of beneficiation would not lie in the comparative advantage sphere, but the competitive advantage sphere. With the current balance and the issues as they were determining the competitive advantage, the department would not go anywhere with the implementation plan. One could have all the minerals in the world, but if you did not lever it to your competitive advantage, the beneficiation plan would not work. Issues like labour productivity, labour and electricity cost, regulatory environments, sustainability, environmental laws and distance from markets were all determining factors when it came to the success of the beneficiating strategy. These were facts, not theories.

The Diamonds Second Amendment Act of 2005, in his opinion killed the beneficiation policy on diamonds in SA. From more than 2-3000 cutters and polishers in the country, there were less than 1000 left. [Someone interjected 600]. What had this done for beneficiation? In fact it went from a positive situation to a negative situation. The beneficiation strategy in diamonds, enabled in law, had taken the country nowhere. It achieved the opposite of what the beneficiation strategy was supposed to achieve.

He took the steel industry as an example. He asked if the DMR had spoken to any of the big steel manufacturers about matters such as distance to markets and labour costs. SA could not do anything about its labour costs, because it was regulated by SA’s labour laws, but countries such as China used its lower labour cost to its advantage. SA had the comparative advantage, but these countries had the competitive advantage. Why did the DMR think that Australia was exporting its iron ore, without it being beneficiated? The Portfolio Committee had to go and do that study. Canada, the USA, SA and Australia could not compete with China on labour costs at the moment. What one found was that companies in the competitive sphere of beneficiation took their companies to China to take advantage of the lower labour costs, and shortened distances to markets, ensuring a competitive advantage. Only if SA used its abundant iron ore deposits and turned it into steel products competitively, would the beneficiation strategy work. This was the difference between a successful and a less successful beneficiation strategy.

Having said that, there was a difference between theory and practice. In practice one would find that Australia was exporting in massive ships costing hundreds of millions of rand all the way from Brazil to China. Australia had a huge industry building and exporting ships, built on transporting unrefined iron ore to China. Why? If SA could find that answer, and this could be phased in, the beneficiation strategy could turn into a real-time beneficiation strategy. As it was at the moment, it was not going to fly.

Mr Schmidt referred to slide five which stated that the SA mining industry employed 750 000 people. The Committee had to be informed by the current situation which he believed was closer to 400 000. He was not sure about the export balance account. If it went down, the Committee had to understand why. If one interrogated the factors honestly, one would get to an answer, but he did not see any of these factors included in the beneficiation plan. With due respect, the plan would go nowhere. Also, there was no implementation plan. He had a very critical approach to the plan as presented.

The Chairperson said the DMR would respond to the policy question. When one made comparisons, it was important to make comparisons between related issues. In the document it was demonstrated that the country was moving into new terrain which would enable it to add value to its minerals so that they were more valuable than they currently were in their raw state. There was the potential to create much-needed jobs through the manufacturing of the beneficiated products. Currently SA was importing the finished products. When comparing economic strategies between countries such as Australia and South Africa, one had to remember that the basis these countries moved from were different. Australia did not have apartheid, nor did it have a period of colonial rule, comparable with what SA went through.

When one made comparisons and looked at the strategies employed, one had to ask: what were the conditions in the country. Were they able to do what they did because the base they moved from allowed them to do it? Was SA not able to do it because the base it moved from was below that of the country it was being compared to. One also had to keep in mind the focus and the strategic approach of the strategy, which was that SA was one of the most mineral rich countries in the world, and the mineral wealth had to be used to benefit the people in the country.

The Director General said the competitive advantage was important, but one could not ignore the comparative advantage. One could have the skills, but if there were no resources, one was stuck. China and Japan were in crisis. Japan had no metals and it had established companies all over the world to search for metals. SA had raw minerals. The DMR was aware that the strategy was an environment which was new to everyone. SA had to be competitive. One could not be naïve in the process. The DMR’s premise was based on the fact that it was going to compete. How would it add the competitive advantage? By developing the appropriate skills and technology. How would the country acquire the technology? One had to look at various ways such as creating partnerships.

 He cited the granite industry as an example, producing slabs for export to overseas. If one did not team up with the proper partners, it would not succeed. The world wanted to manufacture. In America, Americans wanted the motor industry to succeed, similar to this process. As South Africans, debate this matter, and it acknowledged the contribution of the opposition, it needed to be brave. If it took the decision, that it wanted to industrialise and create jobs, it had to go through the process, whether it succeeded or not. The country had to be brave. It had to look at the risks involved. If it succeeded, it would benefit everyone.

The Director General replied that competitiveness would be addressed as part of the strategy and that the DMR had to have a dual approach, when it came to cost. When it came to approach, business people would not come to SA to help SA. They wanted to do business and wanted value for money. SA wanted to continue to do mining. The country should not allow history to judge it and say the present decision makers were not forward-thinking and did not have a vision for the country. At some point in the future, minerals would be depleted, so SA had to look at ways to diversify the economy.

Ms Bikani referred to slide eight where it referred to the different economic programmes and strategies driven by government departments, such as IPAP, the New Growth Path and the New Development Plan.  In terms of the strategies already in place, was there an export levy imposed on exporters? She felt that government did not derive enough tax from people exporting raw materials out of the country.

The Director General replied that export levies only existed in the diamond trade. The DMR had not looked at export levies for other minerals.

Mr Lorimer said it was a beautiful vision, but everybody knew it was complex and many things were difficult to get right. SA was the No 1 supplier of aluminio-silicus in the world and owned 40% of the world market, but lost 11% of the manganese market, because a refinery closed as a result of electricity problems. Electricity power was a big success-determining factor in the strategy.

Considering cost and competitiveness, government always overestimated its ability to make accurate predictions. Government could not be too confident, or it could end up spending on the wrong things. Regarding export levies, it had to concentrate on incentives rather than punishments. It was dangerous to rush into levies. He was interested to hear if the DMR had considered imposing export tariffs on ferro-chrome. This was something that could be dangerous to rush into, because while it could boost one section of the economy, it could disadvantage another.

Brave was good, only if one assessed the risks properly. Markets were the best at assessing the risks, so it had to be left to them. Government had to be hard-headed about how it intervened. It had to decide where it could make a small nudge, without committing the country to huge costs, and without disadvantaging some other part of the economy. This was the difficult part. It would work if approached in the right spirit.

The Director General replied that the Deputy Director General was engaged in talks with the chrome industry. Part of it had asked government to impose export tariffs. Was it an advantage or a disadvantage? One had to be extremely careful with how it was addressed.

The Director General agreed that incentives were better than punishments in the form of levies.

The Chairperson said the Portfolio Committee was really excited about the beneficiation strategy and implementation. He awaited the completion of the strategy in October. The DMR had to come and brief the Portfolio Committee again on the completed strategy.

The Chairperson asked the DMR delegation if the mining industry was receptive to the idea of beneficiation in the mining industry. Was it pledging cooperation, or was it opposing the strategy, still preferring to extract the maximum amount of money by simply exporting all the raw minerals.

The Director General replied that in the DMR’s engagements with various sectors of the mining industry, DMR’s initial plea was: Ask not why the country should not do beneficiation. Ask how it should be done. The DMR was getting more support from industry than before, using this approach. How could the partners make it work? The framework had to be launched as a basis to engage the industry.

The Chairperson had concerns about two areas, firstly, accessibility of energy. Some areas of beneficiation involved smelting processes. At one stage SA had an abundance of cheap electricity. It was still relatively cheap for big business, compared to what the domestic market paid. Did the DMR engage ESKOM regarding the implementation of the strategy?

The Director General replied that the DMR had to align its plans with that of ESKOM as it rolled out new power plants over the country. It had to work together and cooperate with Eskom to ensure success.

Mr Lucas said it would be wonderful if SA could start manufacturing titanium aeroplanes. It would result in building a middle class. This was what was needed in this country, to uplift the people. Skills had to be improved. Training was needed. At one stage black people could not become Members of Parliament because it was believed that they could not think. Today the landscape had changed.

The Chairperson mentioned another point of concern, skills. SA could cut diamonds up to a certain size. It could not cut very small diamonds. Was the DMR working on the skills component of the strategy with industry? The strategy had to be put to the test. The DMR did not want to be found wanting in the field of skills.

The Director General replied that the DMR had been involved in talks concerning skills over the weekend, and would be on board concerning skills when the strategy was implemented.

The Director General asked why SA could not cut small diamonds. It was linked to skills although there were other factors, such as salary issues. Technology, such as lasers, could also cut diamonds. If there were laser machines, why could SA not have them? What were the obstacles to acquiring these machines? It had to be investigated. The blockages had to be identified.

The Chairperson said as indicated, the Portfolio Committee wanted to see the implementation of the strategy. The Portfolio Committee was informed at one stage that Israel or China was prepared to assist SA with skills development. He was not sure if the offer was still standing. If so, was the DMR going to take it up to ensure that the strategy was fully implemented. The Portfolio Committee would allow the DMR space until October to complete the strategy. The Portfolio Committee would be briefed on the completed strategy before year-end. Members were excited about the beneficiation strategy and implementation plan.

The meeting was adjourned.


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