Colloquium on beneficiation: consideration and adoption of report

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Trade and Industry

04 November 2014
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Portfolio Committee considered the colloquium report on beneficiation. The Committee went through the report page by page and thus made some additional inputs, which were incorporated in the report. The Committee took more time in the consideration of the conclusion and recommendations. These two sections were substantially amended. There was a misunderstanding on the recommendations that led to an objection by the Democratic Alliance. The objection of the DA was recorded and the reported was adopted.

Meeting report

The Chairperson opened the meeting by noting apologies from Mr F Shivambu (EFF) and Adv AD Alberts (FF+) for their respective parties business and from Mr D Macpherson (DA) for coming late. The Committee proceeded to adopt the agenda, which was moved for by Ms P Mantashe (ANC) and seconded by Mr G Hill-Lewis (DA). After the adoption the agenda, the Chairperson informed the Committee that she received an email from Mr Macpherson, providing further inputs from the Democratic Alliance regarding beneficiation.   

Consideration of the Colloquium report
The Chairperson directed the Members of the Committee to page 23 of the report to see whether there was anything which could be added to the conclusion.

Mr B Mkongi (ANC) sought clarity on legislation and regulatory.

The Chairperson explained that there were primary and secondary legislation. Most of the time, a legislation or statute had regulations to it. Those regulations were secondary legislation.

Mr T Samanga, Chief Director: Beneficiation: Department of Trade and Industry raised a concern with item 4.2 which was not addressing the issue of skills in the context of education and training and failed to state clearly the issue of creating jobs.

Mr Macpherson intervened and said  the following phrase should be inserted in item 4.2:  ‘the development, transfer and retention of strategic skills to support beneficiation by the Department of Higher Education, and of Science and Technology, as well as through apprenticeships, learnerships, and other job related training’.

The Chairperson agreed. She said people needed to be trained for critical skills. Skills should be developed vertically and horizontally.

Mr Mkongi requested to revise item 4.3 for clarity.

The Chairperson sought clarity on the power given to the Minister to designate certain mineral firms for beneficiation purposes, through appropriate legislative mechanisms.

Mr Samanga replied that anyone who wanted to export minerals ought to get permission in writing from the Minister. The new Bill when it comes into effect would give the power to the Minister to designate mineral firms for the purpose of beneficiation. That was the developmental imperative that would be effected by the Bill.

Mr Mkongi said the word “certain” in item 4.3 was confusing and should rather be placed by the word “strategic”.

Mr Macpherson agreed with Mr Mkongi. Item 4.3 was very vague. It did not clearly speak who would designate; which minerals would be designated; and how much percentage would be taken. He commented that during the beneficiation briefing, nothing was put on table related to what designation would lead to. 

Mr N Koornhof (ANC) commented that it would not be wise not to designate certain mines. Some countries were doing that. The current Bill on minerals was not yet signed into law. That created a room for being amended.  The Bill should allow for market penetration. Uncertainty was not good for economy and beneficiation

Mr Mkongi remarked that if the Bill was tabled again before the parliament, the phrase “strategic minerals” should replace the phrase “certain minerals”. It is not only the state that should take responsibility to guard against economy; the Business should also take responsibility to guard it. As regards discounting the designated mineral firms, Minister should be entrusted with such responsibility.

The Chairperson remarked that the DA was of the view that the designation was not going to create jobs and accordingly, was not supporting it. On the other hand, the ANC supported the view, holding that the Minister should designate. ANC was rather concerned with pricing. The issue of designation and pricing should be separated.

Mr Macpherson sought clarity designation and discounting. What South Africa would benefit if the mineral was designated and 10% discount was, for example, applied.

The Chairperson explained that the Minister spent more time with the Committee, explaining the issue of discounting and the discounting issue was made clear. If the Minister designates, he is saying that certain percentage would remain in South Africa.

Mr Koornhof said designation was done somewhere else in the world. The question was how the designation could be done correctly.

Mr Macpherson stated that he was not happy with the designation.

The Chairperson concluded that the designation ought to be done and we were taking that route. It was noted that the DA disagreed as the ANC could not persuade them.

With regards to item 4.5, Mr Macpherson expressed her concern related to the word “fundamental” impediment to reindustrialisation and suggested that the phrase should be completed by listing those impediments, such as electricity, etc. 

Mr Mkongi objected. The economy was fundamentally a challenge to South Africa due to structural poverty. Fundamental change in economy was needed. The word should not be changed.

The Chairperson agreed and stated that the word “fundamental’ was not removed from the sentence.

With reference to item 4.8, Mr Samanga stated that the DTI could control public procurement but not private procurement for the localisation.

Mr Koornhof stated that the DTI should embark on negotiating long term agreement for our local companies.

Mr Mkongi said he was sceptical to the word “spearhead” the public procurement support for localisation and “buy South African products’. The phrase “buy South African products” should be replaced by “proudly South African.”

Mr Samanga explained that the slogan “Proudly South Africans” do not apply to tangible products only. It should apply to intangible products. Therefore the word “buy” or “purchase” should be used.

The chairperson said the phrased in question should be “locally manufactured products”

With reference to item 4.9, word black industrialists were questioned. The Chairperson asked whether the word “black industrialists” should remain as it was.

Mr Samanga requested to rephrase the sentence to include the promotion of beneficiation that would create opportunities for the emergence of black industrialists.

The Chairperson asked whether the black industrialists existed or were created in 20 years of democracy. If the black industrialists do not exist, how are they going to be promoted?

Mr N Matias (EFF) stated that black industrialisation was political rhetoric and asked: what happened to black entrepreneurship? What happened to black economic empowerment (BEE)? The Minister ought to bring a tangible policy for economic transformation. For possible and successful black industrialisation, South Africa should consider changing university curriculum.

The Chairperson asked clarity on what were actually happening for the promotion of BBE? If we need industrialists we had to have entrepreneurs, first. Black entrepreneurs ought to be promoted. 

With reference to item 4.10, Mr Macpherson remarked that the Committee should think on how the beneficiation would create and empower black entrepreneurs. He would be happy to the beneficiation contributing to the creation of a million black entrepreneurs. These entrepreneurs would employ a lot of people.

Mr Mkongi commented that the promotion of entrepreneurs should contribute to broad based economic empowerment and the creation of black industrialists.

With reference to item 4.11, the phrase “to ensure access to scrap metal for the domestic market” was considered. With respect to scrap metal, the Chairperson recalled the Committee that it was once called to tighten regulatory measures. She asked Mr Samanga to brief the Committee on the law relating to scrap metal.

Mr Macpherson commented that the economy of South Africa could not be compared with one of Japan. Japan had progressed economically.  

The Chairperson said for Japan and Korea’s economy to progress, they had to take political decision. South Africa should take political decision too.

Mr Koornholf stated that a political decision could be taken based on evidence. However it seemed like there were economic opportunities in the scrap metal but it would be difficult for the Committee to decide on the issue without concrete evidence.

Mr Mkongi said the Committee should rather ask itself: Who will benefit from exported metal? If South Africa as a country would not benefit, we should leave it.

The Chairperson stated that the Committee was aware that there were some companies that were collecting scrap metal for the domestic market. The scrap metal saved our energy. ReMember that South Africa is facing the energy problem. The question is how we balance the beneficiation of metal and energy. The beneficiation of the scrap metal could consume less that 50% of energy than beneficiation of the ore. Was there any study could help the Committee to understand the exportation of the metal?

With reference to item 4.12, the Chairperson to consider the phrase “imports of the wooden furniture” and whether the importation of the wooden furniture was conducive to South African economy. She referred the Committee to p20 of the report where it stated that “the imported lumber was so high.”

Mr Macpherson stated that the report should state that there should be a commitment to plant 100 000 hectares of trees. The question was when this should be done. The legislation around land and water should promote that project. 

With reference to item 4.13, Mr Macpherson stated that there should be inter-ministerial engagement on beneficiation.
The Chairperson replied that the proposed inter-ministerial engagement existed.

Mr Macpherson repeated that inter-ministerial responsibility should be emphasized.

Mr Mkongi stated that the following phrase should be inserted in item 4.13: “Commitment is required in terms of co-ordinated efforts of the inter-ministerial and inter-departmental teams dealing with the implementation of the IPAP.”

Mr Hill-Lewis seconded Mr Mkongi. He proceeded to state that “energy” was no captured under item 4.7 and that beneficiation should be based on competitive principle.

The Chairperson agreed.

On the issue of long term agreements, Mr Samanga replied that long term contract was necessary for creation of the sustainable market.

Mr Hill-Lewis suggested that discount should be made on the raw materials.

Mr Samanga stated that Mr Hill-Lewis’ suggestion was valid. However, the issue should be dealt in the harmonisation policy. If at any point the DTI intervenes in respect of discounting and designation, it ought to ensure that there were beneficiation benefits.

The Chairperson stated that the purpose of the beneficiation and industrialised policies were centred on the creation of jobs and the increasing of GDP.

Mr Macpherson asked the Chairperson whether she had looked at the labour market report prepared by the DA.

Mr Mkongi said the DA’s report should be set aside as it would confuse the Committee’s process of considering the report on the beneficiation.

The Chairperson objected to Mr Mkongi’s view and said some issues being advanced by Mr MacPherson and Mr Hill-Lewis were coming from that report. She requested Mr Hill-Lewis to read it.

A report was handed to Members of the Committee. The DA’s report suggested a statement to be included in the conclusion and two recommendations to be added to the beneficiation report recommendations for the Minister of the DTI to consider. 

The Chairperson agreed.

With reference to the recommendations made by the DA, Mr Samanga sought clarity on the commissioning a socioeconomic study on the benefits and downstream beneficiation and its impact on the economy. Should beneficiation be implemented after conduct a study on certain or specific chain management?

Mr Hill-Lewis requested that the following statement in the conclusion: “the consideration of significantly increase incentives for manufacturing, tax incentives, rebates, export guarantees, export credit support, critical infrastructure, and import tariff policy.

The Committee secretary was requested to adjust the beneficiation report to include all inputs made by Members.

Formal Consideration of the Colloquium Report on Beneficiation
The Chairperson stated that the Committee would consider the report page by page and the Members were welcomed to add further inputs. Only items on the conclusion would be considered one by one.

Page one to 23 were considered and adopted with minor changes.

Items under conclusion section were considered and adopted with the minor changes.

Items under the recommendation section were considered.

Mr Mkongi objected to the inclusion of the phrase stating that there should be no pricing control and explained that the ANC position was that pricing should be controlled. 

The Chairperson noted.

Mr MacPherson and Mr Hill-Lewis requested the Committee to deal item 6.1.

Mr Mkongi replied that the item 6.1 could not be deleted because it was agreed that the DA incorporate in its recommendation, which became item 6.2.

The Chairperson commented that she thought that the issue was brought to rest and concluded all recommendations were vital and would remain as they were. She would however place under the record the objection of the DA.

The Chairperson proceeded to the adoption of the four recommendations and the whole report.

Mr Koornholf moved for the adoption of the report. This motion was seconded by Mr C Msimang (IFP).

The Chairperson stated that the document was adopted and would be signed by the Chairperson after the report was revised to incorporate Members’ inputs. The report on beneficiation would be submitted to Parliament for consideration.

The meeting was adjourned.
 

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