Meeting with Norwegian Parliamentary Standing Committee on Energy and Environment

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Mineral Resources and Energy

25 February 2015
Chairperson: Mr S Luzipho (ANC)
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Meeting Summary

The Portfolio Committee on Mineral Resources met with the Norwegian Parliamentary Standing Committee on Energy and Environment. The Norwegian Committee indicated that oil and gas were very dominant parts of the Norwegian economy, similar to the position in South Africa. The main topics for discussion were the impact of mining on the environmental issues, how mining houses impacted on communities, and what laws might be put in place to deal with the environmental impact of mining. There were also concerns on whether there was still a sustainable future for South African mining, but different Committee Members believed that there was. Members from the Norwegian delegation also asked how the Committee viewed the reports coming out from the Marikana issues, but the question was not answered. They touched upon reports a few years ago into illicit financial activities and how badly these impacted on the mining sector.  Members noted that although there was a Mining Charter it was not being particularly well observed. Members wanted to know more about the background, composition, shareholding, and involvement of the company Statoil in the oil and gas industry in Norway and heard that it was not a state company fully owned by the State, but 67% owned and it largely dealt with operational aspects, without interference by the State into the way it competed on the open market, and the distribution of its profits was also touched upon. It was noted that whilst Norway was one of the largest producers of hydro power, and had made significant input on clean air, including assisting South Africa, it relied heavily on non-renewables itself because of high reliance on the oil and gas sector, aluminium production and transport. The Norwegian delegation responded that all political parties were heavily involved in suggestions of how to counter that reliance.

Meeting report

Meeting with delegates from Norwegian Parliamentary Standing Committee on Energy and Environment

The Chairperson, on behalf of the Committee, welcomed the delegates from the Norwegian Parliamentary Standing Committee on Energy and Environment to the Committee meeting and expressed the hope that ideas would be shared and the visit of the Norwegian Committee would be worthwhile. The Chairperson then gave a platform to the Norwegian Committee to share whatever they felt was necessary.

Mr Odd Henriksen, Conservative Party (CP), stated that the committee in Norway had a very broad portfolio dealing with energy and environmental matters in one committee. The key responsibilities of the Committee were in oil and gas, which were very dominant parts of the Norwegian economy,similar to the position with this South African Portfolio Committee on Mineral Resources, seeing that those were also dominant in the South Africa economy. However, for the Norwegian committee, sights were set partly on the energy systems of South Africa so the delegates wanted to know the roles of the different parts of energy systems. They were also exploring the relations between South Africa and Norway, and negotiations around the new plant agreement. The delegation would be interested to hear more about the environmental issues in mining, and particularly how strong were the laws in place, and how they were implemented.

Mr Henriksen asked if Members of the Committee could raise questions or make statements to guide the discussions, and the Chairperson said this would happen.

Mr  A Nicolai, Conservative Party (CP), asked how the mining industry had benefited local communities in the areas where the mines were situated in South Africa. He questioned what would be the future of mining industry, and if it would still be dominant in the RSA economy. He also wanted to know how well companies were complying with the laws and regulations of the country.

Mr H Per-Rune, Labour Party (LP), asked for a brief description of revenue in mining activities, how this arose and how it was structured. He asked for a brief description of the Committee's engagement and how it worked with the mining issues.

Mr H Heikki, Socialist Left Party (SLP), stated that he had had the opportunity to visit Marikana after the massacre, and since that was so closely connected to the report of the Committee, he said that it would be interesting to hear what the Committee thought of the report that was unable to identify any wrong doings by public officials. He also questioned the report that was led by former President Thabo Mbeki, into illicit financial transactions, which reported that in South Africa R60 billion was lost annually through corruption. This was particularly the case in countries that had mineral resources. He asked what involvement this Committee had in dealing with the report.

Mr F Jan–Herik, Progress Party (PP), asked what could be done in order for the forthcoming report to be both able to implemented, and descriptive.

Mr H Rasmus, Green Party (GP), stated that some of the mineral resources that were very important in the mining industry were likely to be exploited and to run out in the near future. Therefore, he asked the Committee for its long term view of the prospect of development in the mining industry.

Mr G Oosthuizen( IFP) addressed the question of local communities, and highlighted that one of the biggest resources of the country was its people. He felt that there was a general failure to recognise the mining effect and stakeholders' legitimate interest in the mines. He said there would always be a future for the South African mining industry. He then responded to the issue of Marikana which affected the country and crippled the platinum industry, by saying the country was still trying to pick up the pieces after this events. He stressed that the Committee was serving as the oversight mechanism on the mining industry.

Mr F Shivambu (EFF) highlighted that the Global Finance Integrity report had said that, between 2003 and 2012, there had been losses of $122 billion in the mining industry. He believed that a lot of revenue was lost due to the inability of the state to have adequate legislation and mechanisms to deal with illicit mining activity and financial flows. The State largely relied on the Organisation for Economic Co-operation and Development (OECD), which had been ineffective and not helpful in containing the extent of illicit financial flows, particularly in the mining industry. He asked the Chairperson to see whether there was perhaps a mechanism from Norway that could be used in dealing with this matter.

In answer to the question on the impact of mining on communities, Mr Shivambu said that in 2004 South Africa adopted the Mining Charter which required the private sector to develop communities and improve the living conditions of workers. The Mining Charter had 14 commitments that were due in 2014, but not even 20% of those commitments were met in 2014.

Mr Shivambu asked the Norwegian delegation to outline a background of Statoil, the extent of state ownership of the company and the model used.

The Chairperson said that natural resources in the country were under the custodianship of the State, but the majority of mining workers were immigrants, which made it difficult for the community to benefit more from the mining industry. The Chairperson said some of the issues were overarching, and he wanted to try to confine his remarks to issues that were within this Committee's jurisdiction. He too believed that there was a future for mining in the country. The only problem was with big players in the industry who accumulated and kept mining rights licenses so he suggested that there was still a need for transformation in the mining sector.  

Mr O Henriksen (CP), replied to the question of the role of Statoil. Norway first found the oil reserve back in 1969, and the country then proceeded to build its own Oil and Gas Industry. He said Statoil was built up as a state owned company. However, the state did not have 100% ownership of the company since the company was publicly registered and ran as a regular company. Furthermore, state involvement in the company had been kept minimal, and that enabled the company to compete throughout the world with less government interference. Thus, the company competed broadly and widely in the market without  government involvement.

Mr A Nicolai (CP) added that Statoil was 67% State-owned, and 33% was owned by shareholders from within the Stock Exchange. His Conservative Party (CP) was off the view that Statoil was the best model which ensured transparency and scrutiny of the company. However, the Norwegian government  still wanted to retain the major ownership of Statoil in order to build a national oil service industry, and also keep the company as Norwegian as possible. He said the company would not be used as a political tool since it had to compete in the international stage. Statoil had been an international player in the market and private ownership was vital in ensuring transparency.

Mr J Malema (EFF) asked about the process for how dividends were declared and how the population benefitted from the proceeds of Statoil transactions.

Mr A Nicolai (CP) addressed the question of proceeds and dividends by saying the state gets dividends from the company major stakeholders, and those dividends benefit the country's whole population. In addition, Norway had a tax system which ensured that extra ordinary profits from the Oil and Gas sector comes back to the Norwegian society at large.

Mr Per Rune (LP) highlighted that Statoil was formed in 1972 as a tool for Norwegian government but then when the government was issuing the exploration and production licensing, there were three companies who were given one license together, and they had to interact and make best use of resources. He said Statoil initially had an ownership role, since the country was still learning and then years after that was given an operative role, so Statoil was the currently operator of the field. In addition, the main aim was to build up Norwegian competencies, to make sure that the country could extract both technology and competencies from the international partners. Thus, the company was no longer a tool of the government, as it achieved the goals that were set, for achieving broad Norwegian experience in the market and also competencies.

Mr M Ndlozi (EFF) asked what was the contribution of this company to the fiscus.

Mr O Henriksen (CP) stated that the income from the oil and gas sector went to the overall budget. However, Norway has a limit that only 4% of the interest could be used from the budget to the pension fund.

Mr A Nicolai (CP) said the reason why the pension fund was so big in Norway, since it was established back in 1994, was due to the income from oil and gas resource stakeholders that went straight into the pension fund every year, then the country used 4% of the proceeds to the maximum permissible to add into the annual budget. The aim was to ensure that resources generated did not only help the generation of today but the future generations also.

Mr Oosthuizen started off by acknowledging Norway as the biggest generators of hydro power. He said Oil and Gas were Norway biggest assets and also Norway helped South Africa with clean air. However, in Norway, carbon emissions were very high and he asked for the reason.

Mr O Henriksen (CP) asked Mr Nicolai to give a brief answer to the question and also the processes that Norway had embarked on to find solutions to the problem.

Mr Nicolai (CP) said that Norway aimed to reduce the emissions by 45% by 2030, in collaboration with European Union (EU). The reason why the emissions were so high was due to  Norway's high reliance on oil, gas and also aluminum from the production of exported products.

Mr Oosthuizen also pointed out that Norway's per capita consumption was the highest in Europe, so it was evident that Norway relied heavily on the non-renewable resources. 

Mr A Nicolai (CP) added that another reason behind high emissions, in addition to oil, gas and the aluminium industry, was transport.

Mr O Henriksen (CP) assured the meeting that the issue of how to reduce emissions was one of the major discussions among all political parties.

The Chairperson thanked the Norwegian committee for attending the meeting and expressed appreciation for the discussion that had taken place, hoping to repeat this and perhaps be in turn hosted by the Norwegian committee in the near future.

The meeting was adjourned. 


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