Atomic Energy Corporation & Mintek: briefing

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Mineral Resources and Energy

15 February 2000
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MINERALS AND ENERGY PORTFOLIO COMMITTEE
15 February 2000
BRIEFING BY ATOMIC ENERGY CORPORATION AND MINTEK

Documents:
Presentation by Dr W.E. Stumph, CEO of Atomic Energy Corporation
Abbreviated Strategy Document
The Funding of Transformation in Mintek.
[e-mail linden@iafrica.com for documents]

SUMMARY
Atomic Energy Corporation (AEC) of South Africa
Dr Stumph, CEO, began by presenting the competitiveness ratings of the South African energy sector on the global stage. Most significant was the slip in ranking in terms of science and technology, South Africa ranked 28 in 1994 had slipped to 44 by 1999.

The speaker then presented the AEC 2000 Plus Plan. Prior to 1990, the focus of AEC was on security-of-supply of nuclear fuels. Post 1990, the focus shifted to commercialisation and industrial product development. The 2000 Plus Plan aims to focus on profit and asset management and has separated its commercial and government functions.

The product portfolio has changed dramatically. By 2002, income from nuclear fuel will have been completely replaced by income from non-nuclear or industrial products. Exports have climbed since the opening of the world market in 1994, starting at 15% of total sales in 1994, they are projected to peak at 63% in 2001 and then level out to about 50% by 2005. This will bring in much needed foreign exchange. AEC has restructured itself in anticipation of the implementation of the White Paper. Its Commercial Division is now separate from the Government Division and is on the way to becoming completely self-supporting and profitable. It will become tax-paying entity and the board would be strengthened to prepare for possible privatisation.

The programme budget has been significantly reduced and this has resulted in heavy cuts in personnel, including many with critical skills and more cuts are anticipated. This has produced a problem of its own, because retrenchment costs are not included in the budget. The Minister has suggested that a short-term loan arrangement be investigated to deal with this.
AEC will also propose to the government that the loans incurred by decommissioning and decontamination operations (D&D) be discharged over a long period.

Dr Stumph presented a detailed outline of the AEC's nuclear technology and radiation programmes, products and services, its chemical production plants and the Pelindaba Skills Institute. He then discussed the benefits of membership in the African Regional Agreement on Nuclear Science and Technology (AFRA). Finally, he briefed the committee on the macro-economic contribution of the AEC business plan and budget.

Following the presentation, Mr Nkosi, the Chair suggested that a further meeting be held to discuss AEC's mission. Members were concerned about the shortened horizon of AEC's projects. As a result of the uncertain budget, only projects that can be completed in 2-3 years are being undertaken. There is a need to discuss this with the Minister, as well as what the future of AEC should be and the role of its Board. These discussions should produce a basis that informs decisions about which programmes should be cut.

Mintek: Specialists in Mineral and Metallurgic Technology
Dr Shezi presented Mintek's vision, mission and strategy. Through its research, development and technology transfer, Mintek aims to promote small, medium and large industries in the field of minerals and, in so doing, to support the nation's Reconstruction and Development Programme (RDP) and the Growth, Employment and Redistribution Programme (GEAR). Its strategic objectives include the identification and development of commercial technologies. Mintek groups its research and development projects into 5 programmes: gold, platinum group metals (PGM's) , ferrous metals, non-ferrous metals and industrial minerals. Non-technical projects that are aimed at education and training and regional co-operation are grouped into a sixth programme: Opportunity Enhancement.

Following the recommendation of the White Paper on Science and Technology, Mintek participates in collaborative projects with South African universities, technicons, other science councils and private sector research and development laboratories. Mintek is also exploring ways of fostering cross-border collaboration, as per the White Paper on Mineral and Mining Policy.

Dr Shezi then outlined Mintek's strategies for the transformation of its human resources. The focus is on the recruitment and development of young black graduates from disadvantaged groups through bursaries and a variety of support programs. This will be achieved by the commitment of all employees across a wide base.

Dr A.M. Edwards, the outgoing President of Mintek, then elaborated on the transformation programme. He explained that efforts are being directed at both Mintek's external environment, the economic empowerment of previously disadvantaged entrepreneurs and communities, and its internal environment, employee empowerment and responsibility.

He stressed that while there has been a lot of attention to SMME's, it should not be forgotten that it is the macro enterprise that create the opportunities for these enterprises. On the other hand, South Africa has not been attentive enough to creating ways to add value to minerals before they leave the country and there is a lot of work to be done in this area of beneficiation.

He pointed out that because of the enormous backlog for developing skills and employment among the previously disadvantaged, there is a small number of black engineers that are lured from job to job by increasingly larger salaries. Despite the importance of mining and minerals in South Africa, these subjects are not taught in schools and there is a lack of awareness about them. He outlined several programmes in secondary and tertiary institutions that Mintek has initiated in order to address this problem, as well as adult education and various training and development programs.

Moving on to external development, Dr Edwards provided a breakdown of Mintek's involvement in SMME's by province, as well as its role in rural development and job creation in each province.
With respect to macro projects, he presented data on the contributions of mining and metallurgy to the national economy, also broken down by province. The spatial development initiatives (SDI's) are overwhelmingly minerals based and include the downstream development of gold (e.g. jewellery production in the Free State). He also outlined potential metallurgic projects at Saldanha in the Western Cape and Coega in the Eastern Cape, as well as future value-added industries in South Africa.

In the discussion following the presentation, several members requested more information about how the industry is positioning itself with respect to globalisation and it was agreed that Dr Edwards would provide them with this. The question of indigenous knowledge was also put on the table for further discussion.

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