Hansard: Appropriation Bill : Debate on Vote No 28 - Minerals and Energy
House: National Assembly
Date of Meeting: 22 Jun 2009
Summary
No summary available.
Minutes
UNREVISED HANSARD
EPC – COMMITTEE ROOM: E249
Tuesday, 23 June 2009 Take: 339
TUESDAY, 23 June 2009
PROCEEDINGS OF EXTENDED PUBLIC COMMITTEE – COMMITTEE ROOM E249
_________
Members of the Extended Public Committee met in the Committee Room E249 at 14:02.
The House Chairperson Mr K O Bapela, as Chairperson, took the Chair and requested members to observe a moment of silence for prayers or meditation.
END OF TAKE
The MINISTER OF ENERGY (Ms D E Peters)
START OF DAY
APPROPRIATION BILL
(Policy debate)
Vote No 28 - Minerals and Energy:
The MINISTER OF ENERGY: Chairperson, Ministers and Deputy Ministers, chairpersons of committees, and hon members, on 22 April 2009, millions of South Africans renewed the mandate of the African National Congress to continue with its popular programme for the reconstruction and development of our country. Our people did so conscious of the fact that the ANC remains the only choice for a progressive advance towards the vision of a better life for all. In the words of the President of the Republic, the hon Jacob Zuma, "they were attracted by our policies and the delivery of services in the past fifteen years, as well as the track record of this movement in working to build a better South Africa since 1912. We do not take the mandate lightly; we know the responsibility that comes with it."
The outcome of the elections clearly demonstrate that the people's confidence in the ANC remains unshaken, and our constant endeavour, in whatever we do, shall be to work very hard to earn that confidence. Members will recall the challenges we faced in the energy sector which manifested themselves in the form of liquid fuel shortages in 2005 and electricity supply disruptions.
In addition, there is now a greater need to be responsive to the climate change imperatives as we embark on the biggest energy infrastructure investment programme the country has ever seen. In recognition of these challenges, it was a prudent response by the President of the Republic to separate energy and mineral resources, so as to allow greater focus on the energy challenges. Furthermore, the outcomes of the 52nd National Conference of the ruling party provide a clear and unambiguous framework for our interventions in the energy sector. Amongst others, Polokwane directed that we should ensure "a security of supply of energy resources, and pursuing an energy mix that includes clean and renewable resources to meet the needs of our fast growing economy without compromising our commitment to sustainable development".
This work must include escalating our efforts towards a greater contribution of renewable energy sources, including solar and wind power, as well as harnessing the hydroelectric potential of the Southern African Development Community, SADC, region. These must be accompanied by a clear programme of incentives for investment, as well as the development of the requisite human resource capacity to take full advantage of the opportunities presented due to the growth in this sector.
We are further charged to rapidly move towards an energy efficient economy by mobilising the collective participation of communities, the public and private sectors to realise energy savings and further to actively work towards integrating our efforts with regards to energy planning with the science and technology agenda, transport policy and the evolving industrial policy. The delivery of this address comes during a period in history when this country and the rest of the world are facing a set of challenges far greater than any we have seen in generations. Our economy is in recession after more than 48 quarters of successive positive economic growth; our families are struggling with rising costs and falling incomes.
South Africa's liquid fuel energy needs depend, largely, on the product produced in the crude oil refineries that are owned by international oil companies. South Africa's healthy economic growth has resulted in the capacities of these refineries being exceeded, and the country now has to rely on imported finished product to meet its liquid energy requirements. Future growth forecasts indicate that, without increased local refining capability, South Africa will be importing up to 20% of its total refined fuels by 2015 and doubling that by 2025. That is not the road to independent, self-sustaining nationhood.
Government is concerned about having our fuels security of supply dependent on imports, with none of the local refineries having indicated expansion plans. Therefore, in line with our previously announced energy security master plan, we support the proposal of PetroSA, our national oil company, to build a mega crude refinery at Coega in the Eastern Cape. Known as Project Mthombo, this modern, world-class refinery will provide the lowest cost refined products sufficient to cater for the country's shortfall needs until 2030. Importantly, Mthombo will enable the economic introduction of globally competitive clean fuels, ensuring that South Africa meets new best practice standards that improve our environment and contribute towards maintaining the competitiveness of our vehicle manufacturing industry. The new refinery, ladies and gentlemen, will have a major positive impact on government's stated objectives of skills training and transfer, creating thousands of jobs associated with supporting and operating this mega refinery. The project will attract much needed foreign direct investment, generate a significant and sustainable improvement in the economy of the Eastern Cape, and provide considerable prospects for broad-based Black Economic Empowerment, and Small, Micro and Medium Enterprise, SMME, participation.
In addition to this, being a coastal facility with export capability, the opportunity to secure international partnerships is self-evident. Our national strategic fuel stocks policy is one of the most important aspects of the implementation of the energy security master plan, which is specifically designed to ensure continuity during fuel supply disruptions. The aim of this policy is to outline a framework for the storage of fuel stocks by the government as well as industry in order to guide the necessary investment decisions and to improve security of supply for the liquid fuels sector. The national strategic fuel stocks policy will be revised to include the holding of commercial stocks as well as emergency stocks.
Since assuming this position of responsibility, I have come to appreciate the need and value of co-ordination and integration within the energy sector. We need to do more to enhance the co-ordination within the sector, develop a shared vision and integrate our various energy planning efforts. In pursuance of this, we will spend considerable effort and time on the development of an integrated energy plan. This would inevitably entail an intensive process of stakeholder engagement and consultation over the coming period.
I have recently approved regulations which will make it possible to use payment cards to purchase petrol and diesel at fuel retail service stations. This is a major milestone for us as we move to modernise our petroleum industry and to reduce the risk associated with large quantities of cash at service stations. Chairperson, it was agreed, in 2006 that the South African fuel specifications and standards would have to be revised. The new fuel specifications and standards will assist in ensuring that the South African economy benefits from the latest engine technologies, which in the main are more fuel efficient. The new specifications will also reduce the maximum allowable amounts of benzene in fuel, thereby contributing to a reduction of this known carcinogen in the atmosphere and the protection of workers against the fumes from benzene.
We will work with the Departments of Water and Environmental Affairs, Transport and Trade and Industry to ensure that the roadmap for the new fuel standards and specifications is developed and that the stakeholder engagement process is completed by June 2010. The new fuel specifications will then be promulgated to enable companies to make investment decisions in line with recommended specifications.
As you are aware, the prices of petrol, diesel and paraffin are currently regulated and benchmarked according to the international pricing system, and this is expected to remain so in the medium-term. In order to give more certainty, I would like to indicate that I do not intend to start any form of deregulation of the liquid fuels industry in the next five years.
However, we will monitor, on an ongoing basis, the international developments of the liquid fuel sector and continuously evaluate the appropriateness of the pricing framework. With rising and volatile oil and liquid fuel prices, government will, in conjunction with relevant stakeholders, extend the energy saving campaign to cover transport fuels.
Hon members, this year we will establish the South African National Energy Development Institute to conduct energy research and development as well as implement more aggressively energy efficiency and renewable energy programmes on behalf of government.
Next year will mark 10 years since the inception of the liquid fuels charter. We will, during the course of this year, initiate a process of reviewing the progress made in the last nine years. Initial indications are that the industry still has a lot of work to do if they are to meet their obligations as stated in the liquid fuels charter. I will be engaging the liquid fuels industry intensively in order to ensure that we start to assist them in complying with the law as the liquid fuels charter is now part of the Petroleum Products Amendment Act.
We will work continuously on finding safer ways to use nuclear power and store nuclear waste. I want to state categorically that there can be no future for expanded nuclear usage without simultaneously addressing four key issues: the public's right to know; the security of nuclear fuel supply; waste management; and nuclear security and nonproliferation.
Accordingly, we are pressing ahead with the implementation of the waste management policy and strategy and will, during the course of this year, establish the National Radioactive Waste Disposal Institute in order to manage and regulate radioactive waste material in accordance with the international standards to ensure the protection of people, property and the environment. We will implement our nuclear energy policy that seeks to put in place nuclear energy as one of the solutions to mitigate against greenhouse gas emissions. In line with our nonproliferation initiatives, the Nuclear Energy Corporation of South Africa, Necsa, will complete the conversion of the Safari reactor from using highly enriched Uranium to low enriched Uranium. As part of the diversification of energy sources, government plans to expand the use of nuclear energy for electricity generation. Our work in this regard will include intensified engagement within the government system and outside, in order to ensure that we take emphatic decisions with regard to Eskom's nuclear build programme.
We must be the generation that leaves to our children the legacy of a planet that is not in decline. We need to leave them a world that is clean, safe and prosperous. Accordingly, clean energy will be one of the key components of our energy mix during the next five years. In this regard, I intend, in the next few weeks, to pronounce on the energy mix going forward, particularly with regard to the role and responsibilities of Eskom in relation to the independent power producers. As you are already aware, the National Energy Regulator of South Africa, Nersa, has promulgated renewable energy feed-in tariffs for a number of clean energy technologies.
This is an opportunity not only to meet our policy objectives in the clean energy space such as the 10 000GWh by 2013, but also to open opportunities for rural and local economic development where the biggest need for employment and infrastructure development is located. This tallies very well with the priorities outlined in the ANC electoral platform.
The feed–in tariffs will enable greater use of solar water heating, wind energy, as well as mini hydro schemes. The department will ensure that one million solar water heaters are installed in households and commercial buildings over a period of five years. This major programme has the potential to create up to one 100 000 jobs across the value chain that will include manufacturing, installation and maintenance. We will be engaging with the Clinton Foundation, whose objective is climate change mitigation, for the development of an industrial energy park concept, focusing on concentrated solar power. In addition, we intend to ensure that, through independent power producers, 400MW of wind power is commissioned in the next three years.
We are aware that our country is literally festooned with a variety of initiatives, particularly in the field of solar energy. These initiatives require a co-ordinated response. During the course of this year, we shall be convening a conference of all stakeholders organised in this industry so that, together, we develop a clear action plan going forward. The responsibility for electricity security of supply previously was the domain of Eskom, which was left with the responsibility to decide on the supply options that the country would introduce in the form of power stations. This function now rests firmly under the control of the Ministry of Energy, as provided for in the Electricity Regulation Act. Accordingly, in order to align the building of new power stations with government policy, the department will be promulgating new regulations relating to the planning framework for new power stations, procurement process as well as the roles and responsibilities of the respective players. The integrated resource plan, or country plan, will be gazetted within the next two months. This plan will indicate both the supply side options, such as power stations of various technologies, and demand side options, particularly energy efficiency interventions.
On biofuels, a 19 million litre ethanol project is being developed by the Central Energy Fund Group of Companies, the Industrial Development Corporation and the Eastern Cape government, giving effect to the government's biofuels strategy. The project has been under development for the past three years and is expected to be commissioned in December 2011. The project has the potential to create a viable fuel grade ethanol business, based on sugar beet grown in the Eastern Cape, centred in the Great Fish River Valley. The agricultural activities will create 1 500 jobs over and above 1 000 temporary jobs that will be created during the construction of the ethanol processing plant. This is one of the many projects that will be developed over the next five years. It is our goal to displace at least 5% of crude oil-based fuels with biofuels. Our energy security imperatives should not only be based on the supply side options. We believe that the demand side options present the best opportunity for our country to claw its way out of the supply-demand imbalance, through accelerated energy efficiency interventions.
It is my belief that we have a 30% upside in energy efficiency potential, which could be extricated purely from the electricity sector. We have always been able to enthuse the masses of our people to respond to challenges facing our communities with vigour, and our challenge is to make energy efficiency a way of life for all our people, rather than the relatively easy and readily available option of building more power stations. We must embark on a mass-based, community-centred programme that would see the critical matter of energy efficiency being part of the daily life of our communities and people. In this regard, we will continue to engage the Department of Basic Education to ensure that energy efficiency forms part of the school curriculum.
In addition, we intend to introduce, under the auspices of the National Electricity Response Team, a framework for power conservation in the commercial and industrial sectors. In terms of this plan, certain incentives would become available for users who introduce energy efficiency measures that are measurable and independently variable. The corollary holds true for those who are not energy efficient. They would be faced with the reality of disincentives. It is through the combination of this stick and carrot approach that we believe will assist us to achieve our target of a 10% aggregate saving on current electricity consumption levels.
I would like to remind this House that we are far from being out of the woods. In fact, was it not for the economic downturn, we would be load shedding. I, therefore, appeal to all of you to please not to be lulled into complacency.
Setswana:
Tima motlakase fa o sa o dirise. [Switch off electricity when not in use.]
English:
It is our intention to enhance the attractiveness of our energy space as an investment destination for renewable and nonrenewable energy by independent power producers, as well as for the increased use of energy efficiency technologies. This is important, given the reality that Eskom is not in a position to exclusively meet our power needs going into the future.
One of the most critical interventions I will introduce is the separation of the Independent System Operator, ISO, from Eskom. This entity will be responsible for planning, procurement and the scheduling of generators to balance the system demand supply equation on a daily basis. The difference brought by this initiative is that it enhances the extent to which Nersa regulates Eskom, and it will lead to improved efficiency within Eskom generators. It is our intention, initially, for the ISO to be independently licensed, with the ultimate intention of establishing it as a separate legal persona owned by the state. Nersa will be making an announcement on the Eskom's application for an increase in the wholesale electricity tariffs. It is an important matter that needs to be put into perspective, particularly as it relates to the latent concerns about the impact of this on the indigent. At the outset, I must state categorically that we do not agree that the tariffs must rise rapidly. It is our view that this will lead to unintended consequences, not least of which would be an adverse economic impact in the face of the recession we are currently experiencing.
We have started a process that will enable us to provide a cushion for the indigent and will develop an appropriate pricing policy framework to structure our tariff regime, such that the indigent sections of our communities are insulated from increasing electricity tariffs. This would be over and above the free basic electricity allocation, which municipalities are responsible for implementing with varying levels of success. This work is being undertaken with the social partners in business, labour and civil society. We are hoping to complete the process by September 2009. Equally, there is a need for electricity tariffs to be structured in such a way that key industrial users continue to subsidise in particular the domestic users and not vice versa. We have to be careful that our pricing framework does not undermine this strategy, by inadvertently selling electricity to key users below cost and to the detriment of a financially sustainable electricity sector. As we speak, our tariffs are 70% cheaper than the next cheapest country, which does not make sense when we have such low reserve margins and need to build more power plants.
We are concerned about the backlog of almost R27 billion on maintenance and investment in the distribution chain of our electricity infrastructure, and we will accordingly give this issue the urgent attention it requires. We are, therefore, pleased that on 15 April 2009, Cabinet resolved to effect the Constitution 17th Amendment Bill and, similarly, to accelerate the process of the enactment of the red establishment legislation through Parliament. This will strengthen the ability of national government to assist other spheres of government, especially local government, to accelerate service delivery. We are committed to work with the South African Local Government Association, Salga, and municipalities in order to deal with all the challenges facing this sector.
We will continue to engage with the global community on multilateral arrangements to reduce the impact of climate change through negotiated protocols and conventions. To this end, our participation in regional and continental structures will be improved to ensure mutual benefit and optimum impact. We will endeavour to encourage all possible projects with climate change mitigation potential to be registered with our Designated National Authority, DNA, office to ensure that South Africa derives maximum benefits from climate change mitigation instruments.
The largest item in the budget we are presenting today is that of the Integrated National Electrification Programme, commonly known as Inep. This is one of the major projects that we are executing, and it combines service delivery and poverty reduction through the creation of jobs, mainly in the rural areas of our country.
By the end of September 2009, we will be launching the Engcobo, Inxuba Yethemba, Umhlonhlo rural electrification projects that will see an investment of R170 million in the infrastructure development of the Chris Hani and Alfred Nzo district municipalities. As part of the nationwide rural development strategy that was announced in the state of the nation address, we will be supporting this initiative through the provision of energy infrastructure. Our contribution to the pilot project in Giyani will be R10 million for rural electrification and exploring the possibility for local electricity generation.
While the process of separating the Departments of Mineral Resources and Energy and its budget is still underway, the preliminary budget for the Department of Energy is R3,7 billion for the 2009-10 financial year. This amount includes R2,5 billion earmarked for transfers to Eskom and municipalities for the electrification programme and R600 million for transfers to entities reporting to the Minister of Energy. The department managed to spend 99% of its final appropriation for the 2008-09 financial year and this year...
The HOUSE CHAIRPERSON (Mr K O Bapela): You have two minutes left of your other time. We did add five minutes to your original time.
The MINISTER OF ENERGY: Thank you, Chairperson. The department has received an unqualified audit report with no emphasis of matter for the 2007-08 financial year, and I am confident that the audit report for 2008-09, which we are expecting later this year, will be in line with the higher bar that we have set for ourselves.
In conclusion, I wish to thank my predecessors for the solid foundation laid in this department. I also want to thank the Director-General, senior management and the staff in the department, as well as the leadership and staff of associated institutions for the excellent manner in which they received us in the department. Allow me also to thank the chairperson and members of the portfolio committee for their progressive engagement with the department thus far. We value these interactions and anticipate a mutually enriching relationship between the Department of Energy and Parliament during this term of office.
We present this budget during the month dedicated to our young people, whose past and present contributions continue to shape our fledgling democracy. We salute the scores of our youth who daily contribute their sweat and toil to ensure that South Africa remains a country alive with possibilities, and we also commit the department to work with the newly established National Youth Development Agency to realise comprehensive, holistic and integrated youth development. We owe this to the proud generations of valiant youth. We commend to this House the budget of the Department of Energy. Together we will do more. Thank you. [Applause.]
The HOUSE CHAIRPERSON (Mr K O Bapela): What we did was take five minutes of your response time and add it to your original allocation, because you are a new Minister. We appreciate that, and we just wanted to give you all that time, but it has affected your 10 minutes at the end. So, you will only have five minutes for responding to the debate, unless something magical happens where other people save time, so we will be watching it.
Ms E THABETHE
END OF TAKE
The MINISTER OF ENERGY
Ms E THABETHE: Chairperson, I'd like to agree with the Minister, that this debate is taking place at a dedicated time, during the youth month. The Confederations Cup is also taking place at the same time in our country. Without any hindrance such as load shedding, we've managed to do well, and we hope till the end of the Confederations Cup.
Last Wednesday we adopted the report of the portfolio committees, after deliberations by the departments on 9 and 10 June. We were able to adopt these reports unanimously. We hope that as the two portfolio committees, we will have the good spirit to work together until the final split. As voters voted us into Parliament, we will make sure that we do so in unity.
The ANC-led government has inherited an economy that is premised on the dominance of mining and heavy industry, characterised by extremely low energy prices and massive capital-intensive and energy-intensive projects. Though we are 15 years into our democracy, our economy is, however, energy-intensive and is still based on primary extraction and processing of coal and other mineral resources. Currently, energy contributes approximately 15% of the GDP and creates jobs for over 250 000 people.
This economic configuration has remained largely untransformed. It has instead been strengthened, although the current economic transformation efforts seek to stimulate other sectors to diversify the production base and increased competitiveness. Surely, energy drawn from coal constitutes a very high proportion of South Africa's energy consumption. In actual fact, it is the highest in the world, excluding noncommercial energy carriers, followed closely by China.
However, as a developing country, we need to invest more in the energy mix. Currently, coal meets 80% of South Africa's primary energy needs; nuclear approximately 3% and renewable energy approximately 8%. Surely, we need to make sure that we do not move away entirely from coal, but try to take measures to invest in other technologies. So, Minister, we are going to support you in this regard and make sure that we are in a position to deal with our malady.
The Polokwane conference asked for, amongst other things, government to be directly involved in the creation of decent jobs, expanding the role of the Public Works Programme and create job opportunities to target directly vulnerable groups, such as the rural poor, women and the youth. So, surely, poverty and unemployment remain prominent realities in South Africa. However, we have done so much that at least there is change. As I stated, we inherited this from the apartheid regime, but we have been able to move on and make sure that we work to the level required of us to do better. That is the reason we have been brought back to power.
There is a proposal to amend Schedule 4(b) of the Constitution, as the Minister indicated. This amendment will see the Regional Electricity Distributors, REDs, being implemented. That is going to be part of our major work as the portfolio committee, and we'll try to make sure that the various stakeholders, entities or state-owned enterprises that report to the department do their job. Part of our job is to make sure that we oversee your work and see to it that you do better, especially for the sake of the poor. We'll continue to deal with the energy challenges emanating from this economic meltdown. We hope that the ANC-led government will be able to deal with those challenges, because we managed to deal with bigger challenges before. Surely, the generation, transmission, distribution, reticulation capacity and the diversifying of sources of energy by household and industrial users remains a key challenge. However, we don't think that we'd go back to the inadequate electricity reserve.
In 1994, we had energy reserves, but it is a fact that it did not even serve half the population. There were some areas that could not access that reserve. With universal access, we will be able to make sure that we deal with this. In this regard, the 2009 ANC election manifesto has made mention of the ANC's intention to ensure that government will defend decisively the economy and take measures that advance the departmental agenda. We believe that this is going to be the solution as the industrial policy framework also covers this. Experience has taught us that innovative thinking is central to economic prosperity. I think that every sector needs some form of energy or an energy mix, for example transport, schools, mining, the world cup, etc. We hope that the good policies that the ANC government is implementing will continue to do well, in the spirit of assisting a lot of people to move out of poverty.
The Polokwane conference resolution referred to earlier targeted the question of the beneficiation process in terms of the larger scale of issues that we deal with. As we deal with the challenges of compact fluorescent lamps and others, we should try to manufacture these in South Africa. This way we can make sure that we create the jobs that we promised people. This is going to be a difficult task, but we believe that, with what we have at our disposal, we will be able to do that.
The President, when he addressed us, said that ...
IsiXhosa:
... abantu basemakhaya nabo banelungelo lokuba nombane, amanzi, izindlu zangasese ezigungxulwayo, ...
IsiZulu:
... imigwaqo, izindawo zokuqeda isizungu, izindawo zemidlalo kanye nezindawo zokuthenga eziphucukile, amashopping centre, emadolobheni.
Sesotho:
Kannete o ne a bua le rona hore re etse mosebetsi ono. Lona Matona, re tshepile lona.
English:
Normally, they say, "if you want something to be debated and further contextualised, give it to a man, but if you want something to be done, give it to a woman." [Applause.] So, I'm glad to have the two women at the helm of this department. They are going to make sure that we do things rather than debate continuously, raising issues that are not going to help us deliver.
The portfolio committee is going to work with you, but be assured that we'll do our oversight work robustly. The President said that this is an activist Parliament. So, good luck. We hope that we'll have a good working relationship, in the spirit of: "Working together, we can do more." I thank you. [Applause.]
Hon MEMBERS: Malibongwe!
Mr S C MOTAU
END OF TAKE
Ms E THABETHE
Mr S C MOTAU: Chairperson, Ministers, hon members, good afternoon. Reliable, affordable energy supply is the lifeblood of a South Africa seriously engaged in the daunting task of reconstructing and developing itself.
The centrality of the energy sector in the development of this country should never be underestimated. The starkness of this fact has been sharply brought to the nation's attention by the disruptions and failures that afflicted our fuel and electricity supplies in the recent past - and I'm glad the Minister alluded to these.
Who can forget the general panic and long queues at inland filling stations when this sector faced problems at several refineries? Who can forget the crippling blackouts and brownouts that forced a rolling, systematic load shedding intervention on a bewildered nation?
These failures came at a very high cost to the nation. I want to quote the March to May 2009 edition of Mining:
The unprecedented levels of load shedding across the country in January 2008 brought into sharp focus the fragile balance between electricity demand and supply.
It goes further to say:
A supplementary damaging outcome was a more than 25% drop in mining GDP, which effectively halved the country's economic growth rate from 5% in the fourth quarter of 2007, to slightly more than 2% in the first quarter of 2008.
Need we say more?
Minister, the DA would thus like to commend you and the department on the separation of energy and mining into discreet portfolios. The DA has long called for such a decoupling, and we believe that this is an important first towards the necessary restructuring of the energy sector. This step will place responsibility and accountability where they belong and sharpen the focus of the Ministry and the department with regard to deliverables in the strategic plan.
According to the department, the end state organisational structuring is to be finalised by the end of August 2009. We welcome this sense of urgency. We also look forward to the speedy appointment of an acting Director-General for the Department of Energy, and other critical appointments to set up the new department. However, we would like to urge that, once the appointment of the acting Director-General of Energy has been done, he or she should be replaced as quickly as possible with a permanent appointee, as should be the case with all the other funded vacancies in the department. We further urge that filling these posts should be based on merit, that is competence, professionalism and even potential where necessary. However, political party affiliation should not be a consideration.
The new Department of Energy has a golden opportunity to do things right the first time. Let us not squander this chance for political expediency and opportunism. Let us put the right person in the right job, to establish an effective and professional department. This should be achievable since a huge amount of the energy budget has been allocated to staffing, and the department expresses in these terms, and I'm quoting here from the Budget Vote: Programme 5 – Hydrocarbons and energy planning:
Expenditure is projected to continue to increase over the MTEF, Medium-Term Expenditure Framework, period from R45,9 million in the 2008-09 financial year to R64,1 million in the 2011-12 financial year, at an average rate of 11,8%.
And this is the important part:
This increase is driven by rising expenditure on compensation of employees, which grows at an average annual rate of 16,1% over the MTEF period as the energy planning subprogramme builds human resource capacity for implementation of the National Energy Fund, 2008.
We agree that employees should be well-compensated for their contribution. Our responsibility is to ensure that the South African taxpayer also gets the appropriate return on that investment.
One cannot speak of energy in this country without reference to Eskom and coal, and I'm glad the Minister has done that too. Eskom is a dominant entity in the energy sector, and some would say "domineering". [Laughter.] In fact, a very big slice of the energy budget is earmarked for Eskom activities. We await with trepidation Nersa's response to Eskom's application for a 34% tariff increase. As we speak, many of our people, particularly in the townships, are deeply in debt as they struggle to keep up with their monthly electricity bills. A 34% increase, on top of the 27,5% levied not so long ago, is certainly bound to make the situation worse.
Setswana:
Ruri ruri bagaetsho, fa Nersa e ka lebala bohuma le mathata a a aparetseng borakgadi, bomalome, bokoko, borangwane le baagi ba bangwe ba Aforika Borwa fa e sekaseka kopo e ya Eskom, gona re tla buna masetlapelo.
English:
Coal is responsible for the production of more than 80% of South Africa's electricity. Owing to its high greenhouse gas emissions and its potential for significant environmental degradation throughout its value chain, the contribution that coal makes to energy production must be scaled down. And we've heard the Minister refer to that.
Carbon capture storage technology should be part of our energy planning, both for coal-fired power stations and other carbon-intensive industrial processes. [Time expired.]
The HOUSE CHAIRPERSON (Mr K O Bapela): Hon member, unfortunately, your speaking time has expired. I did give you extra minutes, but couldn't give you more than I have.
Mr S C MOTAU: Thank you. [Applause.]
Mr P D DEXTER
END OF TAKE
Mr S C MOTAU
Mr P D DEXTER: Chairperson, Minister and fellow members, I must say at the outset that I agree much with what the Minister had said in her opening remarks. No one could disagree with the need for us to focus on nuclear energy; the need for the new refinery; the partnership with the Clinton Foundation, which I think is excellent news; and the focus on independent power producers.
I have very little time, so I want to make three points. The first relates to energy sustainability and development. We have heard from the department, when we had hearings in the committee, from the President's speech and now from the Minister, that the government will be prioritising renewable energy. It has to be said that in the past this has not been the case in practice. No real substantial incentives have ever been put in place or any real measures to compel or to incentivise people to ensure that we promote sustainable use of renewable sources of energy. This, in a country such as ours that has bountiful supply of these sources such as gas, solar, wind, hydro and, in the region, enormous source of hydro, is really inexcusable.
We are also, as we have heard from the Minister, blessed with, what is in some countries considered a curse, uranium. For us as country we really need to have a national debate about how we use these sources of energy. For far too long the coal lobby has dictated and determined the way in which we generate energy in this country. It is going to be painful but it has to be done, and it is something that we would want, as Cope, to see being engaged in a very real way in the committee.
We also want to propose as Cope that, among other interventions that we see from the government, we immediately set up a fund to finance the transformation of all our homes, which are currently inefficient users of energy to being sustainable users of energy. Not only would this be good for our environment, but it can create hundreds of thousands of sustainable jobs. Not job opportunities. And I am not saying that to take a dig at the Public Works Programme. We want those job opportunities, but the real source of transformation of this economy is sustainable jobs. That kind of long-term programme of transforming our economy and the way we use energy will create proper jobs for people. This is being done in other countries where homes are turned from being energy efficient through the use solar power, insulation, double glazing and a whole lot of other things. We could learn a lot from these countries. But that fund, I think would go a long way towards financing the way in which we do this.
The second point I want to make relates to sustainability and equity. Annie Leonard, in a very entertaining and informative video that you can see online at www.storyofstuff.com tells the story of stuff. For those of us who are still Marxists, it's a wonderful video, because she describes how our entire lifestyle is relentlessly eroding the quality of our lives in taking our planet to the environmental point of no return. Ben, you have long been out of the party so you don't have to talk here. [Laughter.]
The government must put in place measures to ensure that
Mr B TUROK: Chairperson, on a point of order: It is really terribly important that the House be informed whether Cope is a Marxist party. It is very important. [Laughter.]
Mr P D DEXTER: Chairperson, that is not a point of order; that is a point of humour. What she says is that we must power down waste less, agitate more for change, detox our homes, the economy and the planet. We need less TV, more community, more walking, more bike rides, more recycling and we must buy green fare locally, use properly and use less. All of these practices can be encouraged by the government. And I want to thank you Minister because, I agree, we have a history of mass mobilisation. Can we not see your department having a campaign to turn all our citizens into green activists? We as Cope will support such a campaign.
Thirdly, in relation to mining, and I know Minister you have not spoken yet, so you'll pardon me. If you cover this in your speech, I will be happy. We've sat and listened in that committee about illegal mining. I must say, it is a real tragedy. It is such a danger for our society - nearly a hundred deaths over the last few months. But apart from that, this practice is exactly the type of activity that promotes the environmental and social degradation that lowersthe quality of all lives in our country. It is clear that this activity is funded by people with serious money. The government must, as a matter of urgency, put in place a specialised team of investigators to crack the syndicates that are behind this criminal activity. The mining houses must also ensure that, like landlords of derelict buildings, they have a duty to protect people from going on site to those places where this activity is taking place, because they must protect our citizens from the dangers that they hold. In the longer term, this issue is about the sustainable resource extraction policy that we have as a country. We must ensure that we fund proper rehabilitation where mining has taken place. We must debate this as a nation, because, as citizens, government, business, labour, we all have a duty to ensure ...
Mr H P CHAUKE: Chairperson, on a point of order: If the DA is able to understand the separation of minerals from energy, why is it difficult for Cope to understand that? He is now opening a debate which is not currently necessary.
Mr P D DEXTER: Chairperson, I apologised to the Minister in advanced. Unfortunately we only have time to speak now, and if the hon member can't understand that, I'll explain it to him afterwards. [Laughter.]
Lastly, I want to say that in terms of the tariff increases we are happy with the notion that these be phased in and that we protect the indigent and other vulnerable people in our society. We want to put on record that it is time that the management of Eskom took responsibility for the crisis that we face as a country. It really is inexcusable that these sorts of things happen and no one is held accountable. In a private company it wouldn't happen. In a good public entity that is governed properly, this would not be the case. We in Cope certainly would want to take this issue up. We want follow through to find out who are the idiots that allowed us to get into the position that we did as a country.
In conclusion, I want to say, thank you to the department for their engagement. The Director-General was not there and we missed him terribly, because he is such a familiar face. I don't know if you will be Director-General of Mining or Energy in the future or whatever, but we missed you. We had a wonderful engagement with the department and we look forward, as a committee, to a fantastic relationship over the next five years. Thank you. [Applause.]
Mr E J LUCAS
END OF TAKE
Mr P D DEXTER
Mr E J LUCAS: Chairperson, firstly, I would like to congratulate the Minister of Mining and the Minister of Energy on their recent appointments. Issues of mining and energy play an important role in the social and economic development of South Africa. The separation of mining and energy into two separate Ministries is welcomed.
The amount allocated to the department increases from R3,79 billion in 2008-09 to R4,65 billion in 2009-10. It is important to note that while the Department of Minerals and Energy did underspend by R27,5 million during the 2007-08 financial year, it has generally managed it's budget well in the past. It is vital that the funds, which have been allocated to mining and energy, are spent wisely and managed efficiently.
With regard to small-scale mining, access to funding remains a major obstacle to the growth of this important sector. While it is relatively easy to obtain a prospecting licence, there is great difficulty in doing the actual prospecting as many miners do not have the funds to engage in prospecting which will enable them to get a mining licence. There needs to be better co-ordination in this regard and improved access to finance for small-scale miners.
The IFP is very concerned about the number of deaths in the mining industry. While we do understand that this a very dangerous job, we must find ways of minimising dangers which lead to loss of many lives and rob so many families of their loved ones. In this regard, the department and private sector need to work together, particularly with regard to the mining inspectors. I have been led to believe that the shortage of mining inspectors has been aggravated by the fact that the private sector poaches these inspectors from the department by offering them better salaries and improved working conditions.
The last point I would like to make on mining is on the illegal mining activities which seem to be rife in South Africa. I do acknowledge that the Minister has taken a strong stance on this matter, but I believe that it is important that the people who buy the product from the illegal mining activities are targeted and brought to book. They are the ones who are creating a market for this illegal and dangerous activity.
The beneficiation of our raw materials needs to be increased as this is an important means of creating employment opportunities. I am therefore pleased that the portfolio committee agreed to pursue the beneficiation debate so that we all can sing from one page.
The shortage of electricity in our country needs special attention as it negatively affects our long-term growth and development prospects. At the recent committee meeting we were informed that the agreement to supply electricity to our neighbouring countries will be renewed soon. The present agreement was long term and at much lower tariff. I am sure that the new agreement will certainly correct this situation.
The IFP is pleased to note that the issue of solar water heating has been taken seriously as we have been calling for increased use of solar water heating for a while. We also hope that the architects at local governments work together to encourage energy-saving methods before passing public plans. We also need to pay attention and allocate more resources to rural electrification. The cost of electricity in these areas must be looked at again. The people who live in rural areas are amongst the poorest members of our society, and this must be borne in mind when costing electricity in these areas. In an effort to expand our energy mix and not rely solely on coal, nuclear must be considered as a viable long-term option. In this regard, the public needs to be educated and informed about the important issues surrounding nuclear, such as the storage and waste as well as the potential benefits and challenges of nuclear.
While we do have an abundance of coal, we are aware of the negative affects that it has on the environment when used with current technology. It is therefore important that research into new technology to reduce the negative impact of coal on the environment be intensified. Also, the Pebble Bed Modular Reactor, PBMR, has been on the cards for a long time now. We need to know when, and if, it will be used. We need to explore all options of efficient electricity use, and the department has given us an assurance that they will be looking into daylight saving and the effect that it would have in assisting our electricity problem.
Another issue of importance is the high price of crude oil and the negative effect that it has on our economic growth and on the lives of the masses. Viable forms of renewable energy must be explored if we are to limit our reliance on crude oil. One of my colleagues has brought to my attention that a group of investors are exploring the possibility of mining in his area. However, there has been no communication between the investor and the affected community and this is causing much concern. This is an issue which I wish to bring to the Minister's attention once I have collected more information. I will communicate further with you. The IFP supports this Budget Vote. [Time expired.] Thank you. [Applause.]
Mr M E NCHABELENG
END OF TAKE
Mr E J LUCAS
Mr M E NCHABELENG: Madam Chair, hon Ministers, hon members, ladies and gentlemen, I was encouraged this afternoon when I came to the House to see lots of political activists and ex combatants. I was actuallyconfused and nearly thought there was a rally of the ANC today. [Laughter.] Your presence here makes our democracy vibrant. We thank you.
The struggle to improve the lives of our people through developing and improving existing energy resources, both electricity and solar wind, and other renewable energies, can only be realised if we collaborate with our neighbours in SADC and the whole African continent. This need for collaboration is further necessitated by the fact that South Africa sells electricity in the SADC region - Botswana, Lesotho, Swaziland and Zimbabwe get some of their electricity from South Africa. This represents about 3% of the net energy produced. Apart from the electricity we get from the Cahora Bassa Hydroelectric Station in Mozambique, Eskom also imports some power from the Democratic Republic of the Congo and, to some extent, Zambia. They do this mainly for peak load management.
Working together with our neighbours, we can do more in facilitating economic growth and sustainable development. We can all proudly say "amandla ngawethu" [Power to the people.] with our neighbours. We need to engage in these efforts, having in mind the interest of the coming generations at heart. As we develop energy and our economy, we should not destroy the environment. We got this environment from our ancestors, forefathers and forbearers. We need to leave it intact for the coming generations.
The split of energy from mining is very welcome as the two have been close for too long. This meant that the energy agenda and the mining agenda were more or less the same. More than anything, this link has resulted in more emphasis on coal and far less on alternative energy resources - that is, renewable energy. It is now necessary to develop an entirely new agenda. [Interjections.] Oh! I would prefer a loudhailer [Laughter.]
It is now necessary to develop an entirely new energy agenda which is deliberately delinked from the mining agenda and which acknowledges the full range of energy options available in the country. Renewables are largely cheap or to some extent free, which is why they are not popular with multinational corporations that would like to control and sell things.
The current energy system in South Africa is predominated by coal, and it constitutes a very high proportion of South Africa's primary energy consumption. In actual fact, the coal-based energy plants in South Africa are the biggest in the world, followed closely by China. In 2007, coal comprised around 75% of South Africa's primary energy; nuclear energy comprised around 3%; and renewable energy comprised around 8%. As for electricity generation, an even greater share of about 92% comes from coal-fired power stations.
The South African economy is energy intensive as it is still based on primary extraction and the processing of coal and other mineral resources. Currently, energy contributes about 15% of the GDP and creates about 250 000 jobs. The energy sector is a critical vehicle ensuring that the growth trajectory we have set for ourselves is achievable and that it is also critical to the betterment of the lives of poor South Africans. It is our view as the ANC that we need to diversify our energy sources in order to gradually move away from over-reliance on fossil fuel-based energy generation or coal.
Although the ANC is very clear in its advocacy of energy mix and renewable and clean energy utilisation, minimal progress has been made in increasing the utilisation of alternative energy sources. Currently, South Africa's utilisation of diverse energy sources is skewed in favour of coal. It comprises a majority share in our primary energy mix. Diversification of energy sources includes nuclear and other renewables like biomass.
Compared to other parts of the world, South Africa is blessed with high levels of solar radiation. Radiation levels range between 4,5 and 6,5 kilowatt hours per square metre in one day, with an average of 2 500 hours of sunshine per year. It is time we invest massively in solar energy technologies to effect true energy diversification in our energy mix. Diversification of the primary energy mix will be intensified to achieve targets, and focus should also be on the promotion of renewable energy sources.
Renewable energy offers alternative sources for utilisation. The policy of the ANC embraces the research into renewable energy technology to increase the resource basket. [Interjections.] The ANC supports the budget.
Mr J SCHMIDT
END OF TAKE
Mr M E NCHABELENG
Afrikaans:
Mnr J SCHMIDT: Voorsitter, geagte Minister, Adjunkministers, lede en gaste ...
English:
One of the objectives of the department is to ensure a well-managed, effective, safe and cost-effective electricity industry. An effective electricity industry is clearly one of the cornerstones of a growing and successful nation. We in South Africa cannot afford to have the same energy crisis as we had at the beginning of 2008. We think it is necessary for this department to see whether Eskom is fulfilling its mandate on cost-effectiveness. They have recently applied for an interim 34% increase, and it is expected that they will apply for another increase of about 52% later this year.
We should consider the following aspects on how Eskom is being operated:
Afrikaans:
Eerstens, die primêre energiekoste, hoofsaaklik steenkool se koste, styg met R7,32 miljard.
English:
Let me give you an example of how Eskom manages its coal stocks. Eighty thousand tons of coal at Arnot Power Station went missing. This was written off through a journal entry. No investigation was undertaken and no one was held accountable.
Afrikaans:
Twee honderd ag-en-sewentig duisend ton steenkool het weggeraak by Kriel. Niemand is verantwoordelik gehou nie. Eskom laat toe vir 'n verskil van 2% in die gewig van steenkool gelaai en gelewer. As ons dit toepas op die 9 miljoen ton gelewer by Majuba teen R70 'n ton, het Eskom R6,3 miljoen te veel vir onafgelewerde steenkool by een kragsentrale betaal.
English:
At another power station, Eskom lost 400 000 tons of coal last year. This is about one soccer field of coal, 50 metres high. If this was bought under the so-called "emergency mandate" of R250 a ton, this alone was a loss of about R100 million.
Afrikaans:
Tweedens, ons moet kyk na die oorbetaling van R120 miljoen aan 'n subkontrakteur vir steenkool wat nooit afgelewer is nie;
English:
upfront assistance to suppliers to help them deliver coal of up to R294 million; why collieries like Optimum have short-delivered up to three million tons of coal in their contract in the last few years but are offering access coal to Eskom at 40% to 50% higher than contract prices. Several of the tied collieries are producing 20% to 50% below the current burn rates of power stations. Therefore, the shifting of coal between power stations is costing between R60 million and R150 million per month. We also need to look at why 20% of coal on short-term contracts cost about 50% of Eskom's total coal costs.
In conclusion, hon Minister, what is this department doing to urgently investigate Eskom's ability to run itself effectively and to provide this country with cost-effective energy according to its mandate? Don't let the consumer pay for what, to a large extent, is a management problem. Thank you. [Applause.]
Mr L W GREYLING
END OF TAKE
Mr J SCHMIDT
Mr L W GREYLING: Hon Minister, let me first congratulate you on your appointment and assure you that we in the ID look forward to working with you to find solutions to our energy problems. It is my hope that now that Energy has been liberated from the minerals sector, we will truly be able to consider ways in which we can build up a low-carbon economy. Our energy must now come from above the ground and not just from below it. Doing this will not only reduce our country's considerable contribution to climate change, but also create hundreds of thousands of jobs in the renewable energy industry.
Minister, with the passing of the new Energy Act, which requires your department to produce an integrated energy plan each year, a new era in energy planning has hopefully been brought into being. It is the ID's sincere hope that this plan will not simply be an amalgamation of the different energy sector plans, but rather a comprehensive plan that undertakes a proper cost-benefit analysis of our different energy options. It must also be prepared to challenge elements of Eskom's new build programme.
This plan also needs to be informed by the review of the renewable energy White Paper, although the details of this review process currently remain unclear. For the plan to be truly comprehensive it should also be informed by the externalities of energy study, which was unfortunately suspended in 2006 owing to a lack of funding.
A review of the first phase of the energy efficiency strategy also needs to take place. We need to have constant monitoring and evaluation of this strategy to ensure that we reach our targets. We in the ID cannot accept a situation in which Eskom sets a target of 1 million solar water heaters in three years and delivers only 1 250 in the first year.
This programme must be taken away from Eskom and placed under the authority of the National Energy Efficiency Agency, which should urgently be staffed with more than two people. We also need a rethink of the model that is used and an increase in the current subsidy level for solar water heaters.
Finally, the ID would like to know what has happened to the energy efficiency strategies that big businesses promised to produce following on from the National Energy Efficiency Accord in 2005. Perhaps it is now time to consider mandatory measures rather than rely on voluntary actions to drive forward our energy efficiency goals. I thank you.
Mr G J SELAU
END OF TAKE
Mr L W GREYLING
Mr G J SELAU: Chairperson, hon Ministers, Members of Parliament, the public, media, ladies and gentlemen, colleagues and friends, before I get into the limited speaking time allocated to me, I just need to talk about two other points that have been raised here: Firstly, in our portfolio committee meeting the term "blackout" was used. I enquired what blackouts and brownouts were and why there were no "yellow-outs" and "green-outs". [Laughter.] The response I got was that South Africa has never had a blackout. I wonder what makes it fashionable that blackouts must now be mentioned in this meeting by a member of that committee.
Secondly, the issue of political affiliation, it's a right protected in the Constitution. Whether a person joins the ANC after or before we have appointed him is a right reserved by that person in terms of the Constitution of South Africa. It's the right to freedom of association.
The need for energy in today's life is beyond any basic description other than a basic need. As advocates of sustainable development, the ANC holds that the development of today's generation should not be to the detriment of future generations, hence the following was resolved in Polokwane: to set a target for the reduction of greenhouse gas emissions as part of our responsibility to protect the environment and promote sustainable development, and to participate in sharing the burden with the global community under a common framework of action.
President Gedleyihlekisa Zuma in his state of the nation address has assured the nation that: "We will continue to improve our energy efficiency and reliance on renewable energy." We call on government departments to apply energy efficiency in buildings, including energy efficient building plans.
Regarding the Integrated National Electrification Programme, Inep, the White Paper on the energy policy of the Republic of South Africa emphasises the need for integrated energy planning. The ANC resolved in the Polokwane conference to build the strategic, organisational and technical capacities of government with a view to a democratic state through, among others, ensuring a security of supply of energy resources and pursuing an energy mix that includes clean and renewable sources to meet the demand of our fast-growing economy without compromising our commitment to sustainable development. The Polokwane resolution, read with the White Paper on energy, leads us to the following processes and functions. Maybe, Chairperson, I should not read them, for the sake of time, but we'll circulate this document at a later stage. [Interjections.]
The implementation of the Inep poses challenges of capacity and its existence in South Africa. The Polokwane resolution asked for, among other things, government to be directly involved in the creation of decent jobs, an expanded role for the public works programme and job opportunities to directly target vulnerable groups such as the rural poor, women and youth.
Poverty and unemployment remain prominent realities in South Africa, and government increased allocations in order to address these challenges. As the Integrated National Electrification Programme is connected to the Expanded Public Works Programme, allocations to the Inep should be increased to move with speed towards achieving universal access to electricity by 2014, whilst creating additional jobs.
Nongrid technologies such as solar should be integrated into the Inep as complimentary supply technologies to grid extension. The key challenges to these are: the establishment of appropriate structures and systems; the establishment and maintenance of resources to operate these structures; linking IEP technical functions to the policy-making process ...
Sepedi:
MODULASETULO: Mohlomphegi, nako ya gago e fedile. [Hon member, your time has expired.]
English:
Mr G J SELAU: OK, Chairperson, the ANC supports this Budget Vote. [Applause.]
Mr W D SPIES
END OF TAKE
Mr G J SELAU
Mr W D SPIES: Chairperson, the division of the department into two units was a step in the right direction. Firstly, President Zuma's promise to create 500 000 jobs before the end of the year was quite an ambitious one, and I think doubling the number of Cabinet positions is a good head-start in accomplishing that! [Laughter.]
Afrikaans:
Op 'n ernstiger noot, Suid-Afrika het verlede jaar een van die ernstigste energiekrisisse in die geskiedenis beleef. Energie is noodsaaklik en ek wil aansluit by die agb Greyling, wat sê ons moet oplossings vir hierdie krisis bó die grond en nie meer onder die grond moet soek nie. Ons glo dit is die regte ding en ons glo dat 'n bekwame Minister se onverdeelde aandag hopelik 'n einde sal bring aan die krisis waarin ons land verkeer.
Die VF Plus sien ook met verwagting uit na die Nasionale Energiereguleerder se beslissing oor Eskom se buitensporige aansoek om 'n 34% verhoging in kragtariewe. Ons glo dit is onverantwoordelik en nie goed vir die ekonomie nie, en ons hoop werklikwaar dat Nersa sy rol as onafhanklike reguleerder ten behoewe van die Suid-Afrikaanse bevolking ook in hierdie saak gestand sal doen.
Suid-Afrika het verlede jaar 'n oorgang gemaak van 'n stelsel van goedkoop, betroubare energie na duur, onvoorspelbare energie. Ons wil graag die Minister sterkte toewens om hierdie saak reg te stel in die tyd wat kom.
Wat betref die mynwese is daar net twee vinnige sake wat ek wil aanroer. Ons wil ook die nuwe Minister in daardie departement gelukwens, maar terselfdertyd twee sake op die agenda plaas. In die eerste plek dink ek die Minister moet kennis neem van die ontevredenheid wat daar by sowel swart as wit sakelui in die mynbou heers omtrent die streng vereistes van swart ekonomiese bemagtigingsdoelwitte in hierdie tye wat betref die mynwese. Die 26% beperking wat vasgestel is en ...
Die HUISVOORSITTER (Mnr K O Bapela): Orde! Baie dankie, meneer, u tyd is om! [Gelag.]
Mr W D SPIES: Is dit om? Wat van 'n bietjie tyd om af te rond! Ek dank u. [Tussenwerpsels.]
THE MINISTER OF MINING
END OF TAKE
Mr W D SPIES
THE MINISTER OF MINING: Chairperson, Minister Peters, Chairperson for Mineral Resources, Comrade Gona, Chair of Energy, Comrade, Elizabeth Thabethe, hon members, board members and executives of state-owned enterprises, members of the labour movement, members of the business community, honoured guests, ladies and gentlemen. It is a privilege to address you so soon after our country's fourth democratic election, which saw an overwhelming majority of the electorate making an X for further improvements in the quality of their lives.
President Jacob Zuma issued marching orders to our government in his state of the nation address. It is now our duty to ensure that our economy weathers the current global storm by continuing to court stability and a favourable climate for investment; to ensure that we protect the jobs of workers during these difficult times; create decent, sustainable employment, and; that we are ready to take advantage of the boom that will inevitably come after the dark clouds which are looming large over the world economy.
As we present the budget for 2009-10 we are mindful of the fact that there is a bumpy road ahead. The mining sector is under severe strain, but we have sown the seeds of a resilient economy. The difficulties that come with this stormy downpour won't last; the sun will shine through, and we should be ready to harvest in the summer. Whilst we are aware of the difficulties ahead, we are also under no illusion that the mineral resources of South Africa can and must be used to further improve the quality of our people's lives, especially those who did not benefit in the past from the substantial wealth of our country.
To Mr Spies, unfortunately those who are complaining whilst you did not complete your statement on the issue of ... [Interjections.] Oh, he is gone? Unfortunately these members come and go. The 2009 Estimates of National Expenditure was showing that the Department of Minerals and Energy had been allocated a budget of R4,6 billion for the 2009-10 financial year. As hon members would be aware, we were still in the process of splitting the Department of Minerals and Energy. Therefore, we will be in a better position to elaborate on the Budget implications of this split after the mid-year adjustments process.
Our performance against budget continues to be remarkable. The department managed to spend 99% of its financial appropriation for the 2008-09 financial years. The department has yet again achieved an unqualified audit report with no emphasis of matter for the 2007-08 financial year. I am confident that the audit report for 2008-09, which we are expecting later this year, will be in line with the high standard we have set for ourselves. Indeed, the challenge going forward is whether the new departments would maintain this standard.
Mining remains an important contributor to the country's economic growth, with an average of 50% of the country's export earnings being derived from mining, while the sector is also a leading contributor to the country's coffers through taxation. This emphasises the sensitivity with which we must treat the industry. At the start of the global financial crisis, conservative projections of anticipated job losses were in excess of 100 000 during the first year of the economic slump.
The government immediately initiated a process of lessen the impact of the global financial crisis on the South African mining industry. To this end, the aggregated commodity prices of minerals produced in the country lost some 40% of its value, while job losses were contained to less than 25 000, representing about 5% of total employment in the industry. This is a result of the instantaneous co-operation among all stakeholders in the sector, represented by government, business and labour. This collaborative work is rooted in the departmental-led Mining Industry Growth, Development and Employment Task Team, referred to as Migdett. The team was also tasked with developing recommendations that would ensure optimal development of the mining industry to benefit South Africa once the crisis was over.
We have been observing a global move towards consolidation of the mining industry during this financial crisis. We are keenly watching these developments to ensure, amongst others, that such consolidation does not take us back to the age of anticompetitive practices, that there are no job losses and to ensure that it does not affect market princes.
In line with the internationally recognised principle that natural resources are a national patrimony, the heritage of all South Africans, the Minerals and Petroleum Resources Development Act, MPRDA, vested the custodianship of all exploration and mineral rights in the state in 2004. Since the promulgation of the Act, some progress, albeit less than envisaged, has been made toward the attainment of the objectives of the mining charter. The promulgation of the Act has also unlocked the mineral development potential of South Africa.
Since May 2004 we have received and processed an unparalleled number of applications for prospecting, exploration and mining, collectively peaking at about 20 000 and resulting in the development of several new projects. This is completely contrary to what has proven to be an inept analysis, which suggested in the past that, at the time of our regulatory framework, it would destroy the mining industry.
The window for conversions of old order mining rights closed on 30 April 2009 with most of the mining companies having lodged their submissions. However, we are aware that there are some who have made submissions and we would like to warn them that those who continue mining without having lodged a conversion submission beyond 30 April would be doing that illegally. So be warned. The department has established the coal industry task team to assist with the sector's market challenges in South Africa, including the infrastructure constraints and monopolisation of export facilities by a handful of large companies.
The introduction of the mining charter in South Africa was aimed at transforming the mining industry, to redress historical imbalances engendered by apartheid so that the industry would be consistent with the changes in South Africa's overall transformation of its social, political and economic landscape. Embedded in the mining charter are provisions to asses the extent of progress towards the attainment of its objectives and to review the charter after five years of implementation. This is the year.
In reviewing the charter, community upliftment would be among the key focus areas, to ensuring that development of mining does not continue at the exclusion of the communities. The role of communities in mining has been less than adequate, with only a few pockets of excellence, which we anticipate would demonstrate the value of community participation, and would be widely adopted as a model for effective community participation.
We remain concerned about the tensions between mining companies and communities in areas where mining activities take place. Such tensions were more pronounced in Limpopo and the Eastern Cape. We believe that communities would not oppose mining if they were meaningful beneficiaries. We recognise that some companies are taking active steps in this regard and encourage those who are not doing so proactively to initiate programs to contribute towards improving the social conditions of the affected communities.
Mining companies should take cognisance of the fact that, over and above the legal license to operate, they should also obtain a social license through co-operation with communities. I therefore implore mining companies to take their commitments in their social and labour plans seriously. Over the last five years, our focus in the department has been on the transformation of the minerals and mining industry. We have driven the process of ensuring black participation in the mining sector as operators, investors and managers.
This would continue for as long as the minerals and mining sector remains untransformed. However, we are going to engage the highest gear when it comes to the minerals and mining industry's contribution to socioeconomic development. Our guiding light in this regard would be the five priorities of government. Gone are the days when mining projects did not have an impact on the quality of life of our people. Therefore, the new Department of Mineral Resources will, as of this financial year, conduct inspections on all social and labour projects.
We are going make sure that companies delivering on their commitments. We have no choice but to ensure that our people see and feel the direct benefits of minerals in their lifetime. In this regard, we are going to boost the department's capacity to facilitate and address the socioeconomic development challenges faced by hosting communities and labour-sending areas. We will, in future, identify projects that will contribute towards the improvement of the lives of our people and announce them in our annual Budget Vote.
As we review the charter this year, we will assess progress in all areas objectively and truthfully as this will inform the review process and its direction. We have appointed an independent service provider to quantify the progress made to date against the commitments of the pillars of the charter. This might be an onerous task, but it is a very important process for all stakeholders. I should also emphasise that the commitments of the charter are not intended for compliance purposes only. They do not have a shelf life ending in 2014, but are meant to permanently transform the industry to be truly reflective of South Africa. Rights holders who continue to create a ripe environment for fronting will soon be losing their licenses.
We are enjoined by Section 100 of the Act to publish both the Codes of Good Practice and the Housing and Living Conditions Standard documents within five years of its implementation. I am happy to announce that we have gazetted both documents by 30 April 2009. However, I am also aware that some stakeholders have concerns in this regard my department and I are ready to consult with them with a view to finding a lasting solution to this problem.
Guided by our understanding that the country's mineral resources are finite, but creativity is unlimited, we have embarked on the development of a beneficiation strategy. The strategy was launched to all representative stakeholders on 31 March 2009, with a deadline for written submissions on 15 May 2009. All submissions received are encouraging and are being consolidated in preparation for adoption of the mineral beneficiation strategy as a policy by July this year. This is essentially intended to support national programmes such as the National Industrial Policy Framework.
I am certain that, as we embark on our beneficiation route, all stakeholders will benefit from the country's comparative and competitive advantages. The extent of the external vulnerabilities created by our significant dependence on international markets are also going to be have be reduced somewhat. This proposition was a natural progression from a resource-based economy to a secondary and tertiary economy, which was consistent with other developed economies in the world.
Accordingly, this strategy will present opportunities for investment in the country by South Africans and foreign investors, as per the beneficiation of the Platinum Group Metals, which grew from less than 2% in the latter part of the 1990s to just over 20% in 2008. It is our intention to increase the value addition per capita in South Africa, contributing to job creation, skills development, poverty eradication and economic growth.
The State Diamond Trader has been severely affected by the global economic crisis, with diamond prices losing considerable value since the implosion of the global financial crisis. The challenges facing the State Diamond Trader are compounded by the standing financial model, which was essentially not developmental, but a classical business model. The department was assessing the prospect of a new business model for the State Diamond Trader, which will allow the Trader to continue implementing their core mandate of promoting equitable access to and beneficiation of diamond resources, addressing distortions in the diamond industry and correcting historical market failures to develop and grow South Africa's diamond cutting and polishing industry.
We are intending to finalise these corrections during this financial year so that the Trader can maximise its contribution to socioeconomic development when the upswing in the economy returns. The department presented its continental shelf claim to the United Nations in May this year. Early indications were that the country was likely to be granted this claim, which will not only extend the surface extent of the country, but increase the potential for mineral and petroleum resources as well as fishery. The medium- to long-term benefits from this undertaking are significant to the benefit of the country.
The department recognised the three spheres of sustainable development, comprising the economic, social and environmental aspects. In the past, the economic sphere took centre stage, with only mining focusing on economic benefits at the expense of the social and environmental aspects. Consequently, there were several thousand ownerless and derelict mines, meaning that the government has inherited a massive environmental liability.
In dealing with the consequences of this liability, the department has developed a dynamic strategy in dealing with derelict and ownerless mines in South Africa, recognising the long heritage of mining and its inherent environmental liability. Accordingly, we should caution against excessive focus on one specific sphere of sustainable development at the expense of others.
The levels of death, ill health and injuries at mines remain a serious concern for my department. The industry's stakeholders have over the last year managed to record a welcome 24% improvement in fatalities due to mine accidents when compared to the previous year, when 220 miners lost their lives. A seismic event of 3,5 magnitude on the Richter scale occurred at the Driefontein mine belonging to Goldfields Mining Company this past Saturday, 20 June 2009, which resulted in the death of two miners and this is a concern to us. This incident and others in the recent past, called for an urgent review of seismic monitoring practices at mines. Both the Council for Geosciences and the Mine Health and Safety Council need to expedite the work that they are currently undertaking to improve seismic network coverage and seismic data integration and transparency.
I would like to take this opportunity to report back to the hon members on the completion of the Presidential audit of mines which was conducted on the instruction of the former President. The auditing programme covered mainly the high risk mines in the country which amounted to 355. Amongst others, the audit indicated that an overall compliance of 66% on the number of items critical for ensuring that there is effective management system at mines. There are various issues that have been highlighted by this report.
We have introduced two critical amendments to the Mine Health and Safety Amendment Act which enhanced the state's ability to tackle the mine health and safety challenge of high injuries, ill health and deaths. The amendments introduce stricter sanctions for noncompliance to health and safety standards by individuals and corporate bodies as well as prosecutions. This amendment is in tune with the outcome of the Presidential audits, which show an overall low compliance to health and safety standards.
The second one was the establishment of the mine inspectorate as juristic person. This amendment was significant in that it provides a platform upon which the critical question of capacity to effectively enforce health and safety regulatory requirements could be addressed. The department will be working hard with all the stakeholders to implement the legislation. We have developed a human resource development plan to address the acute shortage of inspectors.
Over the years it has become more and more difficult to recruit inspectors. It is our intention to create our own skills pool with the intention of improving the race and gender profile of our inspectors. There are three projects which were being managed concurrently: Firstly, a bursary scheme with 16 students at universities and technikons who will complete their course in the next four years; and secondly, 23 learners are undergoing experiential training at the Goldfields Training Academy.
The HOUSE CHAIRPERSON (Mr K O Bapela): Hon Minister, you are left with two minutes, windup your speech, please.
The MINISTER OF MINING: Two minutes from now?
The HOUSE CHAIRPERSON (Mr K O Bapela): You are left with two minutes now.
The MINISTER OF MINING: And I'll take five when I return.
The HOUSE CHAIRPERSON (Mr K O Bapela): Go ahead, you are left with two minutes now, my dear.
The MINISTER OF MINING: I've got totality of 32, that's why I am trying to verify.
The HOUSE CHAIRPERSON (Mr K O Bapela): You've got totality of?
The MINISTER OF MINING: Thirty-two.
The HOUSE CHAIRPERSON (Mr K O Bapela): I don't know how many minutes you took on the first occasion, but here you only have 22 minutes.[Laugher.]
The MINISTER OF MINING: Yes, I am taking five more from that.[Laughter.] Yes, I am loaning. [Laughter.] I am taking an advance.
The HOUSE CHAIRPERSON (Mr K O Bapela): Go ahead. I am told that you you've got 10 extra minutes. So you are left with 12 minutes. Don't argue. You can take all you minutes now, if you like, 12 minutes. [Laughter.]
The MINISTER OF MINING: The Mining Qualifications Authority will, in the next financial year, train more than 100 mining inspectors at a cost of R4,2 million. We are also developing a tailor-made Mine Inspector Training Programme with Wits University as a long-term measure to address the department's capacity constraints. This challenge requires a revolutionary approach. While our regulatory regime makes sufficient provisions for skills development, we shall be embarking on a more co-ordinated implementation of the provisions of the Act and the mining charter. The department will continue to use its regulatory framework to impact directly on the five key programmes of government relating to poverty eradication, job creation, education, rural development and skills development. The charter is instrumental in so far as the local economic development projects and education are concerned.
Despite its significant contributions to the economy, mining has also been associated with illegal activities which are becoming more sophisticated by the day. The recent and widely reported incident of unnecessary losses of lives in Welkom is a clear indication of the magnitude of the problem facing the industry. This problem is compounded by the existence of illegal markets, which thrives when they are being fed, but I must also indicate that we cannot continue to say that this illegal mining is mining, it is a criminal activity, and we have to treat it as a crime committed against our economy. [Applause.] The illegal miners in this country cannot continuously be allowed to plead poverty whilst elicit activity is continuing. We have to be decisive.
I've spoken to my colleague, the Minister of Police, with an intention of ensuring that we take up this matter with the security cluster in ensuring that we develop a much more comprehensive approach and continue to ensure that this matter is elevated to a much higher level. In the police, it can also become part of a programme and create a specialised task team, like we used to have in the past when we had a diamond squad and a gold squad. We want to go back to that era in a much more effective way. [Applause.] I must also indicate and appeal to the members of this House that this cannot be successful if you as Members of Parliament are not going to support this effort. It is not a matter of industry, the department, or even an issue for the police; it is an issue for all South Africans. If we are not able to deal with this matter, we will see all industries in South Africa be infested by illicit activities. We will have a country that is affected by parallel industries not paying tax, and they are going to rob this country of its economy. So we hope this House will support us in our endeavour. [Applause.]
In conclusion, Chairperson, on Friday 26 June 2009, it will be 54 years since all South Africa's racial groups gathered at Kliptown in 1955 to adopt the Freedom Charter. This historical document sets out the democratic changes required to enable all the people of South Africa to live in harmony and enjoy equal rights and opportunities without regard for colour, race, sex or belief.
Hon members, working together with our communities, mining companies and trade unions, we are on course to realise the ideals enshrined in the Freedom Charter when it says:
The national wealth of our country, the heritage of South Africans, shall be restored to the people. The mineral wealth beneath the soil shall be transferred to the ownership of the people as a whole.
As enjoined by the Freedom Charter, we have, through the Minerals and Petroleum Resources Development Act, vested the mining and prospecting rights in the state. However, there is still a lot that needs to be done to ensure that all the people of South Africa share in its wealth. We are resolute in our determination to ensure that we fully realise the ideals of the Freedom Charter, so that all our people can have the better life that the ANC has promised. Thank you. [Applause.]
Ms C DUDLEY
END OF TAKE
The MINISTER OF MINING
Ms C DUDLEY: Chairperson, hon Ministers, the ACDP welcomes government's commitment to clean energy, particularly renewable energy technologies, which sees a 34% increase in budget allocation.
The roll out of the sustainable traffic solutions initiative is encouraging, as the rapidly growing number of solar traffic lights and the proposed installation of solar street lights promise to greatly ease power supply from regular sources. With cable theft, rainstorm disruptions and environmental benefits, solar traffic lights are already reported to be proving its worth.
The ACDP would like to see regulations and incentives set in place, encouraging developers to opt for solar and other renewable solutions. Developments like new shopping centres, for example, should also include plans for solar powered intersections around the development.
Whilst traffic lights and streetlights become significant users of power by their sheer numbers, mining and smelting are mammoth users of power in concentrated units. Has the department done or considered doing research into alleviating traditional electricity use by utilising alternative energy in these areas?
The ACDP appreciates the important contribution made by mining, but the necessity for accountability and transparency, particularly in the awarding of prospecting and mining rights, cannot be negotiable as economic development must be tempered by water security, food security and biodiversity.
We are concerned by complaints by environmentalists and a recent Wildlife and Environmental Society of South Africa, Wessa, report which accuses the Department of Mineral and Energy of short-circuiting environmental laws and procedures, and of nonaccountability in issuing Mpumalanga mining rights on eight of the 11 major provincial nature reserves on a prospective world heritage site, on several conservation areas under the former Department of Water Affairs and Forestry and on private nature reserves.
Hon Minister, can you explain the department's reluctance to give either proof of consultation with interested parties or a complete record of its decision-making in awarding the rights, despite a court order to that effect in January? And I know you've used your time now so, perhaps I'd better put a question.
The ACDP will be supporting this budget which we expect to deliver on renewable sources. Thank you.
Mr M F GONA
END OF TAKE
Ms C DUDLEY
Mr M F GONA: Chairperson, hon Ministers present here, the officials of the Department of Minerals and Energy led by the Director-General, fellow South Africans, let me, from the outset, reaffirm the ANC's support for this Budget Vote. We are basing this support on our all-embracing theme of "working together we can do more". I dedicate this speech to the thousands of mineworkers who perished in this industry over many years of mining in this country. This Parliament extends condolences to their families and loved ones. I agree with the Minister that, on 26 June 1955, the people of this country, under the able leadership of the ANC, converged in the truly and the only congress of the people, hon Dexter, in Kliptown, [Laughter.] where they declared, among other things, that "the people shall share in the country's wealth". In discussing this Budget Vote we will revisit the evolution of mining in this country, very important historically; we will assess whether this desire by our people has been addressed and suggest a clear way forward.
I will come back to the historical background and suffice to say we reaffirm the fact that this country is endowed with rich minerals. South Africa's mineral wealth is found in diverse geological formations, some of which are unique and extensive by world standards. Some of the country's minerals include gold, diamonds, kimberlite, alluvial and marine deposits, titanium, manganese, platinum group metals, chrome and vanadium. We also have in abundance bituminous coal as well as copper, phosphate, iron vermiculite and zirconium. This mineral wealth is supposed to be the whole nation's inheritance because it is God's given gift to the people of South Africa as a whole. The question therefore begs, do we all benefit equitable to this wealth? Why do the majority of the people of this country remain entrapped in abject poverty, including those communities where this wealth is extracted from the land they live on?
These mining communities have no proper roads, no decent housing, no running water and sanitation, no decent education facilities including bursaries for their children, and most of them do not have any form of ownership in these mines.
IsiXhosa:
Lihlazo eli; le meko ayinyamezeleki kwaphela. Siyi-ANC, umbutho wabantu, kunye norhulumente esiwulawulayo, siza kwenza konke okusemandleni ethu ukuguqula esi simo. Siza kuqinisekisa ukuba bonke abantu bakowethu bayaxhamla kubutyebi nobuncwane bezimbiwa zomhlaba wakwaNtu. [Kwaqhwatywa.]
English:
Chairperson, it is imperative to acknowledge the fact that the democratic government led by the ANC inherited a complex land ownership patterns and mineral rights regime that is biased towards the white minority. To radically transform this situation, the first step we took was to develop a mineral policy that would provide a blueprint to change this system, and effectively transfer all mineral rights to the custodianship of the state. This is in tandem with the details of the Freedom Charter, as the Minister has pointed out, in its clarion call that "the mineral wealth beneath the soil shall be transferred to the ownership of the people as a whole," hence, the promulgation of Mineral and Petroleum Resource Development Act, MPRDA, and later the Diamond Amendment and Precious Metals Act.
We appreciate the pivotal role played the Department of Minerals and Energy in implementing these pieces of legislation swiftly and in enforcing compliance to them. Particularly, the progress report on the conversion of the licences from the old order rights to the new order rights, the promotion of the new entrants in the form of broad-based Black Economic Empowerment, BBBEE, and the support given to the small scale miners. We also took note of the challenges raised by the department in their tireless work of regulating this industry.
This Portfolio Committee took serious note of the departments and stakeholder's intention to embark on the due reviewal of the mining charter. This fourth Parliament will follow these proceedings with keen interest given our concern on the reported slow progress made.
The Chairperson: Order, you are left with two minutes, hon member.
Hon F Gona: Therefore, as a way forward, the ANC in Polokwane has resolved that we must strengthen the efforts of building a developmental state whose basic tenets are national planning, and the state's ability to intervene in all facets of our lives on behalf of the poor and the vulnerable people in our society.
In this regard, the Department of Minerals and Energy must accelerate the efforts of establishing a vibrant state-owned mining company. This will assist this developmental state to amass the necessary resources that will enable us to us to address the massive imbalances of the past, and to play a leading role in the industry by setting acceptable world-class standard and best practises.
This phenomenon, I must say, is not unique in South Africa. We draw positive lessons in the development of natural resources for the common good of all countries such as Cuba, under the able stewardship of Companyero Fidel Castro in the eradication of illiteracy and skill development. Comrade Chaves from Venezuela has shown the world how best the natural resources to good use for the good of everybody else. The state will also play a pivotal role in terms of ownership and development in some of our neighbouring countries like Botswana and Namibia. I thank you.
Mr H C SCHMIDT
END OF TAKE
Mr M F GONA
Mr H C SCHMIDT: Chairperson, it is clear that the current global crisis is unfortunately making itself felt in the mining industry locally, leading to job losses, loss in share values, limited production and the curtailment of capital expenditure. These consequences require intense introspection by all constituents to the mining sector as to the viability of certain government objectives and outcomes, some of which I will deal with today.
Recent consideration pertaining to the revival of the state mining company, dormant since 1944, is a concern. The suggestion of setting up a resource bank, possibly funded from royalties, requires careful consideration, as not only is the introduction of a state-owned mining company of great concern, but also the funding of such bank with competitor's money, is questionable. Any reflection on the recent mess at the Land Bank will immediately cause a great deal of concern and anxiety. The lack of competitiveness and bad governance at state-owned companies, inter alia, the state diamond mining company is well known, not to mention the poor state of affairs at other state-owned companies such as Transnet, Eskom and SAA.
The Mineral and Petroleum Resources Royalty Act will come into effect on 1 March next year. However, the issue of unfair payments of double royalties by certain companies to communities as well as the state will remain problematic. Consideration of offset agreements is required in order to prevent possible legal action by affected mining houses, or, worse still, preventing a lack of income by communities who have become reliant on royalty payments. The need to ring fence royalties to benefit mining communities or major labour sending areas should also be strongly considered.
The mining sector accounts for approximately 50% of South Africa's foreign currency earnings and 7% of South Africa's GDP in 2007. The DA believes that with careful planning, a mine can become a driver of sustainable economic development beyond its own life. Sustainable mining and mine closures can aid developing economies to the advantage of communities and mining houses. Efforts by many mining companies to reprocess mine tailing facilities or mine dumps should be managed not only to the benefit of the communities, the mining houses, but also to the state as tax receiver.
The World Bank estimates that Africa's exports fell by 2% in 2008, whilst sub-Saharan Africa's share of global trade has fallen to 1,5% over the three decades from a high of 6%. It is further estimated that both imports and exports as a percentage of GDP have fallen, but exports more dramatically. It is therefore clear that we should not be introducing measures with the unintended consequence of killing the proverbial goose that lays the golden eggs. With the price of commodities falling as dramatically as it did, the necessity of introducing sound measures to stimulate the sector in an ever-increasing competitive mining environment is of utmost important.
It goes without saying that the mine health and safety of all mineworkers is crucially important and that the number of deaths and injuries in mines should be reduced. In this regard, we express our sincere condolences to all workers killed in recent accidents. The Chamber of Mines has however stated that the amendments to the Mine Health and Safety Act approved by Parliament might lead to a flight of necessary skills and the lack of foreign direct investment in the sector. Despite it ensuring arguably strict criminal liability for mine management and directors, as well as the compulsory closing down of mine sites upon fatalities or a threat to serious injuries or health threatening occurrence, it is not clear how these draconian measures would lead to an improvement in safety standards.
Afrikaans:
Dit behoef geen betoë dat die department moet toesien dat aansoeke om mineraalregte die openbare publiek se werklike insette moet insluit nie. Daar is verskeie gevalle, soos die aansoek om mynregte op die SanWild natuurbewaringsgebied in Mpumalanga, en die Verlorenvallei aansoek te Piketberg, wat behoorlike oorweging behoort te geniet en wat daarna tot die weiering van sulke aansoeke behoort te lei.
English:
The Chairperson: Hon member, you are left with two minutes.
Mr H C SCHMIDT: The findings of the Presidential mine safety audit report, which indicates a compliance of 66% by mines indicates room for improvement, but it should not be done at the cost of slowly strangling the industry. Whilst it is imperative to employ the most skilled employees and best equipment, it has been argued that the recent 23% reduction in fatalities indicates the success of the sector in applying the co-operative arrangement as mooted in the Leon Report, rather than punitive measures introduced in the latest amendments. More importantly, the hesitation by the President in signing the new amendment on the grounds of possible unconstitutionality indicates enough reason for reconsideration by Parliament of some of those possibly offensive amendments to the Mine Health and Safety Act.
The review of the mining charter currently being undertaken, should avoid any perception of the goal post unilaterally being shifted by government as it will have its own negative consequences financially and otherwise. As such, the estimated R220 billion worth of black economic empowerment deals already concluded and reportedly at risk due to the collapse of share prices and failure by companies to pay dividends due to the economic turmoil, require more robust reconsideration.
Lastly, and relating to the issue of the splitting of the department, the Minister is describe in the MPRDA as the Minister of Minerals and Energy and in relation to the grant of exploration and production rights, your predecessor delegated her authority to the Director-General of the Department of Minerals and Energy, DME, and from him to the head of the Petroleum Agency to grant rights in terms of petroleum product. This is legally questionable as there is now no longer either a Minister or a Director-General of Minerals and Energy. Although it was advised that this would be resolved by a Presidential proclamation, there has been no sign of this. It would be interesting to know how the department intends addressing the issue of ministerial approvals or delegations of authority with effect from the date of splitting of the department, given that all such approvals and delegations are ultra vires until such time the next proclamation is made. [Time Expired.] Thank you. [Applause.]
Mr L B G NDABANDABA
END OF TAKE
Mr H C SCHMIDT
Mr L B G NDABANDABA: Chairperson, Ministers, hon members and the public, there is no doubt that mining will also benefit from the 500 000 jobs earmarked by the President in his state of the nation address. By the same token, we applaud the Ministry of Labour's forward-looking announcement that unemployment benefits will be increased and prolonged to apply for one year. This confirms beyond all doubt that the ANC-led government is indeed an activist government.
Mining is, undoubtedly, one of the key economic drivers of South Africa with a large endowment of minerals, particularly coal - a fact that gives South Africa an electricity production system that is highly carbon intensive. As a country, South Africa generates two thirds of Africa's electricity, 90% of which is generated from coal. Mining has a long history of creating employment in this country particularly for black people not only from South Africa but also from our neighbouring African states. This dates back to the discovery of gold on the Reef. It is common knowledge therefore that mining has to do with mines that are excavations from which minerals are extracted. Mining constitutes 7,7% of South Africa's GDP. In 2007 the mining sector directly employed 495 474 people compared with 458 600 in 2006. In the first quarter of 2007, the mining sector's output grew by 4,2%, while the level of employment grew by 8,8%. During the fourth quarter of 2008, the mining sector declined by 5% while employment grew by only 4%. Currently, the mining sector continues to face difficulties. According to recent statistics, the mining sector contracted 1,7% in the first quarter of 2009, the current year, while employment did not grow – a very sad state of affairs. This unfortunate economic scenario in the mining sector compels us as a nation and as a department to interrogate the role of domestic micropolicy in shaping current developments.
South Africa has a long history of mining, as has been said. I personally grew up in the mining town of Vryheid, northern KwaZulu-Natal, where many of my uncles, cousins and other relatives worked in coal mines like Coronation, Nyathi, Hlobane, etc. Therefore I have personal and family experience of mining and I am familiar with all the problems.
Related to the creation of job opportunities in mining is the aspect of regulating minerals and the mining sector in order to promote economic development. The ANC-led government realises that mining plays a big role in beneficiation. Like farming, mining as a sector is divided into large- and small-scale farming. Large-scale mining offers employment, naturally, to a large number of people. It becomes problematic when mines, large or small, are closed down, as happened in some parts of South Africa a few years ago. I have in mind here mines such as Dannhauser, Hlobane, Utrecht and many others. Obviously, such a state of affairs leads to unwarranted unemployment within the mining sector resulting, of course, to a poor quality of life for those who depend on mining. For some odd reason, there has emerged in recent times the phenomenon of illegal mining in which one or more persons become pirates by infringing on other persons' rights by mining illegally. In this respect, I endorse the Minister's remarks on the illegality of so-called illegal mining.
I want to close with a few remarks in my mother tongue, IsiZulu.
IsiZulu:
Izimayini zineqhaza elikhulu kabi ekuletheni umsebenzi nasekwakheni amathuba omsebenzi. Siyazi sonke ukuthi abanumzane nezinsizwa bebesuka emakhaya beyosebenza emgodini eGoli kuze bakwazi ukuthola imali yokondla imizi yabo, yokuthenga izinkomo nokusenga,nokufuya zikhokhe ilobolo. Ngiyabonga. [Ihlombe.]
Mr E J MARAIS
END OF TAKE
Mr L B G NDABANDABA
Mr E J MARAIS: Chairperson, hon Ministers and Members of Parliament, I have to be brief due to the limited time allocated to me, so I will highlight two specific issues.
Programme 2 of Budget Vote No 28 focuses on the promotion of mine safety and health. The objective is to contribute to the reduction of mining-related deaths, injuries and ill health. I have a direct request to make of the Minister of Mining that he take a serious look at this programme, because the increase in the number of mine-related fatalities has raised concerns about mine health and safety. However, I admit that some fatalities are directly related to illegal mining.
Programme 3 of this Budget Vote is on mineral regulation. The focus is on administration of prospecting and mining rights, licensing and compliance with the Mineral and Petroleum Resources Development Act of 2002, including mine environmental compliance. The department must be committed to reducing the government's environmental liability and to minimising the pollution impact of the mining sector. This programme must regulate the sector by encouraging compliance with sound environmental practices.
Afrikaans:
Graag wil ek dan nou vir 'n oomblik stilstaan by die toekenning van mynregte wat die voortbestaan van die Verlorenvallei en omgewing kan vernietig. Bongani Minerals het aansoek gedoen vir die mynregte vir die ontginning van Tungsten in die Moutonshoekvallei geleë tussen Piketberg en Elandsbaai aan die Weskus. Dit is in die ontvangsgebied van die Verlorenvlei wat as 'n Ramsar gebied verklaar is. Dit is een van die grootste natuurlike vleilande aan die Weskus en een van enkele varswatervleilande in Suid-Afrika.
Die Krom Antoniesrivier is die voedingsbron van die Verlorenvlei en is die suiwerste skoon bron van water wat lei na die vlei. Die ironie is dat die gebied waar die beplande oopgroefmyn van 200 meter diep, by die oorsprong van die rivier is, bo in die vallei beplan word.
Ernstige kommer bestaan dus oor die impak van die myn en gifstowwe wat vrygestel gaan word, aangesien soda-as gebruik word om wolfraam uit die erts te verwyder en dit in die water gaan beland. Dit is nie net Moutonshoek wat geraak gaan word nie, maar die totale landbou aktiwiteite in die gebied wat strek tot by Elandsbaai. Die risiko, wat die beplande myn inhou vir besoedeling van die grond en bo-grondse water, is groter as die voordele van die nuwe werksgeleenthede wat geskep gaan word.
Maksimum werksgeleenthede wat moontlik geskep kan word vir dié myn wat na verwagting slegs 'n 20 jaar leeftyd het, is aanvanklik slegs 300 in die aanvanklike konstruksie periode en daarna 407 werksgeleenthede. In hierdie gebied vind intensiewe boerdery aktiwiteite plaas, waarin seisoentyd tot 'n 1 000 werksgeleenthede geskep word en dit slegs in die Moutonshoekvallei. [Tyd verstreke.] Dankie. [Applous.]
Ms N F MATHIBELA
END OF TAKE
Mr E J MARAIS
Ms N F MATHIBELA: Chairperson, hon Ministers, Deputy Ministers present, hon members, ladies and gentlemen, the ANC supports this Budget Vote.
The advent of democracy in South Africa brought a paradigm shift on issues of health and safety in the mining industry. This shift has been from safety to health and safety in working environments, particularly the mining industry. It has always been the view of the African National Congress that mineworkers are a valuable part or component of the mining industry. Therefore, the health of mineworkers is central to the health and productivity of mines; mineworkers are the heartbeat of the mining industry.
The Reconstruction and Development Programme, RDP, alludes to mining as a hard and dangerous job, and mineworkers labour under stressful conditions, often deep under the earth. The RDP envisages a new set of minimum standards for the mining industry that ensures fair wages and employment conditions for all workers and a health and safety system that recognises special hazards related to mining. Fundamentally, the Mine Health and Safety Amendment Act of 2008 is premised on the RDP. Mindful of the drudgery facing mineworkers, we continue to develop mechanisms to address challenges of health and safety in mines.
Mineworkers are consistently teetering on the brink of injury or death, as our mines are largely deep and a high risk, especially the gold and platinum group metals mines. It should also be noted that the workplace in mines is characterised by a plethora of imminent dangers from accidents such as rock falls, health threatening contaminants such as dust, fibres, chemicals, noise, thermal stresses and radiation. High levels of exposure to harmful environments lead to occupational illnesses, like, silicosis and noise-induced hearing loss. Some of these problems are further worsened by the prevalence of HIV and Aids.
To compound these matters, mine owners fail to adequately protect those who are vulnerable to injury and harm. When one looks at the low levels of compensation for our mineworkers, we must urgently and speedily move to address the regulatory capacity of the mine inspectorate. The Presidential mine audit has confirmed that we should be concerned about mines' compliance with health and safety requirements and the state's capacity to enforce legal requirements.
Last year, the committee approved the amendment of the Mine Health and Safety Act of 2008 to provide for the establishment of the inspectorate as a juristic person. It is the committee's believe that this move will lead to improved governance of health and safety at mines. Consistent with international practice, the Amendment Bill seeks to strengthen the mine health and safety legislative framework. This Bill fortifies the ANC's commitment to achieve safe workplaces, thus saving the lives of mineworkers; uphold section 11 of South Africa's Constitution – everyone has a right to life - through compliance with mine health and safety regulations.
The social and economic costs of poor health and safety at mines are just too high for us and the nation. For that matter, recently, we have seen the recurrence of mine accidents resulting in injuries and loss of lives, blemishing last year's notable improvement in the levels of deaths and injuries at our mines, which were conducted at an improvement of 24% on mine accident deaths, from 220 in the previous year to 168. Working together, we can do more.
The President, in his state of the nation address, spoke about creating 500 000 jobs in 18 months and making their environment to be urban; they should not leave their villages for a better live. It is of great concern when coming to mine owners who are still exploiting people by bringing people with them, and not hiring these people who are looking at the development in their own villages and having no say or access to the jobs. I think the Minister should engage the chiefs in this matter; that is the only way to change the lives of rural people in this country and to share in the country's wealth beneath the soil.
Sepedi:
Ge magoši a rena a ka ema ka maoto gore le rena batho ba ba dulago dinagamagaeng re seke ra duma ba ba leng makgoweng, ra duma go tla makgoweng, ke yona taba e tla tlošang tlala le bohloki, le malwetši a tla fokotšega ka baka la gore batho bao ba tlabego ba tloga gae ba eya meberekong, e tlabe e se batho bao ba tlogang kua ba eya kua. Malwetši a tla ba gona...[Tshwahlelo.]]Nako e fedile.] Ke rata go leboga. [Magoswi.]
THE MINISTER OF MINING
END OF TAKE
Ms N F MATHIBELA
THE MINISTER OF MINING: Chairperson, I'd like to thank the members for supporting this Budget Vote, even if has not been split into two departments. We hope working together will make us work much better to ensure that there are benefits to communities.
To respond to some of the issues: the issue raised by Mr Lucas around illegal mining has been responded to. We are ceased with those matters and we'll continue to make sure that we address them. The issue of beneficiation will be brought to the committee. We hope members of the committee will be able to make their inputs in enriching the document so as to make sure that it benefits and reflects the various constituencies, in order to address the needs of our people in South Africa.
Regarding the issue of skills development and people leaving raised by Mr Schmidt, the industry is not stifled. There is no goose thrown out or killed. It is the same story that I heard in 1997 saying that we are killing this goose, which is the mining industry. Instead I see more enthusiasm into this area. There is a lot of potential, but the challenge is how we address these issues.
Mr Schmidt also raised the issue of fatalities in the mining industry, and there is no way we can compare fatalities and capital. People are people; human beings are human beings and we've got to respect life. We'll continue to regulate it in a way that respects people's lives. We can't afford to have an industry that is negligent and increases the death rate. It is unacceptable and being irresponsible. One of our responsibilities as a regulator is to make sure that we do the right thing and that is to regulate in a responsible way. If it is tight, hard luck, we have to protect lives. We have a responsibility to do that.
In addition, Mr Schmidt raised the issue around the whole issue of privatisation and state-owned mines currently being in a crisis. We are in a mess because of private businesses. Maybe if all the states took responsibility, there wouldn't be an economic crisis in the world. You can say that is rubbish. It is the banks in the United States of America which led us into this mess. Maybe we must assume our responsibility as the state. [Applause.]
The issue raised by Mr Marais regarding the application at the tungsten mine is fairly new. We need to be patient because it was only received in March. Definitely the issues you raised are going to be taken on board and it is clear that it is an area that is highly challenged and we'll have to address those issues. There is no way in which we cannot address those issues. So, if it's clear that we cannot find a way of working compatibly, the other one will have to exist. My point is that environment and mining are related, they cannot be enemies and we have to make sure that they live together if we are to be a successful country.
The issues raised around Limpopo have been brought to my attention. We are going to look at those issues, because we want to make sure that this country mines better and smarter, in order to leave this country intact for future generations. We must not destroy this country through mining as was the case in the past. We can't go the same route. We must be responsible.
I agree that communities are a priority. No mining will happen without consulting them. I want to also say, whoever has an interest in this industry should not rough shot communities. We are there to ensure that communities are protected. They have a responsibility. We all have to respond fairly and responsibly. That's the nature of the game we'll have to play. If someone feels that he can't comply with the name of the game, he must forget about coming to this industry. Such people do not belong to this industry and must go someone else. Thank you, Chair. [Applause.]
The MINISTER OF ENERGY
END OF TAKE
THE MINISTER OF MINING
The MINISTER OF ENERGY: Chairperson, like my colleague, the Minister of Mineral Resources, I want to take this opportunity to thank all members for their participation as well as their support for the Budget Vote in this twin track Budget Vote debate.
ANC members in this debate are aware of the challenge we have of ensuring that we meet our targets and that our people out there do not have access to resources which we want to roll out, and that they are very impatient since they've been waiting for a long time. The remaining 24% of areas without electricity in our country are in the three poorest provinces and the informal settlements, particularly in KwaZulu-Natal, Eastern Cape and Limpopo as well as the informal settlement of Gauteng. So, we need to speed up the process in order to make sure that our people have access to these resources.
Hon Nchabeleng said that he saw many combatants in the House today. I think it's because of the challenges facing our country and our people which make them to respond positively when they are called upon. As activists they need to be sure that we are kept on our toes to respond to the needs of the people; and I thank them for their attendance.
Hon Motau on a carbon capture and storage issue, the South African National Energy Research Institute, Saneri, will soon be incorporated into Saneti that has been working in the Council of Geoscience and other stakeholders to prepare the groundwork for carbon capturing and storage. I want to announce here today, that there will be an International Conference on Carbon Capture and Storage which will be held here in South Africa and it will be hosted by Saneri. I believe that members of the committee will be invited to this important conference that will examine which strategies can be used to fast-track carbon capture and storage development globally.
The hon Dexter spoke about the lack of incentives and I believe that energy efficiency should be paid for by energy wasters. Those who use more should pay more. That is why we suggest some kind of stepped tariff or a sliding scale type of tariff. The more you use, the more you should pay, so that we are able to make sure that those people who are the poorest of the poor and who do not use electricity can be cross-subsidised by those who use it.
Hon Lucas, you mentioned that there is underspending. I'm happy to say that, as a department, we acknowledged that we had an underexpenditure of 0.9% in the department. It is also important to mention that the expenditure for 2007-08 budget was 99% which is, actually, a very good track record. Hon Lucas, you also spoke about the issue of the Pebble Bed Modular Reactor, PMBR, and I want to inform you that PMBR is a project company that owned by our sister department, the Department of Public Enterprises, and we will evaluate it as part of the Nuclear Policy Implementation Plan. And I believe that members of this committee will participate in the process.
Hon member – is it Greyling or Schmidt – who spoke about the large scale of theft at Eskom. I appreciate that you raised this matter here. The losses of coal as well as other issues related to operational matters at Eskom will be raised with the Department of Public Enterprises, DPE. I believe that as a responsible hon member you should take that opportunity to raise it with the Minister of Public Enterprises so that it could be tracked down. This matter needs to be reported to the police, because it borders on criminality and action must be taken in that regard. Theft is theft; corporate theft is even worse because it denies people access – like you indicated - to resources. And you indicated that there's a possibility that we to cross-subsidise that theft with the tariff increases. So, this is a serious matter that needs to be considered.
The Energy Efficiency Strategy is currently out for public comment, hon Greyling, and we hope that you will provide valuable inputs to this strategy which implementation will be underpinned by regulations. The closing date is the end of the month. So, we appeal to you to make sure that you participate in this important process.
You'd also recall that my predecessor, hon Buyelwa Sonjica, hosted the Renewable Energy Summit in March, this year. One of its resolutions was the process in which the Renewable Energy White Paper will be revised. One of my duties after assuming office was to start and approve this public participation process. I believe that we all need to participate and we'll also be having a Solar Industry Summit where all role-players in the solar industry, from manufacturing up to service provision, will be participating. [Time expired.] [Applause.]
The HOUSE CHAIRPERSON (Mr K O Bapela): Hon members, just before you leave, please note that the debate on Vote No 30 on the Public Enterprises has already started in the Old Assembly Chamber. It commenced at 16:10. And the debate on Vote No 24 on Communications will commence in this venue. It was supposed to have started already at 16:40. So, we will give you 10 minutes to vacate the room to be prepared and those who are suppose to come back to do so. Thank you.
Debate concluded.
The Committee rose at 16:33.
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