Hansard: Appropriation Bill : Debate on Vote No 32 – Mineral Resources
House: National Assembly
Date of Meeting: 31 May 2011
Summary
No summary available.
Minutes
UNREVISED HANSARD
EPC – COMMITTEE ROOM: E249
Wednesday, 1 June 2011 Take: 77
START OF DAY
WEDNESDAY, 01 JUNE 2011
PROCEEDING OF THE EXTENDED PUBLIC COMMITTEE
__________________
Members of the Public Extended Committee met in Committee Room E249 at 14:00.
The House Chairperson, Mr C T Frolick, as Chairperson, took the Chair and requested members to observe a moment of silence for prayers or meditation.
APPROPRIATION BILL
Debate on Vote No 32 – Mineral Resources:
The MINISTER OF MINERAL RESOURCES: Hon Chairperson, Deputy Minister Oliphant, Deputy Minister Sotyu, hon members, the chairperson of my portfolio committee, a very important person, hon Gona, ladies and gentlemen, I am honouredto present this budget, right on the very first day of the landmark month of June, when we remember the sacrifices and the gallantry of the June 1976 generation that literally laid down their lives for the freedom and democracy that we are enjoying today.
I also would like to welcome hon Deputy Minister Oliphant, to the department. His presence has made it possible for the Ministry to, amongst others, has a continued presence in the strategic engagements of the portfolio committee.
We dedicate this Budget Vote to the youth of 1976 who irrevocably changed the course of our history. We should not forget that it was in the same month of June, this time in 1955, that our movement, the ANC, together with its partners in the congress alliance, adopted the Freedom Charter as a blueprint for a just society that today underpins the foundation of our democracy.
The budget we are announcing today gives concrete expression to our determination to ensure that minerals and mining industry that continue to contribute towards addressing the fundamental socio economic challenges facing our country including job creation and sustainable development.
We present our budget at a time where we have to contend with a mix of geo-political and financial dynamics, which have led to the rise in the price of commodities, especially the precious metals. There has been a substantial increase in the price of gold, which is favourable for our marginal gold mines. This will invariably help the gold sector with regard to further expansion projects as well as job creation and retention.
We are a department that has a mandate to regulate the country's mineral resources in such a way as to effect transformation, safety and sustainanability as well as to achieve growth.
In order to achieve the objectives, which we have outlined in our strategic planning document we pleased to present a budget of R1, 036 billion for the 2011-12 financial year. We represent an increase of R40 million from the previous budget of R995 million.
This budget is allocated for departmental programmes, which are as follows: R247 million for administration to amongst others implement the departmental Human Resource Plan with the following elements, talent management, retention and development skills, in the following occupational areas: electrical and mechanical engineering, geology, metallurgy, and the others; R147 million is for mine health and safety; R160 million allocated for mineral regulation, while R480 million is allocated to mineral policy and promotion. This budget includes an amount of R438 million earmarked for transfers and subsidies to departmental state-owned enterprises, which is Council for Geoscience, which will receive an amount of R153 million while the Council for Mineral Technology and Research, Mintek, the South African Diamond and Precious Metals Regulator and Mine Health and Safety Council will each receive about R167 million, R39 million and R5, 3 million respectively.
An amount of R18 million has been budgeted to subsidies marginal mines for pumping extraneous water from underground holdings. This is in addition to an allocation of R17 million included in the transfer to the Council for Geoscience to conduct research, develop and implement strategic solutions for mine water management. The department has managed to align its budget with its programmes and has accordingly completed the compilation of detailed monthly spending plans.
As we said last year, we will continue with the implementation of our cost containment measures in a bid to ensure that the taxpayers derive maximum benefits from our programmes. We will do so as we do everything in our power to stem the tides of rising costs of goods and services, which remain a huge challenge.
Last year, I informed this House that the director-general had undertaken a visit to all regional offices with the express purpose of reviewing administrative processes and clean up the data that was sitting on the NMPS system and subsequently design a system to improve efficiencies. In this regard, we imposed a six months moratorium on new prospecting applications as we simultaneously went about correcting and improving our regulatory and administrative processess.
The audits that took place during the moratorium , was done through inspections and reviews, which were part of the overall plan, a process rather than an event, of improving administrative processess to achieve the optimal utilisation of mineral resources.
The outcome of these audits pointed to cases ranging from, among others, administrative errors such double granting, lack of proper administrative systems, fronting; non- payment of prospecting fees; noncompliance with approved Environmental Management Plans, EMPs; as well as right holders who could not be traced.
Furthermore, the administrative process in the department has now been imbued with efficiency, transparency and accountability, and I am satisfied. This has been done through amongst others, the online licensing system, which is called the SA Mineral Rights Administration, Samrad. Since the launch of the system on 18 April this year, over 627 applications have been successfully lodged.
South Africa's mining sector is the backbone of the country's economy, with a current conservative in-situ value, which is estimated at $2.5 trillion, with an economically exploitable lifespan of 150 years. Moving from this premise together with our social partners, which is organised labour, business and other state departments, we have developed a growth and transformation strategy, which identifies binding constraints to the sector's growth potential and recommends action required to optimise the sector's extractive capacity, attracting investment and job creation and these have been captured in the New Growth Path of the country thus ensuring that the growth of the mining sector is not an island but placed within the context of the broader growth of the country.
I also announced last year I in my Budget Vote that work was underway to establish a state-owned mining company. I must say I am pleased today to report that we have launched the African Exploration and Finance Mining Company in February this year. This forms a nucleus of the state-owned mining company. The President has launched its first coal mine project in Mpumalanga and they have an of-take agreement with Eskom and have made an undertaking to supply coal to Eskom by June, which is now, this year.
In order to improve general competitiveness level of our economy we are steaming ahead with addressing domestic issues, such as infrastructure bottlenecks, challenges in the regulatory framework, human capital constraints as well as other capacity shortcomings as identified by the sectoral mining growth strategy, which we adopted by in June 2010 together with the stakeholders.
This is a general stakeholder agreement that in order to optimise the contribution of the mining sector to the economy, the focus must be on the entire minerals value chain, not just exclusively the mining sector. Countries of the south such as China and India have got this balance right as evidenced by the proliferation of their beneficiation industries. They are doing this to the extent that they are taking the world's market share and job prospects from countries such as South Africa.
We already have a large supplier base that provides goods and services into the mining sector. We need to move beyond the traditional and established form of beneficiation of locally mined minerals. Working together with our partners and the Department of Science and Technology and other science institutions such as Mintek and CSIR, we will collaborate on issues related to research and development.
Towards this end we have now reached a stage where we are taking the beneficiation strategy for the country through the Cabinet process.
Critical to this is the creation of a policy regime that offers positive incentives like a deeper skills pool, a favourable tax climate, lowering the cost of capital and a realisation and the need to address urgently the inherent limitations imposed on the mining industry by, amongst others, the paucity of our rail and energy infrastructure.
Last year, I announced the results of the impact assessment of the Mining Charter, which revealed serious instances of lack of meaningful transformation as well as the 2009 targets as contained in the Mining Charter were not met. Whilst that is, we are pleased that there are individuals, which we have today in the gallery, like Ms Daphney Mashile-Nkosi, who has overcome formidable odds including personal tragedies to launch sustainable mining projects as a black woman. A few weeks ago we participated in the launch of a manganese project in Kgalagadi, which she has already created 1400 jobs for. These are the formidable products of a company with a 60% black women ownership. [Applause.]
I am also pleased to announce today one more company, which is U&K in the manganese sector again, which again it is real BEE, black-owned people again who are making a difference in a real sense in the whole value chain, contributing also to the skills development in the area of Northern Cape.
I am pleased to announce that with the collaboration of stakeholders, we have improved the construct of our Charter to include definitions and set up clear targets thus eliminate ambiguities and multiple interpretations accompanied by a clear score with clear measures towards the 2014 assessment. This process was finalised last year in September.The mining industry is therefore expected to submit the first set of compliance reports from mining companies by the end of June 2011.
The review of the MPRDA is underway; this is aimed at improving the current construct of the Act to remove ambiguities, making provision for consultation processes, and streamlining the licensing processes. In this regard we will be strengthening the law in areas where it allows the Minister to invite applications for mining rights in areas that were previously granted, issued, revoked or even expired. The amendment would include strengthening of regulation of the environment in respect of minerals and mining.
We continue to consult with all the affected and interested stakeholders. As we are talking today, the Bill is currently serving before the Cabinet and will soon served to the portfolio committee.
In addressing these issues, we have identified the need to entirely review the Mine Health and Safety Act. This review will strengthen enforcement provisions; to reinforce penalties; to provide clarity in certain definitions and expressions; and to effect certain amendments to ensure consistency with other laws, particularly the Mineral and Petroleum Resources Development Act, 2002, MPRDA.
We are currently at the tail end of consultation on these issues and we anticipate that these amendments as well as new regulations will be tabled soon.
We are well aware of the problems currently besetting the diamond sector, including lack of access to rough diamonds. We are in the process of finalising our country's diamond strategy, and the Deputy Minister will elaborate on this matter.
As we said last year we had to contend with the consequences of more than a century of mining in our country. One of these is the legacy of derelict and ownerless and un-rehabilitated mines. These mines pose significant environmental, health and safety risks to neighbouring communities. We have embarked on a programme to permanently eliminate the environmental damages by putting the land impacted by the mining activity back to a sustainable usable condition. So far, five derelict ownerless mines have been rehabilitated during financial year.
We have also developed a new set of comprehensive measures to ensure that we do not have a repetition of the status quo. In February, I decided to impose a moratorium on shale gas exploration. I hope the DA members will be very pleased about this.
I am happy that we have set up a task team, which has been endorsed by the Cabinet for us to do further exploration and say how best do we position and ensure that the studies, which are conducted will inform us on taking this matter forward.
One of the issues which are of concern to us is matters of mine health and safety. I want to say as we stand here today, we have seen an improvement in the mine health and safety last year and there was a reduction in fatalities. But this year, we are worried, very concerned. In the first quarter, we have seen a 53% more than last year, which was 49% during this quarter and therefore brings a cause for concern for us. On the basis of that, we will be moving towards making sure that we look at how best do we amend the Mine Health and Safety Act.
We are doing all these whilst we are enhancing our internal capacity in the department. This includes the establishment of regional compliance and investigation units.
My department will embark on interventions, which include among others, stoppages of unsafe mines in line with our legislation to ensure that corrective measures are implemented and maintained
I am satisfied, after studying the long-awaited, which was the Presidential review on mine health and safety. We are ready to release that to the committee.
On our side, I must say in terms of Mining Qualifications Authority, we are committed to skills development in the country, and to meet the challenges of the industry where we are not able to grow and impact on the economy of the country due to skills shortages.
In conclusion, I must say that I want to thank my officials and the rest of the DMR staff for their continuous commitment and dedication in advancing the cause of the department. I want in particular to stand here and thank the director-general, Adv Sandile Noxqina, who had 14 years of dedicated service to the Department of Mineral and Energy, in the past and now the DMR. He has been through various tasks in the department, and inherited a department that was totally untransformed. As we know today, we look at a department, which responds to the challenges, which we faced in South Africa. We now have a transformed department, a department, which has men and women of integrity at the top echelon. I want to say, as he lives the department, at the end of this month, as we bid him farewell and relieve him, and as go for early retirement, I hope he will able to advance new interest and look after his garden at home. Nevertheless, I must indicate that we can't afford to completely allow him and lose the experience and knowledge he has gathered over time. [Applause.] We nevertheless continue to tap into his knowledge acquired through the years as the cadre of the ANC, as an agent who contributed towards transforming the South African society, and mainly, the mining industry. I thank you. [Applause.]
Mr M F GONA / ARM / END OF TAKE
THE MINISTER OF MINERAL RESOURCES
Mr M F GONA: Hon Chairperson, hon Minister, let me join you as well in welcoming hon Deputy Minister, Ministers and Deputy Ministers present here, leadership of the organised labour, I've seen some of you, leadership of the organise business, the same I've seen some of you, officials of the Department of Mineral resources led by the outgoing, Director-General, Adv Nogcina, let me join the Minister upfront in bidding you farewell and appreciate the contribution that you have made, comrade and fellow South African, let me from the outset state that the ANC supports this Budget Vote. There are very good reasons for us to support it. [Interjections.] Just keep quite.
We are basing our support of this budget vote on the agreed theme that: "Let there be change for the better in the mining industry". This theme is based on the fact that since the discovery of minerals in the 18th century in this country, citizens of this country who were classified as non-Whites including Black women, let me re-emphasise including Black Women, were prohibited by Law from ownership and occupation of positions of power in the mining industry.
Currently, meaning 17 years into our democracy, not enough progress has been made to change this situation, we will explain why do we say that. This is a theme which is more relevant to all stakeholders in mining industry, particularly in our present day circumstances.
Once more, hon Chairperson allow me, dedicate this speech to the thousands of mineworkers who perished and continue to die in the industry over many years of mining in this country. We are, particularly, concerned with increased fatalities reported in the first two quarters of this year. This Parliament, indeed, extends its heartfelt condolences to their families and loved ones.
Historically, South Africa's mineral industry, largely supported by gold, diamonds, coal and platinum group metals production, has made an important contribution to our economy. It has provided the impetus for the development of an extensive and efficient physical infrastructure and has contributed greatly to the establishment of the country's secondary industries. Mining remains South Africa's largest industry in the primary economic sector, followed only by the Agriculture.
Mining continues to be South Africa's principal earner of the sort after foreign exchange, although levels of earning continuously decline. During the 1990's, mining directly generated about 41% of total exports, approximately the same as the fast-growing manufactured goods export sector. From year 2007 real fixed investment in the mining sector improved by 14,8%. Unfortunately, this improvement was insufficient to compensate for the declines that had taken place in 2004 and 2005 with the result that production fell by 1,5% in 2006.
We further recognise the fact that, notwithstanding the sometimes jittery mood of the investor community due to some perceptions of uncertainty in our mining policy, this is far from the truth as confirmed by you, hon Minister, when you analyse our minerals strategy that we continue to refine and you reflect on our sustainable mining declaration as agreed to in Mining Industry Growth, Development and Employment Task Team, MIGDETT, Government's commitment in both attracting and retaining domestic and foreign direct Investments in the mining industry is more than clarified.
The portfolio committee will continue playing its expected role to address both the genuine concerns and those perceptions of the investor community. Mining industry continues among others to lead jobs creation in various sectors; we are of the firm view that this industry, through its leadership in MIGDETT and the guidance from the Ministry, will respond positively to the clarion call made by his Excellency the hon President Zuma, in his state of the nation address, early this year 2011, that this year must be approached as the year of job creation.
The New Growth Path gives a clear direction of how and where the mining industry should play its pivotal role in addressing this national objective. This is more urgent now than ever before, given the fact that the country is faced with unemployment levels currently ranging at a staggering 25%, as reported by Stats SA in its report of the first quarter of 2011. In this regard we acknowledge and applaud the role played by MIGDETT, a multi stakeholder team that was established in a multi-stakeholder team established in December 2008 as a direct response and an attempt to mitigate the negative impact that would be resultant from the global financial crisis.
Indeed, these efforts have been successful in reducing the potential high numbers of job losses in the mining sector. In that we have seen that instead of 100 000 jobs that could have been lost at that time, only plus/minus 35 000 jobs were shed. This figure is still high when considering the number of dependants of these mineworkers.
However, this intervention demonstrates the correctness of our general theme as the ANC that "Working together we can do more".
It is important for us to remind, I would like the opposition to pay attention to this section of this speech, this august house that the people of this country from all walks of life converged in Kliptown in 1955, not for a political grandstanding, not to pretend to identify with the poor people of this country as we have seen the gimmicks and political posturing performed by the DA in these recent local government elections. [Applause.] In this real congress of the people, we the people of this country declared that: "The people shall share in the country's wealth" we will expand on this point later in this input.
We further would like to remind you and refresh the memories of the people of this country lest we forget that the peoples liberation movement, the ANC, in its watershed Morogoro Conference, in Kabwe in 1969, adopted a strategy and tactics document that defined in clear terms the character of the national democratic revolution. I can see the hair splitting the national democratic revolution, in relation to apartheid socio-political relations that this democracy is meant to eliminate.
Hon Chairperson, before our colleagues on the left benches get terrified and scared by this big term National Democratic revolution NDR, before they invoke ROOI GEVAAR!! Or invoke SWART GEVAAR!! Let us define this term as a part of a political education which is free that "NDR is a process of struggle that seeks to transfer power to the people and transform society into a nonracial, nonsexist and united democratic society". Among other measures we will fulfill this noble goal through pursuing economic growth, development and redistribution so as to achieve a better life for all. These ideals remain relevant today as they were before and they inform our intervention in the Mining Industry. [Interjections.]
The CHIEF WHIP OF THE OPPOSITION: Hon members, order, order please.
Mr M F GONA: Hon Chairperson, both these historical and current factors discussed above have been made possible by the fact that South Africa is endowed with mineral resources. It is confirmed by the internationally renowned Financial Institution known as CITIGROUP that this country is the World's most richest in terms of mineral wealth, we are home to vital and most diversified minerals reserves in the World.
This extensive mineral wealth is a common heritage to all South Africans. Section 24(b) (iii) of the Constitution of the country guarantees everyone a right to secure ecologically sustainable development and use of natural resources while promoting justifiable economic and social development. Through this section and other provisions in our Constitution we, as the public representatives, are enjoined to ensure that benefits that accrue from the development of our minerals must be enjoyed by all South Africans. Therefore, the question is, do we all benefit equally from these mineral resources. [Interjections.]
Hon chairperson, let us get to this matter that my learned friends on my left are in a hurry towards. Let me remind you that we want to debunk this myth that government only acts upon pressurised by the opposition, far from the truth. It is this ANC-led government that assisted in the recent establishment of more than R3 billion Impala Trust Fund which will benefit the workers and the mining community!! It is this ANC-led portfolio committee and Government that resolved the matter of Taung Community in North West Province. It is this ANC-led portfolio committee that in conjunction with DMR and the Northern Cape government will hand over no less than R4 million worth of royalties owed to the community of Smithdrift this weekend.
It is this ANC-led Parliament that is issuing a subpoena to Namaqua Development Trust for them to account for funds they handled on behalf of the community. It is this ANC-led government that also has taken the issue of Aurora brought it to the attention of Parliament. [Interjections.] not you as the opposition, we as the portfolio committee and the Department of labour have seen and made it sure that the matter of Aurora is receiving an attention and closure, it was not at your instigation as the opposition. Therefore, do not claim any work that you have not done.
The portfolio committee discussed and unanimously adopted the DMR strategic plan and this Budget Vote. We are satisfied with the distribution of the available funds to the four, DOL and Department of Justice together with joint portfolio committees that you have seen a noticeable movement on the much spoken about Aurora's painful matter. It is painful in the sense that not only workers have gone for years without income but also that our aspirant black entrepreneurs are misled into buying DARK HOLES so that they must fail.
Honourable Chairperson in conclusion we note with great concern that there are serious attempts by the Right Wing elements in this country to roll back the gains of our liberation struggle. At first we were informed of the legal action taken by the Italian Granite Mining Companies where they asked the international court to declare the MPRDA to be an unconstitutional Expropriation Law that at its promulgation it took away their mineral rights therefore, they wanted compensation. We applaud DMR for successfully defending the country against this onslaught.
Recently TAU succeeded in getting a judgment against the department on the same issue where overnment is ordered to pay large sums in compensation. These developments are a disturbance and they must be nipped in the butt before they cause untold damage to the entire country. We are happy that DMR is in the process of appealing this judgment.
We, the ANC reconfirm our support for this budget vote.
The CHIEF WHIP OF THE OPPOSITION: [Interjected]
*** Language spoken has changed to IsiXhosa ***
*** Language spoken has changed to English ***
Adv H C SCHMIDT / END OF TAKE
Mr M F GONA
Starts at 14:38:42.27
Adv H C SCHMIDT: Hon Chairperson, it seems to me that Mr Gona and the ANC feels threatened about something. We will probably establish in the course of business as to what is it all about. Can I just say that I have been briefed to say, Mr Gona, that you appear to be on asset mine reigning. There are some problems with your logic but we will leave that for later. [Interjections.]
Chairperson, South Africa missed the last commodities boom due to inter alia load shedding by Eskom, unbridled threats of nationalisation from certain quarters, a poor regulatory regime as well as ageing rail and port infrastructure which limited exports. It is therefore imperative that the department establishes the most enabling environment for growth so as not to forego the next expected growth cycle in the minerals sector, which contributes directly to approximately 5% of South African's GDP.
A concerning picture appears to be emerging in the mineral sector when considering the following important issue: Namely, The recent High Court case won by AgriSa against the department decided that the Mineral and Petroleum Resources Development Act, MPRDA, is unconstitutional in as far as it intends to expropriate mineral rights without compensation, as required in terms of section 25 of the Constitution. The judgement is supported as it sustains the argument against ill-advised and unrealistic calls for nationalisation without compensation. [Interjections.]
The appointment of a task team by the ruling party, the ANC, to determine whether nationalisation is feasible is misguided and reckless. This type of action leads to the creation of unsubstantiated expectations in order to divert internal pressures for a limited period of time. Nationalisation is unworkable and unconstitutional and leads to a road to poverty and misery. The recent portfolio committee tours to Chile and, especially Bolivia as well as other international experiences have proven this.
The hiving off of the state-owned African Exploration Mining and Finance Corporation from the Central Energy Fund group of companies to compete against the private sector is disingenuous. The decision to partake in a highly competitive economic sector with the accompanying risk of major financial losses to public funds generated from taxes is questionable.
The role of the state should be limited to providing an investor-friendly and stable regulatory environment wherein benefit to the state and society is generated from increased economic activity, an improved skills base and taxes generated from profitable mining. The creation of a state-owned mining company in South Africa underlines the need for an independent mining regulation body and not the department. This will ensure that the state is not a player and a referee at the same time such as the case is with ICASA locally and in major mining jurisdictions. For instance, in Brazil an independent regulatory authority regulates the approval of applications for mineral rights.
The events at the Grootvlei and Orkney mines – the war issue are clearly a disaster in portraying South Africa as attractive and stable mining destination. The recent decision by the Master of High Court to dismiss certain liquidators and the subsequent dismissal of no one other than the Aurora management services is a welcome development. Albeit, very late and at the expense, Mr Gona, of 5 000 real time mining jobs affecting up to an estimated 40 000 people, Mr Gona.
It was an unfortunate decision to allow an inexperienced and unknown ANC politically connected entity to run the intricate affairs of mining operations, leaving the objectives of the transformation agenda as implemented by the ANC with serious concerns for criticisms. The untold human suffering by the families of dismissed mine workers due to no fault of their own, has not received the attention it deserves by the department.
Any fatality at a mine is deplorable. It is also the duty and responsibility of the department to ensure that all mining and other ventures, new and established, adhere to proper mining standards. Failure to do so results in a failure of the system to the families of those mineworkers who die due to the departments' inability to ensure that mines adhere to proper standards.
The department's reactionary role is not sufficient, as the law requires it to visit mines and disapprove of unsafe mining conditions. It should co-share the blame for any death suffered on mines. Slamming the mines for unfortunate deaths without proactively enforcing acceptable standards are not good enough.
Whilst the Mining, Investment, Growth, Development and Employment Task Team, Migdett, initiative is supported, the department still has to indicate how it intends to fulfil its undertakings to which it agreed. The Mining Charter has by agreement been amended between government, the mining companies and mining unions with little, if any, input from communities who are supposed to benefit. This was at least clear, Mr Gona, from a visit to the mining communities of Carletonville and Klerksdorp earlier this year, as well as many other complaints which are received annually, by this committee.
The implementation of the new S A Mineral resources administration on-line system following major disarray in the regional offices last year, have led to a bottle-neck of applications waiting to be finalised.
The amendments brought about by the Second Diamond Amendment Act of 2006, has caused severe problems in the diamond industry. One such concern is the state diamond trader whose mandate is to ensure broad access to uncut diamonds in order to develop the local diamond cutting and polishing industry. The failure of the state diamond trader to do so and the financial difficulties which it encountered, has led to a different approach, arguably leading to less accessibility.
This strategy of buying 10% of the so-called run-of-mine rough diamonds from producers and making it available to all was changed. It changed to a strategy of obtaining pre-financing when approaching producers in accordance with their statutory obligation. This was to provide 10% of their run-of-mine rough diamonds and sell to a select few and, contrary to the Act, being exported.
Allegations have recently surfaced that contraventions of the Kimberly Process have occurred in South Africa. The Kimberly Process is an international agreement signed by governments, from diamond producing countries. This was to ensure that diamonds do not fuel conflicts. A contravention of the Kimberly Process therefore has serious ramifications to the offender.
In flagrant disregard of the prohibition in the trade in diamonds from the Marange diamond fields in Zimbabwe in accordance with the Kimberly Process, it has been alleged that Linda Makatini, the Chairperson of the State Diamond Trader, illegally imported a parcel of rough diamonds from the Marange diamond fields. These are surely very serious allegations and warrant an investigation by the relevant authorities as required by the Kimberly Process. The question is, hon Minister, what will you do about it.
The questions that automatically comes to the fore is; will you support such an investigation against a senior official allegedly acting in her own personal interest; and against the interests of the country, being a member of the Kimberley Process? Secondly, will you agree to co-operate with such an investigation to determine the veracity of your role, in what can be described as undermining the Kimberley Process? It is not good enough, hon Minister, to make a blanket denial and to wish the matter had not been raised.
Supporting any illegal trade in diamonds from the Marange diamond fields in Zimbabwe, as Ms Makatini is alleged to have done, is tantamount to discrediting the Kimberley Process. Will you also indicate the role played by South Africa in Africa, with regards to diamonds on the African continent, particularly the Kimberley Process? I think the hon Minister owe us an answer.
The recent Constitutional Court case which overturned the department's decision to allocate a mining right to a mining company following a failure to consult with the community on whose land an application for mining rights were lodged, is also indicative of the failure by government to apply its mind properly in granting applications without communities being adequately consulted or their interests being duly considered.
The recent High Court action between Kumba and Imperial Crown Trading, ICT, and the intended joinder application of ArcelorMittal regarding the dispute of mineral rights granted to Kumba and ICT. Once again, an unknown political connected entity has also highlighted the fact that the department was not even handed in granting prospecting rights to ICT where 100% of the mining rights had already been granted to Kumba. Why did the department want to give it to ICT when it couldn't?
The negative ratings by the international Fraser Institute reflects poorly on South Africa's mining dispensation. South Africa has consistently been downgraded in terms of its poor rating of 67 out of 79 mining destination; a position where South Africa ranks at the bottom end of the scale of mining jurisdictions attempting to attract investment.
This situation prevails despite the Minister's recent visit to Canada and other countries to proverbially talk up South Africa as a mining jurisdiction. South Africa also now ranks as the 5th largest international gold producer. Last year, it was ranked 4th and a few years ago 3rd, and a decade ago 1st due to limited investment. Considered steps are required to be implemented to create a balanced regulatory regime which encourages local and international investment.
Chair, due to time limits I have not attempted to address other important issues, such as the acid mine Drainage, which Mr Gona would know more about, interministerial report that was made public and where no action has been taken, the payment of an estimated R9 billion in Mineral Royalties to which the communities received no benefits... [Time expired.] [Interjections.]
Mrs J F TERBLANCHE: Chairperson, on a point of order, I want to know if it is parliamentary ... [Interjections.]
The HOUSE CHAIRPERSON (Mr C T Frolick): I missed the beginning part of your question, would you start from scratch.
Mrs J F TERBLANCHE: Chair, I am rising on a point of order, and I would like to know whether it is parliamentary for a member to show a fist to another member in a threatening manner. The Minister did that, he showed a fist in a threatening manner to our Chief Whip. [Interjections.] I want to know if it is parliamentary.
The HOUSE CHAIRPERSON (Mr C T Frolick): Order! Hon member, that is not parliamentary, we agree with you.
Mrs J F TERBLANCHE: Chairperson, would you please then ask the Minister to explain or to please apologise for threatening our Chief Whip and showing that he is going to hit him. [Interjections.]
The HOUSE CHAIRPERSON (Mr C T Frolick): Hon members, let us not turn this hon House into a Dojo with a lot of kumite.
Mr P D DEXTER ///tfm/// END OF TAKE
Adv H C SCHMIDTMr P D DEXTER: Chair, My five-year old daughter is watching, so you better be nice to me. Her name is Maya and she is sitting at the back. [Laughter.] Minister, Deputy Minister, the director-general, whom I am also paying tribute to, after long years of service in this department, I am here to support the Budget Vote. [Applause] At the same time, this speech is dedicated to the memory of the Godfather of rap, Gil Scott-Heron, who passed away earlier this week. He was famous for his unique style of fusing music and poetry, which he dedicated to the liberation of his people. He was also a friend to Africa and a fearless anti-apartheid activist. He was famous for an anthem: "the revolution will not be televised".
People say that things are not related, and that what happens in one place does not influence another. Yet the working class and the poor of our country will tell you that that was not true. What the state does, and what the bosses ask it to do, all lead to the same objective, unless we resist them; more ruthless influence for more ruthless exploitation.
Minister, you department is standing at the abyss despite all your best efforts. Secrecy is the blanket that the corrupt, exploiters, bourgeoisie, and those in power, use to hide the nature of nefariousactivities. Secrecy is how they use and abuse, and take what is not theirs and never have to account for it.
Let us talk about the national democratic revolution. If the government of the day has its way, the counter-revolution will not be publicised. If the government of the day has its way, we will not hear about the workers of Grootvlei mine who have been ripped off by the families of the ruling elite, because the
counter-revolution will not be publicised.
If the government of the day has its way, we will not read about the toxic mine dumps, where children go and play with radioactive material because the counter-revolution will not be publicised. If the government of the day has its way, we will not hear about the corrupt lawyer and his partner, who steal mining rights and sell them to the highest bidder or to the highest office in the land, because the counter-revolution will not be publicised.
If the government of the day has its way, we will not hear about the so called liquidator, brought in to liquidate the working class, who was convicted of fraud but rehabilitated to do this dirty deed, because the counter-revolution will not be publicised. We will not hear about nationalisation of derelict mines, about fracking and wrecking in the Karoo, we will not hear about Information and Communications Technology, ICT, about Kunene, Sunelo, Kumba, Mutala, Aurora, Nersa, radioactive Robinson Lake, asbestos at Ga-Mopedi and Ga-Mshushu, Siltek Investments and its directors, and about the case numbers 837/11/1978, 207/7/1989 and 85/3/2010. Minister, look them up.
We will not hear about mine deaths, silicosis, profits before workers safety; we would not see Alexkor on TV, making its first profit in 10 years only and going to invest it in Zimbabwe; or a CEO who does not work at the mine, but shopping in Sandton. We will not hear about this, read about it, or even see it, because if the government of the day has its way, the counter-revolution will not be publicised.
In terms of the Protection of Information Bill B6-2010, the revolution will be over. Everything I have said here will be classified as secret. The revolution will not be publicised. [Applause.]
Mr E J LUCAS
Mr P D DEXTER
Mr E J LUCAS: Chairperson, Minister, Deputy Minister, the department and colleagues, the Department of Minerals and Energy has been split from the Department of Mineral and Energy and became a standalone from 01 April 2010.
The objective of the department is to promote, regulate minerals and mining sector for transformation, growth, development and ensure that all South Africans derive sustainable benefit from the country's mineral wealth.
There has been a slight increase in the budget for the 2011-12 allocation for the department. We do appreciate the fact that this department has managed their finances well. However, the concern that we are having now is how we are going to deal with the rehabilitation of the ownerless and derelict mines. The added problem is our water situation in the mines.
The IFP remains concerned about the Mine Health and Safety Programme. It is important to train mine inspectors who would be responsible for enforcing the compliance of the Mine and Safety Act. We recognise the problem that is caused by trained inspectors being enticed to join major firms for higher salaries. In the future we must find ways of being able to retain our trained and experienced staff.
Let me once again touch on two subjects that are close to my heart. The first one is small scale mining. The department has done quite a lot in order to be able to grant the historically disadvantaged prospecting licenses.
However, by and large, it has not been able to produce the desired effect. Basically, the problem is the inability to acquire funds in order to do prospecting. The finance houses are not prepared to risk investing in prospecting. The banks are only interested in mining licenses because they became bankable document.
It is important that the department and the portfolio committee investigate ways and means to assist disadvantaged groups in entering the mining industry. The IFP believes that this will avoid exploitation of people who firmly believe that they were going to make an honest living, by those with deep pockets and that it will result in developing a self-supporting middle class. May I suggest that we have special meeting to address this problem. The IFP appreciates the new system of granting prospecting and mining licences.
The second one is beneficiation. Beneficiation is another possibility to add to our financial gains. We are a country with large minerals resources. May I first off all clear the air and explain that the mining companies do beneficiation by mining minerals with the gravel and therefore separating the waste from a particular mineral such as gold, platinum, etc; because it is value adding.
However, we need to go a step further in the beneficiation process by manufacturing the finished product. The IFP knows that strides have been made in the jewellery industry. Why do we not go further and build engine blocks, camshafts etc? This will create more jobs and promote skills.
At the beginning, we will have to source the technology which will eventually be transferred to the locals. If we do not begin soon, it will cost much more at a later stage. The IFP admits that one of the disadvantages is that we unfortunately do not have a huge home market because of the size of our population. However, we can develop an export market.
Let us develop and our country and aim to be competitive. We are aware that the Inter-Ministerial Committee. We need to look at new technologies to make our coal environmentally friendly. Coal is going to be with us for a while because it is still a cheaper method of firing our power stations. This has to go hand in hand with seeking other clean fuels.
In conclusion, I would like to state that it is important that we do prospecting for crude and gas. We are also stuck with the use of crude oil for some time to come. Gas is a clean form of energy. It is important to protect our environment. We owe this to future generations. The IFP supports this Budget Vote. I thank you. [Applause.]
The DEPUTY MINISTER OF MINERAL RESOURCES / JN .../TM / END OF TAKE
Mr E J LUCAS
The DEPUTY MINISTER OF MINERAL RESOURCES: Hon Chairperson, Minister Shabangu, Ministers and Deputy Ministers present, hon members, leaders of the trade union movement, leaders of the business community, ladies and gentlemen, comrades and friends, it is amazing how time flies and perhaps the Nobel Laureate for literature, Nadine Gordimer, is correct in observing that, "Time is change; we measure its passing by how much things alter".
It has been a remarkable seven months since I was deployed by the President of our movement, the ANC, to this critically important portfolio in Mineral Resources. I would like to express my gratitude to these two great institutions for having confidence in my ability to discharge these responsibilities.
In the Department of Mineral Resources, DMR, I have joined a team of dedicated professionals who go about executing their tasks with the diligence and fortitude that the demands of our time impose on them. It is perhaps what Ayi Kwei Armah had in mind when he wrote in the Beautiful Ones Are Not Yet Born and I quote:
Alone, I am nothing. I have nothing. We have power. But we will never know it. We will never see it work, unless we come together to make it work.
I have also been humbled and impressed by the warmth with which I was received in the department which can only bode well for the successful execution of our immediate and urgent tasks. In this regard, I want to thank the Minister for her leadership and guidance during this exciting period. To the director-general, Adv Sandile Nogxina, thank you, Mdengentonga, for your support. Give him a hand. [Applause.]
Let me take this opportunity to welcome two comrades, Duma Nkosi and Mandla Rasmeni, to the offices of the director-general and Deputy Minister, respectively. These two servants of the people were right here in Parliament during the period of the drafting of the Mineral and Petroleum Resources Development Act, MPRDA. I have no doubt that they will add a lot of value to our work as a department. They will be right in the thick of things as they serve as a nexus between the legislature, the executive and the department.
It is within the context of recognition of our achievements that we have invited two erstwhile and doyen leaders of the trade union movement, comrades Cyril Ramaphosa and James Motlatsi to attend today's Budget Vote. These stalwarts were founder members of the National Union of Mineworkers, NUM. Through this gesture, we are honouring their role and contribution to the achievements of our democratic mining jurisprudence. [Ezandleni.][Applause.]
As we start this month, we must reflect on our programmes that are intended to support young people and to assess how far we have gone in implementing the vision of the Freedom Charter. As the mining industry, it is our duty to ensure that we do not fail these young people and that the 1,5 million of them who started Grade 1 this year, finish Grade 12 without disappearing from the system.
Last week we were told that a huge number of those who walk the streets, looking for work, are youth between the ages 16 to 35. This is a call to action for us who went through the June 1976 struggle to do our utmost to honour the youth through providing them with opportunities for decent work.
As we meet today, we are a mere month away, July 18, from celebrating our international icon, President Nelson Mandela, who very much like President Oliver Tambo, is the unifier of the nation and the organiser of victory.
President Mandela, a former mineworker, was in fact elected in 1989 as the Honorary Life President of the National Union of Mineworkers. The mining industry therefore will need to play its part in keeping the activities in line with the noble values of sacrifice and selflessness that Madiba has come to symbolise. Nelson Mandela's name should ordinarily be appropriated by, among others, the democratic trade union movement and progressive forces that have, at their frontline, cadres who share the same values with him.
I believe there is no better tribute we can pay to Nelson Mandela than to get the mineworkers and mine bosses to work together to improve the living conditions of people within and without this industry. We will wait for the instructions of President Zokwana of the NUM and the general secretary, Mr Baleni.
In 2007, this House, Parliament, resolved that the living conditions of mineworkers be investigated and improved, that we support the initiatives of the NUM to build a workers museum and that this democratic Parliament should give consideration to naming some of its buildings after J B Marks, the leader of the African Mineworkers Union. We are called upon to see to the implementation of this resolution.
When we visited India recently, we were reminded by one of the Cabinet Ministers from the Silicon Valley who said and I quote:
It is indeed an honour and a privilege to live during the same time as Nelson Mandela, the greatest revolutionary of our time.
We salute you stalwart, isithwalandwe, Seaparankwe. Re a leboga.
The Minister has already outlined the budget that has been allocated to the department, after all budgets are but a mere numerical expression of policy. However, the Minister's budget statement represents a programme of the ANC-led government to use the vast mineral resources of our country to contribute to the overall objective of lifting our people out of the grinding poverty and underdevelopment that currently afflicts them.
The Minister has requested me to deal extensively with the diamond industry and I see that our hon members are also interested to know what we are doing to revitalise the Diamond Industry for growth and job creation. Listen and learn.
As instructed by President Zuma in his state of the nation address, it is our belief that we can use the possibilities offered by the diamond industry to meet the twin imperatives of job creation and economic growth. South Africa is one of the few countries in the world who are involved in the entire spectrum of the diamond value chain, which includes exploration, mining, rough and polished trading, cutting and polishing, jewellery manufacturing and ultimately retail.
This is understandable as South Africa is a major diamond producer and ranks sixth in the world in terms of volume, that is carats, and fourth in terms of value. It is however, worrying that we remain a small player in the downstream sector of the diamond value chain, with a disproportionately small and underdeveloped beneficiation industry.
The situation has been further exacerbated by the impact of the recent global recession, which forced small businesses, particularly the small businesses involved in rough and polished trading, cutting and polishing as well as jewellery manufacturing, either to close shop or reduce production substantially. As a result, thousands of people have lost their jobs.
However, the 2011 outlook for the diamond industry is very positive and we have witnessed a strong recovery in rough diamond prices and demand. This bodes well for the downstream diamond beneficiation industry. We produce enough diamonds to satisfy the demand for our downstream diamond beneficiation industry. Other diamond cutting and polishing centres around the world like India, Belgium and Israel, continue to thrive partly due to their dependence on diamond supplies from South Africa.
The country's diamond beneficiation industry remains significantly small and its development has an immense potential to stimulate further economic activities and to create thousands of new jobs. It is precisely for this reason that we have, through consultations with the diamond producers, the diamond task team of the Chamber of Mines, the state diamond trader, South African Diamond and Precious Metals Regulator, United Diamond Association of South Africa and others, sought to gain a better understanding of the factors that have constrained the sustainable development of our country's diamond beneficiation industry.
The findings of our consultative engagements have revealed that there are four broad categories of challenges that need to be addressed systematically in order to reposition and revitalise our downstream diamond beneficiation industry for sustainable growth and development. Briefly, these challenges are the following.
Firstly, the challenge is the lack of access to finance. Diamond beneficiation is a capital intensive industry that requires funding, particularly for small players. This is so because of the costly nature of the industry's raw materials, equipment and the time-honoured persistence by the main rough diamond producers for their clients to pay cash on or even before delivery. As a result, no substantial trading and cutting business can flourish without a supportive banking environment. Lack of capital prohibits business growth and access to modern technology.
In South Africa, only two commercial banks namely, Nedbank and ABN Amro, are currently providing funding for the sector and mainly focus on the Diamond Trading Company, DTC, preferred clients or sight holders which are normally large established companies. The local, small and medium-sized manufacturers have no or very limited access to sources of finance. The Industrial Development Corporation, IDC, has provided funding to some companies in the sector. However, the majority of beneficiating entities do not have access to funding.
We are currently studying different Diamond Funding models like the Antwerp Diamond Bank, Israel Banks and State Bank of India, in order to propose to local financial institutions and, especially the IDC, to consider developing a South African Diamond Funding model to support our local beneficiation industry. Time flies.
There are other issues concerning the skills shortage and lack of markets that I wanted to deal with here. I will not have the time to do with that. I thought I would also speak about the security of supply. Regarding the security of supply, I would like to express the gratitude to the Chamber Diamond task team and the DMR which, when it was approached to provide short-term relief to the plight of smoke cutters and polishers, rose to the challenge and made certain carats available for cutting and polishing. This gesture of goodwill is appreciated and indeed demonstrates the mature relationship that we have in this sector. We will work towards importing diamonds from Angola, Zimbabwe and the Democratic Republic of the Congo, DRC.
I will not deal with issues acids mine drainage and the issues of mine health and safety. I think that the Minister has dealt sufficiently with those matters.
Let me conclude by thanking the staff of the department, especially my boss in the office Ms Kifelo Tsiboggo, who has been a pillar of strength in the department.
I would like to close by quoting from Jacob Riis, a journalist and social reformer and I quote:
When nothing seems to help, I go and look at a stone-cutter hammering away at his rock perhaps a hundred times without as much as a crack showing in it. Yet, at the hundred and first blow it would split in two, and I know it was not that blow that did it, but all that had gone before together. -Jacob A. Riis, journalist and social reformer (1849-1914)
I thank you
Mr M R SONTO / Src / END OF TAKE
The DEPUTY MINISTER OF MINERAL RESOURCES
The TEMPORARY CHAIRPERSON: Order! I want absolute discipline! [Laughter.] Absolute discipline; no howling. I want good behaviour. I am carrying a stick! [Laughter.]
Hon Sonto, please do not make provocative statements which will cause the House to fall into disarray.
Mr M R SONTO: Chairperson, thank you very much. Hon Minister Shabangu and hon Ministers present here, hon Deputy Ministers under, at this point, Deputy Minister Oliphant, hon members, esteemed guests, ladies and gentlemen, once again, as Parliament, we are called upon to assess and comment on one of our departmental funding allocations by Treasury. This we do so that we can exchange ideas on the allocation and make suggestions on how this allocation could be best utilised for the benefit of our citizens, Parliament and country as a whole.
You have heard that South Africa is exceptionally well-endowed with mineral resources and possesses almost all the minerals necessary for a mineral-based industrialisation strategy. This suggests that this country has been blessed with an exceptional mineral resource endowment and has been aptly described as country of geological superlatives and is arguably the richest geological terrain in the world.
Reliable research has proven that South Africa has substantial deposits of almost all minerals important to modern industry.
When the ANC took over governance in 1994, we observed that discriminatory policies by then apartheid government excluded the majority of South African from full participation in the mineral industry. On the basis of that observation, the democratic government established by the ANC had to devise legislative means that would promote, support and regulate mining in this country. This was prompted, as you have already heard, by one clause of a very thin important document, uMqulu weNkululeko, [The Freedom Charter] which states that the "the people shall share in the country's wealth" and that "the mineral wealth beneath the soil ... shall be transferred to the people as a whole."
That was further amplified by this people's movement in the Ready to Govern conference in 1992.
isiXhosa:
Wawuphi wena? [Where were you?]
English:
The ANC resolved at that conference that the mineral wealth beneath the soil is the national heritage of all South Africans, not of an exclusive few, as we found it. This includes future generations
Afrikaans:
Oppas vir die...
English:
State-owned mining company. It's coming.
Milestones from that conference have been the implementation of the Mining Charter that extended the scope of the Diamond Board to become the SA Diamonds and Precious Metals Regulator. Subsequent to that, we had the establishment of the State Diamond Trader.
These and others were steps taken by the democratic government to expedite the creation of an enabling environment to effect local beneficiation, which should be acknowledged and applauded.
You know, sometimes, people who were given a certain colour by God think that, because of that colour, they can think better. [Laughter.] It is absurd. You know, I was listening when hon Smit said that beneficiation has failed in Chile, it has failed in Bolivia, yet, when a state-owned mining company was briefing the South African delegation in their presence, they were mum; they couldn't say a word about the successes of beneficiation. [Applause.]
Because of this podium now...
[Interjections]
The TEMPORARY CHAIRPERSON: I won't allow that. Please! [Interjections.] Order!
Mr M R SONTO: In the state of the nation address the President declared 2011 as a year of job creation through meaningful economic transformation and inclusive growth. Mining and beneficiation was highlighted as one of the six priority areas where jobs could be created.
In line with the above, you will realise that section 26 of the Minerals and Petroleum Resources Development Act, MPRDA, which came into effect in 2004, legislates the policy concerning the exploration of the country's minerals. The Act address the following, among others: transformation of the industry; promotion of equitable access to South Africa's mineral resources; promotion of investment in exploration; and mining and mineral beneficiation.
Chairperson, beneficiation is one of the issues dealt with in the mining charter and is considered a viable avenue for increasing export earnings, creating employment locally and furthering black empowerment initiatives.
The four stages of beneficiation include mining and production; bulk tonnage intermediate product; refined product; and finished consumer and industrial products.
Comrade Chairperson, the steps that the democratic government has taken might look small and insignificant at this point, but we need to applaud them. As we applaud them, more is needed if we want to talk meaningfully to the actual inception of the concept. It is important for government to guide and lead the mining industry in formulating and accounting on a clear picture of the current status of beneficiation in the country. To what extent should beneficiation be pursued in the immediate future and what long-term future potential does beneficiation have for the country?
The socioeconomic empowerment charter which stipulates beneficiation as those activities beyond pure mining and processing to include the production of final consumer goods also makes provision for mining companies to possibly offset the value of their beneficiation achievements against their historically disadvantaged South African ownership commitments.
As things stand now, there is no clarity as to how mining companies would calculate the level of their beneficiation in order to achieve these offsets.
Chairperson, as government and as the ANC, we strongly believe that pursuing beneficiation to its utmost potential is in the country's national interest, and legislative doors should be opened and institutional arrangements should be made for that to happen, yet we understand that any legislative or institutional arrangement for beneficiation in South Africa will be fiercely opposed by local individuals and certain companies. It is definitely going to be seen by those who are comfortable with the status quo as a form of punishment to the industry. I say no, it is not.
We know that, by nature, people are allergic to change, but I must assure this House that the current government and state-owned entities will surely pursue this initiative. We won't rest until change is achieved in this industry. The ANC supports Budget Vote 32. [Applause.]
Adv A D ALBERTS/ END OF TAKE
Mr M R SONTO
Adv A D ALBERTS: Chair, the proper management of the mining industry is of the utmost importance to South Africa's economic development, job creation and eradication of poverty. One must not forget that it has always been this country's vast mineral resources that have and still do act as drivers of history. It was the vast gold resources that provided the impetus for the Anglo-Boer War. It is the aftermath of that terrible and selfish war, especially the pain suffered by the Afrikaner in the British concentration camps – a holocaust which wiped out a third of our population – that pushed black and white into different camps during the twentieth century.
Today, a result of that history, we have the renewed call by young, black revolutionaries to nationalise all mines on behalf of the poor masses. Clearly, this economic sector carries a lot of historical weight, and thus needs to be treated in a responsible and economically viable manner.
Afrikaans:
Dit is om daardie rede dat die VF Plus die 434 onreëlmatige minerale regte, 713 verbrekings van die wetlike omgewings vereistes, en 120 dubbeltoekennings van mineraleregte as a nasionale skande beskou.
Ons wil egter die Minister loof vir haar daadwerklike optrede om die mineraalregtesisteem skoon te maak van probleme. Die omvang van die onreëlmatighede is verseker nie goed vir Suid-Afrika se beeld nie. Suid-Afrika het die vorige kommoditeitsoplewing misgeloop en kan nie weer so 'n fout bekostig nie.
[Tussenwerpsels.]
English:
You can't hear me?
[Interjections.]
The TEMPORARY CHAIRPERSON: Order, please!
[Interjections.]
Adv A D ALBERTS: Where do you come from?
The TEMPORARY CHAIRPERSON: Members on my right! Members on my right! I have warned you earlier: I want absolute discipline from you. Please continue, hon Alberts.
Adv A D ALBERTS: The FF Plus is also of the opinion that, due to the perception of improper proximity between mining business and government employees, all new mining rights applications and licences must disclose any such connections to the public for scrutiny of any possible conflicts of interest.
The Minister should also engage with the Public Service Commission to adapt the code of conduct for public service employees so as to avoid any such situations.
Regarding nationalisation; what is the point of nationalisation if it is only to benefit a few closely connected government men, or bail out stressed Black Economic Empowerment participants?
We must therefore interrogate the optimal method to achieve the true desired outcome, namely economic growth, job and general wealth creation. Experience, research and common sense clearly show that nationalisation is not the answer. We have only to look in our own backyard at Alexkor to see why.
Alexkor, according to the Auditor-General's report for 2009-10, is effectively bankrupt as it cannot meet its day-to-day obligations.
[Interjections.]
The TEMPORARY CHAIRPERSON: Hon Minister, please! Please!
Adv A D ALBERTS: Therefore we ask the Minister to have another look this whole situation on nationalisation. Thank you.
Mrs I C DITSHETELO / Nvs (Eng & Afr) / END OF TAKE
Adv A D ALBERTS
Mrs I C DITSHETELO: Thank you. Ideally, we should all be proud of being citizens in a country so rich in mineral resources. The country is a leading supplier of a variety of minerals and mineral products that are exported to 87 countries. Each year, approximately 55 different minerals are produced from more than 700 mines, with gold, platinum, coal and diamonds dominating exports in revenue earnings.
There are also important deposits on iron and copper. Unfortunately, the legacy of colonisation and apartheid has created extremely poor sections in our society who only know that we have mineral resources because one or more members in that society would have been employed in the mines, yet live in dire poverty.
This is even more, sad, if you consider that 17 years after democracy, the effect of the richness of our soil has not been felt by the masses. Our people are still trapped in despicable poverty and the level of economic inequality is on the rise. Wealth is still retained in the hands of the few, and we have new terms now, like black diamonds, referring to the exclusive class that has access to economic wealth whilst the majority is trapped in poverty.
Often, when talking about our minerals, we have been made to believe that the problem is still with the white minorities owning our minerals, and that transformation has been slow or been resisted on this front. This is true in many respects. However, more and more black elite have found their way into the mining industry. If media reports are anything to go by, most of these elites are associated in some way with the ruling party. The exploitations still continues.
I am sure we have all read about the Aurora mine and the gross violations of human rights committed against the employees. In this light, I would like to urge the department that as much as they must seriously and consistently pursue fair distribution of wealth and transformation in the sector, but other questions need to be investigated.
How are we making sure that these processes are not just a replacement of skin colour which the rich remain rich, but with a much cocoa skin pigment? The poor remain extremely poor!
How, is this department strategically placed in order to address economic equalities? On a lighter, but still important to note, it was pleasing to read the message from the Minister in the annual report, in particular. [Interjections.]
He is at home, resting! [Time expired.]
Mr C L GOLOLO/ END OF TAKE
Mrs I C DITSHETELO
Mr C L GOLOLO: Good day hon Minister, hon Deputy Minister, hon Chair, hon members of Parliament, captains of the industry, ladies and gentlemen - I greet you all.
Let me take this opportunity on this month of the youth and salute all the youth of this country. Thank you very much for contributing in ensuring that democracy is restored in our country by voting the ANC. Thank you!
I want to support this important budget vote, and my speech will focus on transformation in the mining sector. May I remind hon members that our constitution enjoins us not only to heal the divisions of the past, but also renders the achievement of the equality peremptory.
Equality is not only about inherent human dignity and entrenched right not to be unfairly discriminated against. Equality is mainly about equal access, not only to opportunities but also to resources. Such equality has to be based on positive discrimination to ensure that ownership of the means of production in general and in minds in particular vests with the majority of our people.
As citizens of this beautiful, rich and prosperous country in the continent, we can no longer allow a situation whereby the vast majority of our people do not enjoy and benefit from the mineral wealth that is endowed beneath our soil.
Our government has declared 2011 as a job creation year. The President has called for an inclusive economy in which the black majority, women, people with disabilities and the youth participate fully and meaningfully in the mainstream economy.
Fact of the matter is that, it is argued that efforts to transform the ownership of the mining sector serve to benefit a small group of elite, business people, while the majority of the country's black population remain impoverished and disempowered. There are undoubtedly cases that lend support to this argument.
Although there are also notable exceptions, for example, certain companies have implemented employee share ownership programmes with varying degrees of success, while other companies have met ownership targets through empowerment deals in which local communities have between beneficiaries. A shining best known example of these was the deal between the world's second largest platinum producer, Impala Platinum and the Royal Bafokeng nation in the North West.
South Africa as launched a new mining charter, aimed at facilitating the sustainable transformation and development of its mining industry with emphasis on a target of 26% black ownership of the country's mining assets by 2014. The launch of this charter comes after an assessment of the former charter showed that certain targets had not been met.
According to the assessment, white men and women continue to dominate top management and technical positions in South Africa, earning much more than their fellow black counterparts regardless of skills and experience. The racial ownership pattern of the country's mining assets remain largely unchanged, with only 8,9% black ownership attained by 2009, against a target of 15%.
We are saying as a committee that this scenario can no longer be acceptable. We need to turn it around. In fact, the only thing that does not change is change itself. The department should strengthen its work towards transforming the structures of ownership, acting against monopolisation of the sector and promotion of co-operatives.
A message need to be send out there that BEE should never mean the enrichment of a handful, but rather, the opening up of economic opportunities and improvement in living and working conditions for blacks as a whole. By its nature, the mining industry requires a large capital investment and is thus not conducive for the participation of a larger number of small entrepreneurs.
We, therefore, commend the department for the successful launch of the state-owned mining company. We are convinced that the state-owned mining company will increase national income from the mining and mineral sector. It will advance job creation and destiny changing community development projects for poverty alleviation and rural development. Lastly, we think that it will also improve working conditions of mine workers and income levels.
The new economic growth path is based on the premise that economic growth without corresponding job creation is meaningless; just as political emancipation without economic freedom is. The new economic growth path that also focuses on mining value chain is driven by the machinery of the developmental state with its strategic, organisational, and technical capacities are gaining strength as each day passes.
On the question of procurement of capital goods, we are saying multinational suppliers should contribute at least a minimum of 0,5% of the locally generated annual income towards a social development fund for the benefit of the local communities, especially those residing in and around the mining areas.
Currently, most communities residing in the mining areas, for example in a mining town like Barberton, where I come from, you can see poverty in the face of those people residing around that area; with high unemployment rate, poverty and lack of basic amenities like schools, clinics and proper infrastructure.
We are saying, that should not be the case when there is a presence in the area of big mining companies like your Galaxies, De Beers, Anglo American, just to mention a few. Social responsibility and investment to the local community should be a priority to help arrest the situation. Working together as government, local communities, financial institutions and the mining industry, I am quite sure that we can turn around the lives of our people.
Another serious problem that undermining the targets outlined in the mining charter is fronting, whereby companies misrepresent their BEE status to benefit their business. We are also very happy to learn that the Association for BEE Verification Agency is hosting a convention on fronting today - I think it is on right now – to determine the size and extent of this malpractice of fronting.
On the issue of moratorium that was put in place by the department on the issuing out of prospecting mining licences, we as a portfolio welcome the move as part of transformation. The moratorium which took effect from September last year will allow the department to review gaps and inefficiencies.
In conclusion, as a committee, we are also aware of the concerns raised by big business, particularly the Chamber of Business on the issue of mineral beneficiation. Our answers to those concerns are that South Africa is country full of possibilities. If we put our heads together and work together, like we did in the Soccer World Cup last year, we can do a lot.
We can put back the frontiers of poverty. We can show the world that we the people of South Africa are a force to recon with. Let us stop speculating and let us just do it for the sake of our people. Thank you very much. [Applause.]
Mr E J MARAIS /Mosa/ END OF TAKE
Mr C L GOLOLO
Mr E J MARAIS: Chairperson, hon Minister, Deputy Minister and hon members; the mandate of the Department of Mineral Resources is to ensure transformation, economic growth, health, safety and sustainability of the minerals and mining sector. South Africa, like Chile, Canada and Australia, has mining as one of its biggest income earners and biggest generators.
On the issue of health and safety, the department must improve the health and safety conditions in the mining sector. Mining executives have been urged to confront the health and safety challenges of the ageing mines with renewed vigour. As mines get older, they become less profitable as a result of increasing overhead costs.
However, the health and safety function within the mine needs to be maintained, as long as that mine is in production and until the mine is formally closed on application to the Department of Mineral Resources. Last year, South Africa achieved the most improved safety record in the country's mining safety record and in the history of the country.
However, over 120 deaths were still reported. The fall of ground incidents are still the major cause of fatalities in the country's mines, contributing to 39% of mine deaths in 2010. The fall of ground are caused mainly by systematic and poor discipline. Gold mining remains the epicentre of fatalities followed by platinum and then coal.
The number of deaths from respiratory diseases is increasing. Thousands of South African miners have contracted silicosis and silico tuberculosis in the last 100 years. Mining and the Mine Health and Safety Council has launched a series of road shows to increase awareness of silicosis, an incurable occupational lung disease caused by the inhaling of crystalline silica dust and marked by lesions in the upper lobes of the lungs.
There are recorded deaths of 5396 miners from respiratory diseases from 2003 to 2009. The industry studies in 1998 put the number of silicosis sufferers at some 300 000. The South African mining industry is facing a very serious threat from silicosis claims. The Department of Mineral resources, DMR is focusing on efforts to reduce dust levels in mines. The government is making a concerted effort to move towards a zero fatality industry. Only safe mining is profitable and sustainable.
On the issue of economic growth, mining developments in South Africa are mostly dependant on efficient transportation logistics. The transportation and handling of commodities from a mine to a harbour that optimises infrastructure, operation and maintenance costs, are significant factors in the development of a mine.
Saldanha Bay is a natural deep sea water harbour. The creation of additional quays and new facilities in Saldanha, to encourage the beneficiation of metals and minerals and the possible emergence of a manganese export terminal, will be in addition to the highly used iron ore export terminal.
Last year, South Africa exported more than 47 millions tons of iron ore from this deep water port of Saldanha, and has plans to increase export level to 60 million tons in the near future. The establishing of an industrial development zone in its port region is on the table. It has the potential to create many jobs in the region and stimulate economic growth.
At this point, I would like to invite everybody present, specifically my Chairperson Mr Gono, to come and invest in Saldanha Bay municipality, because that's my constituency. It is now a DA controlled municipality. In 2006, a voter base of 28%, from the DA has now moved to 60, 1%. They will look after your interests in Saldanha. You are more than welcome.
Confidence in the mining sector is growing after the bounce back and steady recovery of commodity prices, following their slide during 2008-09. Labour has an obligation to increase productivity to enhance global competition while government has an obligation to ensure critical infrastructure, such as rail, water, power and a stable investment environment. Export demand from other developing economies, particularly in Asia, gained further ground.
South Africa's exports to China over five years, have increased by 475%, or from R8, 4 billion to R49 billion. The second largest increase in exports of R14, 8 billion is to Switzerland. Nearly three quarters of these increases relates to platinum in general and 11% to platinum coins. The leading export product categories to China, Japan, Korea and India were iron ore, platinum, coal and ferro alloys.
I have to compliment the Minister and the department with the new Electronic Mineral Management System. The EMMS have the ability to group applications and prioritises, by both time and date. It will require greater transparency and accountability from government and those applying for prospecting rights.
The review of the current legislation and the proposed amendments will hopefully be concluded soon, as the widest possible consultation was needed. On rehabilitation: The rehabilitation of abandoned mines will remain a challenge, given the department's budget constraints of plus or minus R5 million. Last year, Mintek completed the rehabilitation of five asbestos mines, in the Northern Cape, under the Department of Mineral Resource, DMR's derelict and ownerless mines programme. Thank you Chairperson. [Time Expired.] [Applause.]
Mr F C BIKANI / C.I/Eng / END OF TAKE
Mr E J MARAIS
**incomplete**
Mr F C BIKANI:
THE MINISTER OF MINERAL RESOURCES
Mr F C BIKANI
Hon FC BIKANI
The MINISTER OF MINERAL RESOURCES: Chairperson, members of the committee, thank you very much for supporting our Budget; it is also an indication of that working together with the committee, we can do better and more. Thank you very much Chairperson, especially for the stewardship you have shown in leading this Portfolio Committee; it is getting better everyday and it is becoming the best, thank you vey much. [Applause.]
I would like to thank hon Marais; I think he understands issues of the mining sector. The issues that he raised are issues of concern to us; we will continue working with him in ensuring that issues of mine health and safety are all for all of us; we cannot politic around them. I would also like to thank hon Bikani, thank you very much hon member for the issues of mine health and safety. We are currently investigating occupational health matters – they are very close to our hearts. We will be having – soon, somewhere in December, a tripartite summit with the intention of addressing these issues. We want to ensure that the mining sector becomes as safe as it can be but it is branded as a sector of preference in our economy.
I would like to take this opportunity to respond to hon Ditshetelo, I would like everyone in this House to look behind us; look at the seats behind or in front of you. Are these elites? What does transformation mean in this country? When it becomes African or Black then it is elites? This is a process we have not yet achieved. We said, in 2009, when it comes to the Charter, we achieved 9% of the 26% by 2014. This is a achievement, it is process, it is not an event. [Applause.] How do you transform your economy when you refer these geologists, mining engineers - who are now participating in ownership - and you call them elites? It is unacceptable. Let us not undermine our people as they make progress. [Applause.]
These same people read the Acts, the Charter and the objectives of being broad base. This is a process and 17 years from over a hundred years of the mining industry which was not transformed. What do we mean, what do we say? We must be realistic, we must not be opportunistic but we also must not insult our people. It is wrong, it is despicable; we cannot afford to have that. Let us change our language because what we are doing is labelling people unnecessarily because they are progressing. Let us appreciate good work which is done by people. Let us give ourselves 20 years and see where the mining industry will be. We are addressing many issues that are the legacy of the past. Please hon member, recognise good work and good intentions in uplifting our people in South Africa. [Applause.]
To the hon Schmidts, the Agri-SA case; that ruling goes against transformation of our communities, hence we are appealing against that decision. We cannot go back to a situation when we tried to reconcile and bring people together – we find a situation that intends to divide us, it is very dangerous. I am saying, let us be careful. Ask yourself, why is Julius calling for the nationalisation of mines? Ask yourself - I am not calling for it.
Adv H C SCHMIDT: [Interjection.]
The MINISTER OF MINERAL RESOURCES: No, he is not an elite, he is a young man who is interested in improving the quality of life of our people [Applause]. State owned mining companies will continue to make a difference, it will compete, it is already competing - and I am very happy with that. There are no rights that are giving to holy cows here, there are procedures in this country, there is a Constitution, an MPRDA, and everyone must follow that. May be when you are the Minister you will take short cuts, not while I am still the Minister, I will never allow that. [Applause.]
On the issue of KP, the Kimberly Process, regarding the allegations you are making on the KB, do me a favour, go and read Kimberley Processes and also understand the regulations and statutory of Kimberley process and understand the role of KP Chair; who took a decision in March in endorsing that the Zimbabwean diamonds, specifically, marange, are compliant. [Interjections.]
It is not against, I am saying read the processes, the role of KP Chair and his decision...
Adv H C SCHMIDT: Hon Chairperson, can I ask the Minister a question?
[Interjections.]
The CHAIRPERSON: Order hon members Order, hon Minister, are you prepared to take a question?
The MINISTER OF MINERAL RESOURCES: No.
The CHAIRPERSON: The hon Minister is not prepared to take a question.
Adv H C SCHMIDT: She wants to run away form the...
[Interjections.]
The TEMPORARY CHAIRPERSON (MR FROLICK: Order hon members, hon Minister, before you continue, hon members from both sides of the House, you must respect the rules of Parliament that you yourselves have adopted. Please, no shouting is allowed while the Minister is busy addressing and concluding the debate. Let us give the Minister an opportunity... [Interjections.]...Order! If you do not respect the Chair, I will identify you and ask you to leave the proceedings. Let us conclude the debate with the dignity that it deserves. Continue hon Minister.
The MINISTER OF MINERAL RESOURCES: Thank you, Chairperson, I am just saying acquaint yourself with the rules, totally in a holistic way; not part of what you think is best for you.
[Interjection.]
The MINISTER OF MINERAL RESOURCES: Another thing that I must indicate to you is that you must also acquaint yourself with the African Diamond Producers Association of all Africans countries and understand their point of view; then you will understand the approach of Africa towards diamonds. We are the 60% producers of diamonds in the world and we have to change that in favour of developing countries. I must also indicate that you should go back to the Fraser Institutes, and read it with an understanding; do not judge us because most issues that you have alluded to and rectified were judged on those issues. We have dealt with all of those issues. To hon Dexter, in IsiZulu we say...
IsiZulu:
...indlela yaziwa ngumhambi wayo. [Ihlombe.]
English:
The last point I want to make is that, hon Schmidts, is that the issue of the Kumba case is in sub judice, unfortunately, we cannot deal with it. Let us respect the law. Thank you very much hon members; thank you for supporting the Budget, I hope as we continue engaging next year we will come better informed and with an understanding of the critical issues in our Budget and the overall environment. Thank you.
Debate concluded.
The Committee adjourned at 16:13.
LIM... / END OF TAKE
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