Hansard: Approppriation Bill: Debate on Vote No 32- Mineral Resources
House: National Assembly
Date of Meeting: 09 May 2012
Summary
No summary available.
Minutes
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Take: 471
THURSDAY, 10 MAY 2012
PROCEEDINGS OF EXTENDED PUBLIC COMMITTEE – OLD ASSEMBLY CHAMBER
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Members of the Extended Public Committee met in the Old Assembly Chamber at 14:00.
House Chairperson Mr M B Skosana, as Chairperson, took the Chair and requested members to observe a moment of silence for prayers or meditation.
The MINISTER OF MINERAL RESOURCES
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Take: 471
START OF DAY
APPROPRIATION BILL
Debate on Vote No 32 - MINERAL RESOURCES:
The MINISTER OF MINERAL RESOURCES: Hon Chairperson, Deputy Minister Oliphant, hon Fred Gona, chairperson of the portfolio committee, hon members, may I begin by acknowledging the presence, in the public gallery, of 21 young learners from disadvantaged communities. Chairperson, with your permission, I would like to request them to stand, so that hon members can see the young girls who are going to be the chief executive officers, CEOs, of the mining industry. I do not know where they put my kids. [Laughter.] Where are my children? [Applause.] Thank you very much. These are the future CEOs of the mining industry, the miners, as well as owners of the mining industry.
When we talk about transformation in this industry, we are not talking about fronting, but about building a sector which will reflect the future, where all of us will be treated equally. Hon members, beneficiaries of the ministerial programme, these are my children.
We stand at the cusp of a new era in South Africa, one which sees, so clearly now, the resurgence of mining as a central force. I am, therefore, honoured to present the budget of the department that is responsible for a sector so critical to our country's future. The fact is that the ANC has placed the mineral and energy complex right at the centre of its socioeconomic and political agenda. This is an appropriately far-sighted step as the organisation and movement I represent marks its centenary, committed as it is with even more vigour to change the lives of our people for the better.
However, over those decades, the nation inexorably grew economically, despite the ravages of apartheid. We have thrown off injustice and strengthened our economy and, in doing such things, we have shown our true greatness as a nation, for the all the world to see. The resulting unity of spirit, rooted in our diversity, is what gives us our real strength and drives us today in an advanced economy characterised by features of both the developed and underdeveloped worlds.
Today we are tabling a budget of R1,169 billion for the 2012-13 financial year which represents an increase of R130 million from the previous budget of R1,39 billion. This increase is largely earmarked for research and development in the minerals and mining industry, through Mintek and the Council for Geoscience. My department will continue to manage this allocation in line with good financial management principles, as prescribed by the Public Finance Management Act, PFMA.
In the same spirit I am pleased to report that my department utilised 99,1% of its allocated budget for the 2011-12 financial year. We have developed clear targets and action plans to address matters which arose out of the audit of the previous financial year.
In response to the call by the President, with regard to tightening supply chain management practices, the department has begun reviewing its procurement policies and procedures to ensure that the acquisition of goods and services continues to be done in a manner that is fair, equitable, transparent, competitive, as well as cost-effective. Furthermore, the department has a process in place, where, annually, all supply chain management practitioners sign a code of conduct. All Bid Committees have been appointed and are functioning effectively. The department has already begun the practice of vetting all supply chain management practitioners.
Underpinning it all is the fact that in 2011 the mining industry contributed 9,6% to our country's gross domestic product, GDP, more than 12% to total fixed capital formation, more than 35% to our total export revenue and employed 2,9% of the country's economically active population, which currently stands at more than half a million direct employment.
Furthermore, the sector contributes significantly to the country's corporate tax. It is important to note that more than 60% of the country's energy and more than 90% of electricity generation is derived from activities associated with mining.
We are tabling this budget at a time when, influenced by our mining sector strategy which is a product of the tripartism of the Mining Industry Growth Development Employment Task Team, MIGDETT, we have an historic opportunity to rekindle the role of the mining and energy complex in our economy in a quest to eliminate the evil triplets of poverty, unemployment and inequality which are stubbornly refusing to disappear from our landscape almost two decades after 1994.
The urgency of ensuring that we take advantage of the next wave of the commodity boom which will surely come was underscored when President Jacob Zuma announced massive infrastructure plans in his state of the nation address. The projects promise solid progress ahead for our nation.
We are committed to working together with our state institutions on action plans to optimise the sector's extractive capacity, attraction of investment, as well as maximising mining's job creation potential. The availability of more rail, port and water infrastructure necessary for mining will raise the level of mining, resulting in job creation and economic development in various commodities, including iron ore and manganese ore in the Northern Cape, and coal from the Witbank and Waterberg coalfields in Mpumalanga and Limpopo.
My department will, at the end of July, release the coal resources and reserves study which is being led by the Council for Geoscience which reveals that the Waterberg region hosts a significant share of our country's remaining coal reserves. This is the first comprehensive assessment of South Africa's coal resources and reserves since 1987.
The promulgation of the Mineral and Petroleum Resources Development Act, MPRDA, in 2004 introduced a policy of equal access to South Africa's mineral resources which was previously an exclusive preserve of one racial group. The democratic mineral dispensation introduced the policy of socioeconomic responsibility, which was to be achieved through the application of black economic empowerment policy by ensuring that the historically disadvantaged South Africans are brought into line and into the mainstream of mining.
However, challenges experienced in the implementation of these policies resulted in the need to review both the MPRDA and the Mine Health and Safety Act, MHSA. The objectives of the review are as follows: To provide a detailed consultation process; support the beneficiation strategy; streamline the licensing processes to avoid delays and inefficiencies; provide for enhanced punitive measures; improve the current construct of the Act and remove ambiguities; and provide clarity on the mining of associated minerals.
The review of the Act, however, does not seek to introduce any major policy shifts in respect of exploration and exploitation of South Africa's mineral resources. Accordingly, in our efforts to harmonise our legislation, the creation of synergies between the MPRDA and the MHSA becomes pivotal in ensuring that we create regulatory alignment.
Last year we launched our flagship online mining licence application system, which we referred to as the SA Mineral Resources Administration, Samrad. I am pleased to report that after initial teething problems associated with implementing a groundbreaking system we have now entered a stage where the system is rapidly gaining ground. To date, we have over 3 500 applications that have been successfully lodged remotely through the department's website into a system designed to ensure that we achieve transparency, reduce the margin of error and ensure a consistent systematic approach to the evaluation and eventual decisions regarding the awarding of rights.
Hon members will recall that on this occasion, last year, we reported on a process of cleaning up our data with the intention of ensuring that we migrate it into the new system. This has now been done. Working together with the mining industry, we are now giving priority to processing legitimate old order rights applications that are our in our system. We are committed to ensuring that these conversions yield positive results.
The department will continue to search for ways to upgrade the system to ensure that we remain a relevant, attractive and competitive mining jurisdiction. These improvements will include, amongst others, the ability for the system to allow users ultimately to lodge various categories of reports online.
A fragmented regulatory and mining licensing system has long been identified as one of the impediments to investments and, therefore, the competitiveness of the South African mining industry. The current timeframes for obtaining a mining right, water use licence and environmental authorisation are not aligned, which results in prolonged processes and unnecessary delays.
As a result the Department of Mineral Resources and the Department of Water and Environmental Affairs are currently reviewing the regulatory framework in an effort to put in place an integrated and streamlined licensing system which will not have a negative impact on the timeframes. It is envisaged that the streamlined licensing process will ensure compliance by right holders with the various pieces of legislation, create certainty in the regulatory framework, expedite the licensing process and ultimately strengthen the constitutional imperative of security of tenure. This is in keeping with the principles of co-operative governance which dictate that government departments streamline their processes to promote seamless compliance with all relevant and applicable legislation.
Over and above this, I am pleased to announce that a task team reporting directly to the Minister of Water and Environmental Affairs and myself will deal with the issues that we have just outlined.
Hon members will recall that we extended the moratorium in Mpumalanga due to the complex nature of environmental challenges in that province. This culminated in over 41 rights that are located in Wakkerstroom and Chrissiesmeer being identified as those belonging to the category of environmentally sensitive areas. Consequently, we have taken action to prohibit mining in these areas, and those rights have been withdrawn.
At the Mining Indaba I announced measures we intend taking to address the issue of the rights that are either being revoked or lapsing. In February this year, I published a notice in the Government Gazette inviting submissions with regard to our intention to introduce a new system of auctioning rights. I would like to thank all those who have made representations which, I must add, were not opposed to the system, but instead were offering suggestions on how best we can address the technical aspects of the process itself.
After due consideration, I have decided to issue a proclamation in the Government Gazette which will invite applications on revoked or lapsed rights. In this regard, rules that are aligned with the MPRDA will be clearly spelt out in the Gazette. I must indicate that the first round of bidding will take place before the end of June.
While reaping the fruits of transformation brought about by the MPRDA, as a department we are concerned that the current litigation which intends to reverse the gains of transformation in the mining industry. Therefore, we are watching the space closely as we have to make sure that whatever happens in this country never ever takes us back in the transformation of our whole economy. [Applause.]
We call on the mining industry to implement fully all the provisions contained in the scorecard of the Mining Charter. Audits that were conducted by my department have revealed that the level of compliance is not what it should be. Such as, amongst others, low levels of implementation of employment equity by some mining companies; low levels of women representation at senior management level, especially in decision-making structures; fronting, especially by women who do it on behalf of men; companies that change approved Social and Labour Plans without appropriate consent from the department and without consulting communities; suppliers of capital goods to the mining industry who are mostly reluctant to transfer skills to the black economic empowerment, BEE, entities; and rampant use of expired BEE verification certificates forms part of fronting.
Hon members, procurement is one of the critical pillars of the Mining Charter. In this regard, I am concerned about the manner in which the entire procurement value chain is being handled in the mining industry. It is disturbing that procurement benefits are being reduced for BEE entities that are limited to mundane and peripheral issues, such as catering, cleaning and gardening services, etc.
The Social and Labour Plans are an essential instrument in the hands of the democratic state to ensure that communities benefit from mining. It is in this area that we have identified gaps in the proper alignment of identified projects with integrated development plans and consultation with communities and municipalities. Sadly, this is one of the areas that constitute conflict between communities and mining companies. I, therefore, call on the mining industry to embrace and implement these imperatives without equivocation as they will create harmony between the mining industry and communities.
We are keen to work with the mining industry in circumstances where voluntary compliance is both a moral and an ethical issue. My department continues with the project of rehabilitating derelict and ownerless mines. Working together with Mintek we have reached agreements with communities on the implementation of the Heuningvlei project whose scope has been finalised, taking into account and building on the experience gained.
In the year 2011-12, a total of 115 temporary jobs were created in the Northern Cape. I must also indicate that when we reflect on the issue of ownerless and derelict mines, what we have done is employ the work of actuaries to come and help us in quantifying the total cost, but also how best we can make sure that we are able to implement a process of changing and making ensuring user friendly land. We are expecting the report at the end of this month.
In July last year Cabinet adopted the beneficiation strategy which is central to our bid to ensure that the mining and energy complex yield concrete benefits. This will take the form of an implementation plan with clear actions for the identified commodity groups. It will, however, align the Act with the recently approved beneficiation policy to ensure that the mining industry contributes to local value addition by making available the requisite mineral inputs to the local benefactors.
We, as a country, are also endowed with semi-precious which we need to use to reconfigure the racial patterns of our jewellery industry. This, amongst others, includes jewellery fabrication which seeks to increase the beneficiation, thus, leveraging maximum value from our mineral resources. At the end of this year we intend to host a jewellery summit, which intends to make sure we create opportunities for previously disadvantaged communities in South Africa.
My department will work with the State Diamond Trader to ensure that historically disadvantaged communities become part of the mainstream and contribute to economic growth and job creation. We want to revisit the State Diamond Trader. We are currently looking at the SA Diamond and Precious Metals Regulator, SADPMR, and the Diamond Trader to make sure that we align them in a way that will ensure that we are able to deliver on this mandate.
In the same vein, the Kimberley Process has elected South Africa as deputy chairperson of the process during the year 2012, and we will assume the chair in 2013. As founding members we accept this honour as it coincides with the 10th anniversary of this initiative founded in the modest Tabernacle Church in Kimberley.
Subsequent to the Cabinet's decision to establish a state-owned mining company and the endorsement of the African Exploration Mining and Finance Corporation to operate as a nucleus for this entity, Cabinet further approved the model and the hiving off of African Exploration Mining and Finance Corporation from the Central Energy Fund group of companies. We, as a department, have got to ensure...
The HOUSE CHAIRPERSON (Mr M B SKOSANA): Hon Minister, you have two minutes left.
The MINISTER OF MINERAL RESOURCES: I have seven minutes, Chair. I will take five from the end. [Interjections.]
My department is working with the Department of Energy, the Central Energy Fund, as well as Treasury in making sure that we create a standalone mining company which can compete with the rest of the industry. This crucial entity of the democratic state is about to undertake a second project which is now in the postfeasibility phase, and will, upon operation, produce 4,6 million tonnes of coal per annum over 33 years, creating, currently, about 1 000 jobs.
I must bring to this House one of the most famous issues which is current affairs – the Shale gas. We are going to the Cabinet with a report with the intention of getting a final decision for us to be able to finalise and give direction to the country.
The health and safety of mineworkers in the mining industry remain of utmost importance to the Department of Mineral Resources. Workers in this industry have endured harsh working conditions ever since the birth of mining in South Africa, including living in overcrowded single-sex hostels.
Even to this day, 18 years after 1994, this sector's commitment to the health and safety of both the workers and communities resembles a curate's egg - good in parts - which means lacking overall. This must change. The inevitability of death, injury and diseases must be rooted out.
In addressing poor health and safety issues at mines, we have identified the need to review the Mine Health and Safety Act. This review will strengthen enforcement provisions, reinforce penalties and ensure alignment and harmonisation with the MPRDA. While we remain ceased with these challenges, we, however, recognise some improvement in health and safety in the environment.
Hon members, we have indicated, through various debates and public platforms, the extent to which these mining companies have performed when it comes to fatalities. While we are mindful that there is progress and reduction in this area, it is a matter of concern for us where we still see some workers dying. I call upon the mining industry to once more commit and internalise the value system of zero harm.
I am concerned with the safety of women in the mining industry. I am urging mining companies to implement measures aimed at protecting women miners. In this regard, I want to commend the National Union of Mineworkers for championing the just cause of safety of women miners. As the Department of Mineral Resources, we remain determined to apply section 54 to ensure compliance.
I want to state categorically that it is mischievous to regard section 54 as the only contributor to the loss of production. This flies in the face of the reality that mine operational challenges, can contribute significantly to low production.
We have agreed with stakeholders to set up a task team comprising of all relevant stakeholders to investigate the concerns raised in respect of the application of section 54. The task team has finalised its investigation and has made recommendations for consideration by myself and other MIGDETT principals.
As I had promised last year, we have split the North West regional office into two offices to ensure that it becomes efficient, especially within the platinum in the Rustenburg area.
In November 2011, the Mine Health and Safety Council hosted a summit on the attainment of occupational health and safety milestones as set in 2003. This includes all the occupational health and safety matters, that is silicosis, noise induced hearing loss, TB and HIVS. The intention is to make sure that matters of health are prioritised in the mining industry.
Also during the 2011 summit a commitment was made to implement the Culture Transformation Framework. The stakeholders are also committed to establishing a centre of excellence to do research, capacity-building and facilitating research implementation. Stakeholders committed themselves to the aforementioned in order to improve the industry's health and safety records.
The department recently participated in South Africa's 2012 World TB Day commemoration in Carletonville, which was also addressed by Deputy President Motlanthe. I would like to commend Gold Fields for supporting this programme, and call on other mining companies to do likewise.
There is a great need to improve on the current skills capacity within the mining sector. To this end, the department is collaborating with the Department of Higher Education and Training in making sure that the Mining Qualifications Authority becomes relevant, and also improve the skills of... [Interjections.]
As I present this budget, I would like to stress that we are working round the clock to build the capacity that is necessary in this department in all areas, including in the vital legal section which is involved so regularly and exhaustively in litigation. We are building up our IT systems to improve efficiency and effectiveness. We are working on developing partnerships between government and the private sector.
Finally, I want to thank the staff of the Department of Mineral Resources, led by able and new-from-the-box director-general, Dr Ramontja, who has taken the proverbial bull by the horns, and acquitted himself very well in his new role. [Applause.] The same goes for the Deputy Minister for his leadership and contribution to the second Budget Vote today, as well as making sure that, as we shape our administration, he makes it better. Thank you, Deputy Minister. [Applause.]
It is this same commendable spirit that must characterise the work of the department as we proceed to build a mining dispensation that is in harmony with the environment, and with the communities with whom we constantly seek to engage in consultation. Thank You. [Applause.]
The HOUSE CHAIRPERSON (Mr M B Skosana): Thank you hon Minister, that was a wise decision you need that seven minutes. Ngibizake ilunga elihloniphekileyo uM.F. Gona.
Mr M F GONA /UNH / END OF TAKE
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Takes: 472 & 473
THE MINISTER OF MINERAL RESOURCES
"Old Assembly Main",Unrevised Hansard,10 May 2012,"[Take-333333472] [Old Assembly Main][90P-4-082A][mm].doc"
Mr M F GONA: Thank you hon Chairperson, hon Minister of Mineral Resources, comrade Shabangu, hon Deputy Minister of Resources, comrade Olifant, ministers and deputy ministers present here, leadership of organized labour, leadership of organized business, officials of the Department of Mineral Resources led by the new from the box as the Minister indicated, Director-General Dr Ramoncha, a special welcome to you sir.
Comrades and fellow South Africans let me from the outset state that the African National Congress supports this budget vote. We are basing our support of this budget on the theme that "Let there be change for the better in the mining". This theme is based on the fact that since the discovery of minerals in the eighteenth century citizens of this country who were classified as non-whites, including black women, were prohibited by law from ownership and or occupation of positions of power in the mining industry.
Currently, meaning eighteen years into our democracy, not enough progress has been made to change this situation. This is a theme which is more relevant to all stakeholders in mining industry, particularly in our present day circumstances. Once more hon Chairperson, I would like to dedicate this speech to the thousands of mineworkers who perished and continue to die in this industry over many years of mining in this country. We are particularly concerned with the 123 fatalities reported last year although we must also acknowledge that we have recorded some improvement by four fatalities from those of 2010. These figures, however, remain high.
This parliament extends heart-felt and sincere condolences to the families of those that departed and their loved ones in the mining industry. Hon Chairperson, 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 by agriculture.
Mining continues to be South Africa's principal earner of the saught after foreign exchange although levels of earning continuously decline. If we go back to the 1900s we will find that mining directly generated about 41% of total exports, approximately the same as the fast-growing manufactured goods exports sector. From year 2007 real fix investment in the mining sector improved by 14,8% unfortunately this improvement was insufficient to compensate for the declines that had taken place in 2004-2005 with the result that production fell at that time by 1,5% particularly in 2006.
We further recognize the fact that notwithstanding sometimes jittery mood of the investor community due to some perceptions of uncertainty in our mining policy. This is far from the reality because when you analyse our mineral strategy that we continue to refine and you reflect on our sustainable mining declaration as agreed to through Mining Industry Growth Development Employment Task Team, MIGDETT, government's commitment in both attracting and in retention of domestic and foreign direct investment in the mining industry is clear.
The portfolio committee will continue playing its expected role to address both the genuine concerns and these perceptions of the investor community. In this regard the ruling party has opened the debate on the nature of state intervention in the mining industry. These discussions will be taken further in the policy conference of the ruling party in June this year, and we call upon all South Africans to participate, listen, listen hon Papi, we call upon all South Africans to participate in this public discourse.
Mining industry continues to make this tangible contribution to the Gross Domestic Product, GDP, mining remains among leading sectors on jobs creation. We are of the firm that this industry through its leadership in MIGDETT and guidance from the ministry will respond positively to the clarion call made by His Excellency hon President Jacob Zuma in his State of the Nation Address early this year that the country must confront the triple challenges of unemployment, poverty and inequality, inequality Democratic Alliance, DA, inequality in this country.
The new growth path gives a clear direction of how and where the mining industry should play its pivotal role in address this national objective of job creation. This is more urgent now than ever before given the fact that the country is faced with high levels of unemployment which is said to be currently at 25,2%.
Hon Chairperson, it is important for us to remind this august house that the representatives of the people of this country from all walks of life converged in Kliptown in 1955, not for political grandstanding, not to pretend to identify with the poorest of the poor in this country but to resolve on national challenges that faced the country then and some of those challenges are still facing the country now. In that real congress of the people, hon Kganare, we the people of this country declared that, "The people shall share in the country's wealth."
Hon Chairperson, both these historical and current factors discussed above have been made possible by the fact that South Africa is endowed with rich mineral resources. It is confirmed by the internationally renowned financial institution known as Citigroup that this country is the world's richest in terms of mineral wealth. We are home to the most vital and diversified minerals reserves in the world that include platinum group metals, that include gold, manganese, chromium, many other mineral commodities which will include diamond, titanium, bituminous coal and other commodities.
This extensive mineral wealth is a common heritage to all South Africans, common heritage to all South Africans! Section 24(b) III of the Constitution of this 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 public representatives, are enjoined to ensure that benefits that accrue from the development of our mineral must be enjoyed by all South Africans. Therefore, the question that we must pose in this august house is that do we all benefit equitably from this mineral wealth? That's a question that we answer.
Hon Chairperson, to answer this question in a frank and objective manner we need to examine just a few socio-economic developments that have a direct bearing in the current political conjuncture in our country. Eighteen years into our democracy South Africa continues to be faced with serious challenges of rising levels of poverty. Political and economic analysts estimate that approximately 40% of South Africans are living in poverty, with approximately 15% of our population living in abject, abject poverty!
As if this burden on our shoulders is not enough South Africa has recently been declared by Gini coefficient institution that is the world leader in the arena of the most unequal society and the gap of inequality continues to rise. And I bet you that if you test this theory within Western Cape you will find that the gap of inequality is huge more than any other place in the country. This is despite our recognisable mineral wealth. The huge backlogs in the delivery of housing, water and sanitation infrastructure, schools and other institutions of learning, healthcare facilities etc, is a stark reminder of our immediate past.
Hon Chairperson, given the picture depicted above anybody in this august house who could give an affirmative answer to the question posed on the submission of whether do we all benefit equitably from our mineral wealth would be pretending to be living in another country or worse would not be living on planet earth.
Therefore our patriotism, our love and commitment to our beloved country and the future of generations to come is being invoked at this juncture. As a caring organization the African National Congress in its 2007 national conference and at the 2010 national general council responded to these challenges by resolving that the state must intervene in the mining industry through the establishment of a state-owned mining company that the Minister has alluded to. In this regard we want to applaud your swift actions hon Minister in that this mining company is already in operation and also it runs a coal mine and is poised to open other new mines -a clear indication that both domestic and foreign investments can play a welcomed role in the mining industry. The primary task of this state-owned mining company is to amass the necessary resources to enable this developmental state to address the huge socio-economic backlogs.
These actions and the promulgation of the Minerals and Petroleum Resources Development Act, MPRDA, are in line with clause 3 of the Freedom Charter that discusses the sharing of the country's wealth that, "The mineral wealth beneath the soil, the banks and monopoly industry shall be transferred to the ownership of the people as a whole." We will work closely with the department in further refinement of the end-state model as the Minister indicated on the state-owned mining company.
Hon Chairperson, we are seriously concerned about the apparent slow progress in transformation in the mining industry. Transformation in the mining industry is a legal imperative as provided for in section 100 and other relevant sections of the MPRDA. Patterns of ownership are reportedly remaining skewed in favour of previously advantaged South Africans and both natural and juristic persons of foreign origin. Implementation of employment equity requirements is selectively undertaken with reported disproportionate biasness towards white women. Mining communities and new entrants in the mining industry remain excluded and marginalised.
Last year the portfolio community conducted extensive oversight visits to various provinces and invited almost all stakeholders to public hearings in parliament to check compliance to mining legislation, mining charter, mind health and safety laws and social and labour plans. We will invite these stakeholders back to parliament in June this year for a detailed feedback on our findings. However, for now let me express our concern that during these oversight visits we stumbled over abject poverty, lack of compliance by a big number of mining companies, unimpressive record of ownership patterns in the mining industry and mining communities that do not derive benefits from the mining operations taking place in their areas.
This situation is completely unsustainable and resulting in increased uprisings by the mining communities - a phenomenon that surely concerns the portfolio community. Hon Chairperson, the portfolio committee discussed and unanimously adopted the Department of Mineral Resources, DMR, strategic plan and this budget vote. We are satisfied with the distribution of the available funds to the four programmes. We are particularly pleased by the attempts to built capacity within the department especially the establishment of the Compliance Inspectorate Unit which will among other things ensure compliance by companies to mining laws and ensure the implementation of social and labour plans. However, both DMR and national treasury need to pay more attention in capacitating our research and development institutions such as Mintek and Council for Geosciences.
In conclusion, we would like to also add our word from what the Minister has raised in terms of the legal challenges that ... [Time expired.]
The HOUSE CHAIRPERSON (M C Mabuza): I am sorry, your time has expired.
Mr M F GONA: Oh! Thank you very much. [Applause.]
The HOUSE CHAIRPERSON (M C Mabuza): Thank you hon Member.
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Mr J R B LORIMER / CP/
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Takes: 473 & 474
Mr M F GONA
Mr J R B LORIMER: Madam Chair, to look at South Africa's mineral resources is to see one fact of overwhelming significance to which hon Gona has already drawn our attention. We have more value under our soil in this country than any other country in the world. It is valued at $2,5 trillion. That is one competitive advantage that South Africa has. That is one advantage that should allow us to create hundreds of thousands of jobs and to boost economic growth.
The mining equation is quite simple. That is, to get wealth out of the ground in such a way as to create the greatest number of jobs, and provide the greatest benefit to the fiscus in such a way that has the greatest amount of economic spin-off to the greatest number of people. And all this must be done in such a way that our resources of water and land are not destroyed.
So, this fact of our mineral wealth must be followed by one big question. Why is our mining industry shrinking? Why is the South African mining industry smaller today than it was in 1994? If the declined is measured in how much mining adds to the GDP, our industry went down by 1% point between 2001 and 2008. [Interjections.]
An HON MEMBER: Buza uKhulubuse. [Uhleko.] (Ask Khulubuse.) [Laughter.]
Mr J R B LORIMER: In the rest of the world mining industries over the same period, mining grew by 5% a year. The news gets worse, in three of the four quarters last year production fell. In January, mining production was down 4,9% year-on-year. In February, by 14,5%. February was our lowest mining output in 50 years. Harmony announced yesterday, that for the nines months ending at the end of March its production were down 18%. So it goes on. Senior people in major companies agree that mining is a shambles.
According to Canada's Fraser Institute, which issues an annual report card on government money policies, South Africa is this year the 54th most attractive destination for mining investment out of 93 countries measured. So, 53 other countries are seen as better places to put your money, if you want to invest in mining. [Interjections.] Burkina Faso, Mali and Zambia are all seen as more attractive than we are. Are we surprised that South Africa's rate of growth in the mining investment is the lowest of any significance in mining country?
We heard that the government is committed to attract investments. Well, that may be clear to government, but it does not seem to be clear to anybody else.
Now all this isn't some academic exercise. A decline in the mining industry means that people lose their jobs. Stats SA says that a 179 000 people lost jobs in South African mining between 2001 and 2011. That is, a 36% drop. Every decline in production means there will be job loses sooner or later. In yesterday's ad hoc figures employment fell sharply in mining down to 11,8% year-on–year, 11,8%! It is incumbent on this government, to urgently review this situation, find out what is causing the declines in the industry and address them. Now, if that 5% growth, which was the world average, applied to us, more than 300 000 jobs would be created. That is what mismanagement of this industry has costs us. So, what is the problem? [Interjections.]
An HON MEMBER: It's a shame!
Mr J R B LORIMER: Industry's specialists broadly agree that the legislation has not been a success. Regulation is unclear and badly implemented. The Minister has vast discretion, which leads to the lack of certainty. Uncertainty means risk and investors hate risks.
That is made worse by abuses of licensing, like the ICT Kumba debacle, which clearly involves complicity by at least some officials of the Department of Mineral Resources. Our old enemy cronyism reared its head there and if you want to see how badly cronyisms affect workers, then take a look at Aurora. [Interjections.] There, there has been protection for cronies and workers lost their jobs and starved. [Interjections.] Are you denying that it happened?
Then, there has been the talk of nationalisation"Old Assembly Main",Unrevised Hansard,10 May 2012,"[Take-333333474] [Old Assembly Main][90P-4-082A][mm].doc"
, which incidentally the Congress of South African Trade Unions, Cosatu, supported and as far as I'm aware still supports and thus prospective investors are almost guaranteed to go elsewhere.
Then there are mining and prospecting licence applications which are governed by what can only be described as administrative paralysis. There are inadequate legal resources deployed here and the result is a long process. Investors need a quick decision, either yes or no.
There's the Mining Charter, which is so unclear that the industry and the government cannot even agree on the extent to which it is being implemented. This is something that has got to be got right; we can't have a situation where everybody has a different idea of the meaning. Instead of a new charter and rumoured stiffer targets, which would be another disincentive to investment, would it not be wiser to put out proper guidelines on how the charter should be interpreted and then agree with the industry on a common reporting protocol? It's not hard.
The difference between certainty and uncertainty is the difference between investment and no investment, the difference between employment and unemployment and the difference at the end is between poverty and wealth.
The National Planning Commission says that constraints to growth in mining must be addressed by ensuring certainty in respect of property rights and a predictable, competitive and stable regulatory framework. I fully agree. The Minister has indicated that the framework will be improved but it is taking too long. We suspect that the government is waiting for direction from ANC conferences happening this year. While we wait for those to happen the industry is on hold, production is plunging and jobs are under threat. Once again party has been put before country.
Mining is a giant in our economy. In South Africa's past it was a giant monster. It embodied some of the worst aspects of apartheid migrant labour, repression and unsafe working conditions. It was an industry where workers did not count.
Things have changed. It is a very interesting comment. If I have time, I will take it later. Most mining companies have had a paradigm shift in their attitudes, advised by our new democracy and pressure from government to their own shareholders. ... [Interjections.]
Mrs S V KALYAN: Point of order. Sorry, Chair.
The HOUSE CHAIRPERSON (Ms M C Mabuza): Hon member, take a seat.
Mrs S V KALYAN: Madam, I submit that the comment made by the hon member about the white man is racist and unparliamentary. Would you please, ask her to withdraw?
The HOUSE CHAIRPERSON (Ms M C Mabuza): Can you mention the hon member?
Mrs S V KALYAN: It is the member with a yellow blouse that made the comment, and the Minister. I saw them. [Interjections.]
The HOUSE CHAIRPERSON (Ms M C Mabuza): Hon member, order please. Hon member, please, can you allow me to go and consider and I'll come back to the House. Thank you. Continue hon member.
Mr J R B LORIMER: Government needs to acknowledge that there has been a paradigm shift in their attitudes of mining companies is no longer helpful to see mining as a monster. But rather as a giant that can work for us all ... [Interjections.]
The HOUSE CHAIRPERSON (Ms M C Mabuza): Hon member, you are drowning the speaker. Can we give him a hearing? Continue.
Mr J R B LORIMER: ... which can work for us all and produce the employment and growth that we seek.
The legislation and the Mining Charter have caught mining companies in a web of rules that continues to raise the costs and difficulties of mining successfully. One major mining company tells me they've had to employ 20 more people at head office, simply to deal with compliance, those are highly level issues 20 highly skilled people do not come cheap. All of that adds to the cost of mining in this country. All of it is a disincentive.
There's an argument that one hears in government circles. That argument says, we've got so many minerals that mining investors will have to come to us and mine on our terms, so we don't need to worry about attracting them. The poverty of that argument is made clear by the statistics of unemployment that I have already mentioned. People's jobs are at risk, we're missing opportunities for poverty relief that will not wait. We need to act now.
Let's look at some specifics, starting with one of the major reasons cited by mining companies for the current fall in production. Safety stoppages under Section 54 of the Mine Health and safety Act.
AngloGold Ashanti Chair, Tito Mboweni, has described these stoppages as a 'sledgehammer'. Miners everywhere complain that whole mines are closed for relatively small infractions. For example, the taillight of a vehicle operating on the surface is broken and the whole mine gets shut down for 48 hours. I'll show you this, or the fire extinguishers are past their expiry date. Rather than issue in section 53, which would give the mine some hours to comply, the whole mine is closed and two days of production are lost. These are the factual cases.
The problem is not section 54 in itself, but rather the way it is applied through the guideline which strips inspectors of discretion. That's what is meant by a sledgehammer.
Now I can predict a response, one of them, that's to use this as a political football and says what about the workers, or what about the workers indeed. Let's regulate efficiently rather than indiscriminately because those who allow indiscriminate regulation will cost workers jobs and their livelihoods as has already happened to so many. We can't continue to use this issue as a political football.
Our department is responding as we have heard some of that today, and says it is working more closely and constructively with mine management. But is this happening fast enough, Minister? As this so directly affects production we'd like to see a lot more money from this budget put into the retention and hiring of inspectors. Early and frequent inspections, where the inspectors can use reasonable discretion would mean fewer closures, and less lost production. We are aware of the difficulties in this area but we think this is such a key thing that it merits more vigorous intervention.
There's much talk of beneficiation as the new way that we will extract more money from the mining industry. As good as it sounds; this is unfortunately unlikely to be the easy solution that it is portrayed.
For one, beneficiation operations generally demand a lot of electricity. That's one thing we don't have. One company wanted to build a chrome smelter near Rustenburg; they went to Eskom and asked if there will be power available. Eskom said yes, from 2017. That company is building its smelter, but is building it in China.
Efforts to beneficiate through the gold and diamond jewellery industry have been an utter failure. Our cutting and polishing industry is a shadow of what it used to be. In the late 1990s, there were four and a half thousand people in this industry but today there are fewer than 700. The State Diamond Trader is supposed to promote local beneficiation. That aim is clearly not being met. Rumour in the industry is that the State Diamond Trader is supplying only three clients with the majority of its sales.
A few people are benefitting and the industry is failing. Government should not be involved in this business, and we think the State Diamond Trader has failed manifestly and it should be closed.
We have heard that this government's slogan is, "Let there be change" and I could agree more. It makes it the right changes, so that you are not only save jobs, but create new ones. The most important thing the state needs to change is its attitude towards mining. The Minister usually says the right thing with a very notable exception today, but the investors are not the only ones to be unconvinced. [Laughter.]
When the legislation and regulation is reviewed and that should happen soon, it should be with an eye to removing the shackles that bind the industry, to set it free to do what it does best, that is to mine, not conduct social policy or beneficiate.
Government must move away from trying to make mining companies do what they are not good at. It must listen to them. If the mining industry is treated sensibly, and as a partner, not as an adversary, it could turn into the engine that drives employment and economic growth, it could turn from a monster into our economic saviour. [Applause.]
Mr P D MBHELE LAK/ ///tfm/ & / /NN / END OF TAKE
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Take: 475
Mr J R B LORIMER
Mr P D MBHELE: Minister, Deputy Minister, officials and guests. It is my maiden speech in this department. [Laughter.] I would like to state upfront that Cope fully supports the aim of the department to promote and regulate the mining sector for transformation, growth and development. It is right and proper that all South Africans derive sustainable benefits from the country's wealth.
However, the manner in which Imperial Crown Trading, ICT, using falsified copies of title deeds of farms on which mineral rights had been awarded, got the then deputy director general for the regulation of mineral resources to award ICT in spite of senior officials specifically asking him to reject it. More importantly, the prescribed application form was not even included at the time of lodging the papers. This scandalous behaviour highlights a serious problem that is costing the country billions in investments.
Chairperson, Cope would really like to know if there are any consequences for those, like the then Deputy Director General, for the regulation of mineral resources who blatantly...
The HOUSE CHAIRPERSON (Ms M C Mabuza): Hon members! Hon member, take your seat. Hon member, you cannot sit beside or behind a speaker and start making noise and he is delivering his maiden speech. Can you please welcome him in this House. Over to you, hon member.
Mr P D MBHELE: ... including you hon members as well. Cope would really like to know if there are any consequences for those, like the then Deputy Director General, for the regulation of mineral resources who blatantly subvert the legal order and bring the state into such disrepute. Is the department still determined to appoint cadres to top positions who seek to enrich themselves and their political allies leaving chaos in their wake?
Minister,... [Interjections.] [You wish] Minister, substantial improvements in the quality as well as the integrity of mining license application is a positive start. Stringent monitoring must be a two way process. It must put the spotlight on mining companies as well as government officials. If corruption is internalised, the whole process of monitoring is corrupted.
The broad based socio-economic charter for the South African mining industry must work in the direct interest of communities and must be angled at skills development and entrepreneurship promotion. The rehabilitation of mines should be an ongoing process during the entire life of the mine and not something that is contemplated nearer the end.
Export parity pricing is another matter of utmost importance. Communities in and around our mines should be able to set up business, beneficiating minerals and ores close proximity to mines. Prices to such enterprises would have to be cheaper than to importers elsewhere considering that transport, storage, insurance and other costs were not incurred. The pricing of minerals and ores to communities nearer mines should receive the highest priority so that people can have a real stake in the mining that is taking place in their midst.
A gold mining area without a thriving jewellery manufacturing satellite is like a vineyard without wine cellars or a cane field without a sugar mill. It is the same for iron mining and all other forms of mining. The product of an area, whether it is under or on the ground, should define the nature of its economy. After all the mineral beneficiation strategy adopted by government in 2011 seeks to add value to minerals to facilitate economic diversification and boost local value addition.
We agree that the plan is there, but on occasions such as this the Minister needs to commit to implementation plans. After all, Parliament is making resources available, not for endless planning superimposed on more planning but rather on fast and furious execution. That is what we want to see and indeed, as Cope, we would like to see it happening now.
I also wish to ascertain from the Minister whether the social and labour plans as well as the programme for communities to access resource information have been implemented and whether they have been actively involving communities in and around the mines. If so, what can the hon Minister tell Parliament regarding this programme?
The department has been running five pilot value chain projects. We, in Cope, believe that South Africans must be invited to create public companies to establish sizeable plants without adequate capital to make the pilot project become feasible enterprises capable of wide scale labour absorption. The time has come for government to broaden its vision and include all South Africans regardless of party affiliation to become involved in such projects. The government must stop operating as a closed shop and stop seeking a slice of every national development for itself. Self-gratification must give way to national prerogatives for the common good.
With 75% jobs lost in the first quarter of this year and nearly 4 million people without work; the situation is bleak. Therefore, governments approach to growth and development must cease being self-centred and self-promoting. Opportunities must be thrown open.
In conclusion, on the question of nationalisation; - yes, yes – [Laughter.] it is important that the tri-partite alliance must come to a common understanding so that clarity is obtained in the long term. Countries such as Cuba, Venezuela, Ecuador, Bolivia, Guatemala and Argentina did not help their economies with nationalisation, in case you do not know. On the other hand, Brazil, Chile, Mexico and Peru have grown their respective economies by taking a different track. Ambivalence on the question will deter investment in mining and it needs to be understood that our aging mines need vast amounts of capital to mine deeper and deeper.
While we support this budget, Minister, we would really like the Minister to do what the Minister of Public Works did in Parliament, laying bare the problems and all so that we can collectively progress and do what we had solemnly sworn to do, creating economic growth and stimulating job creation. In nine elections in Europe recently, changes have occurred. They have occurred in government because the people were no longer willing to live on promises. They wanted action and so do the people of South Africa. I thank you. [Applause.]
Mr E J LUCAS
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Takes: 475 & 476
Mr P D MBHELE
Mr E J LUCAS: Hon Chairperson, South Africa's vast wealth of mineral and diamond is a boon too often repeated amongst other countries of the world as a result thereof our economy is greatly bolstered by highly developed mining industry with all the con-commitment socioeconomic spinoffs. We must, therefore, do everything within our power to explore this advantage and maximise its potential benefits. We have considerable experience of mining at great depth and let us not forget we played a significant role with the rescue of the 700 miners trapped at Chile.
The department has handled this budget conscientiously acknowledging that there has been a roll-over of 9.5 million. This amount is within the five percent limit allowed. We must accept that the department has planned well. The IFP feels that there are, however, areas at which we must take a closer look in order to derive the full benefit from our natural resources.
We have been discussing beneficiation for a while and I believe that we have not come to a common understanding thereof. Yes, the mining houses have beneficiated in the initial stages. We are, however, also calling for more attention to be paid to beneficiation for finished products as this will make way of gaining full benefits from the raw materials. I do recognise this constitutes a major step forward, however, it's a step which must be taken. So, why not take it sooner rather than later?
The workers' safety remains a paramount concern in this industry as there are still for too many accident fatalities that occur which could have been avoided if necessary safety equipment and procedures were in place. Mining inspectors who have been doing a great job thus far are necessary and they are becoming an endangered species as they are being continuously lured by the private sector with higher salary offers. This is a challenge that require urgent treatise as the work done by inspectors contributes greatly to the overall safety and reduction of deaths, ill-health and other serious injuries that currently plague the industry.
Illegal mining is proving to be the most difficult to contain and it is not only illegal but also extremely dangerous to those involved in such practices. The market for such illegal products must thoroughly be investigated by SAPS and buyers thereof exposed and prosecuted to the fullest extent of our law.
The IFP believes that this is a good programme and therefore supports its promotion as it plays and important role in the development and promotion of much needed skills.
I have raised the subject of small scale mining on many occasions. Small scale mining can play and does play an important role in community upliftment and job creation. The small scale mining sector is faced with many challenges such as finance and skills. It is common knowledge that without a bankable document the finance houses will never entertain any request for financial assistance. Therefore, we are faced with the challenge of looking at changing ...
Therefore, we are faced with the challenge of looking at changing the way in which finance is granted and risk assessed. That is, if we are serious about the development of the sector. It's encouraging, Minister, to have, as you say, your children here. This is promising.
The cause of fronting is a serious issue, especially with historically disadvantaged South Africans. This is the only way in which they can be involved in the industry. This is, indeed, very sad. In most cases as the person who is fronting ends up deprived of his or her only assets and becomes, if very lucky, a minority shareholder.
Regarding the Karoo gas projects, I'm hoping that the department will be in a position to share some additional or information about this project. All I know about it is from what is available in the newspapers. This portfolio committee must be better informed.
In conclusion, the IFP believes that everything in our power must be done to rehabilitate the ownerless and derelict mines, as such can be of great socioeconomic benefit to our country and people. The acid mine water drainage problem must also be prioritised and dealt with as a matter of the utmost urgency, before it causes irreparable harm to the environment.
The IFP hopes that we can all work towards a South Africa in which reduced carbon emission and sustainable, green and environmental policy is the order of the day. Our future generations deserve nothing less.
The IFP supports the budget. I thank you. [Applause.]
Mrs N J NGELE / NS & NB/ END OF TAKE
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Take: 476
Mr E J LUCAS
Mrs N J NGELE: Chairperson, hon Minister and Deputy, the chairperson of the portfolio committee, Members of Parliament, officials of the Department of Mineral Resources, all guests, ...
IsiXhosa
... ndiyanibulisa.
English:
The mine health and safety matters are the most important issues which should be looked into within the mining industry to stress the need of improved health, which will result in a healthy mining society and industry. Thus, the enormous statistics are now gradually coming down and improving, which shows clear implementation measures from the Mine Health and Safety Inspectorate.
This natural shaking or vibration of the earth, resulting in rock falls or collapse, continues to result in fatalities. Although through the establishment of the Mine Health and Safety Inspector, there is a clear indication of a drop of injuries amongst miners.
Similarly, it was found that there was a 26% improvement in fall of ground fatalities associated with seismic activity. In fact, over the past two years, fewer miners have died as a result of seismicity. In 2010, 48 miners died compared to the 65 in 2009.
However, overall safety milestones set in 2003 indicates that there is still a lot of work to do as we can see that the mining industry zero rate targets of fatalities by 2013 in the platinum and goal sectors, is yet to be achieved.
The informal settlements surrounding mines and the environment is being affected due to acid mine drainage from mine residue and waste dumps. The study by Bench Marks Foundation of Southern Africa found that nothing is said by the mines in any of their reports of the proximity of villages and informal settlements to major waste facilities such as slimes dams and tailing dams. The mines are silent on this and on the loss of productive land waste facilities.
The report also notes that due to the increasing number of platinum smelters in the area, carbon dioxide and sulphur dioxide emissions have increased, resulting in a dramatic increase in respiratory infections. Apart from immediate harmful impact on the community, this increase in emissions will eventually give rise to acid rain. Some farmers in the area are already complaining that the dust and emissions from the mines and smelters are impacting on their citrus crop.
This remains my biggest area of concern because since the days when my own father was a mineworker, ...
IsiXhosa:
... kwakusoloko kuthethwa ngetafile ewileyo.
English:
Allow me, to repeat what I always say when I meet with the department.
IsiXhosa:
Ngexesha leli litye letafile liwayo elibizwa ngokuba yi-fall of rock ngesiNgesi, awayesixelela ngalo utata, ndandiseyintombazana. Namhlanje ndingumakhulu, sisathetha ngale tafile iwayo. [Kwaqhwatywa.]
Ibuhlungu nyhani le nto kum kwaye yenza ukuba ndivakalelwa Ngokuqinisekileyo ootata bayathandaza xa bevuka besiya kusebenza emigodini kuba abazi ukuba ngubani oza kubuya ingubani ongazubuya. Isebe liyasebenza kodwa lithabatha ixesha elide kuba xa kungoku bekumele ukuba kuyaziwa ukuba kwenziwa ntoni.
Noxa kunjalo mandilincome isebe kuba ...
English:
... at least there is something that they are doing. There is this safety net ...
IsiXhosa:
... ekucaca ukuba ikhona kwaye nixakeke yiyo. Enye ke andiyazi nokuba niyibiza ngokuba yi-aproximity device okanye yi-proximity device, kodwa
English:
... there is something that is going to detect. That thing makes me happy. At least ...
IsiXhosa:
... izakufana nezi moto sezinesixhobo esithi xa zibuya umva senze isikhalo esithetha ukuba uza kutshayisa. Esi sixhobo ke siza kuba njalo. [Kwaqhwatywa.]
English:
This would then be a concern ... [senditshilo] [I have already said.]... because some family somewhere in the mines would be worried about whose father will not be coming home because of death due to rock fall. Really, it is a concern. We continue to talk, thus, even in this modern technological advanced mining industry. With the billions of rands that the mining industry generates, surely some best practices from other countries can be derived from and researched in our own country towards a zero tolerance to fatalities.
IsiXhosa:
Ningandithumela nam kumanye amazwe ndiye kukhangela le nto.
English:
The latest report indicates that mining fatalities declined from 168 in 2010 to 127 in 2011, which is still not good enough. There should be absolutely no single miner who dies due to a mine accident or fatality. Hence the appreciation of the Mine Health and Safety Council Initiative on their road to zero harm journey where a holistic involvement would assist in a speedy achievement thereof with the tripartsm approach.
My biggest compliment to the establishment of the Mining Industry's HIV/Aids and TB council which are now able to give specific attention to concern of these diseases within the Department of Mineral Resources, as well as the Mine Health and Safety directorate. [Time Expired.] Thank you. [Applause.]
THE DEPUTY MINISTER OF MINERAL RESOURCES / Nb/END OF TAKE
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Takes: 477 & 478
Mrs N J NGELE
The DEPUTY MINISTER OF MINERAL RESOURCES: Hon Chairperson, hon Minister Shabangu, former Minister Buyelwa Sonjica who is sitted in the gallery there, Deputy Minister Thabethe, chairperson Gona and members of the portfolio committee, hon members, I see also Kgosi Pilane wa Bakgatla in the gallery there, we recognise you, sir, and all the royalties that I might not have seen here, director-general and senior officials of the department, senior executives of the state-owned enterprises and the private sector leadership that is here, distinguished guests, and ladies and gentlemen, I feel indeed honoured to have the opportunity to address this Chamber on the occasion of our Budget Vote today. Let me also pay tribute to the three departed comrades and members of the NA, Comrades Roy Padayachie, Sicelo Shiceka and Florence Nyanda.
I am particularly mindful of the significance of this day, May the 10, a day that symbolises the tipping point of our sociopolitical and economic history. On this day in 1994, Tata Madiba was inaugurated as the first President of the country's new democratic dispensation. At once, President Mandela became the beacon of hope for hundreds of millions people the world over. Quite deservedly, the inauguration of the Presidency of this long-time freedom fighter marked a new beginning in so many spheres of life on the planet. For sociopolitical scientists and activists, he became the embodiment of a fundamental yet peaceful revolution, demonstrating a practical alternative to confrontation, war, and destruction. This was important not only for our people in South Africa, but as relevant for our continent with its many civil wars raging at the time.
Beyond the continent of Africa, President Mandela and his achievements ushered new options for the masses in Europe, the Middle East and America. His personal philosophy, enhanced by the ANC leadership in general, has already engraved its mark on the history of our nation. All of us in South Africa live with it every day, even when we are too busy or oblivious to acknowledge it, we do live with it every day. For generations to come, Tata Madiba and his legacy will live with us, pulsating like the life blood of our nation, propelling our constitutional democracy. We salute you President and all other outstanding twelve presidents and leaders of the ANC, from president Dube to Zuma. Once more, happy centenary to our glorious movement, the ANC. [Applause.]
Closer to the subject of our discussion today, Tata Madiba was also a mineworker, once upon a time. So, for us in the mining sector, he assumes a special place in our hearts and his association with our sector invokes unique and proud feelings. We cherish his close and personal affiliation. Lest we forget, Madiba still remains the life president of the National Union of Mineworkers, NUM.
Apart from the significance of this day, this year also marks the 30th anniversary of the establishment of the NUM. We can congratulate the past and the present leadership of the NUM for their achievements. As we celebrate this anniversary, let me as an ex mineworker and as an activist mark yet another critical process of our modern history. The formation of the NUM and its history has become synonymous with South Africa's struggle for reversing the injustices of the past, the correction of systemic inequalities, and for the determined but systemic normalisation of our socioeconomic and political landscape. For many decades, the plight of South Africa's mineworkers was an embodiment of the tyranny of colonialism, apartheid and crass capitalism. The birth of the NUM was therefore the start of the journey towards the transformation of this iniquitous labour-capital dispensation within the mining sector.
We in this country, have yet to properly recognise the significant role played by mineworkers in the development of our country and its economy, and in the struggle towards democracy that we are enjoying today.
This year, also marks another anniversary, namely, the 10th year of Mineral and Petroleum Resources Development Act, MPRDA. This was a landmark piece of legislation. With the stroke of a pen, the MPRDA transferred the trusteeship of our natural endowment of all mineral and petroleum resources to the state. This nationalisation of the trusteeship of a major public interest was a critical step towards the normalisation of our political economic landscape.
The amendments to the MPRDA are vital as we anticipate the next century of mining activities in our country. It is by now common knowledge that South Africa's estimated in situ value of mineral endowment exceeds US$ 3,5 trillion. These resources can be economically mined for the next hundred years. As such, we need to optimise the exploitation of the management of the mineral resources to benefit all South Africans and, to contribute meaningfully to addressing the development challenges of our country.
It is therefore our collective obligation to ensure that this considerable wealth is utilised to generate the socioeconomic benefits and integrated development for our nation. To do this, we need to draw lessons from our past century of mining, to avoid the undesirable consequences, and ensure a mining industry that is socially progressive, environmentally sustainable and economically competitive.
To assist the industry in moving towards the new paradigm and ensuring that our mining activities do not compromise the ability of future generations to meet their needs, we have recognised the imperative of a collaborative and consultative platform for moving the industry forward. We have established the Mining Industry Growth and Development Task Team, Migdett, which provides a framework for exchange of views and creating convergence of action plans. This has proved useful and constructive in avoiding job losses in the recent past, and will be critical in transforming our mining industry systematically and continuously.
If South Africa is to succeed in extracting maximum benefit from its mineral endowment, it must do things differently. The operative word is "doing differently". In this regard, the key behavioural change that needs to be prioritised is with regard to the health and safety of the workers. South Africa's mining in many commodities is getting deeper and deeper underground every year. The trade-off between safety and short-term productivity and profitability becomes more and more pressing. Conventionally, the safety of the workforce has received secondary attention; short-term profit is put first. This paradigm needs urgent and ongoing attention.
At the same time, we cannot continue to mine and export ore and other raw materials for processing elsewhere, as this severely limits the benefits we can derive from the exploitation of our resources. There is therefore a need to increase value addition in our minerals, before they are exported, in line with the government's new mineral beneficiation and industrialisation priorities.
The value addition or local beneficiation proposition is a natural progression from a resource-based economy to a secondary and tertiary economy, which is consistent with the path of development followed by other developed economies in the world. Moreover, this will present enormous investment opportunities in the country by both South African and foreign investors.
In the recent past, there has been a great deal of debates and controversies about mineral beneficiation. In the process, much emphasis has been placed on narrow down-stream opportunities for mineral beneficiation. As part of our mind-set change, we need to re-examine notions of beneficiation, and broaden our definition in line with the realities of socioeconomic and financial benefits that both upstream and downstream opportunities offer in each and every commodity
The history socioeconomic development in resource rich countries such as the USA, Brazil, Australia, China, Russia and many others including South Africa demonstrates clearly that industrial and mineral beneficiation inseparable.
The imagining of national utiolities such as Eskom, waterbores Transnet, or its railways and harbour logistics, petrol chemicals and explosives industries was in a large part due to the mining industry. In effect then, these were clear opportunities for industrialisation and hence socioeconomic benefits arising from the development and expansion of the mining sector.
Much the same way, today South Africa enjoys considerable ranges of opportunities for integrating our mineral beneficiation and industrialisation programme in order to enhance the pace of social development and economic growth...[Time Expired.]
The HOUSE CHAIRPERSON (M C Mabuza) / ARM & GC / END OF TAKE
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Take: 478
THE DEPUTY MINISTER OF MINERAL RESOURCES
The HOUSE CHAIRPERSON (M C Mabuza): Hon Members, I indicated earlier that I will come back with a ruling on a point of order that was raised by hon Kaylan.
This was in relation to an interjection by the hon Minister during Mr Lorimer's speech. The interjection was: "It is your creation as a white man." In ruling on points of order, the Chair has to strike a balance between allowing members the freedom of speech as granted to them by the constitution and the need to maintain the decorum of the House. I am not convince that the statement is necessary racist more than that it is an expression of the Minister's view with regard to the issues raised by the hon Lorimer in his debate. Having said that hon members, I wish to advise members to avoid remarks that have a potential of being perceived as having racial undertones. Thank you.
Mrs C DUDLEY
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Take: 478
The HOUSE CHAIRPERSON (M C Mabuza):
Mrs C DUDLEY: Chairpesron, the ACDP is interested to see that the hon Minister is considering the idea of auctioning our mining reserves rather than giving them on a first come first serve basis. We see Liberai has done this and now Mozambique is embracing the concept.
In India, however, their supreme court's decision to distribute scarce natural resources only by public auction is set to be contrary to the mines and minerals development and regulations Act. This Act prescribes that mining rights should be granted on a priority basis before committing ourselves to another debacle like the far from transparent road tolling exercise, the ACDP hopes that you will be cautious and thorough in laying the groundwork to avoid legal hindrances, constitutional challenges and wasted expense in general. The ACDP, whilst aware of the huge contribution made by mining to the economy is also aware of the special treatment that has been reserved for mining on land not zoned for it.
We do not condone breaking the law with impunity by any industry. The executive director of the centre of environmental rights Melissa Fourie, has said the consequences of decisions made on mining operations without proper regard for uner authority and other legislation are severe. They have aggreviated the detrimental impact mining operation have on the environment and have not benefited the country, the mining industry, mine workers or communities.
The constitutional court judgement that holders of mining rights cannot mine until the land has been zoned for mining marks the beginning of the end of decades of special treatment for the mining industry. The ACDP support calls for government to establish a commission to investigate how South Africa's mineral rights were: "recklessly given away after attaining freedom from apartheid."
Commentators say giving away the nation's mineral resources to new owners without tendering has cost the country jobs and they are optimistic that this commission will lead to more reasonable stewardship of mines and miners. They use the aurora empowerment systems disgrace where about 6 000 miners have gone unpaid fro many months with their families living in terrible conditions as an example. The mineral rights conversion process during which the state became a custodian of all mineral rights is said to have fraught with irregularities.
On the tricky question of nationalisation of mines, the chairperson of goldfields, Dr Maphele Ramphele has said that: "I think that anyone with an understanding of the mining industry will know that no government has the capacity to mine, even the mining industry is struggling to find the mining skills, capital and equipment to sustain it. So how could a government struggling with major issues in the education sector, the health sector and even the state-owed enterprise hope to run the mining sector.
The HOUSE CHAIRPERSON (Mr M R MDAKANE): Please conclude hon member.
Mrs C DUDLEY: I did lose a few minutes in between there, so I think if you check on that, and I did time my speech so I am pretty sure...[Laughter.]
What does make sense is for government to rather make sure that the mining industry lives up to its responsibilities, cleans up its mines, compensate workers and their families who are injured and reduce the number of injuries and fatalities. The ACDP agrees with this sentiment and the ACDP will support this Budget Vote which has a crucial role to play ion helping us move towards a prosperous future for everyone living in South Africa. Thank you.
The HOUSE CHAIRPERSON (Mr Mr M R MDAKANE): You must be happy, we are giving you an extra minute.
Mrs C DUDLEY: I would just like that ... [Interjections.]
The HOUSE CHAIRPERSON (Mr Mr M R MDAKANE):
Mrs C DUDLEY: In this regard the ACDP notes Minister Shabangu's statement that there has been improvement on health and safety since the department intensified enforcement measures at the mines. This leads to my previous statement. A safety crackdown on the South African mines is said to have reduced the number of fatalities in the country's mines to three in April form an average of 11 or more a month. Well done Minister. We hope that this trend will continue. My apology hon Minster for having to leave early today because I have urgent business I have to attend to. Thank you.
The HOUSE CHAIRPERSON (Mr Mr M R MDAKANE):
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Takes: 478 & 479
Mrs C DUDLEY:
**first part of speech incomplete**
Mr C L GOLOLO:
*** Language spoken has changed to IsiZulu ***
*** Language spoken has changed to English ***
Mr C L GOLOLO: (Cont)d)
C/W: In deliberating this Budget Vote, we need to remind ourselves that the sovereignty of a nation, in part lies in its ability to institute the necessary mechanism for the development of mineral resources on sustainable basis and in order to address the economic and social needs of the nation. The Freedom Charter of 1955, which is the lodestar of the ANC and a fundamental source of policy which shapes government programmes, focused itself on the necessary measures to redistribute the mineral wealth which is our common heritage to be shared by all.
The challenge therefore for the developmental state is to ensure that it has the ability and capacity to lead and shape the national agenda in respect of the mineral resources and has the organisational and technical capacity to deliver on its programmes that will result in the greater redistribution of mineral wealth and thereby directly tackle poverty and inequalities.
Legislation is an expression of policy. The Portfolio Committee on Mineral Resources embarked on a process of public hearings in 2011, between May and September, to solicit views of the civil society on the intentions of establishing the state-owned mining company and other proposals to address inequitable distribution of mineral wealth. This process included an international study tour to Chile and Bolivia by our committee to study different models of state mining companies.
We were informed in our approach by research, which demonstrated that South Africa is the richest country in terms of its mineral resources, which accounts for 88% of known global resources of the platinum group metals, 80% of manganese, 72% of chrome, 32% of vanadium and 30% of gold. Notwithstanding this, the majority of South Africans still live in abject poverty.
The country is ranked as the most unequal society in the world followed by Brazil. South Africa has a high unemployment rate, regardless of whether a narrow or expanded definition of unemployment is used.
What informs us is a position that the state must be enabled to secure the supply of minerals of strategic significance, such as energy, infrastructure and precious commodities. The state must further assume its rightful position in the global economy through identification of more strategic mineral commodities and must lead in production and supply of these minerals worldwide. Furthermore, the state must intervene and deal decisively with abject poverty that engulfs almost all mining communities as a result of the serious challenges of the socioeconomic backlog inherited from centuries of colonialism and decade of apartheid rule.
Local beneficiation of our minerals is central to this given the huge potential for job creation, skills development, development of small scale business enterprise and rural development.
Therefore, a comprehensive beneficiation strategy that will enhance the industrialisation drive of the state must be concluded speedily. In order that there is no confusion about what I am saying, the African Exploration Mining Company, popularly known as Somco – State-Owned Mining Company, is already an existing state company dating back from 1944, and it is not a state-owned mining company we are speaking of. Rather its future will be determined by the establishment of the state-owned company and necessary legislation will be addressed.
The state-owned mining company should be established through a constitutional Act of Parliament and should have a competent board to run it and be directly accountable to Parliament through the Portfolio Committee on Mineral Resources. The consolidation of all state investment in the mining sector shall fall under the state-owned mining company and be wholly owned by the state. [Applause.] The state mining company will certainly have focus on ensuring and increase in national income, state revenue from the mineral sector, including capturing of economic rents ... [Interjections.] ... so that the state can increase budget allocations for social and economic development.
It will have advance and deepen broad-based transformation of the mining and mineral sector and ensure job creation and destiny changing community development projects for poverty alleviation and rural development. [Laughter.]
Investment in exploration and in the mineral based knowledge generation, including research and development will need focused attention. The ANC supports the Budget Vote. Thank you. [Applause.]
Mrs I C DITSHETELO
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Take: 479
Mr C L GOLOLO
Mrs I C DITSHETELO: I suspect that the most fascinating subject relating to this department is the question of the nationalisation of mines. This is a complex and fascinating debate that can be approached from different endings. Those learned in economics may argue from an economic standpoint whilst those politically and historically inclined may approach it from their predisposed inclination.
Of course, the department and government have said that nationalisation is neither the government's policy nor the ANC's. But, I am of the opinion that there is so much to be pondered on these issues and therefore forums must be created where people can put in their view points. I am no expert on the study of where and when has nationalisation of mines worked or did not work, and what were the prevailing circumstances in any of those cases.
I am however a witness, to a fact that we are said to be a major contributor in the minerals sector globally. However, that has not translated to better quality of lifestyles for many of our people. We have seen communities closer to where most of the mining occurs, and those communities are subjected to abject poverty. And that can never be right. It is not right that people work in mines all their lives and retire to poverty. It is not right that communities and provinces with mines making billions but the people still cannot afford tertiary education for their children thereby continuing in the cycle of poverty.
Whether this means we must consider nationalisation or not, is a question that needs an informed answer. I do assert however, that the department has a responsibility to manage the status quo and ensure that we do not remain where we are. The issue of adding value to South Africa's minerals before they are exported has been under debate for a number of years.
This debate is based on the argument that the South African beneficiation of gold is currently only about 2% of current mine production, and that the country is not exploiting any comparative advantages of its large natural resource base. But the perception of South Africa having comparative advantage due to the location of its mining industry, does not in itself render the country competitive in terms of its downstream industries.
Monopoly in pricing is but one of the problems facing South African mining sector with more propaganda being spread instead of true facts thereby misleading debates. This must be rectified. The UCDP supports the Budget Vote. Thank you. [Applause.]
Mr M R SONTO / JN (Eng) ///tfm/// END OF TAKE
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Take: 480
"Old Assembly Main",Unrevised Hansard,23 May 2012,"Take 480 [Old Assembly Main].doc"
Mrs I C DITSHETELO
Mr M R SONTO: Hon Chairperson, hon Minister and Deputy Minister, Chairperson of the Portfolio Committee, Comrade Gona, the Department of Mineral Resources officials under the stewardship of Dr Ramontja, hon Members of Parliament, guests in the gallery and organised labour, I greet you all this afternoon. I gladly follow those that have spoken before me in the quest to call for meaningful transformation in the industry.
South Africa is one of the four countries that are ranked upper middle income economy in Africa by the World Bank and is the largest economy in Africa; yet surprisingly almost a quarter of her population is unemployed. How can that be possible? Whilst we know that this massive unemployment is historical, we believe that this industry can turn this around. But let us look at how it evolved.
As a result of the systematic marginalisation of the black majority, South Africans by the formerly white government, the historically disadvantaged South Africans were prevented from owning any means of production and from any meaningful participation in the mining sector, including all major economic sectors.
In essence, blacks in South Africa were relegated into objects of no value in the economy, except been made by legislative means to grow wealth for the white minority. This industry that we are talking about is known to have been notorious on that; yet liberation ushered by the ANC in 1994 sought to transform the economy in order to benefit all South Africans. This would, therefore, be a genesis of defeating the triple challenge of poverty, unemployment and inequality.
The ANC's vision of economic transformation emanates from the Freedom Charter's clarion call that the people shall share in the country's wealth. As we are busy designing a developmental state, it becomes our responsibility, therefore, as government to lead and shape the process towards transformation of the economy, and in this case, the mining sector.
At its 52nd National Conference, the ANC resolved that:
A developmental state must ensure that our national resource endowments, including land, water, minerals and marine resources are exploited to effectively maximise the growth, development and employment potential embedded in such national assets and not purely for profit maximisation. As mineral resources are the common heritage of all people of South Africa, it is clear from this resolution that the intention is that our mines should not be a source of income for some, but should benefit the communities in which they are located and the country in general. These resources must be used to maximise growth and development for the surrounding communities.
One would wonder why these mines are not the absolute source of employment for the surrounding communities, for we sought to address these, as the ANC, inequalities existing within the mining sector. The Mineral and Petroleum Resources Development Act, Act 28 of 2002 was enacted. The objective of this piece of legislation was to transform the mining industry and facilitate meaningful participation of historically disadvantaged South Africans in the mining industry.
Section 100 of subsection 2(a) of the Act provides that the Minister has to, within six months from the date which the Act takes effect, develop a broad-based economic empowerment charter that will set the framework targets and timetables for effecting the entry of the historically disadvantaged South Africans into the mining industry and allow such South Africans to benefit from the exploitation of mineral resources. This is inline with the provision of the Mining Charter also signed in 2002.
In terms of the legislation and the Mining Charter, the captains of the industry and the department must do a comprehensive assessment of whether the mining companies are meeting the provisions and targets set by the legislation and charter on the transformation of the mining industry.
The report revealed that minimal progress was made by the mining industry, as no targets were met as set in the Mining Charter. An analysis of data showed that even black economic empowerment, BEE, ownership initiatives did not reach this target. The underlying issue identified is that the funding model is such that actual ownership of the mining assets intended for transformation purposes ended up being tied to the loan agreements. The assessment also showed that only 26% of the mining companies had met that Mining Charter target of 40% participation of previously disadvantaged South Africans at management level.
Consequently, very few historically disadvantaged South Africans, HDSA, in mining industry are found in top management decision-making positions. The effected pieces of legislation seek to change this and these majors have to be implemented if we are honest and committed to the transformation agenda. The assessment also reveals that there is . . . [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Sonto, mind your time.
Mrs S V KALYAN: What does that mean? No, no, no, on a point of order, Chairperson: What does mind your time means? Does the speaker has a limited amount of time, his time is either expired or not. I would like a ruling from you on that, Chair?
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Well, I guess, hon member, you don't expect me to explain it to you. We will surely explain it to you together with our staff after the sitting as to what does it mean. [Laughter.]
Mr A WATSON: Chairperson, I am sorry. The point was raised in the House and I think you must respond, not after the sitting, please.
Adv T M MASUTHA: Chairperson, the hon members are really wasting the time of the speaker.
IsiXhosa:
Unidentified MEMBER: Ayixoxwa emva kwendlu lento. Ixoxwa apha phakathi kule Ndlu. [Kwahlekwa.]
English:
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon member, let me assist you, really.
Mrs S V KALYAN: Thank you.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): When I said to the member to mind his time, it means a member is left with one minute.
Mr M R SONTO: Chairperson, I think I will be compensated for that loss of time.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Sonto, please. We will allow you.
Mrs S V KALYAN: I know I am not a chairperson. I am a deputy . . .
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): No, no, no. Absolutely there is no need for it. Hon member, I think you are happy now.
Mr M R SONTO: The department should intensify its efforts in ensuring that the mining industry plays its part in the transformation of the industry, if needs be legislation should be strengthened and empower the government to take punitive measures if necessary to those who are not complying. I am trying to rush.
In conclusion, for the ANC-led government, the objective is clear and set as follows: The beneficiation, ownership of means of production, skills development and employment equity is among the issues that need transformation within the mining industry. The vehicle as to how this is to be done is what the ANC has opened up for discussion. The government seeks to achieve a competitive industry, therefore, the ANC, we support the budget of the department and we would like to emphasize that it should strengthen its mandate of ensuring that the industry conforms to the transformation agenda of the ANC-led government. Thank you. [Time expired.] [Applause.]
Adv H C SCHEMIDT / AZM MNGUNI/VM / END OF TAKE
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Take: 481
Mr M R SONTO
"Old Assembly Main",Unrevised Hansard,10 May 2012,"[Take-333333481] [Old Assembly Main][90P-4-082A][mm].doc"
Adv H C SCHMIDT: Hon Minister, in light of the fact that the DA is a party of the future, I would like to direct my speech in particularly to the 21 future CEOs sitting in the gallery, unlike the ANC to which I suppose is not open for change and alternative methods. Can I just state that within the international framework and with R2,6 trillion worth of estimated natural resources, $1 trillion more than Russia, the second placed.
South Africa must maximise its comparative advantage. The introduction of a Mineral Resource Rent Tax, MRRT, and the proposed introduction of a carbon tax in Australia; the approval of a new ad volurem tax and royalty sharing arrangements on certain minerals by India; Indonesia calling for a 20% duty to be imposed on their mining export; and the consideration by Ghana, and dare I say Zimbabwe, to drastically raise corporate taxes ad introduce or raise windfall taxes, should undoubtedly help South African mining sector to obtain the competitive edge it requires, if we manage it correctly. This is provided we do not follow the same route by introducing carbon taxes, resource rent, increasing royalties and the like. Some local mining companies have already indicated that they are moving away from larger-scale South African projects to hasten returns and cut risk.
Luring and retaining investment is a real concern. BHP, one of the world's largest mining companies, recently closed down coal mining in Australia due to a lack of return on investment, labour unrest and other factors. An aluminium plant in Canada is also to close down, so is the case with another mine in the jurisdiction. Canada has indicated that it will be easing immigration rules for skilled workers to alleviate mining labour shortages by attracting skilled workers in short supply.
In South Africa, many mining companies have blamed labour action; lower than anticipated production volumes; and lower grades as some of the causes for the gross reduction in gold produced. We should take all reasonable steps in establishing a thriving mining industry – on of the mainstays of this economy – the so-called 'mining and energy complex economy'.
The state intervention in the mineral sector dubbed report, mandated by the ANC, calling inter alia for the imposition of a 50% tax on windfall profit will achieve exactly the opposite by not attracting investment, and places us in the same position as, for example, Australia. It has also been pointed out that had South African government become the owner of mines in 2009. The SA Treasury would then have had to fund the difference between the capital investment and the dividends paid in that particular year an amount of R26 billion. Talk of nationalisation is damaging the mining sector, especially when in the context that nationalisation without compensation is unconstitutional, whilst nationalisation with compensation is unaffordable. Resource nationalisation, the touted alternative, amounts to nationalisation by stealth.
A 40% reduction in platinum group metals, 11,5% in gold output, an overall fall in mineral production of 14% compared to February last year, as well as 17% reduction for April in the export of coal from the Richards Bay Coal Terminal indicates real concerns by the mining industry and investors as to the policy direction, or rather lack thereof by the ministry. Any steps, therefore, to introduce beneficiation, however much needed, should accordingly not come at the cost of competitiveness, lest production in the mining industry is further reduced with the consequent reduction in much needed jobs.
The most recent employment figures from Adcorp found that the employment rate fell sharply in mining, down 11,8%. Growth and the accompanying increase in jobs in the industry are critical. This will require a 180 degree turnaround in policy formulation, such as the inconsiderate policy formulation by this government leading to Botswana becoming the next diamond hub in the world with De Beers shifting its London based Diamond Trading Centre to Botswana.
With the capital cost required for developing a new mine being as high as R12 billion investment in a stable and sound regulatory and political environment is imperative. The recent decision by Argentina to nationalise a Spanish owned oil company, led to a stern warning by Glencore CEO that they would not hesitate to withdraw investments in countries where governments change the terms of existing contracts in order to start taking a bigger profit or start introducing resource nationalisation. We should take note of these comments.
We all agree that mining companies have a social responsibility towards communities within which it operates. Employee share ownership plans, Esops, which allow workers to share in the profits of the mines is an important empowering tool. The pre-tax amount of R500 000 paid to every qualifying Kumba employee is clearly an empowering tool. So too should mining companies and the department ensure that the agreed social and labour plan targets which are aimed at benefiting communities be implemented to its fullest, thereby ensuring the continued successful operation of mines within the communities they operate.
The National Development Plan, NDP, being considered by National Planning Commission, NPC, and the Presidential Infrastructure Co-ordination Commission, PICC, which intends to unlock the wealth of the northern minerals belt in order to expand the infrastructure by developing various transport corridors for minerals are also not supported. With the intended increased participation of the state-owned mining company in the mining production sector, it is imperative that an independent licensing structure be established to ensure integrity within the process. At present the government is assuming the proverbial role of player, selector and referee, all with dire consequences.
Although we support the integrated approach in respect of licensing process announced by the Minister today, we are of the view that an efficient one-stop independent service centre is crucial. Mineral right applicants are thereby afforded the opportunity to interface with the Departments of Mineral Regulation, Water and Environmental Affairs, and other required competencies such as Council for Geosciences, resulting in a speedy and effective application process. Inherent to the success of this proposal is the determination of predetermined geographical areas where no applications will be accepted for certain predetermined and well-known areas due to, for example,, environmental and cultural reasons. Unnecessary costs, time wastage and opportunities by mining companies will thereby be prevented.
We do not share the Minister's views that the outcomes of a number of High Court decisions are an impediment to transformation. In fact, a high number of court cases which the department has recently been involved with and lost are concern. In the vey recent decision of the Constitutional Court in the Macsand and Winelands Municipality, where the DA governed the City of Cape Town and controlled Winelands District Municipality, the DA took the department to court. The constitutional rights of municipalities and provincial governments to regulate mining activities within its demarcated areas by virtue of its zoning regulations and land usage scheme was confirmed.
The Department of Mineral Resources, DMR, was acting unconstitutionally by disregarding the rights of property owners affected by mining licenses by allowing mining to continue where no rezoning of the land had taken place. In most instances, DMR allowed mining to continue against the well established rights of property owners where land had been zoned differently. The reason Western Cape High Court decision in the matter of Kumba versus ICT and the department also confirms the inability of the department to regulate mining licensing justly and correctly.
Can I also finally conclude by saying the mining lekgotla next month, to be attended by unions, government and business to discuss risks in the mining industry, its competitiveness, social pressures and growth opportunities is an ideal opportunity to resolve some of this issues. Interaction must lead to the tabling in Parliament of the long overdue amendments to the Mineral and Petroleum Resource Development Act, MPRDA, Act No. 28 of 2002, thereby doing away with the dangerous impression that is it is tabling it subject to whims of the next ANC congress in Mangaung. We need to keep the South African mining sector globally competitive. I thank you, Mister Chair! [Applause.]
The HOUSE CHAIRPERSON (Mr M Mdakane): Thank you hon member.
Hon Bikani, before you start, please mind your time!
Ms F C BIKANI
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Takes: 481 & 482
Adv H C SCHMIDT
Ms F C BIKANI: Thank you hon Chairperson, hon Minister, hon Deputy Minister, the hon Chairperson of the Portfolio Committee on Mineral Resources, hon members of Parliament, the department, especially the new D-G, Dr Ramo…, the officials, our treasured guests in the gallery, ladies and gentlemen.
We need to begin to apply the concept of a democratic developmental state to the governance of our mineral assets, to ensure that the development of all the mineral linkage sectors is maximised to stimulate industrialisation and job creation, and to capture equitable share of our resource rents.
The legislative mandate of the Department of Mineral Resources is determined by the Mineral and Petroleum Resource Development Act, Act No. 28 of 2002, which provides that regulated framework for equitable success and the sustainable development of South Africa's mineral resources.
My focus therefore, in today's budget vote, is on the transformation of hostels and living standards of mine workers, transformation in procurement, and most important transformation of women in the mining industry.
Better socio-economic conditions, particularly within metropolitan areas and other cities fuel the process of urbanisation. Apartheid colonialism visited such devastating consequences on black communities because it structured the ownership and control of wealth in such a manner that these communities were deliberately excluded and neglected. No society in which wealth is defined in terms of ethnic or racial divisions can expect to maintain social or political cohesion. Therefore, an essential part of a national democratic society is thorough deracialisation of ownership and control of wealth, including land, management and the professions.
Our vision of the economic transformation takes as its starting point the Freedom Charter's clarion, which we all stress as a committee, calling that, "The people shall share in the country's wealth." Since 1994, the ANC led government have made substantial progress in transforming the economy to benefit the majority but serious challenges of unemployment, poverty and inequality remain.
Let me state that the ANC does support this budget vote. The most immediate challenge facing the developmental state is the implementation of our ambitious infrastructure investment programme, which will test its organisational, technical and strategic capabilities.
Our ability to ensure that the infrastructure programme acts as a catalyst towards the broader development of the economy, and will be the critical marker of the progress we are making, in building a developmental state that can truly act as an instrument of economic liberation. South Africa has the largest reserves, in the world, of critical minerals including platinum, chrome, vanadium and gold.
Hon Chairperson, we are also a major producer of a range of other minerals. Through linkages to other factors of the economy: including chemicals; energy and manufacturing; the mining sector continues to drive the expansion of the economy as a whole. The spatial location of mineral production is largely depended on geological rather than economic conditions and it is therefore, the main driver of economic development in some of the poorest regions of the country, for example, the Northern Cape, North West province and Limpopo.
Whilst the mineral sector continues to be more capital intensive, by presenting few opportunities for additional direct employment, the potential to build upstream linkage in the form of capital growth production and mining services, must be fully realised. This means that, a key element of our industrial strategy should be directed and diversified on the basis of our strong comparative advantage in the production of commodities.
An industrial strategy objective is meant to strengthen the manufacturing sectors downstream of mining, including the refining processing and beneficiation of minerals, into more value added products, through a comprehensive strategy that is supported by legislation.
Hon Chairperson, since 1994, South Africa has witnessed a massive migration to the areas of economic opportunity, leading to sprawls of informal settlements in the major towns. Although poverty continues to be highly concentrated in rural areas, today the greatest numbers of poor people reside in and around the urban centres.
Nevertheless, the enduring legacy of apartheid planning can means that spatial marginalisation, from economic opportunities and social amenities, continues to be a significant issue of our economy and must be addressed, in order to reduce poverty and inequality, and ensure shared growth.
Providing affordable accommodation is behind the ANC led government's strategy to redevelop hostels, and turning them into residential family units, which has dignity and proper sanitation. Government is demolishing all hostels and replacing them with new intergrated human settlements, which are now called community residential units.
Limitation, due to scarcity, and price in acquiring a suitable located land, is a major constraint on the creation of sustainable human settlements. South Africa's mining activities left behind a trail of ghost towns. Apart from undeveloped communities, mining, in South Africa, left a system of almost inhumane living conditions for mainly, black mine workers. Such conditions contributed to the spread of diseases such as HIV and Aids, and to the disintegration of family and social systems, as well as drugs and alcohol abuse.
The results, of the Department of Mineral Resources' 2009 report, showed that it is only a quarter of the mining companies that provided houses to their employees, and in fact, 34% had helped their employees to excess home ownership schemes. Hon Chairperson, a very painful part, in the South African history, in terms of a progressive developmental state of the mining industry, and women being the rock of the nation in particular, is that aspiring black women in the mining industry are still in abject poverty; when it comes to ownership in the mines. I am yet to see a good number of successful women, whom we can truly call successful black mine owners, with a significant contribution to the country's Gross Domestic Products, GDP, to ensure a growth in our economy, and as a result, true wealth for black women in mining. This is a much needed increase; participation of women in the country's economy.
I have only but one example of a truly liberated woman, who is a true success story in our country. She is not only owning, in mining, but also a president of the South African Mining Development Association, SAMDA, a director of the New Africa Mining Fund, NAMF, and an executive chairperson of Mmakau mining. She was South Africa's black mining entrepreneur in the 1980s, in contract mining. This I refer to Madam Bridgett Radebe.
I can assure all present here today that, out of the social and community contributions in the miming industry; if each industry had to groom, mentor and support a woman owned mining company, of previously disadvantaged women in the country, the rewards will be great for future generations. This will definitely show true patriotism of those in the Boudoir mining industry, who are said to be the top miners in the Republic of South Africa, and who have the best interest of the country's economic success at heart.
At this point in time, Chairperson, and beyond the project of the Minister, a big congratulation on the young women, that we have seen in the gallery. I wish to challenge entities such as the Chamber of Mines; its top 10 mining companies; the Department of Mineral Resources; and any other willing mining company, in an effort of public private partnership, to commit themselves to assisting black women, in a small scale mining through a coordinated and synergised program assigned for the bottom ten black owned mining companies of women. They must be coached, mentored and empowered locally.
HON MEMBER: Quota! Quota! Failure! Failure! [Interruptions.].
Every possible effort should be made to induct, explore and research all potential in unleashing more successful women black owned mining companies. [Applause.] This, Chairperson, should yield a significant outcome in the light, of the President's state of the nation address, of upcoming infrastructural developments in the mining industry.
As a result of past constraints placed on the employment of women in the South African mining industry, both through legislative exclusion and as a result of attitudes and opinions, women are currently poorly represented in this important sector of our economy. Where women are employed in the industry, it is normally in nonunderground occupations that are in support services such as administration and human resources. Over a number of years, a scattering of women found their way into the South African mining industry; very few owned.
Chairperson, even though a number of women operating as entrepreneurs, in the South African mining industries, is not known at this point in time, it is believed that it is very small and interventions to support women entrepreneurs, are therefore appropriate.
The ANC urges mining companies not to neglect adherence to safety and compliance. The purpose of mineral regulation, in the Department of Mineral Resources, is to regulate the minerals and mining sector, promote economy development, employment, and environmental compliance as well as ensuring proper transformation.
CHAIRPERSON: Hon Bikani, please wrap up.
Thank you Sir. This formulated programme 3 mineral resources' budget summary. It forms part of a very important area of work and implementation within the public services mineral resources, and the implementation of relevant transformation policies to date, that need to glare in an effort of trying to keep up to the desperate needs of our small mining communities, whose significant proceeds and benefits are yet to be seen, in an economically developmental state for the historically disadvantaged South Africans.
With recognition of what the Minister has already said, progress in the development of an electronic licensing system, which is said to be the resource administration system, will certainly go long a way in proving government's technological improvement efforts, to ensure that targets are reached, timeously.
We hope to see these changes, so that we, as the committee on mineral resources, can see the difference, in trying to make South Africans proud, through the achievements of mining and developmental democratic South Africa. [Time expired.] [Interruptions.] I support the Budget Vote. I thank you Chair. [Applause.]
CHAIRPERSON: Hon Minister, please take care of your five minutes. Mind your time.
The MINISTER OF MINERAL RESOURCES (Ms S Shabangu) /Mosa/ & LMM/ / END OF TAKE
UNREVISED HANSARD
EPC – OLD ASSEMBLY CHAMBER
Thursday, 10 May 2012 Take: 483
"Old Assembly Main",Unrevised Hansard,10 May 2012,"[Take-333333483] [Old Assembly Main][90P-4-082A][mm].doc"
Ms F C BIKANI
The MINISTER OF MINERAL RESOURCES: Chairperson, I would like to take this opportunity to thank the hon members for supporting this budget... except for one party.
An HON MEMBER: Which party?
The MINISTER OF MINERAL RESOURCES: The one party that did not support us. It is an indication that the department is on the right path in terms of what it is doing to reposition the mining industry.
Thank you, hon Lucas, for supporting us but also for explaining the area of beneficiation quite well. I hope it will assist hon Lorimer to understand. There is no ambiguity. We are clear on that policy. We are saying that the core business of mining is mining. It is not beneficiation. We recognise that they can't produce cars. They never applied for licences to produce cars. Basically, what we are saying is that what they need to do is ensure that, when it comes to adding value, they avail their commodity to create other industries in this country. That is what we are saying. We don't want them to become a business in areas for which they didn't budget or plan. I thought that we just need to clarify that.
I must also say if you look at where we come from with favour... [Inaudible.] ... we are really striving towards being positive. You know the jurisdictions which you are referring to in Africa, when I meet the Ministers from those countries; they want to learn from us.
An HON MEMBER: Really?
The MINISTER OF MINERAL RESOURCES: It shows that we are on the right path and that we inspire the rest of Africa. [Laughter.] So I just want to tell you as you speak today that some of the African countries you are quoting will be coming to South Africa. They want to see what you are doing as government in this country. So you have got to look at those issues. It's an ace for our side. It shows that we are the right path.
You know, I must also indicate that I like this House, Mr Schmidt. You talk about nationalisation. It is an ANC issue. We have clarified the matter. I think it is high time that I call you Comrade Schmidt so as to allow you space to participate in the ANC debate around the issue of nationalisation.
An HON MEMBER: Never! Never!
The MINISTER OF MINERAL RESOURCES: This looks very important to you. [Laughter.]
Adv H C SCHMIDT: Chair, I rise on a point of order: Is it parliamentary to refer to a dear member as a comrade? [Laughter.]
The MINISTER OF MINERAL RESOURCES: Hon comrade! [Laughter.]
I think it shows that there is no suppression of ideas in the ANC. Individuals are allowed to express themselves in whichever way they choose.
An HON MEMBER: What about Mr Malema?
The MINISTER OF MINERAL RESOURCES: Including Julius Malema!
An HON MEMBER: Oh no!
The MINISTER OF MINERAL RESOURCES: So, if you want to join the ANC, come and join the ANC, because it is a voluntary organisation. The privilege and the advantage of joining the ANC is that it is voluntary. You also don't go through a process of interviews as if you are seeking employment. [Applause.] That's the difference between us and you. [Interjections.]
An HON MEMBER: No wonder! Look at what you have! [Interjections.]
The MINISTER OF MINERAL RESOURCES: We are transparent. [Interjections.]
Hon Lorimer, I think I would like the two of us to meet to talk about the issue of the discretionary powers of the Minister. You will realise that there isn't much power given to this little Minister. So I'm just saying the industry has no problem. I don't know where your concern arises from. And I think you also need to understand that the Act we are implementing is an Act of consensus. There was never a unilateral approach. It was government, it was business – which is your mining industry as a whole – and it was labour in the mining industry. It's a consensus document. The issue of negotiations you find within the spirit of the mining industry. There was never a unilateral approach when it comes to the issues, including your section 54. We agreed with all the stakeholders to implement this particular section, section 54. So I'm just saying that, when comes to consensus, this is the best industry you could come across.
I agree with you on the issues of tax dispensation. As a country, we have to be competitive because we are not an island; we belong to the global environment. So I fully agree with you– we can't unilaterally kill this industry. That is exactly what you are doing. Talk to the people who are giving you information. The industry will tell you exactly how we as the Ministry are approaching issues of taxes as the sector. So I'm just saying we will always listen, and we will always make sure we don't contribute towards the downfall of this industry.
[Interjection.]
They have agreed. We agree. So I'm saying to you, you are welcome. If you want to debate the taxation, you can also become an hon comrade in the ANC when we go to the policy conference in June. [Laughter.]
Lastly, I must indicate that there is one more expression which shows us that tripartism works through the mining industry and ourselves. In June we will have a mining lekgotla where we are going to put our heads together on how best to position the mining industry in South Africa and also in the rest of Africa. Join me, comrade Lorimer, in making sure we make a successful business. Thank you. [Laughter.]
Debate concluded.
The Committee rose at 16:24.
Nvs / END OF TAKE
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