Hansard: EPC: Debate on Vote 32: Mineral Resources (E249)

House: National Assembly

Date of Meeting: 15 Jul 2014

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Minutes

PROCEEDINGS OF EXTENDED PUBLIC COMMITTEE – COMMITTEE ROOM E249

"Committee Room E249 Main",Unrevised Hansard,15 Jul 2014,"[Take-12] [Committee Room E249 Main][NW-2-49][mn].doc"

TUESDAY, 15 JULY 2014

PROCEEDINGS OF THE EXTENDED PUBLIC COMMITTEE – E249 CHAMBER

Members of the Extended Public Committee met in Committee Room E249 at 10:00.

House Chairperson Ms A T Didiza, as Chairperson, took the Chair and requested members to observe a moment of silence for prayers or meditation.

The MINISTER OF MINERAL RESOURCES

START OF DAY

APPROPRIATION BILL

Debate on Vote No 32­­ - Mineral Resources:

The MINISTER OF MINERAL RESOURCES: House Chairperson, Chairperson and members of the Portfolio Committee on Mineral Resources, esteemed guests, ladies and gentlemen, it is indeed a rare honour and privilege to present my first Budget Vote before this august House.

The department has been allocated a budget of R1,47 billion for the year 2014-15. I present this Budget Vote mindful of the central role of the mining industry within the South African economy. With over

1 600 mines and quarries, employing over half a million people directly, it remains a significant contributor to gross fixed capital formation and foreign earnings in South Africa. In addition, it has a significant multiplier effect through its links with other sectors such as energy, manufacturing, services and transport.

Current geoscientific information corroborates the exploration and developmental potential of the mining industry over the decades ahead. Such development must be balanced with both social and environmental responsibilities, as inscribed in the supreme law of the country, our Constitution. The industry has experienced numerous challenges in recent times, not only locally, but also globally. However, as we have maintained, these are short-term in nature, and should not detract from the immense development potential that exists.

We are at a crossroads in the history of resource development in our country. The potential of the upstream petroleum industry, both shale gas and, increasingly, offshore deep-water oil and gas is profound, and if stewarded properly, has the potential to be a game changer and to drive the development of our economy for all our people in a manner contrary to the historic injustice afflicted upon our people by the mining industry.

The potential of both the mining and upstream petroleum industries is located within the National Development Plan, NDP, which aptly provides the national Vision 2030, and the national guiding principles to realise this vision. The value chains of both industries play an important role in contributing towards the attainment of this vision. It is in our collective interest therefore to ensure that these industries are properly positioned to take advantage of opportunities that present themselves.

One hundred years after its enactment, we are still grappling with the magnitude of the calamity afflicted upon African people by the Natives Land Act of 1913 that had such a devastating impact on our population across the country. The manner in which this Act was implemented, along with other subsequent, repressive legislation of the apartheid government, resulted in the exclusion of black people from participating in the mainstream economy of the country, other than as suppliers of cheap labour, hewers of wood, and the subsequent creation of the migrant labour system in South Africa.

Following the 1994 democratic breakthrough, the government began to rewrite the policies that had turned our people into slaves in their own land. Thus, the mining regulatory reform, for instance, sought not only to rectify 100 years of repression, but to balance this with the development of the mining industry in a responsible and sustainable manner.

The introduction of the Mineral and Petroleum Resources Development Act in 2004 not only enunciated the Mining and Minerals White Paper of 1998, but also represented a fundamental and qualitative turning point in sectoral transformational legislation. It did this by vesting mineral and upstream petroleum resources and control over their development in the hands of the state. What this means is that mineral and petroleum resources in South Africa are in fact nationalised.

Accordingly, my department issues mining licences to whoever may wish to harvest our mineral resources. We do so with attendant conditions that, if not observed, expose the holder to possible revocation of the licence so issued. Our country has a legislative framework that covers both our mining and petroleum industries. With this in mind, we engaged in the process of further enhancing and strengthening our legislative framework.

Key to this involved the amendment of the Mineral and Petroleum Resources Development Act. This was initiated as part of efforts aimed at, inter alia, optimising the contribution to national development priorities, improving the investment climate and ease of doing business, strengthening compliance, creating jobs, driving industrialisation through beneficiation and moving South Africa forward. What we have come to realise through the amending process is that the mineral and petroleum industries are at very different stages in their development in our country.

Since my appointment, a number of concerns have been received by me from stakeholders both in the mining and upstream petroleum industries on some issues contained in the Mineral and Petroleum Resources Development Amendment Bill, the MPRD Amendment Bill. I have been consulting on these issues and, as a result, an interministerial committee has been established to comprehensively evaluate and accommodate concerns through the development of robust regulations in order to provide greater certainty and to encourage continued investment in the mining sector, to give practical effect to the MPRD Amendment Bill.

We undertake to continue to engage with and to address the concerns of stakeholders throughout this process of strengthening the regulatory framework during the course of this administration. Having spent time listening to stakeholders and taking cognisance of the fact that under our Constitution a Bill before the President can only be referred back to Parliament if it cannot master a constitutional test, I am ready for any eventuality. In the event that the current Bill is assented to in its present format, I commit to rigorous and transparent engagement with stakeholders on draft regulations.

The regulatory environment relating to mine health and safety is also being reviewed, as part of our programme to create a conducive working environment. The objective is, among other things, to ensure alignment with the MPRDA, to remove ambiguities in the law, and advance the aims of decent employment in the mining industry. We will also collaborate with the relevant departments to ensure that the principle of equal pay for equal value work in the mining industry is ascribed to. We cannot allow differentiation that manifests on the basis of colour, or gender profiling.

We are also aiming at "zero harm" in the mines, as well as to create an appropriate working environment for women mineworkers. The Mine Health and Safety Bill will be submitted to Parliament during this financial year. The department will further enhance working relations with its entities, such as the State Diamond Trader and the South African Diamonds and Precious Metals Regulator, to focus on the review of both diamonds and precious metals-related legislation, and to also ensure that it creates greater benefits for South Africa as a whole. The review will, amongst other things, be informed by the outcomes of the Jewellery Consultative Forum held last year to identify impediments and appropriate strategies to develop the jewellery industry of the country.

With regard to the upstream petroleum industry, our policy position is to enable an investor-friendly environment whilst at the same time securing vital state interests. Any legislation or agreement or arrangement in the interim or long term has to conform to this principle. In the event that the MPRDA Amendment Bill is referred back to Parliament, I intend to drive forward a full democratic process involving all stakeholders to develop this new foundation that underpins the profound potential for the upstream petroleum industry. In the event that the Bill is assented to, again, I reiterate my commitment to rigorous consultations on regulations.

Hence, in the coming weeks we will launch a platform to debate draft regulations that have already been developed that may provide an interim solution to enable the significant investment required to take place while a long-term foundation is being laid. This interim solution has the benefit that it will afford us the opportunity to explore long-term and sustainable solutions that can then be incorporated into the overall process. The interim solution is critical now because it allows us to harness the opportunity to capture the scale of investment in this window of opportunity that is available to South Africa.

Regarding state-owned mine companies, one of the critical instruments of the democratic developmental state is greater participation by the state in the mainstream economy. The establishment of a state mining company represents a positive step in this direction. In this respect, the African Exploration, Mining and Financing Corporation, AEMFC, was resuscitated as the nucleus for the establishment of the state-owned mining company, currently a wholly-owned subsidiary of the Central Energy Fund.

The company has already exceeded production volumes at its pioneering mine at Vlakfontein in Mpumalanga, and two further coal mines are expected to be in production by 2017. This year, we will submit the State-owned Mining Company Bill to Parliament for processing with the aim of establishing the entity as stand-alone company.

South Africa is regarded as a force to be reckoned with in terms of the trade, manufacturing and marketing of diamonds worldwide, especially within emerging markets. However, its prevailing diamond exchange model does not measure up to our firmly established principle of home beneficiation and favourable pricing for industrialisation. This has led to an investigation to explore the possibility of the establishment of a diamond bourse in South Africa as a possible intervention. Obviously, this will be informed by our own developmental imperatives.

We all know that skills development and education are crucial in not only propelling forward the sustainable development of the industries such as ours, but also in addressing the triple challenge of unemployment, inequality and poverty that continues to haunt our country. In this regard, the department will enhance collaboration with the Department of Higher Education and Training and other stakeholders through the Mining Qualification Authority to improve skills development of the youth and mineworkers.

In this partnership, we will place bursary-holders, interns and students at various universities and mining companies to train future engineers, environmental scientists, surveyors and geologists. We will also be implementing other programmes to provide learners in townships and rural mining areas with skills in core mathematics and physical science subjects as well as Abet training; artisan development; improving the participation of women in mining; further develop skills required for jewellery-making; the training of health and safety reps and shop stewards, using accredited institutions.

The stability of the mining industry depends on a conducive operating environment. This environment has a number of influencing issues, including the mining regulatory regime, socioeconomic factors and the industrial relations environment that all interact with one another as is evidenced by recent events in the platinum belt. While the strike in the platinum belt has ended, there remains a need for introspection and analysis to ensure that the root causes are addressed in order to avoid a recurrence in the future.

In this regard, we support calls for a mining summit to be convened during this financial year. We are ready to participate in such a forum and to make a contribution towards sustainable solutions. I believe that this exercise will go a long way to building trust among all stakeholders, which is a key ingredient in engaging constructively to build our enormous potential.

We want to reaffirm our commitment to sustainable transformation. The the Mining Charter, which was developed as a tool to effect sector transformation, nd is accompanied by a scorecard with clear targets. The implementation of the Mining Charter by right-holders is a non-negotiable legal and contractual imperative.

The mechanisms to monitor the implementation of the Mining Charter are prescribed by sec 28(2)(c) of the Mineral and Petroleum Resources Development Amendment Act in respect of which the holder of a mining right must submit a report detailing compliance with the Mining Charter and the social and labour plan. Companies that are found to be noncompliant in terms of implementing the agreed-upon targets will be issued with the necessary directives to ensure that they implement remedial action, failing which more stringent measures in line with the Act will be taken, including the possibility of suspension or withdrawal of their rights.

One of the key requirements of the Mining Charter is for mining companies to implement ways of improving housing and living conditions of mineworkers and to achieve a set of targets by 2014 that includes the conversion of all hostels into family units. As part of the support to the President-led Framework Agreement for a Sustainable Mining Industry, housing and living conditions of mineworkers and surrounding communities have been prioritised for development.

Accordingly, the Mining Charter will play an important role in the attainment of these critical commitments in the framework agreement. Implementation of projects in the prioritised mining areas such as the Bojanala District Municipality has duly commenced. Government is also conducting a study of the migrant labour system aimed at addressing some of the socioeconomic challenges facing the mining industry.

The MPRD Bill has created an environment to augment the contribution of the mining industry to community development. This is intended to enable mining companies operating within a district municipality to pool their resources and to align their social and labour plans with the integrated development plans in order to optimise the development impact in communities within which mining takes place. To this end, the notion of social and labour plans is engraved in our regulatory framework as a social licence to operate in order to enable the contribution of the industry to uplift the communities in the areas of its operations.

Communities in this regard rightfully have an expectation that the presence of mines in their areas should result in inclusive economic growth and development. Linked to this is the call on mining companies to treat our communities with respect, value their culture and traditions and strive for sustainable relations with them. We are reviewing the implementation of the Mining Charter during this financial year. The results will be published later this year and such results will inform what is to be done next.

In the World Economic Forum's Competitiveness Report, South Africa's innovation pillar features eminently for the quality of research institutions and spending on research and development. Mining innovation straddles cost-efficiency, productivity and management, all of which impact on sustainable growth and meaningful transformation of South Africa's mining industries. Thank you, Chairperson. [Time expired.] [Applause.]

The HOUSE CHAIRPERSON (Ms A T Didiza): I am sure you will catch up on some of those topics at the end of the debate. Hon members, particularly those of the public who are stakeholders of the department, we would like to apologise that some of you had had to stand because the gallery was full and therefore we had to make some arrangements. Thank you very much for being patient.

I note that this is a very important debate, Minister. Some of the members are really getting lost. Those who were supposed to be sitting on the left are going towards the right... [Laughter.] ... but it is an interesting matter.

Mr S LUZIPO

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The MINISTER OF MINERAL RESOURCES

Mr S LUZIPO: Hon Chairperson, hon Minister and Deputy Minister, hon members of the Portfolio Committee on Mineral Resources, other Members of Parliament present here, officials of the Department of Mineral Resources, committee personnel and other staff of Parliament, let me take this opportunity to greet you all equally this afternoon. It gives me great pleasure to be given an opportunity to contribute on this important occasion, which is the debate on the Budget Vote of the Department of Mineral Resources.

It is important though to preface such an address by acknowledging that we meet today at a time when the country, the continent and the world over is celebrating the life and times of our renowned icon, Tata Rolihlahla Nelson Mandela, in this month of July. Within a few days, on 18 July, we will be celebrating his birthday by observing 67 minutes of voluntary service to the needy for a good cause. Though Tata Madiba is no more, he continues to inspire us to do our utmost in our commitment to improve the quality of the lives of our people.

Therefore, this Budget Vote takes place at a time appropriate for the recognition of the good work that Madiba did, not alone though, but surely as part of the collective within the ANC. On the occasion of meeting the Free State leadership on 17 September 1994, Madiba had this to say:

Freedom should not be understood to mean leadership positions or even appointments to top positions. It must be understood as the transformation of the lives of ordinary people in the hostels and the ghettos, in the squatter camps, on the farms and in the mine compounds. It means constant consultation between leaders and the members of their organisations. It demands of us to be in constant touch with the people, to understand their needs, hopes and fears, and to work together with them to improve their conditions.

What Madiba said then remains relevant today, in particular for the department whose budget we are debating today. Hon Chairperson, the issue of mineral resources remains a central and important area of interest to this country as it is about the country's economic growth and job creation.

Unfortunately some of us have personal experience of the tragic incidents that continue to happen in our mines.It was in 1982 when my uncle was trapped underground and, though he survived, today he is unable to work and even walk. I can further testify that my cousin, working in the Virginia mines, contracted TB and today is no more. With so much progress made so far, we must appreciate the commitment by the department to ensure that fatalities are reduced to zero.

The recognition that we are dealing with human lives, not just statistics, is a much welcomed and appreciated commitment. It is important to extend a word of appreciation to the Minister and his deputy on their willingness to work with the committee and also for their commitment to ensure that the department fulfils its mandate. As the committee, we will not only continue to work with the department, but also hold it accountable and provide the necessary support where it is required.

The mandate of the department is to act as the custodian of the mineral and petroleum resources of this country. These are resources that now belong to us. The department has to ensure that all South Africans derive sustainable benefits from the country's mineral wealth. The department does this by granting licences to prospect, to explore and to mine. It also regulates the industry to ensure that the environment is protected and that the health and safety of workers is attended to. It regulates mining to encourage deep-seated transformation in a sector that has been notorious for its racist practices ever since industrial-scale mining came to our shores over 150 years ago. The goal of transformation goes hand in hand with the goal of growing the sector. There is a need to increase the scope of mining activity and to provide incentives where possible.

These are the essential tasks that are provided for in the departmental budget. As the Minister has confirmed, the budget for 2014-15 is R1,47 billion. Over the past two weeks, as committee we have had intensive engagements with the department and its entities over the budget.

In terms of monetary transfers, the greatest sums go to the two science councils for which the department is responsible. These are the Council for Mineral Technology Research, Mintek, and the Council for Geoscience, CGS, which continue to undertake research work. The geological information and maps help our mining industry to identify where the best mineral deposits are located. They encourage further exploration of new investments.

Both Mintek and the CGS are key players in government's ongoing battle to treat the toxic water that flows out of old mines and to rehabilitate abandoned and derelict old mine sites. Both remain an ongoing danger to people as well as the environment. This will therefore take a long time and many generations to rectify.

The Mine Health and Safety Council is the third entity which embodies the principle of tripartism. Mine operators, trade unions and government are joint partners here, striving to continue with the impressive improvements that have been made in workplace safety. The two other entities are the South African Diamond and Precious Metals Regulator and the State Diamond Trader, both of whom are involved in promoting the jewellery industry and the beneficiation of diamonds in South Africa.

All the entities under the control of the Department of Mineral Resources obtained unqualified audits for the year 2012-13 and we trust that that pattern will be seen again when the 2013-14 audited annual financial statements are tabled in Parliament later this year. One concern is that last year the department itself did not achieve an entirely positive audit result for 2012-13.

As the portfolio committee we have held special meetings with the Auditor-General's office last week to understand the issues around the management of the department's budget. We commend the Office of the Auditor-General for its work in assisting the department to identify problems as well as forms of intervention that are needed to improve financial controls and capacity in the department. The Auditor-General continues to help departments to correct their weak points and improve continuously. This is a much more constructive and productive approach rather than simple threats or punishments.

There seems to be just one small issue that caused the department to have a qualified audit in 2012-13. This relates to gaps in the system for collecting the correct royalty payments and prospecting fees from mining companies. As was reported, corrective measures are now in place to address those issues.

The Auditor-General believes that with proper application the department and its five entities can achieve clean audit reports in 2014-15, making it potentially probably the first portfolio in government to achieve such levels of performance. As Parliament, we will also be pushing the department to exert itself so that it can take the lead in the campaign for a clean audit.

As a committee, as part of the deliberations, we will continue to look at areas of recommendation that might require further engagements between ourselves and the department, and amongst those, but not limited to, are that most entities are conducting research and therefore consideration should be given to the establishment of a centre for excellence to ensure that there is integrated work on research and saving costs. The process undertaken by the interministerial task team on the issue of the social and labour plans to deal with living conditions in mining communities should involve all role-players, in particular a stakeholder forum that will be able to effectively engage on this, including the involvement of Salga and mining companies in that process.

The process of monitoring the Mining Charter, which has so far not been able to yield the necessary results, requires attending to. When a company gets a licence, it should be an automatic requirement that in its submission of reports to the department it should also report upon its own auditors as a matter of compliance. Therefore we are suggesting that the issue of compliance should be made part of an audit query.

As the committee we remain concerned, after engagement with the department's officials, that the mechanisms being used by the department to monitor compliance with the Mining Charter are not sufficient. The process of monitoring must begin now, not only after the performance deadline had expired. This should also take into consideration the role of the committee in overseeing the functions of the department.

Another important area of financial concern or gap that we have identified relates to the issue of the retention of inspectors, which has become a scarce skill, in particular as they continue to be snatched away by the private sector with the offers they are able to make.

The needs are infinite. We can never have a budget that satisfies all the needs that can be identified. We have scarce resources and we have to prioritise their use. This is what is provided for in the department's budget. The department has demonstrated its capacity to manage its budget in the past years and to improve its performance, based on the good relationship we were told exists between the director-general and the Office of the Auditor-General.

With all the limitations, we see no reason not to support the passing of the budget, because processes are already under way to deal with the shortfall that one has related. Anyway, failure to adopt the budget would only stop the department from doing its work and the actual people who will face the consequences are the very same people whose plight we want to address.

Additional funds are not yet available at this time and the available budget requires that difficult choices be made.It is a fact that, as the Minister has also said, the mining sector is going through difficult times. As committee, we have already had some extensive debates and, as the ANC, we welcome this. We will always continue to welcome all parties who continue to make constructive comments, contributions and provide solutions. We must seek and learn lessons from President Nelson Mandela, who realised that we can improve our performance by drawing contributions and strength from all South Africans.

In conclusion, President Jacob Zuma devoted a major part of his state of the nation address to the need to address the issues that affect our mining communities and as such laid a challenge at the doors of the department and the committee, that have the responsibility of oversight. We must ensure that the mining bosses play their part to address the plight of their employees. The dehumanisation of mineworkers must come to an end and can longer be postponed.

All of us have a responsibility to take this country forward. None of us should assume the privilege of just being critics without providing constructive ways to attend to these challenges. The role of all social partners must also be recognised by all, be they employees, government, trade unions or business.

The overall task at hand is that of addressing the triple crisis of unemployment, poverty and inequality. Surely we have to honour President Nelson Mandela's instruction and counsel that, "eradicating poverty is not an act of charity". Indeed we commend the work done by the ANC so far under the stewardship and visionary leadership of President Mandela, President Thabo Mbeki, President Kgalema Motlanthe and now President Jacob Zuma.

Indeed we have a good story to tell. It is through the interventions of the ANC-led government that for the first time in 20 years, fatalities in the mines have been reduced to below 100 and there is still further commitment to ensure that they reach zero level. We have committed ourselves to ensuring that we learn from our bad past and move towards a positive future, as advised by President Mandela, when he said:

Let us never be unmindful of the terrible past from which we come – using that memory not as a means to keep us shackled to the past in a negative manner, but rather as a joyous reminder of how far we have come and how much we have achieved. My wish is that South Africans never give up on the belief in goodness, that they cherish that faith in human beings as a cornerstone of our democracy.

We pledge to do exactly that. [Time expired.] [Applause.]

Mr J R B LORIMER

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Mr S LUZIPHO

Mr J R B LORIMER: Madam Chair, mining has been through a tough time. In the past couple of years, production has been down. There have been bloody and destructive labour disputes. There has been a world economic crisis that has slashed demand for the minerals that are mined in our country. The cost of electricity has soared, as has the cost of labour. Many of our mines have stopped making profits.

The question we need to answer is how much of this is self-inflicted? How much of this is due to poor legislation and wrong-headed policies badly carried out? How much is due to the prevailing conditions in the world economy?

Before we look at this, it's worthwhile getting some of the basics in place. We do not court international investors because we owe them anything. We need them because it takes money to unlock the wealth that is in mining. We will not get the benefits that mining can bring us unless we have money. We don't have money in our own country unless it comes from investors, mostly overseas investors.

So, attracting investors is key unless the state gets involved in the mining business. But countless local and international examples show that governments do not mine well. They don't understand capital and efficiencies that private business does. They tend not to be able to mine profitably. When there are no profits, there are no reinvestments and generally workers get a worse deal.

There is an even bigger problem. To start up and maintain a mining operation takes a lot of capital. If that money is going to start and maintain mines it means that it's not going to housing, hospitals and schools. That's why we need investment.

The trick is to make sure that we get maximum investment and take maximum benefit for the South African people. We need to make our mining regime attractive enough so that investors flock to our industry while taking out the most we can in tax and other benefits, and creating the greatest possible number of jobs. This balance, where we get a win-win arrangement, cannot happen if government does not have a credible role as a partner with the industry. So, is our mining jurisdiction credible?

Let's first of all look within the department. It remains difficult to get a mining licence even if all the requirements are met. Procedures don't always go as planned. Let us take one situation which encapsulates much of what this department is doing wrong.

In 2007, Australian-owned Aquila Resources is granted and executes a prospecting licence on land north of Hotazel in the Northern Cape province. It discovers manganese and spends R50 million prospecting over the next four years. At the end of 2010 it applies for a mining right, intending to invest about R1,8 billion in a manganese mine. A month later the Department of Mineral Resources informs Aquila that it has granted a prospecting right over the same area to a company called the Pan-African Mining Development Company. This is a company that is jointly owned by the governments of South Africa, Zimbabwe and Zambia. The company is housed in the Central Energy Fund - who knows why - where it has one line in the annual reports. That one line shows that it has lost about R2,7 million in each of the past two years.

So, for the next two and a half years Aquila tries to get more information from the Department of Mineral Resources on what is going on and how a double prospecting right could have been issued. The Department of Mineral Resources gives no concrete information. But Aquila is sure of its case and invests another R100 million in improving the resource. Aquila establishes in August 2013 that the department in fact only executed the double prospecting right over the same area in November 2011, confirming that there was no other right when Aquila first made its application for a mining right.

Former Minister Shabangu agrees to decide the issue by January 2014 this year. But as yet nothing has happened. Aquila has since been sold to a Chinese company whose future plans are in doubt.At least for some of the time the Chairman of the Pan-African Mineral Development Company has been none other than the director-general of this department. Does the department not understand the concept of conflict of interest? Does this government believe that it can get away with being player and referee and still maintain credibility?

This sends an appalling message to would-be investors. The message is: "Come and spend your money in South Africa and through either incompetence or crookery, we will make sure that you lose it." Self-evidently, this is no way to run a mining jurisdiction. It shreds the credibility of the department.

That lack of credibility is evident elsewhere. When we look at the department's budget before us, we are struck by two glaring defects.

The first of these relates to the Council for Geoscience, which has already been mentioned. It is one of the two major entities funded from the department's budget. In 2010 Parliament passed legislation to expand the record-keeping duties of the council, but until today, and in this budget too, those new duties required of the council are not funded by government.

Not a huge amount of money is missing. Apparently about R20 million would do it. This is made worse by the recently passed but unsigned amendments to the Mineral and Petroleum Resources Development Act. That benighted piece of legislation saw fit to scrap the Petroleum Agency of SA, Pasa, one government entity that had performed its task efficiently, and gave its duties to the Council for Geoscience which, as we have seen, cannot even meet its current commitments.

Now, if this Parliament wants to be taken seriously, it should ensure that funding is provided for legislative mandates. It's no good simply legislating for a big idea without funding that idea. If, as seems increasingly unlikely, the President signs the Bill, the Council for Geoscience will simply be unable to do what it is supposed to do.

The second glaring defect relates to inspection. The performance of South Africa's mining industry in fulfilling its social and developmental obligations is very much a disputed space right now. There's an ongoing debate about the extent to which mines are fulfilling their duties as set down in the law and the Mining Charter. Everybody seems to agree that mines are not doing what they should do. But there is a dispute about which mines are doing what they should and which are not. So, it would be vital for policy formation to know what is actually happening in this regard.

As we questioned the department on this this week, it became resoundingly obvious that there are simply not enough inspectors in order for the government to make any kind of accurate assessment of the extent of compliance. It was let slip that there is only one inspector in each region covering social and labour plans. So, that is to inspect 1 600 mines countrywide. That would work out at about three mines per inspector per week to be inspected across the year, which is clearly totally impossible and unrealistic. The Department of Mineral Resources appears to rely largely on compliance reports given by the mines themselves. If this government doesn't have information on compliance, it has very little chance of making credible policy.

So, there is not enough money for geoscience and not enough money for inspectors. Some of us in the committee recommended rejecting this budget on those grounds. The ANC in the portfolio committee did not want to rock the boat and decided this budget should be passed, albeit with some recommendations being made for the future funding of more inspectors.

But then, what is this budget process for? If the committee sees a shortcoming, surely it must correct it. Now, best case scenario, we will see another year of inadequate funding before the new budget comes out. In the meantime it will be another year of inadequate inspections and an underfunded Council of Geoscience. Is anybody taking Parliament seriously? It doesn't sound like the ANC is. If it doesn't, can it expect other people to do so? Credibility is lacking.

This gets worse. This government is convinced of its own ability to shape the economy as it sees fit. In doing so it makes the mistake of every statist government in history. Each one is blindsided by unintended consequences. Each one ends in failure. The case of coal proves the point.

For years, South Africa's coal industry has produced low-cost coal for Eskom by subsiding the lower grades of coal supplied to power stations through money made by exporting higher-grade coal. But that must all change because of this government's bid to force the creation of black economic empowerment moguls. Government will pick these winners and give them helpful contracts, no matter what the cost.

The major supplier of coal to the new Kusile Power Station is supposed to be the New Largo Colliery, which is 27% BEE owned, slightly above what is demanded in the Mining Charter. But in terms of the Department of Trade and Industry's BBBEE legislation all coal suppliers have to have to be 50% BEE-owned.

Coalfield developers Anglo American won't begin to build the mine before an agreement is signed. Government is refusing to sign an agreement until it gets the BEE ownership that it wants. The result is a stalemate. And even if Kusile is built on time, it seems highly unlikely that its major coal supplier will be ready. This may of course have adverse consequences for our electricity supply crisis and for Eskom's disastrous financial position as it will have to continue spending large amounts of money producing electricity fuelled by diesel instead of cheaper coal power.

This kind of rule-making has ensured that major investors are not building new mines and Eskom faces what's being called a coal supply cliff from next year.

So, to deal with the consequences of this failed attempt to bend the industry to its will, government has included new provisions in the MPRDA to force mines to sell some of their production at lower prices locally. That may well be a short-term gain for Eskom, but in the long run it will simply make the problem worse. Coal mining in South Africa will no longer be profitable. So, large mining companies will put their investment money elsewhere. Mozambique is not far and has huge undeveloped coal resources.

There is a naive belief that investors will be forced to come here because we have so much mineral wealth. The truth is different. There are dozens of other mining jurisdictions where it is easier and more profitable to mine.

If this government truly wants investment in our mining, it has to rid itself of the notion that it can micro-manage the mining sector. The simple truth is, it cannot and any attempt to do so will bring serious consequences in falling tax revenues, lost jobs and a diminished supply of strategic minerals.

More than anything else, if this government wants to attract the investment our industry needs, it has to restore its own credibility. A good place to start would be in passing a realistic budget. [Applause.]

Mr J S MALEMA

"Committee Room E249 Main",Unrevised Hansard,22 Jul 2014,"Take 15 [Committee Room E249 Main].doc"

"Committee Room E249 Main",Unrevised Hansard,15 Jul 2014,"[Take-15] [Committee Room E249 Main][NW-2-49][mn].doc"

Mr J R B LORIMER

Mr J S MALEMA: Hon Chairperson, hon Minister of Mineral Resources, special greetings to the Deputy Minister of Trade and Industry and the convenor of the ANC Youth League. [Laughter.]

Hon Minister, we are disappointed that you are continuing with business as usual because those in the gallery who have been invited to this important occasion are representatives of imperialist forces. This is to the exclusion of ordinary workers who constitute the majority of the constituency in the mining sector. You continue to meet and talk about them without having any regard for their being present and listening to you directly deciding their future.

I thought knowing you and your ideological perspective, you would change the way things were done in the past - and this was more informed by your attitude when you were appointed as Minister of Mineral Resources. Like those who came before you, you were immediately whipped into line, and you complied with wrong tendencies, because you are more interested in position than principle. If you had remained principled, both the strike and the way of doing things in the department would be different today.

We ask that you remain true to your ideals and what you have articulated throughout your involvement in the struggle. Don't allow those who are compromised - especially those who committed class suicide - to deviate you from what constitutes your original thinking on where South Africa should go.

Mining directly and indirectly employs more than 1 million South Africans and, on average, 10 people depend on each miner. Therefore, mining is responsible for the lives and livelihoods of more than 10 million people.

We, however, cannot say with certainty that mining constitutes part of our future if the current government continues with a very weak and loose approach to mining in South Africa. We cannot say mining is the future, because it is currently the biggest contributor to environmental degradation. Mining towns are experiencing the highest level of disease, particularly TB and other occupational diseases.

The Minister of Health acknowledged that about 500 000 mineworkers are the group most vulnerable to TB after prisoners. Mining is supposed to be the biggest contributor to state revenue, and the amount of money collected as taxes. However, mining as a whole contributes less than R25 billion to the revenue of South Africa, meaning that all the mining taxes cannot finance even the education budget of one province, such as KwaZulu-Natal, whose budget for the current financial year is at R38 billion.

There are widespread instances of transfer pricing and base erosion in South Africa's mines and no one seems to be doing anything about it. Mineworkers in all sectors continue to be paid slave wages, and live under inhuman conditions. This happens even after the adoption of the Mining Charter, whose targets were supposed to have been achieved by 2014.

It is 2014 this year, and none of the existing mining companies can claim to have achieved the Mining Charter's targets and objectives. It is 2014 this year, but the reality is that mineworkers continue to live in squalor, despite a commitment in the Mining Charter to improve their living conditions.

Mining communities are not benefitting anything from mining, despite the Mining Charter's commitment that there would be proper mining community development plans. Employment equity targets set for the mining sector have not been met, and the majority of, if not all, rock drill operators, continue to be black workers, while their bosses are white workers, most of whom are members of the Solidarity Trade Union. Already! [Time expired.] [Laughter.]

Mr J A ESTERHUIZEN

Mr J S MALEMA

Mr J A ESTERHUIZEN: Hon House Chairperson, in previous years, the budget of this department has raised less concern than the department's actual performance. Several weaknesses as identified through parliamentary oversight remain unaddressed. This year, however, there is an added concern that inflation will outstrip the budget increase.

The economic climate in which this department must perform is suboptimal. Moody's has warned that strikes have assured South Africa of subpar economic growth for another year. Considering that mining contributes approximately 19% to the gross domestic product, problems in the mining industry are key aggravators.

Cost calculations of the five-month platinum strike, led by the Association of Mining and Construction Union, AMCU, are varied. One suggests that it will take more than 10 years for the lowest-paid underground worker to recoup lost earnings, based on the monthly increase the strike secured. Together with the economic cost, there was also cost in human lives and livelihoods.

The IFP therefore emphasises the department's responsibility to implement policies that protect people, communities and human wellbeing. It may struggle to do this as inflation eats away at the budget allocation.

South Africa's mineral resources offer us strategic advantage. We produce 10% of the world's gold and have an estimated 40% of the world's known mineral resources. The sale of primary minerals alone contributes over R300 billion to South Africa's economy and our mineral resources contribute significantly to job creation.

It is therefore essential that we protect and optimise what we have. Illegal mining activities are threatening the lives of the poor working class and cost the country R39 billion a year through the sale of illegally mined gold.

The Mineral and Petroleum Resources Development Act has not had the intended impact. Instead, it has led to less compliance and less investment, while creating more tension.

The continued reliance on migrant labour from neighbouring countries, rather than focusing on employment generation and development in mining towns and communities will result in further social and economic problems for our government to redress, at a cost to the country's overall budget.

Perhaps most urgent of all, this department needs to co-ordinate with the Departments of Water and Sanitation and Environmental Affairs to ensure that communities are not compromised by mining's intense water usage. Water shortages and environmental contamination and destruction must be prevented. In determining mining applications, the need for land for agriculture and food production must also be a key consideration.

To achieve all its performance targets within the allocated budget, this department will need careful and responsible management. We therefore urge that past performance weaknesses be addressed immediately. In support of that goal, the IFP supports the Budget Vote. Thank you. [Applause.]

Adv A D ALBERTS

Mr J A ESTERHUIZEN

Afrikaans:

Adv A D ALBERTS: Voorsitter, ek sal baie mooi praat. Minister, die VF Plus het al telkemale sy kommer uitgespreek oor die wyse waarop die regering omgaan met die minerale bates van die land. Suid-Afrika het 'n geweldige minerale rykdom, maar ons sukkel om dit tot ons voordeel aan te wend. Dit is daarom kommerwekkend dat die regering reeds sy lippe aflek vir die ontginning van skaliegas sonder dat die gevestigde minerale-industrie se probleme behoorlik aangespreek is.

English:

It is true that the problems in the mining industry have a long history and are very complex, but not unduly so that they cannot be solved. We need true leadership from all stakeholders to ensure a lasting solution to the labour-related impasse we have witnessed recently. Mining bosses need to look at better ways to invest in their workers and the communities around mining operations. Some companies like Kumba Iron Ore have set an example in this respect. However, broad-based black economic empowerment, BBBEE, does not democratise wealth, but merely aggregates it into the hands of the few, and that is not a solution.

Furthermore, unions must realise that the whole world is changing fast. While in the past the struggle was between workers and owners, mostly in racial terms, the struggle in the future will be between the human workers and the robot. While we are not yet in some science fiction dystopian future, we are entering the phase of mechanisation that will increase as technology develops. Machines, robots and other forms of technology will increasingly replace the human worker as the cost of labour disputes escalate.

Therefore, a balanced approach is needed to ensure a labour-intensive mineral resources industry that ensures decent work. If the unions push too hard, they will lose everything as the mines scale in technology or withdraw their business from the country. In that regard also, a state-owned mining company will not be able to alleviate this. The bankrupt Alexkor has shown that the state actually cannot mine at all.

Afrikaans:

Ons vind dit ook goed dat die Minister die Wysigingswetsontwerp op Mineraal- en Petroleumhulpbronontwikkeling vir eers wil terughou vir hernieude evaluasie. Die gratis 20% aandeelhouding wat die staat sou kry in alle eksplorasie- en produksieregte sal verhoed dat enige belegging in die industrie plaasvind. Die feit dat die staat 'n verdere 80% kan aankoop, sou kon veroorsaak dat die staat in effek maatskappye kan nasionaliseer onder die vaandel van die bestuur van strategiese minerale. Dit is niks anders as nasionalisering onder 'n ander naam nie. Die beperking van die uitvoer van sekere volumes minerale ingevolge die resep van strategiese minerale is ook dan teen die reëls van die Wêreldhandelsorganisasie. Die VF Plus hoop dat die Minister sal afsien van die planne, want dit sal die minerale- en petroleumsektor net eenvoudig in groter chaos laat.

English:

A further concern that is undermining confidence in South Africa's economy is the handling of the contentious matter of the expropriation of mineral rights. While the Constitutional Court did not view the appropriation of mineral rights as expropriation per se, it is trite that the state did allow for the facilitation whereby the rights that existed before were unilaterally alienated.

The Minister has actually admitted today that the state has effectively nationalised minerals. Given this position, surely the government must provide some compensation to those who have lost their mineral rights. One way of solving the problem is to provide that the previous mineral rights holders must share in the profits made by any mining company, as much as connected communities should share therein. This will provide for an equitable and elegant solution to a complex problem. Thank you.

The DEPUTY MINISTER OF MINERAL RESOURCES

"Committee Room E249 Main",Unrevised Hansard,15 Jul 2014,"[Take-16] [Committee Room E249 Main][NW-2-49][mn].doc"

Adv A D ALBERTS

The DEPUTY MINISTER OF MINERAL RESOURCES: Madam Chairperson, thank you very much for this opportunity. I want to recognise Minister Ngoako Ramatlhodi and other Ministers present; fellow Deputy Ministers – thank you for supporting us – the hon Chairperson of the Portfolio Committee on Mineral Resources, Mr Luzipo; Nkosi Zwelivelile Mandela and other traditional leaders present here today; religious, business and trade union leaders amongst us; hon members; ladies and gentlemen; comrades and friends,the last time I checked there were representatives of workers in the gallery, and most of the comrades I know do not represent imperial forces, hon Malema. I just want to state categorically that you cannot say that everybody in the gallery represents imperial forces. When it comes to ... [Interjections.] [Laughter.] ...

in an overall like you? [Interjections.]

The HOUSE CHAIRPERSON (Ms A T Didiza): Order, hon members!

The DEPUTY MINISTER OF MINERAL RESOURCES: It is my considered view that budgets by their very nature represent numerical expressions of policies within departments, and it is indeed an honour and privilege to address this House on the occasion of our Budget Vote for 2014-15.

This year we celebrate 20 years of democracy with overwhelming support for the ANC to continue with its radical socioeconomic transformation in general, and the full implementation of mining transformation in particular. Since the promulgation of the Mineral and Petroleum Resources Development Act, South Africa has grown in number of operational mines and quarries from around 800 to about 1 700, These mines have great potential for employment.

New technologies and massive value addition propositions are also at various stages of development. Therefore, hon Lorimer, there are new mines with massive investments in the industry and we continue to receive applications every day. Where there are any potential legal challenges, we ought to be circumspect in such matters, and the one that you mentioned here is such a matter.

As we reflect on the state of our mining sector, and look at gleaning lessons from our recent period of modern regulatory framework for the mining industry, it is safe to suggest that we face a number of challenges that require determined and systematic resolution. The catalogue of current issues that require both political and technical leadership includes a range of items such as the need to boost exploration and prospecting investment; matters of health and safety of the workforce; rehabilitation of the environmental legacy; illegal mining, which the office of the Deputy Minister is now seized with; mineral beneficiation and the revitalisation of mining regions across the country.

Preceding all these pressing items is a far more strategic issue, namely the need to revive the reputation of our mining industry and its global branding. Time permitting, I would like to deal with these issues in some detail in this House.

It is a fact based on evidence that the events of the past couple of years, and in particular the prolonged strike in the platinum mines, have seriously damaged the reputation of our mining industry and its governance structures. Whilst it is tempting to apportion blame to some or other sector players, it is nonetheless a matter of national interest that we instead summon all key role-players to focus on their collective responsibility to safeguard the overwhelming interest of the industry, its sustainability and its global competitiveness. The urgent rehabilitation of the industry's branding and its comparative positioning remain the topmost priority. To this end, we should certainly learn from our own lessons and experience, and that of others.

Structural issues of the industry need collective and effective resolution. There is a real risk that if matters are left to unco-ordinated sociopolitical and financial markets, the industry will evolve along the trajectory of capital intensification and resource underutilisation. The upshot of it all would be a steady contraction in the sector's employment level and other social benefits.

President Jacob Zuma, in his state of the nation address, highlighted the urgency of dealing with the sector's challenges. It is clear that the prosperity of the nation and our social welfare are greatly affected by the developments in the mining sector. This is particularly so if we consider the vast opportunities and the great potential that the mining sector has to offer. Careful analysis of our modern economic history would show that this sector has a pivotal role in the modernisation of the South African economy. It is therefore a national imperative that we focus on the ways and means of unlocking the inherent potential of the sector at the same time that we deal with the outstanding structural issues facing the industry.

An area that requires our focused attention is the field of exploration investment. Despite our industry's considerable natural endowment of resources, South Africa's share of global exploration and prospecting investment has declined considerably over the past two decades. We need to reverse this trend if we hope to have a sustainable mining sector and promote junior and emerging mining companies. Prospecting is the only route to the establishment of growing mining companies, and it is the practical means of replacing our old and ageing mines.

At the same time, our national interest calls for a systematic and integrated mineral beneficiation drive. Clearly, we cannot continue to mine and export our ore and other raw materials for processing elsewhere, as this severely limits the benefits we can derive from the exploitation of our resources. Therefore, there is a need to increase value addition to our minerals before they are exported, in line with government's stated mineral beneficiation and industrialisation priorities.

With regard to health and safety, a crucial part of the department's mandate relates to ensuring that workers are healthy and that their working environment is safe. In this regard, the Department of Mineral Resources will continue to promote the health and safety of workers and strictly monitor companies' compliance with the Mine Health and Safety Act. We expect companies also to play their part in that regard.

It is common knowledge that every year South Africa's mining in many commodities is being done deeper and deeper underground. 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 needs a paradigm shift; something that needs urgent and ongoing attention.

The mining sector has increasingly been giving more attention to health and safety matters as a result of the promulgation and implementation of the Mine Health and Safety Act, as amended. However, the sector should continue putting more effort into reducing the number of occupational diseases reported by the mining sector, mainly pulmonary tuberculosis, TB, silicosis, noise-induced hearing loss and asbestosis, which still prevails today.

The chairperson of the portfolio committee has elaborated on the statistics as to how we have reduced the number of fatalities over the years. Yet, despite these improvements, it is still of great concern that we continue to experience loss of life, injuries and ill health of mineworkers in the mining industry, mainly in the gold sector. The mining industry should continue to implement effective measures to ensure that there is a significant and sustainable improvement in the health and safety of mineworkers. The department, in collaboration with our social partners, will also continue to ensure compliance with and implementation of the National Strategic Plan, and the HIV/Aids and TB programmes in the sector.

The department also continues to be greatly concerned with regard to the health and safety of women workers, including the inhuman treatment by fellow workers in some of the underground workplaces. Hence, the mining sector should continue to take appropriate measures to ensure that women have safe and dignified working conditions. The personal protective equipment available for use in the mines does not fit women workers as most PPE are designed based on the male body structure. In this regard, research has been conducted by the Mine Health and Safety Council and recommendations of this study to provide appropriate and suitable PPE for women in mining are well in progress. Further research is currently being conducted through the council to enhance women's health and safety.

We are also pleased to report that, together with the Department of Health and the Department of Labour, we implemented the One Stop Service Centres. These One Stop Service Centre facilities for ex-mineworkers are based at public health facilities and will deliver the following services: health and rehabilitation services; social services; compensation services; and facilitation of access to other benefits like the Unemployment Insurance Fund, UIF, provident funds and pensions. [Applause.]

We should also thank traditional leaders, especially those in the Eastern Cape, who have helped us to mobilise ex-mineworkers so that we are able to deal with this matter effectively.

The initial sites for the establishment of One Stop Service Centres are Mthatha and Carletonville respectively. The Mthatha facility is based at the Nelson Mandela Academic Hospital and is funded from the national and provincial Departments of Health, whereas the Carletonville facility, based at Carletonville Hospital, is funded by the Chamber of Mines and the local mining companies in Carletonville. Let me also say that we intend to open another centre in Mthatha because the current one is so popular that it cannot cope with the demand. [Applause.] Additional sites will be set up in Kuruman in the Northern Cape and Burgersfort in Limpopo. This will hopefully be done by August or early September.

We look forward to the support of this House and that of the Portfolio Committee on Mineral Resources as we discharge our mandate in this current administration.

In the minute remaining, I want to deal with one final matter. It deals with the living and working conditions of mineworkers. To give historical perspective, on 3 August 1941, the ANC conference pressed ahead with strengthening the African Mineworkers Union. By 1944, membership of the African Mineworkers Union had grown to thousands. The response of the Smuts government and that of the Chamber of Mines towards these developments was lukewarm.

In 1943, the government set up the Landsdown Commission to investigate the living and working conditions of mineworkers in the industry. Even the recommendation of the Wage Board to Parliament was simply turned down.

So, this is not a new matter. We can't come here and pretend that the struggles of mineworkers are something that came with the Association of Mineworkers and Construction Union, Amcu. At that time, the demands included a living wage; the demolition of hostels; the reduction of working hours to 40; the provision of free safety equipment and the improvement of food in the compounds. Since these matters were not attended to, the demands were set out in a letter written by the African Mineworkers Union to the Chamber of Mines on 3 May 1946.

Until today, the Chamber of Mines has never acknowledged receipt, nor responded to that letter. This type of arrogance and insensitivity displayed by mine bosses, together with their government then, precipitated the historical 1946 strike. Sixty years later in this Parliament, a resolution was taken , as Parliament, in 1986 that we support the National Union of Mineworkers, firstly, by building a museum for mineworkers; econdly, to investigate the living and working conditions of mineworkers and ensure that they are improved, andthirdly, that one of Parliament's buildings must be renamed after Uncle J B Marks, who led the strike in 1946. [Applause.]

We have already engaged – I have to say that this was supported by all political parties then without exception – with the office of the Deputy Speaker to ensure that the Marks Building is renamed, hopefully before the end of this year, J B Marks Building. Thank you very much. [Applause.]

Mr M H MATLALA

TAKE 17

The DEPUTY MINISTER OF MINERAL RESOURCES

Mr M H MATLALA: Hon Chairperson, hon Minister, Deputy Minister, hon members, ladies and gentlemen, it would be naive of all of us to take for granted the effects of many centuries of repression that we are seeking to undo in order to truly normalise our society in keeping with this democratic promise, and securing the future growth of the industry.

One of the adversities in our national history was brought about by the proclamation of the Natives Land Act of 1913. The Act created a system of land tenure that deprived the majority of South Africans of the right to own and work their land, resulting in major socioeconomic repercussions. The Natives Land Act was a consolidation of this system of dispossession that South Africa was already moving towards, with one of the pieces of legislation that laid the foundation for a spatially divided South Africa passed in 1894, known as the Glen Grey Act. The Natives Land Act was specifically configured to deal with the land, labour and franchise, all of which were geared towards disenfranchising blacks and forcing them to provide cheap labour for the development of mines.

Today, we are still grappling with the microcosm of the societal effects of the Natives Land Act, which had a profoundly negative impact on the African population across the nation. The efficacy with which the Act and subsequent repressive legislation of the apartheid government was implemented left the African child with a deep scar of hopelessness.

In our pursuit to achieve the ideals of a nonracial, nonsexist and democratic South Africa, we have modernised our mining regulatory regime through the introduction of the Mineral and Petroleum Resources Development Act that came into effect in 2004. Mining reform was not only unprecedented, but also vested the custodianship of minerals in the state in line with such international conventions as United Nations Resolution 1803.

In order to correct the centuries-long prohibition of blacks from active participation in the economy necessitated that our normalisation policies that seek to change the ownership patterns reflect an ordinary profile of ownership in order to maintain the relevance of the industry in our society and ensure long-term sustainability.

On 25 June 1955, our people, in spite of the reign of terror of the racist regime, found ways and means of paying homage to the fallen heroes and heroines and those languishing in Vorster's dungeons and they reaffirmed their unyielding commitment to pursue the struggle relentlessly until final victory was won in 1994. Finally, thousands of delegates, including workers, peasants, intellectuals, women, youth and students of all races gathered in Kliptown on 25 June and 26 June 1955 to make a statement of the core principles of the ANC-led South African Congress Alliance, as inscribed in the Freedom Charter.

In 2002, when the Mineral and Petroleum Resources Development Act was considered by Parliament, the prophets of doom in the unpatriotic and cold opposition benches projected that the Act would deter investment and that the Bill marked the beginning of a short journey to the end of the mining industry. To the contrary, empirical evidence, not rhetoric, pointed to the democratic government of the people of South Africa as having created a predictable regulatory framework that was in sync with the dynamic socioeconomic and political landscape of our country and international conventions such as United Nations Resolution 1803 in 1962.

This has resulted in the following milestones: vested custodianship of mineral rights in the state in order, amongst other things, to facilitate the orderly development of the country's natural resources and enable equitable access, especially for historically disadvantaged South Africans; gross fixed-capital formation increased significantly under the MPRDA, from R18 billion in 2004 to R75 billion in 2012; foreign direct investment grew exponentially from R112 billion in 2004 to R389 billion in 2012; employment also grew from approximately 448 909 in 2004 to 518 240 in 2012; gross sales of primary minerals appreciated from R98,5 billion in 2000 to R371,7 billion in 2012, whilst the number of operating mines increased from 993 in 2004 to 1 579 in 2012.

Transformation remains a critical point of focus for this government, which is directly geared towards normalising our society. We keenly await the findings of the Mining Charter report, which will inform an appropriate set of levers that must be invoked to ensure that we continue along the trajectory of results.

The mineral wealth of a country is a normal patrimony that must be utilised for the benefit of its citizens. This assertion is the core tenet of the MPRDA, which is consistent with international conventions that affirm its relevance, such as the United Nations General Assembly Resolution 1803 of 1962. This UN resolution affirmed that the right of peoples and nations to permanent sovereignty over their wealth and resources must be exercised in the interests of their national development and of the wellbeing of the people of the state concerned.

Even though South Africa is blessed with some of the largest reserves of minerals in the world, this abundance is ultimately finite and must be the basis on which a more diversified, industrialised and ultimately sustainable economy is developed for the benefit of its citizens. The mineral beneficiation proposition will create a domestic market for local miners and does not require them to subsidise the manufacturing industries. It will also ensure that security of supply is guaranteed for local manufacturers or beneficiators and will optimise use of the currently installed infrastructure for the movement of bulk commodities. These interventions are intended to optimise links between the mining sector and the manufacturing sector.

Accordingly, the sustainable mineral beneficiation value proposition is necessary because minerals are ultimately finite, and with their depletion will come a wave of foreclosures and the attendant cessation of economic activity. Export revenue realised from the sale of primary commodities is more than offset by the import of high-value manufactured goods, thus placing negative pressure on the country's balance of payments.

An example of the value realised from beneficiating our minerals can be seen in the form of significant revenue potential realised from adding value to a mineral such as titanium, the 2010 prices of which were the following: Titanium ore sold for US$136 per ton; refined titanium metal sold for US$907 per ton; an ingot of titanium sold for US$2 041 per ton; and a rolled sheet of titanium metal sold for US$14 741 per ton. Effectively, the final product of titanium is sold at 108 times more than an original ton of mined ore, representing the value capture potential of mineral beneficiation. Also, each step in the beneficiation process represents additional employment directly and indirectly.

The amendments to section 26 are intended to put in place key interventions.

The HOUSE CHAIRPERSON (Ms A T Didiza): Hon member, your time has expired.

Mr M H MATLALA: The ANC supports the Budget Vote. Thank you. [Applause.]

Ms N M MDAKA

Mr M H MATLALA

Ms N M MDAKA: Chairperson, hon Minister and Deputy Minister of Mineral Resources, chairperson of the portfolio committee, Members of Parliament, officials of the Department of Mineral Resources, all guests and fellow South Africans, good afternoon, dumelang, molweni, thobela. [Interjections.] [Laughter.]

The health and safety of mineworkers should continue to form an important part of the sustainability of the mining sector. Hence, it is heartening to note that, as we continue to celebrate the good story of freedom and democracy – hon Malema, the good story of freedom and democracy! – the mining sector recorded the lowest fatalities ever during 2013, with more workers going home safely to their families than over 20 years ago. It is further encouraging that this landmark has been reached whilst there has been a significant increase in workers being employed by the mining sector, with the introduction of the Mineral and Petroleum Resources Development Act.

We commend the role of the department in ensuring that such a milestone is achieved. This is extremely encouraging, and a step in the right direction. We further acknowledge the critical role that the unions and buildings ... yho! [oh!]... business ... [Laughter.] ... heha ke, nihleka ntoni ngoku? [... what are you laughing at now?] ... continue to play in improving ... ufuna ukuwela na wena lungu elihloniphekleyo? [... do you want to cross the floor, hon member?] ... [Laughter.] ...

The TEMPORARY CHAIRPERSON (Ms A T Didiza): Hon member!

Ms N M MDAKA: ... the health and safety of mineworkers. We also acknowledge the important role that mineworkers that have passed away – our fallen heroes and heroines – have played in shaping the economy of this country. Their efforts will not have been in vain.

Whilst we recognise the improvement, it is of great concern that we are still experiencing loss of life, injuries and occupational diseases. So we, as the ANC, urge the mining sector to constantly focus on both health and safety, to ensure that zero harm is done to workers. Underline that. We, as the ANC, care very much. The department should also continue to ensure that the working environment of the mineworkers is safe, by taking the necessary steps against those mines that do not comply with the legal provisions.

It is also important for the mines to give more attention to occupational health matters as there are more deaths in the industry as a result of occupational diseases than of mine accidents. I am pleased to note that the department is collaborating with the relevant departments and stakeholders in implementing measures to improve general health issues, such as noise-induced hearing loss; silicosis – and that one is a dangerous disease. I should think that those who come from the rural areas know that as most of our parents and brothers died due to this disease – exposure to dust; living conditions; TB and HIV and Aids. Also, although the sector has extended work with local community stakeholders to support HIV and TB-related initiatives, much still needs to be done.

The ability to improve the health of workers is limited if education and outreach efforts are not extended to the affected communities. Accordingly, partnerships must continue to be enhanced and strengthened between the mines as well as neighbouring communities and labour-sending areas. In this regard, social and labour plans should be used to advance this partnership. Such partnerships will not only help to reduce the risks to workers, but will also promote a healthy community, which in turn can enhance the mining sector's reputation for social responsibility.

In conclusion, the ANC supports Budget Vote No 32. I thank you. [Applause.]

Ms D CARTER

Ms N M MDAKA

Ms D CARTER: Chairperson, in order to eliminate poverty, reduce inequality and create employment, South Africa needs faster growth.

According to the National Development Plan, NDP, direct mining activities declined from 21% in 1970 to only 6% of our GDP in 2010. During the 2001 to 2008 commodity boom, our mining industry shrank. Today, our mining sector is smaller than it was in 1994.

The NDP lists the following constraints relating to the mining industry: The uncertainty in the regulatory environment and in respect of property rights; electricity shortages; electricity prices; infrastructure weaknesses, specifically in relation to rail and ports; and a lack of skills. All of these issues are avoidable, and could have been avoided. All of these issues are of the government's very own making.

Over the past few years, we have kept hearing the Mandela, Zuma and Gupta names in the news in respect of mining activities that have been in breach of our laws and our regulations. [Interjections.] The Idwala coal mine in Mpumalanga, to which a Zuma name is also attached, has been mining in an unbelievable way for three years, and is leaving a trail of destruction. Are certain people free to operate outside the law? We need to know.

This government continues to promise people that it would broaden participation in the mineral sector, but it is the politically connected few and a small number of families who remain the mining barons of South Africa. Are they obeying the law and are they paying their workers a living wage? We need to know that.

The department acknowledges the finding of the NDP that there is significant unrealised opportunity in South Africa's mining sector and that an opportunity exists to create an additional 300 000 jobs. Does the department have plans to show that we are on our way to creating those jobs and realising all of the missed opportunities?

Since the tragic happening at Marikana, our country has been waiting to hear what progress the department has made, in conjunction with labour and business, in improving mineworkers' working and living conditions.

In conclusion, Cope believes that we need to see a detailed plan with goals and time frames as to how the Ministry and department intend giving effect to the vision set out in the NDP. I thank you. [Applause.]

Mr H C SCHMIDT

"Committee Room E249 Main",Unrevised Hansard,06 Aug 2014,"Take 19 [Committee Room E249 Main].doc"

Ms D CARTER

Mr H C SCHMIDT: Hon Chair, it seems to me that the hon Deputy Minister has just set the pace for radical transformation by renaming, or intending to rename the Marks Building to J B Marks Building. That is a remarkable pace, Deputy Minister! We will keep that in mind! [Laughter.]

The current financial year will reflect sadly in the history books as having endured the longest and most costly labour strike in the mining industry. This unfortunate incident under an ANC-led government prepared to make unfulfilled undertakings has only provided the ANC with the proverbial extra time to deliver. More concerning is that the strike followed on one of the biggest blots on the reputation of 20 years of ANC governance, the Marikana shooting of 34 mineworkers by the SA Police Service in August 2012.

Whilst political considerations were widely held to be the cause of failed attempts to reach a settlement agreement in the recent Association of Mineworkers and Construction Union strike, it appeared that the underlying reasons were ultimately the shocking socioeconomic conditions to which workers and families are still subjected.

Settlements have been reached, and increases in salaries and other benefits such as living-out allowances have been agreed upon, while shop stewards and other union officials received their salaries without so much as an interruption. However, the various causes of the strike continue to exist.

The Minister's failed and late intervention during the strike did not reflect positively on the ANC government. Even less so did the ANC's decision to torpedo proposed amendments to labour laws – to allow for a secret ballot before embarking on a strike – which served before the portfolio committee towards the end of the last parliamentary term and were agreed to by the National Economic Development and Labour Council, Nedlac, in advance.

The right to a secret ballot might arguably have led to a quicker ending of a strike which cost the platinum industry, its workers in Rustenburg, the North West province, and the country billions of rands. This resulted in a total loss estimated to be in excess of R30 billion.

Following the longest strike in history, one would have expected government to provide tangible progress, at least in a form of a co-ordinated governmental strategy between the departments of housing, Mineral Resources, Public Works as well as local government. No tangible evidence of any strategy to deal with the consequences of this strike, the prevention of future strikes and, more importantly, the improvement of living conditions of those affected have been forthcoming in the recent months.

The failure by the department and hence government to appreciate the importance of preventing similar strikes and resolving its underlying causes is reflected in the same old uninteresting budgetary provisions with the same old undertakings with a strong indication of business as usual, as illustrated in the past 20 years.

This is a strong indictment on the department that appears to lack the will, ability and capacity to improve the lives and conditions of the average miner and his family. Is it possible that it takes this stance in light of the suggestion that these miners, in general, do not support Cosatu, hence one of the tripartite alliance partners of the ANC? Whatever the answers to these questions, it is concerning to note that little, if anything, has been put into operation by the department or the ANC government.

Concerning the performance of the mineral regulation department, it must be noted that the Mineral and Petroleum Resources Development Act Amendment Bill has still not been passed. The Bill will possibly be referred to Parliament by the President, after ANC members acted as the puppets of their masters, the Cabinet, shortly before the elections.

It cannot be said that ANC members of the portfolio committee were not warned by the major oil companies, various NGOs and community organisations that the Bill was heading for disaster in the mining and oil industries.

It is interesting to note that none of those committee members returned to the mineral portfolio committee after the recent elections. Could it be that they had had served their useful purpose of ramming the Bill through Parliament despite all contrary indications as to its appropriateness in a slowing mineral economic environment?

It is unfortunate that figures that reflect on the actual performance or lack thereof by the department are only provided after express and continuous requests by members of the portfolio committee. Those figures have to date not been forthcoming. The poor written responses in replies to parliamentary questions by the previous Minister revealed very little information, and were an indication of a Minister trying to hide something.

Hon Minister, I am sure that, with a little bit of effort, you will be able to dramatically improve the quality of replies to parliamentary questions and report to the portfolio committee on a more regular basis.

Various recent media reports indicate that certain politically well-connected companies are being rejected contracts with Eskom, particularly due to their noncompliance with conditions relating to specifically environmental considerations.

A serious question mark is placed over the department's ability and, more importantly, its political willingness to apply the mineral dispensation fairly, without fear or favour. By taking politically affiliated matters to court and supporting such parties, as was the Imperial Crown Trading court case – which the department lost – it will not only increase the financial risk of the department, but also create the perception of a biased approach to politically connected applicants.

The onus is on this department and the Ministry to prove these allegations and perceptions wrong.

The department needs to ensure that the process to be followed regarding the assessment of compliance by the mining houses to the Mining Charter is credible. It should not be a repeat of the disastrous attempt in reporting on the compliance of the Mining Charter with the 2009 deadline. Mining Houses should be afforded an opportunity to reply to the draft report, measuring compliance with the Mining Charter before its release. It is one of the most basic requirements of the law, the audi alteram partem rule, otherwise known as "hear the other side".

A consistent recurrence of decisions by the National Prosecuting Authority not to prosecute offenders accused of offences in the mineral sector is disturbing. In this regard, the failure by the National Director of Prosecutions, NDPP, not to prosecute John Block in the Soutwerke case after the Supreme Court of Appeal, in particular, referred the matter to the NDPP for possible prosecution, is concerning. So too has no decision been made by the NDPP regarding the politically well-connected Aurora Systems matter, leaving thousands, if not tens of thousands of workers, without income for months, if not years. This is totally unacceptable. Thank you. [Applause.]

Nkosi Z M D MANDELA

"Committee Room E249 Main",Unrevised Hansard,23 Jul 2014,"Take 20 [Committee Room E249 Main].doc"

Mr H C SCHMIDT

Nkosi Z M D MANDELA: Hon Chairperson, hon Minister and hon Deputy Ministers, hon members, distinguished guests, ladies and gentlemen, good evening. This Budget Vote comes at a time when, as a country, we will be celebrating the international Nelson Mandela Day on 18 July. We call on all South Africans to adhere to His Excellency President Zuma's call that we clean up our communities. [Applause.]

I am indeed honoured to address this august House during this debate on Vote 32. I would like to commend the Minister, the Deputy Minister and the department for the sterling work that they are doing and assure them of the unwavering support of the ANC for this Budget Vote... [Applause.]... to ensure that we reshape and transform this industry as an important platform to build a great future for our country and our continent. Parliament and our committee, in particular, will ensure that no stone is left unturned in addressing the challenges faced in this sector and ensure that it reaches its potential to transform the lives of millions of our people.

I want to dedicate my input today to the men and women who have dedicated their lives, sometimes at great peril, to work in the deep and dark recesses of our mines, suffering great hardship and enduring some of the most difficult working conditions for a tiny fraction of the value of what they unearth. Many descend into the depths of the earth before dawn, not knowing whether the day would be their last. It is the sweat and blood of such mineworkers who have laid the foundations of what we today celebrate as one of the country's greatest industries.

While the industry has been the main driver of phenomenal economic growth and industrialisation for more than a century, it was also partly responsible for the institutionalisation of racial discrimination and the exploitation of cheap labour. It is this contradictory legacy that still haunts us as we labour to ensure that the industry lives up to its full potential and that those who play a pivotal role in creating this massive wealth receive a just share of its fruits.

Before the 1990s, the mining sector was owned and operated by six very large, powerful mining finance houses and we had a situation where only 9% of the country's population owned all the productive mining assets.

Within the first decade of the ANC-led democracy, we saw radical changes that changed the face of this industry. However, none was more effective than the passing of the Mineral and Petroleum Development Resources Act, which ushered in a completely new regulatory environment that quantum-leaped the metamorphosis of the industry and spurred unprecedented activity to transform the mining ownership patterns and operations. We grew the industry from merely 800 mines with the advent of democracy to over 1 700 mines today. And I can assure the hon Lorimer that this is a result of the ANC-led government, because the ANC created opportunities for investments in this sector. In addition, the Mining Charter, adopted by the industry, gave further impetus to the emergence of new players.

Some of the newcomers to this august House, seated on this side of the House, often raise issues on the nationalisation of mineral resources. Let me assist these hon members in this case. The Mineral and Petroleum Development Resources Act, No 28 of 2002, effectively nationalised all mineral resources, returning custodianship of South Africa's vast mineral wealth to the state and gave expression to the call of the Freedom Charter that says and I quote:

The people shall share in the country's wealth ... the mineral wealth beneath the soil... shall be transferred to the ownership of the people as a whole.

This was the vision at the dawn of democracy in 1994, which this ANC-led government pursued through our founding Reconstruction and Development Programme that says, and I quote:

We seek the return of the private mineral rights to the democratic government in line with the rest of the world.

IsiXhosa:

Abanakuyazi ke loo nto ngokuba baphuma ngerisesi esikolweni somrhabulo. [Kwahlekwa.] [Kwaqhwatywa.]

English:

In the ensuing decade since 2004, close to R400 billion's worth of black economic empowerment deals have been concluded in the wake of the implementation of that legislation, enabling historically disadvantaged people to participate in the industry at ownership level and irreversibly changing the face of the industry.

It is for this reason that we look at this watershed year of 2014 to assess the progress made and as we tackle the next decade of mining development and transformation, we do so knowing that mineral resources constitute such an important component of our economy. We also do so with a great deal of optimism because South Africa has such a vast wealth of experience, expertise and depth in research and development that is sorely needed on our entire continent and has the potential to change the life of each and every child in this country and on the African continent.

Mineral resources research and development therefore represents the bridge that can quantum-leap us into a new future, one in which we are not only net exporters of our own mineral wealth, but also global leaders in the mining knowledge economy, innovation and beneficiation of upstream and downstream economic activity, creating employment and wealth. We can change the development trajectory of impoverished villages and create new platforms, spurring manufacturing and industrialisation.

We must applaud the efforts of the research and development sector within the mining industry. We call on the government to further strategically invest in research and development projects in mining that can position the industry for long-term viability, extend the life of our valuable reserves, innovate for optimum recovery, enhance mining safety and deploy enhanced technology for better results and achieve greater development impact.

We therefore applaud the ongoing work of Mintek, established in terms of the Mineral Technology Act, No 30 of 1989, to provide research, development and technology that foster the development of business in the mineral industries.

We must push strongly for companies to adopt zero harm policies. Mining research and development must also ensure that we usher in an era of zero harm in the area of mine safety.In 1993, there were over 600 fatalities in the mining sector, but by 2013, the number had been reduced to 93. However, this cannot be the cause for complacency or a reason to pat ourselves on the back. We must continue our safety drive and ensure that we strengthen the state's monitoring and evaluation capacity in order to further drive down fatality levels and enhance safety. We therefore welcome the One Stop service facilities for ex-mineworkers and call on traditional leaders to inform their people to make use of these facilities.

We must push strongly for companies to adopt these zero harm policies. Zero harm is an objective that is not negotiable. Each life lost is a life too many and means that a family has lost a breadwinner, a company has lost a valuable human resource and our economy and country has lost all that it has invested in that individual. It is a price that is too high to pay and a cost that we cannot afford, not to mention the social, emotional and personal trauma that is sustained.

It is for this reason that we are still painfully processing the tragic events at Marikana and we will probably do so for a long time to come. Hon Schmidt, it is easy to a point finger and find fault, but it is a collective responsibility that we have to carry. It is very easy to try to score cheap political points and take delight in the sound bites of the noise that is made. However, it is infinitely more important that we take stock and deal with the real issues that confront our brothers, sisters, fathers and mothers who slog under the most difficult and hostile conditions, sacrificing their sweat and tears so that we can lay the basis of a vibrant economy and a healthy and strong nation.

I recall the utter desolation as the body of a breadwinner, Michael Ngweyi, was brought home for burial in my own village of Mvezo, Great Place. I was moved at the horrid consequences that stared his family in the face at burying a loved one; one through whose efforts a family was saved from hunger and poverty; one through whose children could be clothed and go to school, and through his work deep down in the dark recesses of the mine in Marikana, he provided light and hope to many in our dusty village and this diverse country of ours.

The widows of Marikana are not served by the fingers that are pointed, nor by those opportunists that jump on the bandwagon only to boost their own public profiles, yet take no responsibility for ensuring that a tragedy of this nature never takes place again, and that those affected, be it at Marikana or by any other tragic loss of life, enjoy a bright future, the loss of a loved one does not represent the loss of hope and all prospects for a viable future by those who are sadly left behind. If we do so,we would indeed have failed in our duty as fellow South Africans and as a country that cares for all our people.

In this regard, Michael Ngweyi's widow, Nosihle Ngweyi, with the assistance of the ANC-led government, has been appointed by the Mvezo Traditional Council to be a community liaison officer, CLO, for the phase 2 access road to ensure that she is a breadwinner. In so doing, the ANC-led government ensured that she upheld the dreams and hopes for a better life for the children of her late husband, Wanda and Olothando. [Applause.]

We must approach mine safety and security as if it is an inseparable part of our transition to greater responsibility in our young democracy. Only when we imbibe the truth and value our slogan, "An injury to one is an injury to all" in its fullest sense, will we take collective responsibility for the tragedies in this industry and for the lives lost. Then perhaps no miner will ever have to suffer being forced to work in the most life-threatening circumstances. We can then and only then say with one voice and with full conviction: Never, never and never again shall our country experience such. I thank you. [Applause.]

The MINISTER OF MINERAL RESOURCES

"Committee Room E249 Main",Unrevised Hansard,06 Aug 2014,"Take 21 [Committee Room E249 Main].doc"

Nkosi Z M D MANDELA

The MINISTER OF MINERAL RESOURCES: Hon Chair, I wish to respond quickly to a few issues that were raised.

Hon Schmidt, the idea of our intervention was not to resolve the strike ourselves. That was a matter between labour and employers. However, in the event of a stalemate, we thought it necessary to assist the parties to find one another. To that end, we asked the Labour Court not to pronounce on the outcomes of its mediation so that we could bring the parties back into the system.

We did not want government to replace institutions that were created to resolve labour issues in the country. That explains the intervention, our withdrawal and why the parties signed three to five days later. I am grateful to them, for having done what they did to save the country's economy. I also want to thank all those in the technical team who were there, the technical team initially led by the Deputy Minister. Thank you very much.

The matter of Aquila Resources is on my desk. I will attend to it as a matter of urgency. We do not have time to waste; we have to get the country working.

Dr Ramontja was chairperson of the Pan-African Mineral Development Company before he became director-general. He resigned from that position after his appointment as director-general. [Interjections.] We are willing to look at the facts.

I want to commit to working very well with the portfolio committee. It is your job to probe and assist us and to correct things before they get out of hand. I am told that eight questions have to be answered. We will definitely answer them.

As far as state participation is concerned, in 1948, when the National Party came to power, they understood that they had to deal with the poor white problem. As they went about doing that, the state was put at the forefront of economic transformation. That project delivered the outcomes for Afrikaners that one has seen in South Africa. [Interjections.] No, we learn from them as well. [Interjections.]

Alexkor is but one example and the current mine is actually doing very well. By the way, the Iron and Steel Corporation of South Africa, Iscor, was a state-owned company before 1994. Somebody decided to tear it apart. Therefore, you cannot always move from the premise that state participation in the economy is dangerous or negative. It is not necessarily so; it is not always so. In fact, you would find different outcomes in different situations.

With the presidential intervention team, we are involving local government, the SA Local Government Association, Salga; we are involving everyone. I can tell you, the example we saw last week in Marikana on Lonmin's ground was that of the provincial government leading the process of rebuilding those communities. I can assure this House that we are going to see more collaborations and inter-collaborations between us and other stakeholders. We are not looking for glory, we want the job to be done. Others can take the praise. That is the attitude that informs my approach in this Ministry.

Hon Carter, the number of mines has actually increased quite significantly. I have a whole page of statistics, but I do not have the time to go through it. All I can say is that the gross sales of primary minerals has increased from R98,5 billion in 2000 to R371 billion in 2012. We can look at the other statistics at some other point.

I commit my department to looking into our own internal reorganisation, particularly the issue of an inspectorate and related matters. These will be attended to, and we hope that you could assist us with the implementation plan as we go along in this Ministry.

I have ordered an organisational review across the board so that we can see which areas need to be strengthened. For instance, the issue of stakeholder consultation with respect to gas and shale gas is something new, and we are putting in place mechanisms to interact in a meaningful way with the stakeholders, which include the communities in the Karoo, the farmers, villagers, farm workers and so forth. We would want to have that interaction with them. I am most grateful for the opportunity. I thank you. [Time expired.] [Applause.]

Debate concluded.

The TEMPORARY CHAIRPERSON (Ms A T Didiza): Members are reminded that the Extended Public Committee debate on Vote No 24, Justice and Constitutional Development, will take place in the National Assembly Chamber at 19h10; the Extended Public Committee debate on Vote No 37, Transport, will take place in the Old Assembly Chamber at 19h10; and the Extended Public Committee debate on Vote No 9, Government Communication and Information System, will take place in Committee Room E249 at 19h10.

The Committee rose at 18:40.


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