Hansard: NA: Mini-plenary 2
House: National Assembly
Date of Meeting: 19 May 2022
Summary
No summary available.
Minutes
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MINI PLENARY - NATIONAL ASSEMBLY
THURSDAY, 19 MAY 2022
VOTE NO 34 – MINERAL RESOURCES AND ENERGY
Watch: Mini-plenary
PROCEEDINGS OF MINIPLENARY SESSION – NATIONAL ASSEMBLY CHAMBER
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Members of the mini-plenary session met on the virtual platform at 14:00.
The Acting Chairperson Ms R M M Lesoma took the Chair and requested members to observe a moment of silence for prayer or meditation.
The ACTING CHAIRPERSON (Ms R M M Lesoma): Hon members, before we proceed I would like to remind you that the virtual mini- plenary is deemed to be in the precinct of Parliament and constitutes a meeting of the National Assembly for debating purposes only. In addition to the Rules of virtual sittings the Rules of the National Assembly including the rules of debate shall apply. Members enjoy the same powers and privileges that apply in a sitting of the National Assembly.
Members should equally note that anything said in the virtual platform is deemed to have been said to the House and maybe ruled upon. All members who have logged in shall be considered to be present and are requested to mute their microphones and only unmute when they are recognised to speak. This is because the mics are very sensitive and will pick up noise which might disturb the attention of other members. When recognised to speak, please unmute your microphone and connect your video. Members may make use of the icon on the bar at the bottom of their screens which has an option that allows a member to put up his or her to raise points of order. The secretary will assist or alert the Chairperson to members requesting to speak.
When using the virtual system, members are urged to refrain or desist from raising unnecessary points of order or interjections. Hon members, we shall now proceed to the Order of the day which is Debate on Vote No 34 – Mineral Resources and Energy, Appropriation Bill. I now recognise The Minister of Mineral Resources and Energy.
APPROPRIATION BILL
Debate on Vote No 34 – Mineral Resources and Energy:
The MINISTER OF MINERAL RESOURCES AND ENERGY: Hon House Chairperson, His Excellency, President Cyril Ramaphosa in absentia, His Excellency Deputy President Mabuza, Ministers, Deputy Ministers, hon Deputy Minister of Mineral Resources and Energy, Dr Nobuhle Nkabane, hon members of the National Assembly, Acting Director-General of the Department of Mineral Resources and Energy, Ms Patricia Gamede and team Department of Mineral Resources, chairpersons and chief executive officers of our state-owned entities, captains of the industry, distinguished guests, ladies and gentlemen, domestic and global economic realities under which our budget isdelivered today remain dim, continuing with the difficult conditions of 2020 and 2021. In partnership with the Minister of Finance, we have introduced mitigating measures to contain the rise in fuel price. However, due to global events pushing
oil prices above US$100 per barrel and high US interest rates, fuel prices are set to rise again. The department has implemented various intervention measures on energy security and supply. However, load shedding is commonplace, adversely impacting mining production and the economy broadly. Therefore, we are highlighting the fact that load shedding is actually a negative factor in the economy. We have, nevertheless, and against odds, made good progress since our last Budget Vote.
To meet our commitment for universal access to electricity, 166 000 households were electrified as a result of the integrated national electricity programme, INEP. We plan to connect an additional 640 000 households to the grid in the next three years. Energy efficiency is important with more than 200 municipalities participating in the energy efficiency and demand side management grant programme. Forty-five municipalities are funded through the fiscus and complemented by donor funding. During the 2022-23 financial year, we will accelerate the energy efficiency campaign to save energy in the energy sector. Integral to reforms, we have amended the Electricity Regulation Act to create a transmission entity to act as wheeler and dealer of electricity. In other words, we are creating a common place. That common place will buy electricity from generators and wheel it to the consumers wherever it is ordered. The Bill, tabled in Cabinet in January 2022 and published for comments, is being finalised. It will be presented to cabinet for approval with the intention to table it in Parliament by the end of July 2022. Alongside these are amendments in the electricity pricing policy which will also be tabled for final approval by Cabinet by the end of July. When it comes to electricity generation we mean to deal with the shortfalls, either in supply and demand. 1 850MW from projects signed under bid window 4 are connected to connected to the grid. That means that 1 850MW of the Bid Window 4 are connected to the grid. An amount of 2 600MW of renewable energy with the signing of project agreements planned for end of July 2022 and end of September 2022, was procured. These projects are expected to deliver power into the grid within 24 months from date of signing of the project agreements. It confirms a very important significant point that there is nothing like instance energy. It requires project. They must construct the generation capacity and then connect it to the grid. Patience is quite important. A request for proposals for the procurement of 2 600MW of renewable energy under Bid Window 6 was also issued. This mean
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that we are moving towards connecting 7 800MW when we release
Bid Window 7. We are finalising with Eskom the buyer, the
agreements with preferred projects procured as part of the
2 000MW under the risk mitigation independent power producer
procurement programme. We are finalising additional request
for proposals for issue in the current financial year for the
procurement of 513MW of storage, 3 000MW of gas 2 600MW of
renewable energy in Bid Window 7 and 1 500MW of coal. These
initiatives will bring online over 13 000MW. In other words,
the outcry that we are not addressing the shortfall of 4 000,
5 000 and 6 000 of Eskom is not backed by facts. We are giving
you the facts that these projects are in the pipeline. But
what we should always remember is that Eskom remain the
primary generator of electricity and therefore every project
that we are putting in place is supplementing what would be
the performance of Eskom which has a connected capacity of
45 000MW but hardly work and operate optimally even at
30 000MW.
On generation for own use, the National Energy Regulator of
South Africa, Nersa, has registered 553 projects that are
under one megawatt, totalling 268MW. In other words, the self-
generation remains in the main between 1 and 10. We are still
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trying to encourage and wait for the 100MW that was
deregulated last year. Since the 2021 announcement and
gazetting of the 100MW embedded generation, the energy
regulator has registered six generation facilities with a
capacity ranging between 1MW and 10MW. The total capacity to
be generated from the six generation facilities is 24MW. In
other words, again, the much-talked about deregulated up to
100MW in embedded generation 1s something that we should
encourage and work for. It has not materialised practically up
to now. We continue to work with other government departments
under Operation Vulindlela to streamline approval processes
for generation for own use.
Let us come to oil and gas. The Upstream Petroleum Resources
Development Bill was tabled to Parliament. The iGas, a
subsidiary of the Central Energy Fund, has acquired an
additional 40% ownership of the Republic of Mozambique
Pipeline Company, Rompco, pipeline. South Africa and
Mozambique governments jointly own 80% of the pipeline and
Sasol owns 20%. This disadvantages us in our gas
industrialisation strategy to support our economy. In other
words, gas is going to be a game changer in the economy. And
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we appreciate the fact that eve n the European Union, EU, now
is labelling gas and nuclear as part of the green transition.
The Council for Geoscience has confirmed the verification of
the shale gas samples that were tested internationally. Now it
has been confirmed and verified that shale gas deposits in the
central Karoo are a reality and are economical. That is
another opportunity that is presented. A gas master plan, yet
to be presented to Cabinet is at an advanced stage of
development.
Notably, oil and gas projects continue to be under threat from
well-funded lobby groups which also misinform unsuspecting
communities. We since February therefore consulted some
traditional councils in the Eastern Cape to help them
understand the possible benefits of the upstream petroleum
industry on their communities and our economy in general. We
intend to engage more traditional leaders and communities. The
reason for this is if we are going to develop fully we cannot
write off and kill prospects of gas and oil development before
it even starts. That’s why if you look into the July
uprisings, you will notice that one of the most shocking
discoveries was that 50% of the gross domestic product, GDP,
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of the country is in two provinces. In my own analysis it
means we have not tempered with the apartheid architecture of
the economic infrastructure in South Africa hence it is
important to accelerate development in other provinces as
well.
On nuclear, the department is addressing the suspensive
conditions from Nersa on the section 34 determination. This
will ensure that the procurement of the 2 500 MW of nuclear
energy is completed by 2024, in line with the Medium-Term
Strategic Framework, MTSF, commitments. The department will
continue to exercise oversight on the Eskom implementation of
Koeberg Nuclear Power Station long-term operation to ensure
security of energy supply for an additional 20 years. That
project is important to us. But there are some noises that are
trying to resist it. We have a responsibility to drive it
home.
The SA Nuclear Energy Corporation, Necsa, has issued a request
for information, as part of the feasibility study related to
the project development work to replace the globally leading
SAFARI-1 nuclear research reactor with a multipurpose reactor
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by 2030. We are hoping that Nrcsa will chip on the programme
and adhere to the time frames.
The National Radioactive Waste Disposal Institute has started
with project development work for the establishment of the
used nuclear fuel. The department plans to submit the
feasibility report for the Centralised Interim Storage
Facility, CISF, to Cabinet during the current financial year.
The problem of nuclear waste remains a global problem and we
must resolve it.
On developments in the mineral resources sector, in fulfilment
of our commitments in the economic reconstruction and recovery
plan we are undertaking certain activities. On exploration
government approved and published the mining exploration
strategy and its implementation plan. The Council for
Geoscience will provide details of derisking our mineral
acreage to attract more exploration budget to our shores.
Also, the minerals diversification strategy of the African
Exploration Mining and Finance Corporation, AEMFC, is
positioned to support the just energy transition initiative
through investing in the exploration of minerals of the
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future. The Council for Geoscience is seized with the process
of geomapping of these minerals. What is important is that we
may have all the dreams about beneficiation expanding
investment if there is not enough and sufficient investment on
exploration, we are not going to discover the minerals that we
are having. We are in that process.
For beneficiation of our minerals, in 2021 we developed a
strategy to revitalise the ferrochrome sector. We will convene
social partners to agree on a social compact as part of
reviving the smelting capacity in South Africa which has been
closed to be killed and the price of electricity is a
determining factor in this regard. If they are more expensive
and you impose export tariffs in business, check which is
costlier in the export of commodities when you think you can
benefit.
In mining and safety, the department in partnership with
employers and organised labour to achieve the goal of zero
harm at work. Continued collaboration to implement COVID-19
pandemic interventions has seen the mining sector vaccinate
more than 75% of mine workers, with a recovery rate at 98,5%.
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People who suffered from COVID-19, 98,5% of them recovered
from COVID-19.
We are concerned with the 74 fatalities reported in 2021. We
must remember that this 74 is compared to the record that was
set in 2019. In 2019 we had 21 fatalities in the industry.
Anything more than that breaks that record and therefore is a
call to work more intensively to reduce the fatalities. Later
this year, the department will host the Mine Health and Safety
Tripartite Summit to consider further interventions that can
prevent accidents in the workplace. We must continue to
improve in this area of work.
In mining and petroleum regulation, it is common knowledge
that licence applications and processing remains our critical
challenge. The petroleum side has done well. We have dealt
with the backlog and are within the legislated timeframes for
all applications for which all information has been submitted.
On Mining applications, over 1 000 prospecting right
applications were finalised and about 300 mining right
applications were adjudicated. We are mindful that not all of
these have translated to operations due to the fact that a
number of the applications get appeals that usually follow
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positive decision made. Backlogs are being attended to. But
the reality of the matter is that we can do better if we can
have a system that is working efficiently. Until we have that
system we will always be attacked easily from the anger of our
backlogs.
On financials, the main appropriation for the Department of
Mineral Resources and Energy in the 2022-23 financial year, is
a total of R10,4 billion. Earmarked transfer payments to
public entities, municipalities and other implementing
institutions account for R8,3 billion or 79,9% of the budge go
to entities and allocations. Only R2,1 billion is allocated
for operations. In other words, we are running a tired ship
and we must continue looking our budget because a failure to
do so will reflect the department badly.
A substantial portion of the transfer payments budget is
distributed to implementing agencies as follows: R5,7 billion
to Eskom and municipalities for the implementation of the
integrated national electrification programme, INEP,
R233,5 million will go to various service providers for the
implementation of the nongrid electrification programme and
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R223,2 million will go to municipalities for the energy
efficiency demand side management programme.
Our public entities are budgeted to receive a combined
allocation of R2 billion mainly for operational activities. In
other words, we are having a very tight budget to do any
capital investment and therefore be innovative in doing many
things, hence it is important for all of us to manage our
budget tightly, carefully and be sure that it has no wasteful
expenditure.
Comparative to the indicative allocation of R10,2 billion
confirmed during the 2021 Budget process, the 2022-23 main
appropriation of R10,4 billion is 1,4% higher due to increased
allocations towards the information and communications
technology, ICT, costs including the cost for the new
enterprise system to address backlogs in the processing of
mining license applications. In other words, we have allocated
money to the ICT to address the question of our ICT challenges
in dealing with the backlogs of the applications.
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The development of the electrification master plan is planned
for finalisation in the 2022-23 financial year with an
earmarked allocation of R50 million.
Let me conclude by being more positive. First, all the
preliminary work for the incorporation of the South African
national petroleum company has been finalised and approved by
the Cabinet. This will enable the new entity to target
R95 billion in market potential opportunities ensure security
of energy supply and create much-needed jobs - the merge of
PetroSA, Strategic Fuel Fund Association, SFF and iGas as the
national petroleum company. That work is underway. It is quite
difficult and complex as we do not have all the entities with
positive balance sheet. We have to tighten the ship and work
very hard.
Second, another news for our industry and country to celebrate
is the launch, on May 6 2022, of the world’s first hydrofuel
cell, NuGen truck, at Anglo American Platinum Mogalakwena Mine
in Limpopo. Together with the President we participated and
inspected the progress on the conversion. In other words, we
registered a record breaking innovation by South Africans in a
small village called Mogalakwena in Limpopo in South Africa.
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It is the first of this nature. Therefore, South Africa can
lead in many aspects of the work we do. This is part of our
continuing work on the hydrogen economy. The potential for
hydrogen economy in South Africa is massive due to our
enormous endowment with the Platinum Group Metals as well as
renewable energy resources. Linked to the Platinum Group
Metals are many minerals of the future which can contribute to
developing green economy. It is quite important for us to
continue doing the exploration and investing in mining these
minerals of the future and beneficiate them to participate in
developing green economy.
Finally, let me thank the Deputy Minister, Dr Nobuhle Nkabane
for her sterling support since assuming her portfolio in 2021.
Thank you very much, “ntombi” [lady]. “Siyavuwa ikubanawe
apha” [We are happy to be with you here]. I thank the
continued support of the former director-general, Adv Thabo
Mokoena. The current Acting Director-General, Ms Patricia
Gamede, you are achieving your side of support to the
department. I thank all members of executive council, Exco,
and the staff of the Department of Mineral Resources and
Energy – all of you and everybody’s support is appreciated.
Thanks to the Portfolio Committee on Mineral Resources and
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Energy, that is Z and the team. We are very appreciative of
your support, the boards and CEOs of entities reporting to the
Department of Mineral Resources and Energy and the many
organisations and associations within the mineral and energy
complex. We are quite appreciative of the work. If we were not
pulling our work together, we wouldn’t be successful in many
areas that we are confronted with comprising a number of
challenges for every work we do. Thank you for the support. If
we pull ourselves and need ourselves together into a team, the
impact is bigger. When all of you pull into a team we get an
additional value or signage that two plus two becomes five.
But if we are all over, we are disintegrated and we are
fragmented, our impact is less than nation.
Lastly, let me thank my wife Nolwandle, my family, my private
office staff and people in the Ministry. I must say that we
have a team of young people in the Ministry and we are hoping
that they will grow into formidable operatives in the Public
Service in the future. Thanks to their continued unwavering
support of all our endeavours. I am presenting Budget Vote 34
for your deliberations. I am hoping that the deliberations and
the contributions will improve the budget higher than that of
nitty pickings and looking for faults. This is Budget No 34
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and it is tabled for deliberations. Thanks very much, hon
Chairperson.
Mr S Z LUZIPHO: Hon Acting Chairperson, I would like to first
make an apology because of the energy crisis conditions. I
just wanted you to see that it’s me. Can I switch off the
video to reinforce the network, if I am allowed, Chair?
The ACTING CHAIRPERSON (Ms R M M Lesoma): You may, hon
Luzipho.
Mr S Z LUZIPHO: Thank you, Chairperson. Good afternoon to the
Hon Minister of Mineral Resources and Energy, Gwede Mantashe,
Deputy Minister of Mineral Resources and Energy, Dr Nkabane,
hon members, Members of the Portfolio Committee on Mineral
Resources and Energy, all protocol observed, for the purposes
of this introduction it sufficient to point out that Budget
Vote 34, whose main purposes encompasses both regulation as
well as the formulation of Mineral and Energy Policy in order
to effect structural reform within South Africa’s new economy
and subsequently spare economic growth.
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It comes at a time when South Africa is being unfortunately
ranked amongst the world’s ten least attractive mining
destinations globally. In addition, the National Treasury’s
Budget Review 2022, states that South Africa struggles to
attract long term fixed capital flows as a country on a slow
economic growth path. Some of the often cited reason for the
bleak picture are amongst others that does not bode well for
South Africa’s prospects of radical transformation in an
attractive industries and sustainable economic growth, which
include amongst others, the backlog of mining and prospecting
rights, as well as mineral transfer application within the
department, energy insecurity and high electricity tariffs.
Budget Vote 34 allocated expenditures, and the intended
forecast seeks to successfully confront these challenges that
have had less impact on actual transformation and economic
growth. It is due to this that Budget Votes 34 allocate funds
towards the procurement of a new information, communication
technology, infrastructure and enterprise system at the cost
of almost R84 million to address the backlog in mining rights
and mineral transfer applications.
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With regards to energy insecurity, and high electricity
tariffs, the department will address the suspensive conditions
identified by the National Energy Regulator of South Africa,
NERSA, to finalize the request for proposal for the
procurement of 2,5 megawatts of nuclear energy and implement
the long term pricing agreement to enable smelters to have
competitive priced electricity to facilitate mineral
beneficiation.
To be against this budget, generally speaking, would be
against progress. This is primarily because Budget Vote 34,
complements the government’s efforts to repurpose and
rationalize the state-owned enterprises, SOE, to support
economic growth and development, as well as a support of the
aggressive infrastructure, Economic Reconstruction and
Recovery Plan. Already, SOEs such as the African Exploration
Mining and Finance Corporation, have clearly defined strategic
objectives aimed at driving the central energy funds growth
agenda. Amongst others, investment in the acquisition of the
Vlakfontein coal mine will increase the AEL Mining Services’
footprint in the coal industry, thereby enabling the entity to
be an engine and a promoter of national development.
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This will also allow room for improvement in coal contract
expertise amid the growing demand in coal import markets, such
as India, Pakistan, Malaysia, Taiwan and Bangladesh. Most
importantly, the AEL Mining Services will improve the quality
of its supply of coal to guarantee availability of coal
resources for power generation, which has been, one of course.
Yes, it is a known fact that there will be others who will
argue that AEL Mining Services’ prospect of revenue generation
through taking advantage of the economies of scale in the coal
market contradicts the government’s commitment to address the
challenge of climate change.
Hon Chair, it is essential to stress that South African
National Energy Development Institute, SANEDI, has deployed
its research capacity to the task of developing clean coal
technologies to put in place measures to tackle emissions in
coal-fired power stations and help the country achieve its
commitment to the Paris Agreement on climate. And progress in
this regard, is within the contingency plans upon which Budget
Vote 34 to fall is anchored.
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We must also upload the budget allocation towards the Council
for Geoscience which accounts for the largest share of the
transfers to the entities under the department. The South
African experience shows that there is an abundance of
untapped resources such as cobalt, copper, lithium, nickel and
zinc, which is becoming increasingly important in the phase of
transition to a green economy.
We must state that amongst the task that we think that the
Council for Geoscience has is to also add or make new minerals
that may have a value addition that could be appreciated not
to be identified by other outside entities.
The allocated budget should allow Council for Geoscience to
jumpstart the mining of these commodities at a rapid pace.
Most interestingly, the exploitation of these commodities will
create the much needed linkages in the domestic upstream,
midstream and downstream industries as well as shape and
spread along the global value-chain.
Of course, these linkages are associated with the reduction in
the triple challenges of poverty, inequality and unemployment.
Mintek is also one example instance of a public entity with a
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with potential to assist South Africa to approach a transition
to a high income status from a middle income status which has
been the country’s characteristic feature over a long period
of time as well as foster the kind of structural reform that
could form the basis for a shift towards inclusive economic
growth.
South Africa has performed a little bit poor compared to its
international peers, for example Brazil, China and Malaysia in
terms of the share of the manufacturing sector in total
employment between 2005 to 2021. Worth noting is that key
enabling technologies and policies specifically designed to
support research and development played a critical role in
assisting these three comparator countries that I have
mentioned above to upgrade and leapfrog to a high income
status above.
In the context of South Africa, low investment in research
development coupled with a slow performance in inputs to
technological upgrading as well as the outcomes in
technological intensity are partly responsible for what
political economy literature refers to as premature
deindustrialisation. However, the premature
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deindustrialisation is not a confinement from which South
Africa has no hope to escape. This is a reason why Budget Vote
34 must pass to utilise the undeniable innovative technologies
which are of competence and much more sophisticated for which
Mintek will be able to perform as far as development is
concerned.
Mintek is certainly making strenuous efforts to help South
Africa catch up with the latest technology system to maximise
value in the manufacturing and mineral industry as can be as
can be assessed from the entity’s new operational model which
comprises research in the key strategic programmes including
but not limited to establishing a local rare earth mining and
manufacturing industry, expanding fuel cell manufacturing
infrastructure and construction of a manufacturing facility to
conduct ... [Inaudible.] ... research.
More importantly, Budget Vote 34 as allocated for 2022-23
financial year in which Mintek receive the second largest of
transfers to public entities as financial means to complement
Mintek’s operational model. The merger of South Africa’s iGas,
PetroSA and Strategic Fuel Fund to form a national petroleum
company is even more interesting. The merger is projected to
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target R95 billion in market potential opportunities than was
possible under three separate subsidiaries with overlapping
and competing mandates. This merger will not only ensure the
security of energy supply and will create much more needed
jobs through the revival of PetroSA’s gas-to-liquids refinery
in Mossel Bay and increased dividends from capitalisation of
the ROMPCO pipeline transaction.
It will address the barriers that inhibits entry in general
and that of black owned companies in particular in the mineral
resources subsector and refined petroleum chemical products.
Aligning the mandate of the national petroleum company which
with the strategic objectives of the upstream Petroleum
Resources Development Bill will make the participation of the
state and black-owned businesses far more lightly in South
Africa’s upstream industry. The National Petroleum, Gas and
Oil Corporation of South Africa and Ketlaphela Pharmaceuticals
taken together will act as trustworthy instruments of the
state’s interest in sectors with oligopolistic characteristics
features that feed into the uncompetitive behaviour which
undermines economic growth and development. The ANC therefore
supports Budget Vote 34.
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The portfolio committee has obviously made particular
observations and recommendation with regard to Budget Vote 34.
Amongst others are the filling of the vacant posts, improving
the safety culture of Koeberg Nuclear Power Station,
expediting amendments of the targeted of the legislations.
There will then be a follow up on the progress made by
Department of Mineral Resources and Energy, DMRE, with regards
to the licensing regime that remains a challenge. May I extend
condolences to the Moerane family in the loss of comrade
Moerane. Thank you very much, hon House Chair.
Mr K J MILLEHAM: House Chairperson, they say that insanity is
doing the same thing over and over, and expecting different
results. Yet, that is exactly what we keep doing. South Africa
is in an energy, and more specifically, an electricity crisis.
President Ramaphosa admits it. Andre de Ruyter admits it.
Pravin Gordhan admits it. I think even Minister Mantashe would
admit it, albeit reluctantly.
Our electricity generation is insufficient to meet demand, and
Eskom is unable to do much needed maintenance, because it is
forced to run its power stations beyond capacity just to keep
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the lights on. And even there, it is failing, as evidenced by
the stage 4 loadshedding we have just experienced.
Eskom indicated earlier this week that they may have to go to
higher stages of loadshedding because of diesel supply
constraints — in a month where they have gone through more
than 40 million litres of diesel at a cost to South Africa of
more than R800 million rand. We are unable to ensure a steady
supply of jet fuel to our airports, and a number of
international airlines have diverted to other countries to
refuel, or cancelled flights altogether, with a consequential
impact on our economy. Our fuel price is at a record high,
with further massive increases in the pipeline for June. And
despite promises, there has been very little movement on
reviewing the structure of the fuel pricing model.
We need to be crystal clear that our economy is suffering
because of these issues. Every day of loadshedding wipes
hundreds of billions of rands from our economy. It deters
investment in businesses, who would rather take their
investment elsewhere, where the lights stay on. It affects the
small business owner who is unable to operate, and the spaza
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shop owner who can’t keep food cold. Let me state it as
bluntly as I can: Loadshedding is job shedding.
My purpose today, however, is not to point fingers or
highlight the myriad of challenges we face in the energy
sector. It is to say that there is a way we can fix this. It
is to focus on solutions. We need to do things differently.
Minister Mantashe, as a country, we need to make electricity
generation our number one priority for the next five years. We
need to focus our attention on getting as many megawatts added
to the grid as possible. That needs a fundamental change in
the way we operate.
The integrated resource plan is out of date, and works off old
assumptions that are no longer justified or viable. We should
scrap it and look for new solutions, like incentivising
investment in rooftop photovoltaic – whether residential,
commercial or industrial. Perhaps the Minister is unaware that
in 2021 Vietnam, a country at roughly the same level of
industrialisation as ourselves and without many of our natural
resources, added nine gigawatts of rooftop solar to their
generation capacity simply through legislative changes that
incentivised the installation of these systems.
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We must increase the offtake in future bid windows of the
Renewable Energy Independent Power Producers Procurement
Programme from 2,5 gigawatts to whatever the market is
prepared and able to provide. In the recently concluded bid
window five, some nine gigawatts of electricity was offered by
tenders, but only 2,5 gigawatts procured. This is completely
unsustainable in a country where daily loadshedding is killing
our economy and our citizens.
We need to remove the red tape and bureaucracy at National
Energy Regulator of South Africa, NERSA, that is stifling
innovation and delaying the roll-out of sub-100-megawatt
generation. I know that you and NERSA have spoken about the
reduced timelines it takes to process an application, but the
reality is that it is still too long and too onerous. That’s
not my opinion; just ask the Minerals Council of South Africa
who claim to have more than 30 projects ready to go, worth
more than R60 billion in investment. They will tell you that
they are held up because of NERSA administrative processes.
And before we start criticising these proposals as not
addressing baseload demand, let me be clear. I’m not
suggesting we shut down Eskom’s plants. I’m saying we need to
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supplement the supply we receive from Eskom so that they don’t
need to run those plants so hard, and so that they have a
chance to build up storage reserves at the Ingula and Palmiet
and Drakensberg pumped storage schemes. We need to ease the
burden on Eskom so that they can do the much needed
maintenance to keep those plants running.
You will have noticed, Minister, that my proposals relate to
issues that are very short-term. That is because we need to
plug the electricity shortfall of between 4 and 6000 megawatts
now, not in 10 years’ time. Once we’ve addressed the short-
term supply challenge, we can start looking at long-term
solutions – and that’s where nuclear and other technologies
can be considered. But let’s focus on the immediate crisis
first.
I’ve spoken a lot about electricity, because that is our
biggest challenge, but our energy sector as a whole needs
urgent attention. We need to fast track the review of the fuel
pricing model and look to securing our fuel supply pipeline.
We need to acknowledge that perhaps refining our own fuel is
not the best solution, and see what alternatives exist to
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bringing in more refined fuel, and ensuring it gets to where
it is urgently needed.
Minister, I am reaching out to you to open up a discussion
with all sectors of society; the government, opposition
parties, Eskom, independent power producers, engineering
experts, non-governmental organisations, the unions and
ordinary members of the public. A discussion in which we don’t
seek to raise more challenges or apportion blame, but rather
try to find solutions. A discussion in which we make getting
more generation onto the grid in the next five years our
number one priority as a country. As a starting point,
Minister, let’s have lunch. A long lunch, where we set aside
politics and ideology, and map out a plan to fix our
electricity crisis. I’ll even pick up the bill, although I do
expect you to declare it in your member’s interests. Let’s fix
our energy crisis and build a country we can all be proud of.
Thank you.
Ms P MADOKWE: House Chairperson, the EFF rejects Budget Vote
34 on Mineral Resources and Energy. As we have stated in
previous debates, pumping money into a department that lacks
the capacity or will to improve is not only a futile exercise,
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but also a waste of tax payers’ money. As we debate in the
House today, the department has failed miserably in its core
mandates and responsibilities in terms of mineral resources
and energy in this country. This is evident in the Fraser
Institute Annual survey which ranks South Africa is the
world’s tenth worst mining destination. If one looks at our
ratings overtime, we have been steadily declining.
As we all know, South Africa is in the midst of a massive
energy crisis, and every other day we are destructed by
loadshedding schedule announcements, rather than announcements
that we are one step closer to stable electricity supply.
The current energy conversation has been relegated into a
blame game between Eskom’s CEO and the Minister of Mineral
Resources and Energy. An argument that should have been
avoided if the EFF’s call for Eskom to be transferred to the
Department of Mineral Resources and Energy had been heeded. In
this way, all energy related matters, including Eskom our
primary energy provider, would be handled and accounted for by
a single department.
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We are being asked today to approve a budget that is clearly
aimed at giving this country false hope and encouraging more
tax payers’ money to be pumped into a department with little
accountability and consequences. A number of departmental
targets set when canvasing for previous budgets have not been
met, and instead of demonstrating measures taken to meet such
targets, new targets have been set instead.
We can’t possibly be discussing the backlog of licences and
the department’s failure to resolve the solar water heater
saga at this point in our term. These are two elephants in the
room that keep popping up but they are always brushed under
the carpet. We would have assumed that the merger of the
Department of Mineral Resources and the Department of Energy
would have save tax payers’ money. However, we are expecting
to increase spending on administration as a result of this
Budget Vote.
The department cites several resources for the high costs,
including leases that did not go through the Department of
Public Works, and some private leases that were quite
expensive. How is it that rather than holding those who
disobeyed the law’s procurement processes accountable and
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negotiating better leases, or better yet, building its own
buildings, the department is asking tax payers to fund this
rather fraudulent arrangement.
Back to the mining industry, we have companies like Sibanye
Steel Water in this country which we characterised even in the
previous Budget Vote as one of the arrogant companies that
continue to exploit our people. Companies that are encouraged
by the knowledge that they are untouchable and that the DMRE
is not only toothless but is also slow to respond to where
there are complaints.
Workers at the same company have been fighting for months over
a mere R1000 raise while the CEO who profited from their
labour, received a bonus of over R300 million. We admire the
workers’ relentlessness and believe their request is
reasonable. However, we are disappointed that this department
has stood by and watched them suffer. We also applaud the
workers’ refusal to listen to a murderous individual who
believes that presiding over a country entails a few speeches
here and there. Our people are not vile, and certainly ...
IsiXhosa:
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... ziza kujika izinto.
English:
It wasn’t long ago that we saw the country’s leadership
cowering in the face of demands from environmental capitalists
who offered a few billions in exchange for the abrupt closure
of our coal mines. This Budget Vote has made no explicit
reference to a programme to reject this attempt to bring our
economy to its knees and place us at the mercy of our
colonisers.
With regard to the energy sector, we note the South African
National Energy Development Institute, SANEDI’s intention vote
more resources to research on clean fossil fuels, renewable
energy and smart grids in order to help stabilise our energy
supply. However, South Africa has been facing a looming energy
crisis for nearly a decade, and we have been finding ourselves
in the dark more frequently as a result. We have moved beyond
this research phase, and should be seeing a massive rollout of
these energy technologies. The South African National Energy
Development Institute should have a clear programme in place
in collaboration with the Department of Higher Education,
Science and Technology to ensure that young people and
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unemployed graduates are adequately trained to meet the
department’s anticipated skill requirements in all of its
initiatives.
Moreover, it should encourage for funding for local and youth-
base initiatives that aim to mitigate the energy challenges in
our communities. It cannot be correct that we continue to
import skills and products that could be produced locally,
thereby providing jobs for our people. As we debate today in
this House, there is no clear report on where we are with the
IRPPP programme in relation to previous targets, and no
willingness to review and table the outdated integrated
resource plan for electricity.
House Chairperson, we are facing yet another wave of fuel
price increases, and there is no plan in place to save the
refining industry or to combat cable theft and fuel theft,
which at the rate they are occurring, should have been
classified as economic sabotage and dealt with harshly.
This Budget Vote also supports onshore gas exploration and
drilling of the karoo, despite appeals for explanation
technology and techniques that will not harm the environment,
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ground water cable and affect people’s livelihoods. Although
no such provisions have been made, we are expected to sign off
on a Budget that wants to move forward anyway.
We have also noted that some of the challenges facing the
department are not of its own making, however, there seems to
be no will or initiatives to have round-table discussions on
how our departments can work together for the betterment of
our country. Our departments work in silos and so do some of
our entities in this very department. Because of that, work is
duplicated while other departments, including the DMRE, do
work that is not mandated to do. If these discussions were
done and thoroughly implemented as a collective, we would have
been guaranteed efficiency and save a lot of money in terms of
the Budget Votes that we are requesting. Thank you very much,
House Chair.
Prof C T MSIMANG: Thank you, hon House Chair, and hon members,
South Africa remains home to the greatest mineral wealth in
the world, estimated to be worth US$2,5 trillion with the
world’s fifth largest mining sector, we are truly a blessed
country when it comes to mineral wealth, yet we continue to
fail to take advantage of such lessons with little or none of
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the world benefitting the country after it has been mined by
foreign investors.
In fact, this has led to some economists stating that the vast
mineral resources in many countries in Africa, despite such
abundant supply have proven to be a curse rather than a
blessing especially when looking at the associated economic
stability and political division that follows in the wake of
such industry.
This has proven true in the case of South Africa. Our mining
sector requires greater oversight and scrutiny. Information
and communications technology, ICT, can assist government in
not only creating a more effective licensing framework but
also provide greater ease of access to information in the
sector.
Mine health and safety must be prioritized and the 12
performance targets set by the Mine Health and Safety
Inspectorate programme for this year, must be met.
In respect of energy, one can only but lament the state-run
entity Eskom. This state-owned power utility, which should
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supply 95% of the country’s energy requirements remains an
outright failure and an example of a mafia-run state sponsored
patronage network.
How long will this government allow this to continue? How long
will it be, before the lights go out indefinitely, put
plainly. Eskom cannot meet demand. It remains the greatest
systemic risk to our already challenged economy. It is an
insolvent ... [Inaudible.] ... of corruption and is symbolic
of this government’s many failings to the citizens of South
Africa. Eskom must be dismantled. The stranglehold of energy
supply must be redirected to entities structured as public-
private partnership.
Research and innovation should lead this energy supply
reorientation as we strive for sustainable and renewable
sources of energy supply to meet our socioeconomic
requirements. Our energy sector should also be looking at
nuclear energy while paying careful attention to costs as well
as ensuring all procurement processes followed are transparent
and above board.
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Further, our nuclear safety management must be brought in line
with international best practice. Greater impetus must be
placed upon the finalization of the government framework for
the co-ordination nuclear new build programme and multipurpose
reactors.
In conclusion, this Parliament, through its committees and
other mechanisms should be the guardian of state resources not
for the profit of the few connected elites but for the benefit
of citizens.
However, through the majoritarianism of the ruling party, we
are failing our people. The IFP calls upon this government to
draw a line in the sand on corruption. More specifically, we
call upon the Department of Minerals and Energy to uphold its
mandate in ensuring the transparent and efficient regulation
of South Africa’s mineral resources and the mineral industry.
The secure and sustainable provision of energy in support of
socioeconomic development ... state companies that fall under
this department must be monitored to ensure that they are
aligned to achieve their developmental objectives and to
improve performance efficiency.
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In the interest of South Africa and subject to above serious
concerns, we support this Budget Vote. I thank you, hon House
Chair.
Dr W J BOSHOFF: Thank you, hon House Chair, we debate today
against the background of load shedding and record high fuel
prices.
The purpose of this department is regulations of the minerals
and the mining sector for transformation, growth and
development, formulation of energy policies, regulatory
frameworks and legislation to ensure security ... [Inaudible.]
... and access to affordable and reliable energy.
Positive transformation of society depends on economic growth.
If the economy grows at 6% per annum, it doubles every 14
years. That would create a lot of scope for transformation and
empowerment. We all rejoice in the commodity’s windfall
leading to increased mining tax, but just like an
international slump, it is not the Minister’s fault and not
his achievement.
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Jobs are preserved and created but transport infrastructure is
trodden into pieces. We enjoy a windfall but simultaneously
consume the infrastructure needed for sustained growth and
development. Communities around Nigel are facing emergent of
acid mine water again and at Kromdraai, near Emalahleni the
community is in danger because of open cast mining near
residential areas. Those are functions of regulation.
In the meantime, South Africa slides back as a preferred
destination for mining investment largely due to
overregulation, deteriorating infrastructure and lack of
dependable energy supply.
Therefore, hon Minister, will you abide by the judgement to
regard the Mining Charter as a guideline or are you going to
force it down to legislation? Will we see an end to corruption
in awarding mining licenses?
Moving to energy, hon Minister, normally you respond as if
there is a debate between ... [Inaudible.] ... who wants to
switch off coal generation any moment soon and yourself, this
is not the case. We all recognize the country’s dependence on
coal for the time being, but in the just transition means
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failed, not optional. Regarding energy, we have some problems.
Normally, about half of our coal capacity is offline. We are
even less dependent on coal than we would have liked to be.
Nuclear, maybe part of a solution, but it never commences on a
short term and it is expensive as you mentioned, whichever
nuclear option one takes. Alas Minister, it does not create
confidence when it seems you have done this thing of a role
between the regulatory board and the board of an operational
entity.
In Ogies, there is an oil storage facility which is strategic
fuel funders long decommissioned. Now there is a rumor of a
purchase agreement, which a certain company buys the right to
clean it up in exchange for the oil which can be recovered.
For R6,18 billion, is this plausible?
Our national capacity to refine crude oil decreases with each
disaster. It might be better to let that be and focus on the
transition to alternatives. In the meantime, buying the fuel
we need.
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It is not clear what your department intends. Are we looking
for new technologies? Or are we looking for new reserves?
Attempts to seek exploration points to the last.
Hon Minister, you also mentioned shale gas in the Central
Karoo as commercially viable. How do you know, as exploration
has ceased a few years ago when there was no clear conclusion
on this? ... [Inaudible.] ... as an alternative. All the work
is being done by the Department of Science and Innovation, the
Northern Cape provincial government and the private sector. At
least, we heard today that the Minister supports it – I am
told now that I haven’t heard a word.
A clear strategy for the transition to green energy would be
great. Being divided into strategies for transport, mining
industry and households, convincing each role-player to share
the vision and to play its part.
Hon Minister, we see a lot of drive for transformation,
whatever the price, but we don’t see growth and development,
environmentally friendly carriers and access to affordable and
reliable energy in your department. The department seems stuck
in the old ways of thinking, being dragged kicking and
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screaming into the future by the very role-players who are
suspect of being stuck ... [Inaudible.] ... and short term
consideration. Wont you start governing with your eyes on the
road ahead rather than the rear view mirror? I thank you.
The DEPUTY MINISTER OF MINERALS AND ENERGY: Hon Acting House
Chairperson, the Ministers and the Deputy Ministers, hon
members, captains of the industry, team of the Mineral
Resources and Energy, our people watching this debate today,
good afternoon. I stand before you after the Minister has
presented a comprehensive Budget Vote 34 speech on how we are
turning around the tides in the mineral resources and energy
industry.
On this day in 1964, the apartheid government’s prosecutors
were presenting closing arguments in the Rivonia Trial in
which our struggle icons faced possible death by hanging. As
accused no. 1, Tata Nelson Rholihlahla Mandela, in his opening
statement outlined the essence of our struggle as follows:
The ideological creed of the ANC is, and always has been,
the creed of African Nationalism. It is not about driving
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the white man into the sea. It is the concept of freedom
and fulfilment for the African people in their own land.
Our country and the world are suffering the pain of rising
energy and food prices owing to the ongoing conflict involving
Russia and Ukraine. As we celebrate Africa month, our economic
strategies have to strengthen the bonds of solidarity with our
continent where millions are facing starvation. Unlike the DA
leader, we cannot leave this continent and go on a war tourism
venture to Europe. We are Africans and our mission is to
ignite Africa’s growth and development.
As government we are working hard to ensure security of energy
supply and curbing energy poverty in order to support economic
reconstruction and recovery, while at the same time fulfilling
our international climate obligations under the Paris
Agreement to reduce our carbon footprint. The ANC-led
government is very clear that we did not say we want to switch
off coal and move towards renewables. We said we want to
reduce our carbon emissions from high to low but it should be
understood that as Africa our contribution currently is only
sitting at 3% in terms of our contribution to carbon
emissions.
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We also need to clarify matters of importance when platforms
of this nature are created. As I am addressing the House on
this debate today, we are running a pilot project at
Mpumalanga in the area called Leandra. This a carbon capture
storage project and is projected for finalisation in two
years’ time. We did not say that we are moving from coal but
we are coming up with all the technologies that will be
assisting us to reduce our carbon emission. In trying to make
sure that we are ensuring the security of energy supply, we
are looking at the energy trilemma which is affordability,
sustainability and security. All those elements are being
considered by this government which is a caring government.
In our interventions and programmes that we are employing, we
are guided by the policies and regulations of this government.
We have the ... [Inaudible.] framework, we have also the
structure called the Presidential Climate Commission in the
Office of the President and we have the Integrated Resource
Plan, IRP 2019 which is still relevant.
As the Department we exercise oversight on a number of
entities to drive economic transformation. These entities that
are dedicated and competent execute their responsibilities
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effectively. I will share with this House the strides that we
are making as the department. Two years ago, Cabinet approved
the merger of iGas, Strategic Fuel Fund, SFF and PetroSA to
form a National Petroleum Company. We are awaiting final
Cabinet approval to enable the new entity to target
R95 billion in market potential opportunities, ensure security
of energy supply and create much-needed jobs.
As a country we face a threat due to gradual decline of
refining capacity. In our response, the Central Energy Fund,
CEF Group is currently pursuing the acquisition of a brown
field transaction to maintain our refining capacity and
capabilities. The Central Energy Fund has successfully
acquired 25% shareholding of the R11,7 billion International
Company for Water and Power Projects, ACWA Redstone Project in
the Northern Cape. With 100MW capacity, this project will
provide clean energy to 200 000 households and create 2 000
jobs.
The Strategic Fuel Fund has successfully acquired 50% of the
BP storage facility in the Western Cape with a 30 percent
capacity in the high growth Cape Town fuels market. House
Chairperson, we are pleased to report that the 10 million
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barrels of crude oil, which was illegally sold, is now back in
the hands of the state and processes are afoot to deal with
those involved in this illegal transaction. The ANC government
is serious about rooting out corruption and criminality.
As far as exploration is concerned, we have unfortunately
encountered delays to the implementation of some projects
owing to court challenges. In fact, some of the members here
in this House today, they support this delay which is
resistance to the economic growth of the country. In spite of
these, we continue to collaborate with stakeholders to ensure
development of our oil and gas sector through an inclusive
social compact.
The National Energy Regulator of South Africa, Nersa strives
to finalise applications for newly constructed petroleum
infrastructure within 60 working days. A good example is the
Ambrose Park project in Durban which will connect to the
Transnet Pipeline network to improve the security of supply to
the inland area. House Chairperson, we are pleased to announce
that the department through the Independent Power Producers,
IPP Office has processed tariff reduction applications for 13
IPPs from Bid Window 1 to 3 estimated at R2,1 billion.
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We are also moving with speed on tariff applications. NERSA
has processed 176 tariff applications from municipalities and
private distributors for implementation since 1 July 2021. Hon
Members, the first commercial demonstration Fuel Cell unit
using Mintek manufactured catalysts, has been installed at 1
Military Hospital in Pretoria. Market development and
commercialisation efforts are underway with the aim of
supplying a significant share of global catalyst demand within
the next decade.
Mintek has secured R 40 million and is working to broaden the
energy mix to include 30 percent of electricity required for
...
The HOUSE CHAIRPERSON (Mr C T Frolick): One minute is left,
hon Deputy Minister.
The DEPUTY MINISTER OF MINERALS AND ENERGY: Okay, hon members,
in conclusion, I thank the thank the Minister for his
continued support since joining this department last year, the
officials and the heads of entities. Lastly, I wish to
reiterate that as the department we are happy with the manner
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the budget vote has been processed. We thank our colleagues in
the portfolio committee and appeal to our social partners,
workers, industry, and communities to continue working with us
to grow and transform the sector. I thank you.
Mr B N HERRON: Hon House Chair, the destruction of the earth’s
environment by carbon pollution derived from burning fossil
fuels can no longer be regarded as science fiction. There is
an overwhelming body of evidence that even members of the Flat
Earth Society can no longer deny.
It is a human-made crisis whose effects are already being felt
in increasing radical climatic events, here and across the
planet, and in rising sea levels that are already forcing
communities in the Southern Pacific to abandon their family
homes. South Africa belches more carbon than any other nation
on the continent. We are ranked 14th on the list of the
planets’ worst or largest emitters of greenhouse gases,
principally due to our reliance on coal for energy.
But despite Eskom’s best efforts to drive us to distraction,
we cannot simply pull the plug on coal. First, we must develop
alternatives. Including alternative skills for coal workers
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and their families, and local coal-dependent economies. This
is what we call a just transition. People are quite good at
creating crises. They are also good at developing solutions
for crises of their making. But leadership is required to
implement the solutions.
We know we must reduce carbon emissions, and have
international obligations to do so. At the same time, we have
developed cleaner technologies to do the job. A combination of
this knowledge, our obligations and the technology at our
disposal must inform our priorities as we battle through our
parallel Eskom crisis.
The equipment we use to generate electricity is not only
filthy and outdated. It has also been failing us for the past
15 years. While it has been failing our understanding that we
have to transition from fossil-fuel generated power to clean
and renewable sources of energy has been growing. It is no
longer futuristic; it is here. Cabinet has already committed
to the zero net emission of carbon pollution by 2050. We have
spoken of a just transition from coal to minimize short-term
social and economic impacts for years. The world has made
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billions of Rand available to support this transition. We must
stop talking about it and begin to see some real action.
South Africa was relatively quick off the mark in its initial
uptake of solar and wind energy farms, but that momentum has
long been stifled by incoherent policy and vision. We must
accelerate the introduction of Independent Power Producers,
IPPs. Besides the obvious environmental benefits, there is the
added extra of reducing our dependence on Eskom.
We must embrace innovation and invest in a sustainable future
rather than dither and consider investing in questionable
short-term powership deals. Innovation, such as that
underpinning the recently announced Kibo Energy PLC deal that
will turn plastic waste that cannot be recycled into energy,
in Gauteng. Dr Crispian Olver, the executive director of the
Presidential Climate Commission, has said that for our country
to meet its 2050 goal will require the deployment of 150GW of
Solar and Wind energy by 2050. To achieve this, we must up our
production rate of clean energy ten-fold. Thank you.
IsiZulu:
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Nk V T MALINGA: Sihlalo weNdlu yesiShayamthetho, uSotswebhu
weQembu eliBusayo, usihlalo wekomidi uBaba uLuzipho,
usotswebhu wekomidi uBaba u-Mahlaule, uNgqongqoshe u-Mantashe
neSekela lakhe uMama uNkabane, noyibamba lomqondisi jikelele
uMama uGamede
English:
The HOUSE CHAIRPERSON (Mr C T Frolick): Hon Malinga! Hon
Malinga, may I request you rather switch off your video feed,
please. Thank you. You may continue.
Ms V T MALINGA: Hon members, energy security is a serious
organisational strength for a potential developmental state,
as well as the economic reconstruction and recovery in South
Africa. The basis of Budget Vote 34 is to take deliberate
actions by implementing institutional and structural reforms
to realise energy security that is conducive to the
construction of a developmental state and economic
reconstruction and recovery. However, we must not
intentionally downplay the two dimensions that may reduce the
range of things that Budget Vote 34 can do to realise energy
security without major opposition.
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The first dimension is that population growth in South Africa
increases in geometric progression. Whereas the supply of
electricity increases in arithmetic progression. In other
words, there is an imbalance between population growth and the
supply of electricity. To correct the imbalance, Eskom has to
run its coal-fired power stations more intensively, as well as
recommission the mostly old power stations.
Even though the strategy was successful in many other ways, it
has restricted the effectiveness of electricity reliability
and generation capacity as witnessed by the unprecedented load
shedding which constraints development and economic growth,
especially through its detrimental effect on business and
household productivity. And the fostering of population
control measures to address this imbalance is practically
espousing totalitarianism and, therefore, unacceptable to a
country committed to democracy like South Africa. The second
dimension is that the US-denominated debt incurred while
building the much-needed Kusile and Medupi power stations
exposed Eskom to a currency mismatch between income-generating
activities and debt servicing costs, aggravated by exchange
rate volatility. Consequently, Eskom’s investment in
generation capacity has fluctuated and has been declining
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because the revenues raised from the sales volumes are not
adequate to cover both debt servicing costs and investment
projects.
In addition, maintenance activities are often cut back to
cover debt servicing costs and this, in turn, cuts the quality
of service to the existing customers. Of course, the
opposition parties like the DA and the Freedom Front Plus will
never accept that market fundamentalism diverts finance from
investment in productive activities that could mitigate most
of the challenges facing Eskom today. As such, Budget Vote 34
provides more specificity in policy and allocated expenditure
about how energy security will be realised regardless of the
two dimensions reviewed earlier.
A body of rich literature postulates that competitive
processes can drive economic efficiency and higher
productivity. In other words, rivalrous behaviour between
businesses is imperative as it leads businesses to intensify
efforts to improve both their business models and
competitiveness. The gains from the competition are there for
productive growth and dynamic efficiencies.
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As shown in Budget Vote 34, the Department of Mineral
Resources and Energy will implement and support the amendment
of the electricity pricing policy, the Electricity Regulation
Act and the Gas Bill in the current financial year which will
stimulate rivalry and discipline market concentration in the
energy market to deal with the electricity supply shortages.
There were predicted optimal degrees of competition and
openness will allow the Department of Mineral Resources and
Energy to rapidly and significantly augment energy generation
outside of Eskom to address the supply and demand deficit.
Thus in line with the Integrated Resource Plan of 2019, the
Department of Mineral Resources and Energy will procure 9 213
megawatts during the current and the next financial years. And
this will include about 3 000 megawatts and 530 megawatts of
gas and storage respectively.
This implies that the electricity pricing policy, the
Electricity Regulation Act and the Gas Bill will stimulate the
energy of the new independent power producers, IPPs, at a
sufficient scale and with capabilities to supply energy.
However, there are concerns about the capabilities of the IPPs
to supply energy on time and without delays; including but not
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limited to finalising the necessary agreements between Eskom
and the IPPs. This is the reason why Budget Vote 34 allocates
an amount of R140 million through reprioritisation within the
Department of Mineral Resources and Energy to find the IPP
office in the current financial year to assist with the
funding required for the evaluation of the IPP procurement
programmes to minimise delays.
The importance of evaluating IPP procurement programmes will
not only expedite the supply of energy to offset the growing
demand but will also assist in unlocking IPPs investments,
over R250 billion from various energy sources that include
coal, gas, and renewable energies and storage. Removing any
stumbling blocks to the widespread uptake of IPPs is will have
a positive bearing on structural transformation in terms of
gender and racial dynamics in the mining sector. In the
current financial year, the Department of Mineral Resources
and Energy will accelerate the structural transformation to
enable the large-scale inclusion of women of the black
majority through the drafting and implementation of the Mining
and Mineral Sector Women Empowerment and Gender Equality
Strategy and Implementation Plan. Building on that framework,
the Department of Mineral Resources and Energy has set aside
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funding to pilot the Women Diggers Programme launched in Taung
in 2019 in other provinces in the hope of assisting women with
the application processes to secure mining permits.
Removing stumbling blocks to the widespread uptake of IPPs and
a structural transformation to enable the large-scale
inclusion of women in the mining sector, are closely related
and mutually reinforcing in the sense that mining is energy-
intensive. And, therefore, the success of women in this sector
hinges on the reliable supply of energy.
Relatedly, the success of women in the mining sector is also
dependent on the Department of Mineral Resources and Energy’s
ability to process applications and issue mining permits on
time. More importantly, it is not noted with concern that the
backlog in mining rights licenses has limited the Department
of Mineral Resources and Energy’s capability to drive
structural transformation in the mining industry. This
diagnosis points to the importance of keeping up with
technological changes in so far as keeping up with
technological change are concerned. Budget Vote 34 allocates
R84 million to the procurement of a new ICT infrastructure,
including the cost of an enterprise system which has the
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potential to be quality and productivity-enhancing and
strategic. Thus this ICT infrastructure will reshape the
mining rights application system by making processes faster
and more responsive.
Energy security must not be defined now narrowly and should
assume a broadened incarnation to include access to
electricity. In other words, access to electricity is as
important as the supply of electricity. With regards to
connection, the Department of Mineral Resources and Energy,
through the ... [Inaudible.] ... plans to extend access to
electricity through the grid and a further 15 000 households
through non-grid technologies in the current financial year.
The impact of the grid and non-grid technologies will be
greater this current financial year because the Department of
Mineral Resources and Energy has finalised the evaluation bids
for the procurement of services from professional service
providers to conduct studies to help the Department of Mineral
Resources and Energy rethink their approach to electricity
connections, expansions in sparsely dense rural areas. These
studies are important as they will provide explicit planning
criteria given that connections to rural households are
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expensive relative to urban households due to lower population
densities, and they will also assist in terms of drafting the
Electrification Master Plan intended to address the backlog in
connections. Moreover, the professional service providers will
also be responsible for oversight, monitoring and evaluation
of non-grid connections to ensure that they are completed on
time and are installed according to the specifications.
Of course, additional non-grid connections will increase the
energy demand that Eskom’s coal-fired power stations cannot
match on their own. It is due to this issue that the
Department of Mineral Resources and Energy will expedite the
procurement of 2 500 megawatts as part of the New Nuclear
Build Programme in the current financial year. Moreover, the
lifespan of the Koeberg Nuclear Power Plant will be extended
to manage the energy demand pressures. As I conclude, the ANC
supports Budget Vote 34 and implores this House to also
support Budget Vote 24. And the portfolio committee will
continue monitoring the progress made by the Department of
Mineral Resources and Energy regarding its performance plan
targets in the current financial year. I thank you,
Chairperson.
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Mr M G E HENDRICKS: Hon House Chair, it is very difficult to
support a department that is slow poisoning hundreds and
thousands of South Africans, because we know that coal is
known as the dirtiest fossil fuel for electricity, attributing
largely to air population.
You must come and go with me on a visit to Ellisras, Lephalale
where the Medupi Power Station is and where the coal mines
are. Every street has a coal lane. The whole town is just
full. You just see coal all over. Four years ago, the World
Bank and the African Bank gave money to mitigate the effects
of, let me call it, coal pollution, and not a cent of that
money was used.
Instead, people are dying a slow death and that is also in
Mpumalanga and in other areas. How can this department come to
Parliament and ask us to give them money and not do anything
about people dying a slow death because of what I call coal
pollution?
The deployment of clean coal technologies to attain a
sustainable future was highlighted at the recent World Coal
Association programme. It looks like this department takes no
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notice of these experts. A report on an expert analysis by the
Energy Systems Research Group, the University of Cape Town and
the Climate Equity Reference Project states that government’s
plans to procure 1 500 megawatts of new coal power electricity
will cost at least R23 billion, more than a least-cost optimal
electricity plan for South Africa.
This department is not interested in the least-cost optimal
electricity plan. They want a procurement that will lead to 25
job losses by 2030. Thank you very much.
Mr J R B LORIMER: Hon House Chair, some time ago, the Minister
declared it was his intention to raise our rankings on the
Fraser index of desirability for mining investment. Since
then, we have slipped to 10th least desirable in the world.
That’s a measure of how this government and this Minister have
failed to foster our mining, which should be even more of a
national asset than it is. We have bad rules that are badly
implemented, when they are implemented at all, because there’s
illegal mining which is outside the system and hardly
addressed.
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I went to a function in Cape Town recently that coincided with
the Mining Indaba. This was hosted by a company which is
trying to get several major mining projects started. I was
told about the frustrations this company was going through,
just to get a license approval. Their documents are in order,
but the application mysteriously seems to get transferred from
desk to desk within the Department of Mineral Resources and
Energy, DMRE. Nobody can tell them where their application is
or why it’s delayed. The miners want to start their project;
they’ve done all their work, but permission is stalled, for
months. Hundreds of millions of Rand, which could create
hundreds of jobs which would feed thousands of our people are
left unspent.
There’s an acknowledged backlog in licensing applications.
This process is characterized by weak IT, weak and compromised
decision making and buck passing.
The deputy director-general told the portfolio committee
recently that he hoped the backlog would be resolved by the
end of this financial year. All credit to him for optimism,
the facts show that is unlikely. Let’s look at those facts.
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In a portfolio committee in early 2021, we were told that
there was a backlog of 5 326 mineral license applications of
various types. In October, the DMRE gave figures which showed
it had processed an average of 87 per month. At that rate it
would take five years to resolve, but the department stepped
up its efforts. A total of 1 400 have now been dealt with.
That works out to an average of 108 per month better, but
nowhere near good enough.
Nearly 4 000 applications are still unresolved. At the rate
the department is working, it will take 36 months more to
clear the backlog. So, that will be by around April 2025.
Does anybody really think that those applicants keep their
investment capital sitting around waiting for the department
to get its act together? That’s not how mining capital works.
In most cases, if a project seems blocked, it will go
elsewhere. What would be more interesting is to tell us, how
many of those license applications that were processed
actually result in mines.
By the time it’s licensed, there’s no guarantee that the
department hasn’t thrown away that chance of investment,
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thrown away those projects, thrown away those potential jobs,
and thrown away that mine’s contribution to the fiscus.
One of our reasons for our problems with licensing is that
there is no transparent record of rights. A cadastral system
tells the public who owns what mineral rights where. In most
countries that is transparent, you can see who has how many
rights. You know where there are still mineral rights you can
and can’t apply for. In most countries. In most countries in
Africa, but not in South Africa.
The Minister has been saying for years that there was a
problem with the South African Mineral Resources
Administration, Samrad, and something would have to be done.
He then went about it in a lackadaisical fashion, drawing up
the tender parameters. All the while, for three years, our
mining exploration is bleeding, shrinking, reducing.
Then in March last year we had a portfolio committee meeting
in which we discussed what a mess Samrad is in. At that
meeting, I asked if it was true, which I know it is, that
mining companies have offered to pay for an off the shelf
cadastral system that could be installed in six months. As is
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usual with revealing questions in portfolio committee, I
didn’t get a direct answer.
No, it was insisted, we must have a specially designed system
at two or three times the cost. And 14 months goes by and the
Minister reveals that the tender is with Sita. Now, with the
best will in the world, Sita does not have a reputation for
speed, efficiency and incorruptibility. Any Minister worth his
salt would have sat on Sita’s heads and made sure that this
system, this lifeblood of the future of our mining industry
was moving along. But after 14 months, nothing!
Then, after the Minister has blamed Sita for the delays, Sita
reveals that it is in fact the DMRE that is responsible for
the delays, that five of the six members of the procurement
team are members of the department, who have refused to
address auditors’ questions about conduct that could mean the
tender is corrupt. Why are they not answering? It would seem
the tender is corrupt. Even if it isn’t, why has the Minister
not intervened to speed up the process?
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All of this prompts the question: Why does the ANC government
and its deployed officials in the department not want a
transparent licensing process? Here’s why.
One, the ANC has given us a generous record of crooked
contracts, where the tender is inflated so money goes back to
the ANC and back to connected, crooked officials. That’s why
they must control this tender and build an in-house system.
Two, if there was transparency in mineral rights, everybody
will see how many rights connected comrades have in their
pockets. They squat on those rights and demand a cut when any
real miner comes along.
The Minister will deny this, but there is plausible evidence.
Give us a plausible alternative explanation. In the absence of
that, and there will be an absence, because there is not
plausible alternative, we must believe that the entire system
is rotten from top to bottom. South Africans should know. All
that new mining investment and all those potential new jobs
will not come, because the ANC must eat.
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The department spends all its time on essentially obstructing
potential investment. Meanwhile a large and growing part of
mining in this country is unregulated and illegal. The
department spends very little time on this.
In Emalahleni last weekend, I saw illegal coal mining, in
plain view of a major provincial road that had been going on
for months. It wasn’t hard to find. It was marked by plumes of
smoke from spontaneous fires. Residents from the adjoining
suburbs had been breathing smoke and hearing blasting all that
time. No sign of action by the department. They may tell us
they been doing something. I don’t believe that. Illegal
mining was happening continuously, visibly, nine km away from
the Emalahleni office of the DMRE.
Two possible explanations, either crippling incapacity or
officials are paid to look the other way. Everybody in mining
knows the problems with this office. It is not known as
“crook’s corner” for nothing. I believe the current going rate
to get a section 54 lifted is R10 000. The Minister says he
has dealt with corruption in this office. He hasn’t. Another
in his long list of failures.
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Even if minerals get out of the ground, not all of them can
get exported. Transnet incapacity means Exxaro alone lost out
on R5 billion in exports. When asked by the media, Minister
Mantashe said: “Ask Portia Derby.”. That’s not good enough.
The Minister is a member of the Cabinet. He should be taking
this up vigorously, not shifting responsibility.
Despite this stellar record of failure, the Minister is not
hated by the mining industry. They know, from experience that
it could be worse. The Minister’s one great achievement is
that he is not Mosebenzi Zwane. That is not very impressive.
Mining could provide a lot more jobs and wealth, but it needs
to be free to operate. Drop BEE, drop localisation, stamp out
corruption and fix infrastructure. The investment will come.
Thank you.
Mr M J WOLMARANS: Thank you, hon House Chair, greetings to
you, hon Minister, Gwede Mantashe, hon Deputy Minister, hon
Nkabane, Chairperson of the portfolio committee, hon Luzipo,
Whip of the portfolio committee, hon Mahlaule, hon members of
the committee and hon members on the platform. Chairperson, I
would like to reiterate my deep felt condolences from the
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bereavement of our hon Deputy Minister, hon Nkabane, in
Setswana we say ...
Setswana:
... a robale ka ntho madi a tshologe.
English:
We sympathise with her. Chairperson, the mineral energy
complex has changed in the democratic South Africa where
accumulation has been and remains dominated by an independent
upon a cluster of industries, particularly around the mining
sector. However, there is continuity in this change. The key
change in the minerals energy complex is that, the
relationship between big business and the state in the mining
industry, has shifted from one of co-operation and sharing of
benefits related to the development of mines, suppliers of
electricity, and export terminals to one where there is
extension and less space of mutual benefits.
There are three factors that validates this. Firstly, the
corporate strategies in the mining industry has shifted from
the old logic, retaining and investing to one of the
downsizing and distribution. A logic underpinning the
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downsizing and distribution, is the reason why corporate
savings are at their highest level reaching almost 18% of the
Gross Domestic Product, GDP, which is around R480 billion in
and around 2010-11. Unfortunately, corporate savings in South
Africa are not reinvested back into the productive sector of
the economy, with high expected social benefits or positive
economic externalities, but rather, are hoarded as private
gains.
This has contributed to the inability of South Africa to
achieve structural transformation in the mining industry.
Secondly, the Gauteng High Court ruling that set aside some of
the black empowerment provisions in the Mining Charter, and
subsequently declared this charter a policy rather than a
binding law, indicates that mining companies are unruly to
collaborate with the state to limit rank seeking behaviour and
promote reinvestment capabilities as well as broader economic
gains for the economy. The implication of this ruling is that
it has weakened the intervention intended to trigger
instructional change to address the real impact of monopoly
power in the mining industry.
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I think hon Lorimer would take a look and reflect on this
part. I am also encouraged by hon Boshoff that the elephant in
the room of over regulation that he has been putting across,
espoused by himself relate to this part where transformation
cannot necessarily happen. Thirdly, the mining industry tend
to offer high profitability margins during commodities boom
where mineral revenues are large in international currency
terms, especially when beneficiation activities are limited.
This also explains why mining companies are reluctant to
invest in mineral beneficiations activities, because such
investments should impact negatively on their financial
commitments to maximise profit and shareholder returns.
The poor design of the corporate strategies in the mining
industry feeds into this dilatory tendency as it undermines
the use of mineral revenues to drive diversification and
production inclusion. Ironically, the DA attributes South
Africans downwards, rather than stabilising or improving
performance in the Fraser Institute’s 2021 Investment
Attractiveness Index to the Department of Mineral Resources
and Energy, and yet, the very same party does not say anything
about the three factors highlighted earlier on. But we are not
surprised by this, because the DA is nothing, but a lobbying
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vehicle used by the industries that prospered under apartheid
to continue to hold sway in the democratic South Africa.
What is more disappointing is that, the DA links the current
load shedding to the inability of the Department of Mineral
Resources and Energy to finalise the signing of the risk
litigation independent power producer programme. The
confidence that the DA shows in renewable energy reminds of
the economist, Ha Jung Shanks, interesting parable. Like many
people as a child, Shanks was fascinated by all those graphics
defining Kung Fu Masters and Hong Kong movies. Like many kids,
Ha Jung was bitterly disappointed when he learnt that those
masters were actually hanging on piano wires.
The DA’s believe in renewable energy only is a bit like that.
The party accepts the capabilities of these renewable energies
as a reliable source of energy, even when it does not see
those capabilities. However, I am also a bit encouraged by the
olive branch and offer to the Minister of Mineral Resources
and Energy from hon Milleham, I wish to be a fly on the wall
during their lunch. Regardless of these three factors
highlighted earlier on, Vote 34 followed the necessary steps
to attain some congress between the diagnosis and the
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prescription, to improve the possibility of structural
transformation in the mining industry.
More especially, the Department of Mineral Resources and
Energy will amend regulations to section 75, 76 and 77 of the
Mineral and Petroleum Resources Development Act in the current
financial year, to ensure attainment of the government
objectives to redress historical socioeconomic inequalities,
Broad-Based Economic Empowerment, BBEE, and minimal
participation of the historically disadvantaged South Africans
in this industry. Most importantly, the amended regulations to
these sections not only expand opportunities, but rather, they
will also improve substantive freedom that people need at
their disposal to lead lives they have reason to value, in
particular, the intended transformation initiatives through
the amended sections of the Mineral and Petroleum Resources
Development Act, will ensure the integration of women and
youth and people with disabilities across multiple value
chains within the mining industry.
Going further, Budget Vote 34 augment structural
transformation in the mining industry as it allocates
R62,89 million oh the SA Diamonds and Precious Metals
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Regulator, SADPMR, to amend the Diamonds, as well as the
Precious Metals Bill in the current financial year. Therefore,
this budget allocation, will go nearly far enough in
addressing complex ways in which the historically
disadvantaged South Africans are excluded from participation
in the mining industry, more especially, the SADPMR has
project underway aimed at increasing the participation of
Broad-Based Economic Empowerment suppliers on the one hand, as
well as ensuring that historically disadvantaged South
Africans across all the nine provinces can fully participate
in the mining industry on the other hand.
More importantly, seven projects are already operational with
27 beneficiaries of which over 50% are women and youth, with
the amendments of Diamonds and Precious Metals Bills, greater
participation of enterprises and businesses owned by women and
youth will be promoted in the current financial year. Hon
Chairperson, to ensure that structural transformation in the
mining industry is meaningful, we must address the
infrastructural inefficiencies that put the mining industry
under pressure, to be specific, the legging water and energy
supplies has acute causes, that means the increased water
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scarcity and the cost of energy to mining houses due to the
rising prices, as well as poor energy supply.
Both these casual effects undermine the prospect of high
production levels and triggers low investment in the mining
industry. Fortunately, Vote 34 addresses these casualties
before they become catastrophic for an industry that has been
on the decline for the past three years, in particular, Budget
Vote 34 allocates transfers to the council for geoscience to
continue using machine learning to map ground water resources
necessary for mineral beneficiation. Moreover, the Department
of Mineral Resources and Energy will be implementing the long-
term pricing agreement to enable small towns to have
competitively price electricity in the current financial year.
Aside from all these, access to water supply and competitively
price electricity will increase the staged diamond industry of
rough diamonds to the historically disadvantaged South
Africans, to accelerate local diamonds industry beneficiation.
Chairperson, the ANC will support this Vote 34. Hon Hendricks,
we are as concerned as you are. However, the portfolio
committee will ensure that the Department of Mineral Resources
and Energy’s monitoring of social and labour place addresses
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the interests of the mining communities, particularly, around
the alleviation of poverty, inequality and unemployment, as
the basis on which structural transformation in the mining
industry is predicated.
The portfolio will also ensure that the Department of Mineral
Resources and Energy heeds the observation and the
recommendations made regarding Budget Vote 34 in the current
financial year. Hon Chairperson, on the basis of the above and
the long held view, the Department of Mineral Resources and
Energy will be properly monitored and encouraged by all
observations that we have as a committee and recommendations,
the ANC supports Vote 34 in addressing the plight of our
people. Thanks, Chairperson.
The MINISTER OF MINERAL RESOURCES AND ENERGY: Thank you very
much, House Chairperson. We are taking notes of all the
comments made in the debate and we will consider them as we
move forward – positive and negative, we’ll look at all of
them. However, let me touch on few and I want to help Al Jama-
ah to ask them to this abuse themselves over a department
poisoning thousands. I want to invite him for a visit in the
area from Belfast to Delmas where coal mining and coal
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generation is taking place. Therefore, when he comes from
there he will understand thus energy transition better that it
is only just when it is taking into account that justice is
exercised. Number two, it is talking about people and
communities not numbers. He’s treating people as numbers. On
the shell gas, I can tell you that the experiment that was
left in the hands of our department led by the Council for
Geoscience of checking that gas has been completed, tested and
sent to another developed country for validation and has been
validated. Therefore, the fact that nothing has happened is
actually not based on facts.
Nuclear safety compliance with industrial standard because it
is an affiliate of relevant industrial bodies of nuclear. The
mining contributed positively to the economic reconstruction
recovery of the economy, and actually we discovered quicker
because we took painful decisions to revive the mining
industry we open colliery to continue at level 5, opencast at
level 4, and all the mines at level 3. Therefore, that
decision was to criticised, but it is proven over and over
that it’s correct because it saved number of jobs, it saved
the industry and it also saved the fiscus.
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Refining capacity is being saved, I can report here and I
don’t know what will be the end results being, that we are
heavily involved in terms to ... [Inaudible.] Shell SA
Refining and BP Southern Africa, Sapref, as a department. I
hope that we will succeed in that because this thing of a
refining capacity being destroyed and, therefore, we don’t
care is not factual.
There was a reference by the EFF to Sibanye-Stillwater - to
Sibanye-Stillwater’s arrogance. I would prefer to engage
Sibanye-Stillwater directly on that. For example, there is the
running of a strike for two months without meeting with the
unions face-to-face not once until we walked in to intervene
and put them together, they talked together in the fourth
meeting. It was Sibanye-Stillwater’s executive who walked out
of the meeting, and actually I listened to the comments by the
chief executive officer, CEO that he has enough money to run
that strike for years. In other words, the message he is
sending to us is that he’s not prepared and he’s not ready
actually to mine gold. He has enough money to fight a strike
and stop production for years and years and that actually send
us a message that says the department’s relevant officials
look into the possibility of the application of section 47 to
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a mine that doesn’t want to mine, but sit on the properties
and we saw that we can give that property to companies that
want to mine gold.
The Fraser Institute, I want to advise the EFF to read the
report. Many of the people who comment on the Fraser
Institute’s report read one item where we are rated 75 of 84
which is the investment attractiveness. The other 14 elements
of the report are not read. For example, in the skills and
labour availability we are rated number 35. There are quite a
number, there 15 elements of the report that are there. I’m
advising people to read all of them. We will engage Fraser
Institute because they never interviewed our executives which
is what they do in other jurisdictions. They just did at
desktop research on us and rated us.
I welcome the offer by the DA for a meeting and a session of
many people under one roof and we discuss these issues. I
think it’s a constructive proposal in the sense that sharing
ideas is the most obvious way of finding solutions rather than
just nit-picking and look for weaknesses. We will take that up
and the rest of the issues that are raised we will follow
them. For example, the embedded generation, I have seen enough
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of articles by a number of people, particularly the DLSA and
many of those talk of ... [Inaudible.] and they say that
Department of Mineral Resources and Energy and National Energy
Regulator of South Africa, Nersa, the reality of the matter is
that at Nersa it takes less than two months to complete a
permit for the embedded generation. However, ... [Inaudible.]
because they have other ... [Inaudible.] let’s take for
example, for an environmental assessment, the law gives them
300 to 350 days to approve environmental assessment.
Therefore, yes, let’s take the responsibility if it is thrown
at us, but the reality of the matter is that Department of
Mineral Resources and Energy and Nersa don’t keep an
application for more than two months. It is the same as what
Mr Lorimer says that if the logistics contribute to a movement
of commodities to the coasts and therefore rail
inefficiencies, we must take the responsibility. I agree that
we take the responsibilities, but it is also equally correct
to say that, but this is falling under Transnet. Therefore,
Transnet is in another department. We are blamed for
Transnet, we are blamed for Eskom, and we are blamed for
everything, it’s fine because a leadership is about absorbing
the pain and taking responsibility. The major of the three
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entities is quite an important and it must give us results
that are bigger than individual entities put together because
we must get synergies from them and get more value. Thank you
very much, the hon House Chair.
The HOUSE CHAIRPERSON (Mr C T Frolick): Thank you, hon
Minister and thank you to all hon members for participating in
this debate. Members are reminded that the debates for the
Basic Education Budget Vote, Correctional Services Budget Vote
and Women, Youth and Persons with Disabilities Budget Vote
will take place at 16:30 on this platform. That concludes the
debate and the business of this virtual mini-plenary session.
Therefore, the mini-plenary will now rise. Thank you.
Debate concluded.
The mini-plenary session rose at 15:57.
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