Members of the Business Forum
Australian and South African business leaders
Ladies and gentlemen
We are pleased that the Commonwealth heads of government have, once again, afforded the democratic and free South Africa a chance to present its case in this august chamber of business and political leaders.
To echo the poet John Donne, South Africa is not an island existing on its own. We are part of the global community of nations, with all the benefits and obligations that this should offer.
When it comes to my country, it should be pointed out that we are driven by the desire to ensure that we use our vast mineral resources, inter alia, to better the lives of our citizens; to give them a chance in life to get quality education; to ensure they have decent housing and a comprehensive social security system; as well as to ensure that they get job opportunities to cater for their own needs and those of their immediate families. This is the minimum objective in other African societies and beyond.
Our government is doing everything in its power systematically to ensure that our country retains its place as a preferred mining destination. It has not escaped us that some of the biggest players in the resources sector that are located in this country owe their very existence to South African origins and these continue to have major operations in our country. This has been a two way process whereby Australian companies have equally established a presence in our country.
Following road shows and interactions with investors, including our own experience over the last seven years of the implementation of the Act (MPRDA), we have found reason to pioneer through Parliament some adjustments which will culminate in the introduction of objective criteria in the processing and granting of both prospecting and mining rights.
This will introduce changes like, for practical and objective reasons, the concept of the partitioning of rights, a development which has long been awaited by the mining industry that needs it to bring extra resources to improve efficiency. In terms of the proposed changes, holders of rights will be entitled to subdivide the right and dispose of a portion of the same after following due process.
This will also include strengthening of the construct of the Act to remove ambiguities and possibilities for the multiplicity of interpretations. As part of the measures to improve our country’s attractiveness we have introduced an electronic application system (SAMRAD) which has immensely assisted us in:
- Making information available about areas that are being applied for, or granted, and those that are still available. This is being done to assist the public in regard to applications for prospecting or mining rights or even mining permits
- Ensuring transparency and information in the processing of applications.
- Ensuring the efficient processing of applications with the resultant benefit of reduced turn-around times for finalizing applications.
Accordingly, we have processed well over 2 000 applications since the system was introduced on 18 April this year.
We intend to create a single integrated licensing system in terms of which the granting of a mining right will be integrated with the issuing of a water use licence and environmental authorisation. These are critical steps in our attempt to ensure that our mining regulatory system conforms to international best practice.
We have changed tack with the establishment of the multi-disciplinary enforcement and compliance unit we have moved ahead with to address the compliance issues. I want to emphasise that temporary closures of operations will only be done as a last resort - only if our attempts at correction fail. We will tread very carefully with these issues because we are very much aware of the link between the need for private companies, on the one hand, to make their margins and the need for the DMR, on the other hand, to ensure that there is compliance with our country’s laws.
In the event of non-compliance, with, for instance, environmental management plans and mining works programmes, we will then throw the book at these entities in a bid to promote responsible mining which is our way of contributing to the fight against climate change. As hosts of COP17 we have an extraordinary obligation to lead from the front and create a mining industry that is in tune with international conventions and agreements.
As is well known, mining activities are largely located in remote and under-developed areas of our country. The need for harmonious coexistence between mining and prosperous communities cannot be over-emphasised. Tensions between communities and mining companies must be resolved as a matter of top priority, with full consideration for the welfare of the communities and workers.
Despite their contribution to foreign exchange earnings and taxes, these companies need to continue to work with us to give effect to the reasonable targets that are spelled out in our mining charter. These, among others, include the creation of opportunities for local communities in areas such as procurement, entrepreneurships, and the building of housing settlements to get rid of the indignity of single sex hostels. These are not luxuries; they are a critical part of our attempts to right the wrongs of the past.
We are currently looking at ways to ensure that mining houses, in specific areas, are able to pull together their resources – taking advantage of the economies of scale and scope - to bring about visible improvement in the affected mining areas. Our children deserve this.
The issue that has been on the lips of many people is the prospect of the nationalisation of our mines. Let me restate what I have said previously. Nationalisation is neither government nor ANC policy.
I want to remind the audience that when this very ANC took power in 1994 some Afro-pessimists predicted that we would be another case of African Armageddon. Some of these people even resorted to hiding candles and tins of sardines in some remote farms in the then Northern Transvaal – at the time a favourite place for anti-government forces who were implacably opposed to the ANC government.
If one wants to get a picture of how bad things were, look no further than the economy that the ANC inherited. It was an economy in distress:
- There was macroeconomic instability
- Fiscal stress resulting from potential government debt concerns;
- Budget Deficit was over 9%
- Public debt charges were 20% of the Budget
- Social spending (education/health) was too low
- Government (of the new Republic of South Africa) was not ‘credit-rated’.
With regard to the Forex Policy:
- South Africa had negative foreign reserves (Net Open Position [NOP])
- The rand was under attack, so the Net Open Position kept rising
- Fiscal contingent liabilities were rising.
It does not need a rocket scientist to realise that the ANC, South Africa’s ruling party, inherited a bankrupt country. It is quite interesting that, despite having no background of running a modern economy and with the markets that were sceptical about its readiness and its ability to govern, we have done a modest job of it.
I, for one, sleep peacefully at night with the knowledge that, when the ANC finalises this matter next year, they will do so in a manner not dissimilar to the way it handled political economy decisions that have defied the doomsday predictions of our opponents. We did it then and I am convinced we will repeat the same feat next year.
We recognise that government cannot solve all our country’s problems on its own. We can only achieve our goals by using instruments such as the recently approved mineral beneficiation strategy which recognizes that, despitecomparative advantages, we have been having low levels of beneficiation that are mostly concentrated in the capital and energy intensive segments of the mineral value chains.
As mandated by Cabinet, the DMR is currently developing the implementation plans for the five value chains outlined in the strategy which are:
- Iron and steel
- Energy commodities
- Pigments and titanium metal production
- Autocatalytic converters and diesel particulates
- Jewellery fabrication.
We have subsequently developed implementation plans for the first two, covering the areas of steel and energy and these are currently going through the Cabinet processes with the remaining three to be finalised early next year.
Despite the fact that there has been marginal reduction, year on year, of the number of fatalities on our mines we are, nevertheless, still concerned about the continued loss of lives in this industry. It is in this regard that we are ramping up our sanctions against the mines if they fail to comply with our country’s health and safety requirements.
We will, in the meantime, continue to take action with the hard stance of stopping unsafe mines to ensure that employers take in instances where safety standards have been compromised and this we will do in terms of section 54 of the mine health and safety requirements. We are also currently reviewing the Mine Health and Safety Act to strengthen enforcement and remove any ambiguities.
It is a long and difficult road. We have very different socio-economic circumstances compared to this country, Australia. However, I am convinced that we can build on the goodwill of the sister people of this great country to forge a South Africa that truly belongs to all who live in it as promised both in the Freedom Charter of 1955 and reconfirmed in the Constitution of our country.
I thank you!
