2013/2014 Budget Vote Speech of the Deputy Minister of Mineral Resources of South Africa, Mr Godfrey Oliphant MP: National Assembly
Honourable Chairperson,
Honourable Minister Shabangu,
Honourable Members of Parliament,
Director-General and senior officials of the Department,
Senior Executives of the state owned enterprises and the private sector,
Trade union leaders,
Religious and traditional leaders,
Ladies and gentlemen,
Comrades and friends
Let me start off by first and foremost wishing the Chairperson of the Portfolio Committee on Mineral Resources, Cde Fred Gona a speedy and full recovery.
I also wish to appreciate the privilege of this opportunity to address this chamber on the occasion of our Budget Vote for 2013/2014. I am particularly mindful of the month of May which is acknowledged for its historical significance like the incarceration of former President Nelson Mandela on Robben Island 50 years ago on 27 May; the formation of the Organisation of African Unity/African Union (OAU/AU) also 50 years ago to name but a few.
But most importantly, May is considered the workers’ month. On May Day, the world over, we are reminded that social development assumes meaning only when the economy consciously and actively promotes the wellbeing of the working classes and the poor. Focusing on poverty alleviation and the working class welfare does not necessarily mean neglecting the broader interests within society.
This is particularly pertinent for us in South Africa, and given the prevailing industrial relation disturbances within the economy, and in the mining sector in particular.
The current conditions remind us that despite considerable progress made since the dawn of democracy in 1994, we still have a long way to go to reach a point where the relative earnings within the economy are conducive to rising living standards. It is a fact that mine workers’ living conditions have not changed sufficiently, and by all accounts remain below all our expectations since 1994. This is not helpful for productivity enhancement and for stability of operations within the industry.
As such, I firmly believe that it remains our collective responsibility to deal with the remaining issues with haste and composure. It is particularly noteworthy that, ever since the 1920’s, the mining sector in South Africa has been the arena for highlighting excessive income disparities and earnings inequalities within our society. Clearly, history has shown beyond any doubt that such structural issues need resolution once and for all – the sooner they are resolved the sooner the mining industry will resume its stability and predictability that is so badly needed for growth and development of the sector.
The mining sector is far too important for our country and for our social welfare to be left saddled with unfinished structural difficulties. Importantly, the resolution of these issues requires multi-stakeholder commitment.
Honourable Chairperson,
Let me remind this chamber once more about a resolution taken by this Parliament, seven years ago, on the occasion of the 60th Anniversary of the 1946 Mineworkers Strike. The National Assembly resolved:
1) that the living and working conditions of mineworkers be investigated further and be improved
2) to support the initiative by the National Union of Mineworkers to build a workers’ museum
3) that Parliament gives consideration to naming some of its buildings after JB Marks, a leader of the African Mineworkers Union, and other heroes of the struggle.
Honourable Members,
South Africa is one of the oldest mining jurisdictions in the world, we have over 100 years of mining experience, expertise and knowledge and we are indeed respected for this throughout the world.
To date we are still the richest country in the world with more than 100 years of mining still ahead of us.
So, mining matters in South Africa
On 1 May 2014, Workers’ Day, we shall be celebrating the 10th anniversary of the MPRDA. This is a solid piece of legislation that has changed the minerals and mining landscape in South Africa. We wish to thank those who spent sleepless nights developing this revolutionary legislation. For many years, the prophets of doom had claimed that the MPRDA provisions amounted to expropriation of property without compensation.
Today, we must also celebrate our recent victory in the Constitutional Court. For many the so-called mining law experts have claimed the MPRDA was unconstitutional and its provisions amounted to expropriation. These voices have been silenced forever. The Department has won the debate. In a landmark decision, the Constitutional Court said, “… the transitional arrangement … were so carefully designed to alleviate potential hardship and prevent expropriation.” This shows the genius of the public servants who drafted MPRDA. Let those who think that the Public Services only employs those who cannot find jobs in the private sector be silenced. The MPRDA was not drafted by lawyers in private practice, this piece of legislation was drafted by officials who were employed by the then Department of Minerals and Energy. We salute them.
Let me inform this august House what the Constitutional Court said, “The MPRDA constitutes a break through the barriers of exclusivity to equal opportunity and to the commanding heights of wealth generation, economic sector development and power.
It seeks to address the injustices of the past in the economic sector of our country in a more balanced way, the treating of individual property rights with care, fairness and sensitivity the deserve.”
If the Constitutional Courts labels the MPRDA as “… a break through the barriers of exclusivity to equal opportunity and the commanding heights of wealth generation …” let’s ensure that our people feel the warmth of this legislation. Our expectation in 2014 is full compliance with the MPRDA and the Transformation Charter.
As we set to deal with the structural issues, we should ever be mindful of the manner in which we resolve the issues and the way in which we communicate the rationale and the outcomes to the broader investment community. It is stating the obvious that our collective national interest is in our own hands. We need to take extreme care that we do not unnecessarily and inadvertently undermine our country’s brand and our collective ability to attract investment into this sector and its associated industries.
In addition to matters related to industrial relations, there are other structural issues that also need careful attention and conclusive resolution.
All over the world, the mining industry is synonymous with the destruction of the environment, land disposition and the use of land potentially useable for agriculture and food production.
Such dichotomies have to be managed carefully and responsibly via sound and concurrent environment rehabilitation management practices.
Globally, the extractive industries have come under the spotlight. As the honourable members are aware, the G8 leaders are focussing on this sector, not only due to the issues of tax evasion, but also because of the broader factors that have turned the blessings of the natural resources to what is now referred to as “the resource curse,” a term subsuming the multi-faceted damage that the mineral endowment imposes on the political stability, societies and communities that are rich in natural resources. How ironic, how very ironic, that the very resources that should and could be used to initiate and accelerate socio-economic development, turn out to be a curse of environmental and socio-political instability.
Surely, this is the time to break with the past and reverse the patterns of historic instability in this sector into a framework for a coherent and integrated developmental process. I would like to believe that our mining sector stakeholders in South Africa are well aware of their joint destiny and have had sufficient historic experience to be able to discharge their patriotic responsibilities towards our country and its people.
The turbulent state of the mining sector calls for urgent and meaningful commitment to our collective patriotic responsibilities with a view to set up our mining sector for success.
As it is well known, our natural resource endowment is considerable, and we have at least another century of mining ahead of us. It is surely incumbent upon us to govern it differently, structure it differently and manage it differently so as to unlock its maximum socio-economic benefits for our nation.
To this end, some basic building blocks of sustainable mining need effective attention. First and foremost it is about weaknesses in occupational health and safety performance in the industry. We cannot underestimate the misery brought to widows and orphans due to the failure to comply with health and safety standards. There is an urgent need to eliminate the fatalities and injuries that have characterised the mining industry for more than a century.
Next in line of priorities is the approach to environmental management, rehabilitation and more broadly the “greenification of mining operations.” This broader term pertains to a large number of factors such as energy efficiency, concurrent rehabilitation, prior planning for post-mining activities and the like. What is not acceptable, and indeed highly undesirable, is the neglect shown by many mining houses and companies with respect to the environmental management. In the recent past, we have had high profile cases of acid mine pollution and contamination and the social pain caused be asbestosis. We are still seized with the long outstanding matter between the Kgatelopele Asbestos Community in Kuruman and the Asbestos Relief Trust and hope to find some resolution as soon as possible.
These are indicative of the extent of care that needs to be taken by not only the regulators but also by the industry to avoid further damage to the socio-economic fabric of our society.
Honourable Chairperson,
Globally, it has also become clear that in all areas of economic activity, legislation and legislative pressures have their limitations. We have seen such limitations in the financial sector with colossal social consequences.
The mining sector is no exception. Whilst appropriate legislation and adequate administrative capacity are important requirements, the role of compliance with the spirit of the legislation, alignment with the broader national ideals, cannot be under-estimated. It is in this regard that we have reached a critical juncture in our mining sector, and I submit we have all that it takes to hammer out a sustainable growth path going forward.
What is moreover exciting and encouraging is that despite all the unfavourable developments and the negative publicity around the challenges facing our mining sector, there is a great deal of good will and investor appetite for investment in our industry. The reality is that if we see beyond the current cyclical downturn, the medium to long term demand for our mineral resources remain solid. Furthermore, there are many and major mining projects that are ready for implementation.
In our interactions with global and domestic mining houses, it is obvious that those who are long term investors are committed to work with us and see beyond our short term challenges.
Based on my recent interactions with the mining investment community in Canada, Australia and South Africa, I am convinced that we have major projects that are “shovel-ready” in commodities such as manganese, zinc and platinum to name but a few. Moreover, there is a growing realisation and willingness amongst the investor community for cross-border collaboration within our SADC region with a view to creating economies of scale and find practical means of overcoming logistical bottlenecks. Opportunities for value addition are enormous and plans are already in place to start serious pilots in the near future.
Ironically, if we entertain a collaborative framework, much of what we now face as logistical bottlenecks can be turned into investment opportunities. We need to acknowledge that the cost-base of our mining operations has risen sharply and in the prevailing globally competitive environment, our ability to remain a desired investment destination hinges on our creativity to manage costs and do so in a timely manner. Both cost containment and timely interventions are critical.
Honourable Chairperson,
As we reflect on the challenges and opportunities within our mining sector, we cannot be blind to the vast opportunities that our region offers. Possibly, for the first time in our history, our economy and that of our neighbours have a real chance of sustainable integration and industrialization. To this end, the mining sector offers critical and exciting opportunities.
Getting the mining sector policy and operations right is not an academic goal or a theoretical nicety for us and our region. Rather it is a matter of “development” or “no development” for many of our regions, communities and our neighbouring countries.
It is therefore our collective obligation to ensure that this considerable wealth is utilized to generate socio-economic benefits and integrated development for our nation. To do this, we need to draw lessons form our past century of mining, to avoid the undesirable consequences, and to ensure a mining industry that is socially progressive, environmentally sustainable and economically competitive.
Honourable Chairperson,
Whilst I am concerned about the challenges prevailing in our mining sector, I am nonetheless convinced that in our typical South African way we will resolve our issues and carve a new path of our national prosperity. I am excited about the prospects of our mining industry and I look forward to serving the process of unlocking its potential.
I thank you.
