at the Mining Indaba in Cape Town
6 February 2007
Programme Director,
Honourable Ministers,
Distinguished guests,
Captains of industry,
Senior Government officials,
Ladies and gentlemen
It is with great pride and honour that I welcome you to the Republic of
South Africa and indeed to the 12th annual Mining Indaba in Cape Town and
extend to you all warm and hearty greetings. I am pleased to see my
counterparts from the rest of the continent and other parts of the world, as
well as local and international participants at this critical juncture in our
mining industry.
I also extend a special welcome to President Jakaya Kikwete of the Republic
of Tanzania, who'll be delivering a keynote address later today. South Africa
and Tanzania have a lot in common, including significant gold production and
reserves, among others. Programme Director; allow me to convey my sincerest
appreciation and congratulations to the organisers of this event, the
International Investment Conferences (ICC), for such a successful Indaba again
this year. In particular, my appreciation for my departmentâs good working
relationship with Mr Timothy Wood (current vice president of the ICC) and his
predecessor Ms Sandy Lawrence.
In this, my inaugural Mining Indaba, I would like to start by focusing on
the role the mining stakeholders I believe have to play in Africa, because
there continues to be several war-torn countries in Africa, at a time when
peace is supposed to prevail throughout the continent. Many of the wars in
Africa were fuelled by proceeds from African countries' respective natural
resources, as depicted in the recently released movie "Blood Diamonds".
However, the movie does not go further in revealing the positive
contribution that diamonds have made in the regeneration of Africa. It is these
very same diamonds that have restored the shattered economy of Sierra Leone and
that also contribute significantly to the economies of Angola, Botswana,
Namibia and South Africa, among other African states. The role of the Kimberley
Process is pivotal in ensuring a conflict-free industry.
We do, however, remain mindful of the raging wars and resultant crises that
continue to take place in Darfur, Cote d'Ivoire and Somalia. The Ethiopian
intervention which has brought a speedy end to the bloodshed in Somalia is much
appreciated. We are even more hopeful of the continentâs ability to bring about
lasting stability through the presence of South Africa, Ghana and Congo in the
United Nations Security Council (UNSC). Also, last but not least, the
contribution of mining companies in promoting lasting solutions to Africaâs
problems is of paramount importance.
The mining industry has built and still continues to build the economies of
this continent. Africa remains a leading producer of many critical commodities,
such as diamonds (+50%) gold (18%), platinum (+70%), chromium (+50%), vanadium
(40%), cobalt (18%) and others. More importantly, the continent remains
under-explored, albeit there are known reserves that surpass the rest of the
world in terms of volumes in the ground, grades and ease of mining. Such known
reserves include gold, diamonds, platinum, chromium, vanadium, cobalt, uranium,
copper and phosphates.
The ongoing exploitation of these reserves requires your much-needed
investments and skills to create more wealth in the continent and combat the
unacceptably high levels of poverty. In 2005, 17% of the global exploration
budget was spent by mining companies in Africa, indicative of the commitment by
these companies in improving the economic state of Africa and equally by
African government in creating enabling investment environments of mutual
benefit.
I wish to encourage you to extend your role further in providing additional
jobs in the continent. Africa's resurgence and renewal has to be marked by a
complete break with the past of only exploiting and exporting her raw
materials. When you eventually find these economical deposits in Africa, employ
and skill the local people to run your operations in the host countries. I
further encourage you to plan your value-adding programmes for the respective
commodities in the continent. This will help the continent in rebuilding
itself. The transformation of the industry in Africaâs renaissance should
encompass women empowerment and the broadening and deepening of the development
of communities around whom mining occurs.
We recognise the challenge of skills shortage throughout the world, but we
are convinced that skills development is a challenge for all stakeholders in
the industry. We can collectively find solutions to this challenge in a short
to medium term. It should be clear that the best stakeholder we are looking for
is the one when he or she operates in the continent provides maximum jobs to
locals, does beneficiation in the continent, act responsibly and supports
legitimate governments.
In the South African mining industry, we have been perplexed by reports of
declining investment trends, ostensibly inconsistent with the current "Mining
Boom." Indeed, we did establish that real fixed investment in mining declined
by 4,2% per quarter from the last quarter of 2002 to the fourth quarter of
2004. This trend, however, was reversed from the beginning of 2005 to the third
quarter of 2006, during which time investment grew at a moderate rate of 1,4%
per quarter.
The recent modest investment in the sector since the beginning of 2005
implies the return of positive although somewhat tentative investor sentiment
to the mining sector during 2005, but there are indications that a more
aggressive situation could have emerged during the last quarter of 2006. The
decrease in real mining fixed investment appears to be consistent with
anticipation of the uncertainty surrounding the imminent promulgation of the
Mineral and Petroleum Resources Development Act in 2004, which has since been
fully understood by a significant majority of stakeholders in the sector. I
would like to stress that it is absolutely critical for the sector to
understand the philosophy behind the Act that the locals must benefit from the
activities around them.
The CHINDIA (China and India) effect has been instrumental in driving the
demand for many commodities. The volatility of the rand is comparable to that
of the Australian dollar, yet the latter attracted significantly more
investment than South Africa in 2005. Currency volatility can therefore not be
the major contributor to the observed decline in investment. Australia is
relatively proximal to both China and India, both of which prefer imports of
raw ore to be treated in their respective countries. In addition, Australiaâs
deposits are characteristically closer to its export harbours than is the case
in South Africa and furthermore, the country does not have a specific policy
requiring that the value of its primary minerals be optimised in terms of the
value chain before exports occur.
In South Africa however, this value addition or as we call it
"beneficiation" is pivotal to our economic growth and we remain committed to
advancing it. To this end, Parliament has enacted two new Acts in 2006, namely,
the Diamond Amendment Act and the Diamond and Precious Metals Act. The
announcement on the implementation of these pieces of legislation is to be made
some time this year.
These policy changes are intended to ensure that South Africa remains
internationally competitive in attracting and retaining mining investments.
Accordingly, the Treasury has further indicated its support for local
beneficiation, in keeping with broader government policies. The royalties for
beneficiated products will be significantly less than exported ores. The
details are still work-in-progress, but are intended for inclusion in the
Royalties Bill expected in 2009.
During 2007, the Mining and Petroleum Resources Development Act (MPRDA) will
be amended to remove all identified obstacles to mining investment. In
addition, beneficiation baseline definitions will be completed and gazetted in
order to remove uncertainty for those who intend to take their products to the
optimum beneficiation standard locally.
Since the promulgation of the MPRDA in 2004, many licences (both prospecting
and mining) were issued by the Department of Minerals and Energy. It should be
noted that all the applications approved satisfy the seven pillars of the
Mining Charter. This suggests that the mining industry in South Africa has
indeed been transformed. These changes are, however, not intended to apply only
up to 2009, but for as long as mining exists. Those who entered into short-term
contracts with Black Empowerment Economics (BEE) companies have therefore been
misled.
In conclusion, I wish to reiterate that this Indaba is not only about
mining, but also about tourism in Cape Town. I urge you to visit Robben Island,
as it is a reminder to all of us that there are Africans that have endured
suffering at the southern end of this continent, just as Gorey Island, off the
coast of Senegal, serves as a similar symbol in the north. We need to visit
such places to ensure that these sufferings do not happen again. Hence we would
welcome your continuing assistance in the economic development of Africa as
well as support for South Africa, Ghana and Congo in their representation of
the continent in the United Nations Security Council (UNSC).
With these words, I wish you success in your deliberations during this
conference. Let us work together towards ensuring that Africaâs renaissance is
expedited by leveraging Africaâs resources to the benefit of the entire
continent. Let us also derive inspiration from the celebrations of the 5th
anniversary of the formation of the African Union and the historic 50th
anniversary of Ghanaâs independence in the year 2007 to harness the continent's
resources to rebuild a better Africa and a better world.
I thank you.
Enquiries:
Sputnik Ratau
Spokesperson: Ministry
Department of Minerals and Energy
Tel: (012) 317 8291
Fax: (012) 320 0915
Cell: 082 521 9614
E-mail: sputnik.ratau@dme.gov.za
Issued by: Department of Minerals and Energy
6 February 2007
Source: Department of Minerals and Energy (http://www.dme.gov.za)
