D Peters: DBCM South Africa and Ponahalo Investment Holdings
Partnership

Keynote Address by Premier of the Province of Northern Cape, D
Peters, at the celebration of DBCM South Africa and Ponahalo Investment
Holdings Partnership in Kimberley

23 May 2006

Programme Director,
Members of the Executive Council,
Chairperson of De Beers Consolidated Mines, Mr Nicky Oppenheimer,
Deputy Chairperson of DBCM SA and Chairperson of Ponahalo Investment Holding,
Mr Manne Dipico,
Members of De Beers Consolidated Mines Board,
His Grace Bishop Barnabas Lekganyane,
Ladies and gentlemen,
Members of the media,

Tonight we are gathered here to celebrate yet another milestone in our
endeavours to build our country from the ashes of apartheid colonialism and to
improve the quality of life of all our people for the better.

It is indeed befitting that a celebration of this nature should be held in
Kimberley which remains the icon of the diamond industry.

It is here in Kimberley where the diamond industry was developed. It is here
in Kimberley where the world adopted the Kimberley Process Certification to
combat destructive and anti-human practices in the industry.

We have come back here in Kimberley to witness and celebrate the further
development and expansion of the participation of the previously disadvantaged
in this industry.

Indeed we must come back here and put the sparkle back into Kimberley and
its diamonds.

My contribution tonight will focus on a very important policy imperative of
Black Economic Empowerment (BEE) and economic transformation in South Africa.
This is necessary and relevant because the partnership of Ponahalo Investments
Holding and De Beers Consolidated Mines (DBCM) South Africa speaks directly to
issues of BEE and economic transformation.

One of the reasons why we celebrate the partnership between De Beers and
Ponahalo Investment Holdings is because it contributes significantly to the
national agenda aimed at transforming the economy of the republic. It is common
knowledge that apartheid economic policies excluded the majority of South
Africans from participation in the economy, created a massive disparity in
black and white ownership and control as well as access to employment
opportunities.

Against the background of what is generally accepted as a stable political
dispensation in our country it became imperative that in the current phase of
governance we ensure that we deal with the twin challenge of redressing the
economic exclusion of the majority of South Africans as well as create a more
equitable and stronger economy.

We recognise the fact that higher growth that we aspire to will not be
possible without broad based empowerment and the fact that high levels of
inequality poses social, political and investment risk. Hence the need to
ensure that as per Accelerated and Shared Growth Initiative for South Africa
(AsgiSA), economic growth and development must be accelerated and shared.

The President noted amongst other things that as we enter the second decade
of our new democracy the need for an economic transformation that brings about
effective and significant sharing of the wealth of the country becomes more
pressing. It is our view that the types of empowerment we aspire to would
amongst other things ensure participation of women as major shareholders as
well as include workers and communities.
Through a far sighted partnership between all sectors of our society we can
ensure a stable and growing economy that erases the inequalities of the past
and draws us all irrespective of our race, sex or creed into a more prosperous
and equitable future.

Because of the unfortunate history of our country, we have a duty to ensure
that the mining industry like the rest of our society reflects the reality of
South Africa. To this end, we are encouraged that companies such De Beers are
moving to ensure inclusivity and broad based participation.

For these reasons we are happy that the partnership being celebrated tonight
happens within the framework of our Broad Based Black Economic Empowerment
(BBBEE) policies and marks progress in the economic transformation agenda.

We expect this partnership to grow from strength to strength.

Let me take this opportunity to reflect briefly on the significance of the
partnership we are celebrating tonight. The partnership between Ponahalo and De
Beers is very important to socio-economic development in our country for a
number of reasons.

Firstly, it is significant because it represents some progress in our quest
to transform the economy of South Africa. It is an open secret that economic
transformation marks an important element of our countries programme to better
the lives of its people. It is acknowledged in many quarters of our society
that political freedom and transformation alone is not sufficient in broad
framework of building a non-racial, non-sexist and democratic country.

In fact in certain quarters of our society others argued that progress
within the economy towards empowerment, equity and increased employment are
burning issues which will define the politics and degree of conflict of this
generation.

Another important element about the partnership we are celebrating tonight
is the commitment of mining companies like De Beers as enshrined in the Mining
Transformation Charter. Amongst other things the formal mining industry
expressed its intention to adopt a proactive strategy of change.

This strategy includes commitment to foster and encourage BEE and
transformation at the tiers of ownership, management, skills development,
employment equity, procurement and rural development.

It has been our view that mining companies must ensure that they deliver on
the commitments they made through Mining Transformation Charter. To this end we
are encouraged and happy that through the Ponahalo partnership De Beers is
demonstrating the seriousness with which it views the commitments made in the
Mining Transformation Charter.

We must acknowledge the fact that this partnership which was announced in
October 2005 represents the biggest change to De Beers's ownership since the
company's foundation more than 100 years.

Recent BEE partnerships left little to be desired particularly around the
inclusion of workers, women and people living with disabilities. To this end we
are encouraged by the fact that of the 26 percent shares acquired by Ponahalo,
50 percent will be owned by South African based De Beers employees and
pensioners. In addition, the inclusion of women, people with disabilities and
communities living around DBCM mines must be applauded.

As we celebrate the achievement of Ponahalo Investment Holdings and DBCM
South Africa it is important that we do not loose sight of some of the
challenges facing our country and the Northern Cape in particular. In this
regard it is appropriate to use the following quotation from the economic
transformation Audit conducted by the Institute for Justice and Reconciliation
in 2004:
"If transformation were a mountain, then we South Africans have just finished
setting up the base camp. It is an achievement that we should not downplay: a
miraculous beginning. And from these slower slopes, we begin to see how far we
have to go. Conditions and opportunities must improve for the South African
majority. The alternative is stagnation, insecurity and increasingly bitter
social conflict."

I use this quote not because of pessimism about economic transformation in
South Africa but because it highlights the challenges still to be addressed.
Despite the milestone reached in certain quarters a number of challenges
persist with regard to economic transformation and Black Economic Empowerment
in South Africa.

After many years of exploitation of mineral resources in South Africa and
the Northern Cape in particular without any benefit to the locals, we are
encouraged by developments relating to the issue of mining beneficiation.

Many of you would recall that the Northern Cape has been identified in terms
of the AsgiSA, as the South African hub for mining beneficiation. In particular
a diamond cutting and polishing factory is to be established in Kimberley. This
is a very important development which may contribute significantly to
socio-economic development of the Northern Cape.

Nonetheless without support, co-operation and assistance from our partners
such as DBCM this development would face a number of challenges.

It is for this reason that in November 2004, when the President addressed
the High Diamond Council, of which De Beers is a member he remarked that it is
both incumbent upon and would be of benefit to the international diamond
industry to support and invest in beneficiation and value added projects in
African countries to ensure economic sustainability beyond the depletion of
diamond resources.

It is our hope that De Beers and other mining companies would heed the call
of the President by ensuring that diamond beneficiation becomes in a reality in
South Africa and the Northern Cape in particular.

We make this call because of our observation that the downstream
beneficiation industry in South Africa remains very tiny if existent at all.
The Deputy President Ms Mlambo-Ngcuka observed correctly that in almost all
African countries mining economies stop at mining with little effort at
beneficiating our mineral resources. Indeed if we are serious about job
creation, poverty alleviation and the generation of economic growth, this is an
avenue we should explore rigorously.

Furthermore in our quest to ensure beneficiation we need to draw the line
between mining and manufacturing with regard to skills that need to be
developed and promulgated. This needs to be done not only in order expand our
mining activities but also to enter the world market as a vibrant manufacturing
country.

The manufacturing share of the GDP has decreased from 26 percent in 1990 to
17 percent in 2004. This scenario means that there is much that needs to be
done by all stakeholders in order to revive this industry. The initiatives such
as diamond cutting and polishing operations based in the regions of production
will contribute significantly in this regard.

Indeed we recognise the fact that the mining sector cannot take the sole
responsibility for beneficiation. There is a need to encourage other role
players to support this initiative by bringing in their skills and develop the
manufacturing side of what we produce. The real issue lies within the sphere of
developing conducive environment for the manufacturing sector to invest in
manufacturing beneficiation.

The country must develop the competitive advantages that would attract
investments by the worlds manufacturing companies into the manufacturing
sector. The simple availability of natural resources in the form of comparative
advantages is no longer a sufficient condition for attracting competitive
advantage based industries such as manufacturing.

In the past we have heard and observed as companies cite a number of reasons
why it is not favourable for them to process produced mineral resources
locally. However, it is our view that we have the resources, human and
otherwise to do the job in a competitive and profitable manner in South
Africa.

We also recognise and acknowledge the fact that in the new economic
trajectory, mining is not only, limited to mining but it includes tourism and
heritage.

To this end, we are happy that the Big Hole project will be contributing to
the expansion of the tourism industry. However, it is important that we ensure
work together over and above the big hole project to identify and pursue
projects that would contribute to the growth of our provincial tourism
industry.

In the same breadth we recognise the fact that the province has the
potential to become the preferred adventure with its recognised cultural
heritage.

The preservation of the natural and cultural heritage in the Northern Cape
has the potential to contribute significantly to economic growth. It is our
hope that we can work together to address these issues.

It is well known that unemployment remains one of the pressing challenges
facing contemporary South Africa. According to Statistics South Africa
unemployment was projected to be at 26,7 percent in September 2005. This
implies that although progress is being made in the battle against unemployment
much more remains to be done. Our government has committed to half unemployment
by 2014. Several analyses indicate that in order to achieve this target the
economy needs to be growing at a rate of six percent annum. In the context of
our province we projected that annual economic growth of between four to six
percent will help us to ensure that unemployment is halved by 2014.

I highlight these issues because moving forward it is important that we work
together to ensure that these targets are achieved.

Each and every one of us needs to reflect on what contribution they would
make to ensure that the economy grows at levels adequate to address the issue
of unemployment. What role do we play in an attempt to improve the quality of
life for the people of the Northern Cape?

Indeed as the President observed when he addressed the High Diamond Council
the diamond industry or mining has always had potential to play a critical role
in the development of specific countries. We must also recognise and
acknowledge the fact that there are instances where the diamond industry played
a role to help address the challenges of poverty and underdevelopment.
Nonetheless it is important that all of us continue to work together to ensure
that we create a better South Africa.

In conclusion, on behalf of the people of the Northern Cape province we wish
this "marriage" everything of the best for the future. We hope that this will
be recorded in the history books as one of the very successful partnerships. We
do not want to hear of any separation or divorce.

If this was a real marriage and I will be the priest I would declare you
"husband and wife." I would put it differently and say, "what these witnesses
tonight have put together, no one shall put it asunder." Just like a diamond is
a girl's best friend, so should a diamond be our "best friend" and make
Kimberley and the Northern Cape sparkle.

The journey that you have just started must take this partnership and
marriage to a destiny beneficial to all of us. It is also my hope that you
would improve on what you have started. Together, side by side, we should
ensure that we contribute to the development of this country.

I thank you!

Issued by: Office of the Premier, Northern Cape Provincial Government
23 May 2006
Source: Northern Cape Provincial Government (http://www.northern-cape.gov.za)

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