Programme Director
National Secretary and leadership of the YCLSA
Young communists here present
Honoured guests and comrades
Revolutionary greetings to you all. First and foremost, let me convey my appreciation for the invitation to address this gathering of vibrant and future leaders on such an important subject. It is aptly titled “Economic Transformation of the mining sector and greater ownership – avoiding another Marikana”. Let me also hasten to join my fellow compatriots in wishing both the South African Communist Party (SACP) and the Young Communists, our vanguard and revolutionary movement of socialism, a happy 91st anniversary.
Your roots run deep through the history of this country and elsewhere in the world. Your efforts helped to change the face of humanity, and particularly the lifestyles and hopes of working people. The challenges of further change lie ahead - in a new and unpredictable world that is opening up. You will have to be light on your feet and committed to principle to undertake the role that you deserve to play in the unfolding fortunes of South Africa.
You have much behind you in these efforts. This splendid revolutionary movement bred selfless and dedicated leadership such as J.B. Marks, Ray Alexander, Ruth First, Jack Simons, Bram Fischer, Moses Kotane, Moses Mabhida, Govan Mbeki, Harry Gwala, Chris Hani and Joe Slovo, amongst many others. This leadership characterised a splendid pivot of leadership on which hopes and liberation aspirations of the masses were pinned.
The brutal and futile attempts at suppression by the previous order in South Africa failed miserably, but after much suffering and unnecessary bloodshed. We now have a free society in which everyone may choose their own path in life. We salute those icons of the past. They inspire us now, as we move ahead.
The South African Communists’ anniversary coincides with the year-long centennial celebration of the African National Congress (ANC) this year. As such, the anniversary of the South African Communist Movement forms an integral part of the celebrations of the centenary of the ANC in the context of our enduring alliance. Indeed, the collage of anniversaries of our respective movements confirm the assertion that the red flame of hope and a better life for all is still burning and held high.
The need to reflect on how far we have come in the struggle for the liberation of our people and the country as well as that of liberating our people from the triple challenges of poverty, unemployment and inequality has never been more appropriate.
Mining is central to this effort. It is therefore fitting to place the necessary reform of the mining regulatory framework in South Africa in a proper context. It was in 1955 when the people from all walks of this country, black and white, men and women alike, gathered at what history would come to name the Freedom Square in Kliptown.
They declared, in a show of defiance of the illegitimate government, that "South Africa belongs to all who live in it, black and white and that no government can claim legitimacy unless it is based on the will of the people.” It is our collective duty to bring to fruition the aspirations of the masses of our people who gathered in Kliptown and further declared that "the wealth of this country will be shared by all".
The unequivocal position of these ordinary South Africans, championed by the revolutionary movement, was subsequently affirmed by the UN General Assembly adopted Resolution No. 1803 of 1962, which confers Permanent Sovereignty over Natural Resources. Principle One of the Resolution provides "The rights of peoples and nations to permanent sovereignty over their wealth and resources must be exercised in the interest of their national development and of the well-being of the people of the state concerned“.
The Resolution’s principles formed the foundation of the UN's 1974 Declaration on the Establishment of a New International Economic Order and the Charter of Economic Rights and Duties of States, which followed in the same year. This position is further supported by the Constitution of South Africa in terms of which the State is bound to take legislative and other measures to enable citizens to gain equitable access to rights in land.
Actuated by idealism and the resolve of the democratic government to embark on a massive programme to rewrite and modernise the country’s policies and laws to integrate the previously excluded majority into the mainstream economy through socio-economic transformation, the Minerals and Mining Policy White Paper was adopted in 1998. This set the tone and pace of necessary changes to the structure and role of the mining industry in the democratic South Africa. The Mineral and Petroleum Resources Development Act of 2002 reflected the Whitepaper and became effective in 2004.
The MPRDA marked a watershed moment that heralded the necessary changes that legally considered mineral wealth as a national asset, a common heritage that belongs to all South Africans, and pronounced the State as the custodian thereof. This is further enunciated in Section 2(a) of the Act that acknowledges the right of the State to exercise sovereignty over the entire mineral and petroleum resources within the Republic. Let me reiterate the significance of the introduction of the MPRDA – it effectively transferred all the mineral wealth from private to public ownership. No one should have any doubts about this.
In the main, the MPRDA sought to address specific ills created by the apartheid regime through a number of inherent pillars, namely:
- recognition of the internationally accepted right of the State to exercise sovereignty over all the mineral and petroleum resources within the Republic
- to give effect to the principle of the State custodianship of the nation’s mineral and petroleum resources
- to promote equitable access to the nation’s mineral and petroleum resources to all the people of South Africa
- substantially and meaningfully to expand opportunities for historically disadvantaged persons, including women, to enter the mineral and petroleum industries and to benefit from exploitation of the nation’s mineral and petroleum resources
- promote economic growth and mineral and petroleum resources development in the Republic
- promote employment and advance the social and economic welfare of all South Africans
- Provide security of tenure in respect of prospecting, exploration, mining and production operations
- Give effect to section 24 of the Constitution by ensuring that the nation’s mineral and petroleum resources are developed in an orderly and ecologically sustainable manner, while promoting justifiable social and economic development, and
- Ensure that holders of mining and production rights contribute towards the socio-economic development of the areas in which they are operating.
It is important to note that the introduction of the MPRDA also addressed a racially biased structural weakness, in which South Africa had a dual ownership model for mineral rights, with the bulk of the mineral wealth held in private hands and the remainder by State. A distinguishing feature with the old order mode of ownership was that almost all privately-owned mineral rights were in white hands, deliberately excluding other races. This situation also encouraged the hoarding of mineral resources and contributed to significant delays in investment and development of mining projects.
In addition, this dispensation ignored the basic principles of sustainability and allowed mining companies to mine without due consideration of environmental impact, which has resulted in a critical mass of derelict and ownerless mines. The new regulatory framework introduced these principles of a sustainable development approach to the mining industry, including economic, social and environmental spheres, with stringent environmental provisions.
This mining regulatory framework also reached a significant milestone that embeds requirements for a social commitment to operate in the country’s mining industry, which marked another yardstick of incorporating social-development as one of the key requirements for mineral development.
The Social and Labour Plan (SLP) requires every mining right holder to commit and implement community development projects as one of key critical conditions to retain the licence to operate. This further marked a fundamental shift from the traditional corporate social responsibility investment that was implemented solely at the discretion of business, without due consideration of host community development needs.
The SLPs are intended to address the colonial legacy of ghost towns, eliminate the notion of enclave development that characterised mining towns in which mine villages would be eminently advanced than the immediately surrounding communities. Accordingly, SLP projects span, inter alia, community infrastructure, health, education as well as arts and culture.
Section 100 of the MPRDA provided for the development of the mining charter, as a precursor sector tool to effect transformation. All elements of the mining charter were selected to effect the notion of broad based socio-economic development, in order to allow mine employees, communities, both host and major labour sending areas, as well as the people of South Africa previously excluded from actively participating in the mainstream economy of the country to benefit from exploitation and development of the national patrimony in mineral assets.
I must emphasise that at the time of introducing the mining charter in 2004, we were entering uncharted seas. However, we used the first five years of transition to pilot implementation of our transformation tools, after which we evaluated the efficacy of these tools. The benefit of hindsight of the five years of initial implementation enabled us to strengthen the construct of the charter to provide clarity of purpose and intent, strengthen the scorecard and renew commitment of all stakeholders to the ultimate milestone of the current targets of the charter in 2014.
The government has in recent times been subjected to minute scrutiny in many areas, in particular, as to what some critics have referred to as an inequitable and unbalanced regulatory framework that is in favour of government. Could I hasten to say that this government is not immune to criticism, especially constructive criticism, as this allows for reflection. It may highlight limitations in certain aspects. However, some criticism that is levelled against government adumbrates any progress that has been attained dating back to 1994. Yet the process of transformation cannot be reduced as to be an event in one particular epoch, but a process that takes place over space and time.
Notwithstanding varying degrees of progress in the implementation of tools to effect “economic transformation of the mining sector” let me also restate that the Mineral and Petroleum Resources Development Act was introduced on the 1st of May 2004 and provided a transitional period of five years to April 2009.
In actual fact, the provision relating to transformation has only become applicable to existing mine operations in the last three years, taking into account the transitional period. We are however confident of the future that lies ahead. For instance, the Mining Charter scorecard is intent on eradicating the colonial hostel structures that host a number of men in one room by 2014, as part of improving the living conditions of mineworkers in the democratic dispensation.
In a nutshell, the Mining Charter is a tool to effect broad-based socio-economic empowerment. The Charter comprises the following constitutive pillars, which formed part of the regulatory requirement for conversion of old order rights into new order rights.
Human resource development
The intent of the Charter is to use and expand the existing skills base to contribute to sustainable development of the mining industry. To ensure that there is sufficient funding to support the effective implementation of the proposed human resources development intervention, the revised Charter has set a new target of 5% of the companies’ total annual payroll as a requirement for skills development by 2014, which excludes the mandatory Skills Development Levy.
I cannot emphasise enough the need for development of requisite skills to underpin sustainable development of the industry and effect workforce diversification and transformation. At the heart of mining, enterprise development, BEE ownership, etc. is the need to acquire and nurture the right skills to effect meaningful transformation. For instance, the current levels of gold mining necessitate a different approach to exploitation of these resources at depths in excess of four kilometers. The character of a gold miner would certainly not be the same in the next 10 years and young people must be focused on acquisition of correct skills to benefit from the imminent model of mining.
Employment equity
To promote diversity and equitable representation in terms of HDSA participation in all decision making positions and core occupational categories or levels of employment within the mining industry, the following targets are set, that every mining company must adhere to a minimum of 40% HDSA representation at various occupational levels of management categories by 2014.
Mine community development
Mine communities form an integral part of mining development and are most susceptible to the effects of mining, hence the need for a meaningful contribution towards community development in terms of size and impact, in keeping with the principles of the social licence to operate. To ensure the achievement of the socio-economic development, mining companies are expected to pursue community upliftment programmes to support communities within which mining takes place as well as labour sending areas.
Housing and living conditions
The apartheid system developed policies that subjected mine workers to unhygienic housing and living conditions, as this workforce was only seen as a source of production and not an integral part of business. These conditions subjected mine workers to poor living conditions in single-sex hostels resulting in social disruptions. As stated earlier, these have to be eradicated by 2014 through the upgrading and conversion of hostels into family units and the promotion of home ownership.
Procurement
The mining industry’s purchasing power provides a significant advantage to strengthen linkages of mining to side-stream benefits. These linkages further present opportunities for proliferation of mining industry’s based manufacturing sector for the capital goods sought to advance development of mining projects, including drilling equipment and services, mining machinery, etc.
While not all goods and services consumed by the local mining industry can be economically produced locally, there are goods and services consumed by the industry which can be economically produced locally with the support of the industry’s purchasing power. Further, mechanisms of creating an environment for multi-national suppliers of capital goods to contribute towards the socio-economic development of the local communities should be explored.
Ownership and funding
The mining charter provides a basis for greater ownership of mining industry assets by HDSAs, in line with the objective of de-racialising ownership of the mining industry within the context of transformation. As a result, a number of BEE transactions have been concluded since the introduction of the mining charter. Mining companies must achieve a minimum target of 26% ownership by 2014 to enable meaningful economic participation of HDSA. The fronting schemes of armchair BEE ownership have fundamentally undermined the transformation agenda of government that sought to create a critical mass of operationally involved black miners to lead the development of mining. We will have to address this matter.
Beneficiation
In order to further transform the industry and unlock the significant beneficiation potential of the country, the Beneficiation Strategy was adopted as government policy in May 2011. The strategy seeks to facilitate economic diversification, improve the country’s productive capacity, expedite progress towards a knowledge based economy and attain incremental GDP growth in mineral value addition per capita. The beneficiation strategy complements the industrialisation policy of South Africa, in line with government socio-economic development priorities to unlock intrinsic value inherent in the country’s mineral resource heritage.
As part of the transformation process of the mining industry, the amendment of the MPRDA is near conclusion and intended to strengthen the construct of the Act in order to, amongst others, remove inherent ambiguities that create room for a multiplicity of interpretations that result in perceptions of regulatory uncertainty and enhance sanctions to discourage non-compliance. The amendments are also intended to ensure that the benefits from exploitation of mineral resource development in the country are equitably shared, lay the foundation for sustained growth of the sector, effect meaningful and quantifiable transformation, and strengthen provision for mineral beneficiation to prosper.
The transformation of the mining industry is consistent with the aspirations of the ANC to build a non-racial, non-sexist and inclusive society. The ANC recently emerged from the Policy Conference in June, reaffirming the character of the ANC as a disciplined force of the left, with a bias towards the poor and the working class.
The ANC policy conference of June this year unambiguously recommended greater State participation in the economy, consistent with the developmental State agenda of the movement adopted in its 52nd elective conference in December 2007. We have accordingly established a State Owned Mining Company currently known as the African Exploration, Mining and Financing Company (AEMFC), a subsidiary of CEF. Cabinet has endorsed the process of hiving off the AEMFC from the CEF and establishing it as a standalone State Owned Mining Company.
We are finalising modalities of hiving off the AEMFC and resourcing it appropriately to be optimally functional. This company already holds several prospecting and mining rights in the country and has launched its first coal mine in 2010. The State Owned Mining Company is already operational and its creation is fully supported by all mining industry stakeholders.
We have worked very hard with all mining stakeholders to create an enabling environment for the mining industry to be positioned along a trajectory of sustainable growth and meaningful transformation. The Drakensberg mining Summit of 2010 concluded a blue print declaration of commitment by stakeholders to the mining strategy. Further, the mining strategy was emphatic on symbiotic inclusivity of both competitiveness and transformation elements as the cornerstone for sustainability of the industry and that one element could not take precedence over the other.
The work of this strategy has already featured the industry appropriately as being amongst the top five priority sectors of government. As such, the mining infrastructure requirement feature eminently in the Presidential Infrastructure Coordinating Commission and the national infrastructure investment programme recently announced by President Zuma.
On the recent unfortunate events at Marikana, I would like to urge all South Africans to respect the work of the Judicial Commission of Inquiry on Marikana instituted by President Zuma. Let us all allow the work of the Judiciary that will consider submissions from all identified stakeholders, to pronounce on its findings, beyond which we must engage further.
Having said that, we cannot allow anyone in this country to take our democracy for granted. The Supreme Law of the country and relevant tenets of the law provide sufficiently for aggrieved citizens of the country to seek legal recourse. The acts of public violence that undermine the democratic gains of the first 18 years of political freedom and deny others the right to life, as enshrined in the Constitution of South Africa are condemned in the strongest possible sense.
In conclusion, I deemed it proper to address you in this gathering, so that your engagement on such matters of national importance are informed by factual developments and progress we have made so far in our endeavour to effect the notion of “Economic Transformation of the Mining Sector and greater ownership”.
It is my firm view that the road we have traversed to date in transforming this sector has been protracted and onerous. Notwithstanding a degree of progress made to date in this journey, it is important to locate it within a proper framework. We have confidence in the tools currently in place and being further sharpened, that we are in a much better position to accelerate progress towards our stated objectives.
I thank you for your attention.
