The President of the Chamber of Mines, Mr Sipho Nkosi
The outgoing CEO of the Chamber, Mr Mzolisi Diliza
The incoming CEO of the Chamber, Mr Bheki Sibiya
Members of the Chamber
Programme director
Ladies and gentlemen
Good morning
The 121st Annual General Meeting (AGM) of the Chamber of Mines undoubtedly takes place at a challenging and exciting juncture in the history of South Africa’s mining industry. In the first half of 2010, the American Citibank group estimated that South Africa’s in situ mineral wealth was worth some two point five trillion US dollars ($2.5-trillion) or the equivalent of 18 trillion rands (R18-trillion).
At the same time, there is unprecedented attention focused on the state of the mining industry and its contribution to our country’s socio-economic development. The chamber, as a representative of a significant bloc of the industry’s big players, therefore has an enormous task lying ahead in the months and years to come.
Government has recognised the need for a cooperative approach to tackling these challenges together with business and organised labour. Indeed, we have been working closely together over an extended period to ensure that we deal with challenges facing the industry.
You will recall the Mining Summit we held in the Drakensberg in March this year, where government, business and labour thrashed out a range of issues affecting the entire industry. We set a deadline for 30 June 2010 to announce details of our strategy and, as promised, we held a press conference on the deadline, in the midst of the World Cup, to reveal the ‘Mining Industry Strategy for Sustainable Growth and Meaningful Transformation’.
That strategy, ladies and gentlemen, cannot simply be a document which gathers dust in our filing cabinets. It is a working document of which each one of you should not only have a copy, but should be as familiar with ‘its’ contents as you are with the balance sheets of your companies.
It is a strategy document to which the Chamber of Mines has made a significant contribution and for that the minister would like to compliment the leadership of the Chamber. The work of elaborating on various commitments outlined in the declaration of 30 June has begun in earnest.
For example, task teams on research and development, infrastructure, exploration and the regulatory framework have convened meetings to define the mandate and scope of their task teams and table a range of possible solutions to the identified challenges.
You may recall that at your last AGM the minister had specifically raised concerns about the relevance and currency as well as the structure and content of the Chamber of Mines. A year later, the Minister compliments the specific efforts that you have made in addressing her concerns, albeit that there is room for further improvement.
For our part, the Department of Mineral Resources has since the beginning of this year been conducting a thorough examination of the state of administrative processes with the aim of ensuring that our systems and processes improve South Africa’s competitive edge on the global mining arena.
Right at the beginning of this year, the minister announced at the Mining Indaba that the department would halve the times for processing prospecting and mining rights, from six to three months and from twelve to six months respectively.
As part of this process, the Director-General visited all the department’s regional offices to, amongst others:
- Audit all activities involved in processing applications, with the intention of reducing timeframes
- Review the entire functioning of our regional offices, which are at the coalface of service delivery. This review included organisational structure, systems and functioning of the offices
- Conduct a comprehensive review of the capabilities and limitations of the National Mining Promotion System (NMPS) which is utilised for the purpose of capturing and processing applications.
We have since shortened the timeframes involved in processing the various categories of rights. To this end, the processing of Mining Rights has also received priority attention because of our resolve to grow the mining industry in a sustainable manner.
Shortly after this announcement, we commenced an internal process of comprehensively analysing the root causes of the problems besetting our internal administrative systems. The following are some of the prominent problems that were identified:
- The inability of our administrative system to effectively manage Section 9(1)(b) (i.e. competing applications) leading to double granting, overlapping and rights that cannot be registered
- An increase in litigation and appeals as well as letters from applicants relating to delays in processing their applications
- The limited capabilities of the NMPS system, which lacked proper GIS capability leading to rights which cannot be registered and misalignment when provincial boundaries change
- Information on land availability not being readily available, thus leading to perceptions of corruption on the part of officials
- The lack of a proper interface between NMPS and other planning and development systems
- The absence of an inherent accountability system for officials involved in processing applications and administering rights
- A lack of transparency in decision-making leading to perceptions of too much official discretion and perceptions of impropriety, especially on the part of those who are negatively affected by decisions taken
- An inability to conduct proper compliance inspections to ensure compliance with undertakings and commitments of right holders
- An increase in complaints from communities arising in part from the failure by some mining companies to implement their social and labour plan commitments
- The need to re-align our organisational structure to focus on new priorities of government, as well as the implementation of the Mineral and Petroleum Resources Development Act, key amongst which was effective monitoring and evaluation.
The battery of measures that we were implementing was also informed by the results of the assessment of the Mining Charter which confirmed some of our own findings relating to system problems.
In an effort to systematically address these problems internally, we started a process of addressing cases of double granting and overlapping rights. This took the form of high level visits to the regional offices and working through all the cases with the right- holders.
In addressing these cases, we involved applicants with a view to demonstrating to them that there was no malicious intent. The process was done in a transparent and accountable manner.
Cases of double granting that were attended to (including unregistrable rights) that were identified were less than 120 out of a total of 26 000 applications that were processed since the implementation of the Mining and Petroleum Resources Development Act (MPRDA), representing around 0,005 percent of ‘errors’ which, I must state, can be explained.
I must also indicate that some of the errors that we encountered were occasioned by consultants of applicants themselves who submitted sketch plans with incorrect polygons leading to overlaps, changes in boundaries during the demarcation process, inability of the NMPS system to effectively detect and manage competing applications, and gaps between the appeal process and processing of applications.
As early as October last year, the minister commenced a process of developing an integrated electronic system for managing the Mine Health and Safety portfolio. The system allowed a process of integrated management of information and improved management of the mining industry.
Due to NMPS systems limitations, we took a decision to roll out the new electronic management system within the department, starting with Mineral Regulation branch. To this end, NMPS data is being migrated onto the new platform to be integrated into the new system.
Work in this regard is at an advanced stage and some of its new applications would entail early warnings for non-compliance with undertakings and commitments made by applicants, effective time and task management on the part of officials, limited human tampering and transparency. The system is being enhanced to allow applicants to make on-line applications and view progress on-line.
The minister will be announcing a launch date for this new system early next year. Once the system is fully operationalised next year, compliant applicants will receive acceptance letters instantly.
To prepare for the implementation of the new electronic system for the administration of rights, it became imperative that the data currently sitting on our NMPS system be properly audited. To this end, in August this year, the minister imposed a moratorium with effect from 1 September 2010, on the lodging of new prospecting rights to enable us to re-direct resources and focus on conducting massive audits into the status of all rights that were granted since the implementation of the MPRDA.
The terms of reference of the audit deliberately commenced with granted rights, because we discovered a significant number of rights which never progressed to the ‘issuing’ stage. A sum total of the number of prospecting rights that were issued plus exploration commitments that were made convey a story that South Africa had an excellent prospect of a ‘boom in exploration activity.
Even more disturbing is the fact that even in seams or mineral complexes with known mineralisation such as Mpumalanga, Limpopo, etc, this hive of exploration activity did not take place.
As reported previously, we are conducting these audits during the moratorium period all over the country and I need to indicate that preliminary results are not encouraging. Although we are still focusing on prospecting rights, the following are the preliminary results:
- There is gross non-compliance on the part of right holders with regard to failure to commence with prospecting activities within 120 days as stipulated in the contract
- Cases of fronting by some right holders which result in ‘bogus transactions’ or unsustainable mining transactions
- The use of consultants by applicants to a disempowering extent
- Applicants who are not serious about mining and, as a result, have no idea of areas where their rights were granted
- Applicants who have not complied with their prospecting works programmes by engaging in extensive drilling, without amending their works programmes and financial provisions, thus increasing the state’s exposure to risk
- Illegal drilling in some areas leading to increased hazards to communities, land owners, etc
- Right holders whose companies have been de-registered or liquidated, and the regulator has not been informed
- Diamond procurers who are not properly registered with the South African Diamond and Precious Metals Regulator, creating problems of incompleteness of diamonds mined and sold legally
- The creation of a myriad of schemes of companies
- The sale of rights without ministerial consent.
Procedurally, all cases of non-compliance are to be followed by the issuance of Section 93 notices as well as Section 47 procedures for the cancellation of the right. I must indicate that there is no room to tolerate non-compliance and those who are found to have transgressed will be dealt with in the appropriate manner.
The minister is appealing to the Chamber to encourage its members to cooperate with this process as a matter of urgency and provide responses to all questions or queries made by the Department of Mineral Resources (DMR) officials – it is for the good of us all.
We are conducting these audits with the intention of restoring integrity to our regulatory system which is currently under attack because of perceptions of inefficiencies and irregularities. The minister want to encourage the Chamber of Mines to spread the message to your members and bring to her attention unbecoming conduct, even on the part of the DMR officials who are involved in this process. Equally so, it is crucial for your members not to try to tempt our officials.
We have implemented a code of good practice aimed at insulating our officials and protecting applicants. I must indicate that any applicant caught trying to compromise the DMR officials will face the full might of the law.
The minister is also aware of reports alluding to a bad relationship between government and the Chamber of Mines, some of which allude to the Chamber being a ‘discredited organisation in the eyes of government’. Nothing can be further from the truth.
Recently, the Director-General held a workshop with senior officials in the department to finalise the process of drafting guidelines that need to underpin the various administrative processes that must assist both applicants and officials in processing applications.
These guidelines would also serve to clarify roles and areas seen to be a mischief such as community engagement, over-concentration, optimal utilisation, etc. These guidelines are being mapped onto the new system to ensure that there is certainty in our regulatory framework.
Of late, there are increasing reports of concerns emanating from various communities. Our assessment is that these concerns are a function of a myriad of outstanding issues from communities which were never fully addressed, a lack of understanding of the extent to which the department as a regulator can address community issues, and non- compliance on the part of applicants on the commitments that they made to communities, which we are not always aware of.
The Minister has instructed the DMR officials to roll out a large scale roadshow focusing on community engagements to address these matters in a sustainable manner. We are conducting these in concert with other role players from government. We urge you to encourage your members to cooperate with this process so that the notion of a ‘social license’ can indeed become a reality and security of tenure can be guaranteed.
We are doing all these during the moratorium period so that we can ensure a structured and properly coordinated clean up of our entire system and urge you to continue on this path of working with us.
Ladies and gentlemen, the government released the new growth path last week, with mining being within the top four priorities. This is an important achievement, but it also puts pressure on us to demonstrate our worthiness of being a sector which is highly regarded.
In the past, mining was regarded as a sunset industry, which made it very difficult for the industry to solicit appropriate support within the structures of government. That picture is quickly changing.
The new growth path seeks to address the socio-economic backlog, with a particular focus on supporting labour-absorptive economic growth opportunities. There are several opportunities for the mining industry to contribute expressively to the objectives of the growth path, including but not limited to:
- Increasing productivity (output) of mining assets, complemented by a visible investment in new mines
- Initiation and support of mineral beneficiation programmes, which will not only add a new layer to the national economic landscape, but will also create a critical mass of decent employment prospects for South Africans
- The rehabilitation of the mining areas, and the effective management of the environment
- The adoption and promotion of the green mining technologies.
Programme Director, there is increasing tension globally between growth and socio-economic development on the one hand, and the environment on the other. We in South Africa grapple with the same challenge, as espoused by the sustainable development framework. The recent closure of a coal mine in Limpopo which resulted in the loss of jobs for more than 500 people in one of our poverty nodes, amplifies the nature of the challenge that lies ahead.
There are dubious ‘green’ non-governmental organisations (NGOs) operating in Mpumalanga and Limpopo, who are feeding communities with untruths and encouraging them to resist mineral development. Whilst the minister accepts that there is scope for this industry to work with NGO’s who ought to be providing us with guidance on mitigating the negative impacts to the environment, the minister finds the methods of some NGOs worrisome.
Let us work together to deal with the real issues concerning the environment, but not allow to be deterred from our task by bogus environmentalists.
I strongly believe that it is our collective responsibility to locate the country’s mining industry well within the green revolution, i.e. greening the mining industry - and taking advantage of the inherent opportunities in this process for job creation, growth generation and socio-economic development.
The minister is pleased to point out that one of the differentiating attributes of the South African mining industry is the unique ability of all stakeholders to tackle current and impending challenges as a collective.
Our track record on collaborative work dates back to the 1990s at the time of the gold crisis, during which we established a working group to develop mechanisms that would mitigate the impact of the crisis. We also worked together as stakeholders to develop the Mining Charter in 2002, which became a precedent for all other sector charters in the country to affect the notion of transformation. The latest collaborative effort is the formation and work of Mining Industry Growth, Development and Employment Task Team (MIGDETT), which was established at the outset of the global financial crisis and has yielded positive results over the past two years.
Ladies and gentlemen, I trust that it is abundantly clear to you that we have been making steady progress toward ensuring that we tackle the challenges facing all of us involved in mining in South Africa, whether the regulator, the mining companies or the workers who toil in our country’s mines.
Together we can do more with South Africa’s mineral wealth.
I thank you.
