Address by Minister of Mineral Resources S Shabangu at a media breakfast, Sheraton Hotel, Pretoria

Deputy Minister, Mr Godfrey Oliphant
The Director General, Advocate Sandile Nogxina
Senior Managers
Ladies and gentlemen of the media

Let me take this opportunity first and foremost to welcome publicly our new Deputy Minister Mr Godfrey Oliphant. It hasn’t been two weeks on the job yet and already he is feeling the heat. But as public representatives, we know that this comes with the job and would urge, where possible, for the media to be fair and in return we will be open and transparent.

Three months ago when we held a similar update session, we committed to regular sessions so that we are not accused of conducting our business behind closed doors. We are painfully aware of suggestions that had been made in a number of media platforms insinuating corruption on the part of the department and we hope that, as we asked last time, those who have evidence and information of these nefarious activities, they should not hesitate in bringing it forward so that we can deal with it once and for all.

We acknowledge the important role the media plays in this regard and today, it gives me pleasure to welcome you all and hope that at the end of this engagement, all of us would have benefitted in one way or another. It is our fervent wish that a spirit of openness will prevail.

There are a number of issues I would like to raise and in some instances correct. If there is another issue that I have not highlighted in this address, let us then deal with it during the question time. As you can see, I have here with me the Director General with his senior managers and between all of us; we should be able to give an answer to most of the questions.

1. Streamlining administrative processes and the audit of rights granted

The department is serious about improving its workflow processes which will lead to greater efficiencies and improved turnaround times. We announced, in the last briefing, the moratorium 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 commence with granted rights, because we discovered a significant number of Rights which were never progressed to ‘issuing stage’.

We commenced with audits during the moratorium period with an intention amongst others, of establishing actual status of all rights issued since the implementation of the MPRDA. This was done amongst others, to restore the integrity of our regulatory system which is currently under attack because of perceptions of inefficiencies and irregularities.

In the same breath, I also want to urge right holders, especially black economic empowerment (BEE) entities to also cooperate with the audits, as it is in their best interests. We are currently experiencing a major problem with a sizeable number of right holders, particularly BEE entities who are not honoring site inspections or complying with contractual obligations pertaining to their rights, by keeping information on site. We would like to make an appeal to right holders not to compromise the audit process by trying to intimidate, bribe or discredit the process.

I must indicate that any applicant caught trying to compromise our officials will face the full might of the law.  We have conducted in excess of 1 475 prospecting inspections and 2191 audits are still outstanding. We are well on course to complete and lift the moratorium within the stipulated period of six months.

These are some of the key issues that we have identified during the audits:

• Some of the mining entities or right holders are under liquidation, and has proved difficult to trace the responsible persons for site visit.
• The BEE partners in most cases don’t show up for site visit and no valid reason given for their absenteeism.
• Some of the (BEE partners) who attend the site visit are clueless about the operations, and are over reliant on consultants – a clear case of fronting.
• The right holders are continuously postponing the inspection dates scheduled by Regional Office, perhaps hoping that this will go away. To address this, we have started making inspection notices a directive.
• ·Documents not on site during the site visit such as the Environmental Management Programme, Prospecting Works Programme, and Annual progress/ performance reports.
• Financial provision for environmental calamities and performance assessment reports were not submitted annually by some mining companies and right holders.
• Some of the prospecting rights are at the process of closure
• Complaints by some land owners that they were never properly consulted by applicants. 
• Gross non-compliance on the part of right holders who fail to commence prospecting activities within 120 days as stipulated in the contract

These findings, however provisional, talk to a need for us to streamline our internal processes particularly in the area of adding capacity for constant monitoring and evaluation. This audit will also feed into changed processes that will come on stream when we introduce the online application process next year.

2. Mining charter update

Not only was the mining charter we have reviewed the first but we are once again leading the pack by doing a holistic assessment of transformation. This means that it has not been restricted only to issues of ownership but looks at the whole gamut of issues including Human Resources, skills, research and development, infrastructure, competitiveness, exploration and others. Last week we appraised the Parliamentary Portfolio Committee of the update of the charter, a presentation that was received well. We have noted reports about so-called lack of consultation and other wild allegations.

3. Sustainable growth and meaningful transformation

Mining in this country has, in real terms, regressed or shrunk by one percent.  This is certainly not because of regulatory environment but binding constraints for growth - R&D, Infrastructure, Exploration, and Cost competitiveness. This point links with the earlier on, mining charter where we argue that a much more holistic view needs be taken by the various instruments that government has in its possession to encourage growth.

The sustainable growth and meaningful transformation strategy should be released in the first quarter of next year. The strategy seeks to enhance the very tributes that make mining so important to our economy. Some of these contributions are:

• About 18% of gross domestic products (GDP) (eight directly and another 10 percentage points through the indirect and induced effects of mining).
• Over 50% of the country’s merchandise exports.
• About one million jobs (directly 500 000 jobs, indirectly and through the spending induced effect another 500 000 jobs).
• About 18% of gross investment (9% directly).
• Approximately 30% of capital inflows into the economy via the financial account of the balance of payments (mining is a major magnet attracting capital inflows to the economy).
• About 35% of the market capitalisation of the Johannesburg Stock Exchange (JSE).
• 93% of the country’s electricity generating capacity.
• About 35% of the country’s liquid fuel supply.
• Consumes 15% of the  country energy (demand driver)
• About 20% of direct corporate tax receipts (R33 billion in 2008).

We are confident we will release this strategy in the first quarter of next year.

4. Mining as the one of the key priority of government

Government has set out very clear objectives of where the country should be going or what the expectation is for growth. To this end, DMR and other departments are enjoined to work together in the mitigation of binding constraints to growth of the industry. In other words, mining has been singled out as one of the drivers of growth. The work on the above growth strategy also talks to this very point.

5. Overhaul of the regulatory environment

DMR has identified a number of ambiguities in our regulatory environment. This is particularly in relation to the principal Act – the MPRD and the department is looking at amendments to further enhance the working of the act. This should also help deal with issues that fall through the cracks like issues of environmental management and rehabilitation. To this end, we would be working with relevant departments like the Department of Environmental Affairs so that the various pieces of legislation do not create this space for ambiguity.

We have absolutely no doubt that legislation is properly constituted, but there are some areas of weakness in the act and the department (DMR) is at an advanced stage of reviewing mechanisms of strengthening those weak areas for introduction to Parliament next year.

6. Geosciences Bill

National government is committed to the infrastructure development which is predicated on sound information and data. This is what the bill seeks to achieve – to lend its expertise for the proper development of infrastructure especially national imperatives like housing and other developments. The bill has passed in the National Assembly and is now going to the president for assenting.

The main objective of the Bill is to make provision for the following:

• The Council for Geoscience to be a national advisory authority with regard to geohazards that are related to infrastructure and development.
• empower the CGS to be the custodian of all geotechnical data with the purpose of compiling a complete geotechnical risk profile
• put mechanisms in place to address the problems, which are associated with infrastructure and development on dolomitic land;
• empower the CGS in the management and administration of the National Seismic Network;
• enable the CGS to execute its functions and responsibilities in promoting investment in the mining industry through its research activities;
• enhance administrative processes of the CGS to ensure effective implementation of the proposed amendments;
• address references in the Geoscience Act to legislation that are obsolete;
• alignment of the Geoscience Act to the Mineral and Petroleum Resources Development Act.

 7. Derelict and ownerless mines

Government has been saddled with the task of dealing with derelict and ownerless mines – through no fault of its own. This is an inherited problem. To this end, an inter-ministerial committee comprising of the DMR, Environmental Affairs, Science and Technology has been formed to try and find ways of dealing with this problem.

We have also solicited the participation of professors from various institutions with expertise in assisting government in finding solutions on how to tackle the threat of mine environmental pollution and its latent impact.

Thank you.

Source: Department Of Mineral Resources