President of the South African Chamber of Commerce and Industry, Mr. Choeu
Chief Executive Officer of the South African Chamber of Commerce and Industry
Mr Neren Rau
Directors and distinguished members of the Chamber
Ladies and gentlemen
Let me express my sincere appreciation for your invitation to engage with this eminent forum of business figures, entrepreneurs, and job and wealth creators. The timing of this invitation is impeccable, as it coalesces with an important moment for the South African economy as a whole and the mining industry in particular as we assess progress towards sustainable development, and meaningful transformation.
For many years, the South African mining industry was confined to a few players with significant barriers to entry. However, the advent of democracy and the necessary regulatory reform that followed catalysed a new era of mineral development in South Africa, opening up opportunities in a diversified range of minerals including platinum-group metals, ferrous minerals and coal.
Notwithstanding the well-entrenched principle of multi-stakeholder participation in shaping the mining industry, our journey to transform this economic sector has been long and arduous.
Upon the implosion caused by the global economic and financial crisis, my department initiated and led the establishment of the Mining Growth, Development and Employment Task Team, popularly known as Mining Industry Growth, Development and Employment Task Team (MIGDETT), and constituted by Government, organised labour and organised business.
While the immediate task for the team was to propose mechanisms to mitigate the effects of the global economic crisis on the South African mining sector and its labour absorption capacity, the team synchronously worked on a strategy that would place South Africa on the path to maintain sustainable growth and transformation in the long term.
As a result of the MIGDETT intervention, the collaborative work of stakeholders significantly contained job-losses in the sector to 40 000, as opposed to projections in excess of 100 000 that were pronounced at the beginning of the crisis, and the almost one million jobs lost in that period from the economy as a whole.
The strategy for sustainable growth and meaningful transformation is emphatic that growth and transformation should not be mutually exclusive. Further, the strategy identified binding constraints to the sector’s possible growth potential and recommended solutions. As a result of the mining sector strategy, such constraints as infrastructure requirements for optimal mining growth are being adequately featured in the National Infrastructure Programmes, such as the Presidential Infrastructure Coordinating Commission.
South Africa has been a resource economy for longer than a century. An independent evaluation of South Africa’s non-energy in-situ mineral wealth is estimated at US$2.5 trillion (Citibank report, May 2010), making the country the wealthiest mining jurisdiction. However, a considerable amount of South Africa's mineral resources are exported as raw ores or only partially processed. Although South Africa has steadily improved its ratio of beneficiated to primary products exported since the 1970s, this ratio is still well below the potential suggested by the quality and quantity of its mineral resources endowment.
The Government’s industrialisation policy calls for a paradigm shift in mineral development strategic investment in assets to maximise long term growth beneficiation projects, enhance value of exports, localise imports and create opportunities for sustainable jobs. Minerals constitute a vital input to an industrialisation programme, which is intended to accelerate manufacturing in South Africa (for local consumption and export). Competitive access to minerals for local beneficiation is one of the key success factors for the country’s industrialisation initiative.
Government also introduced the New Growth Path (NGP), which seeks to create more inclusive economic growth by systematically encouraging more labour absorptive economic activities. The mining value chain, which includes mineral beneficiation, is amongst those labour intensive economic activities indentified in the New Growth Path.
As a department, we have developed the minerals beneficiation strategy, which was adopted by Cabinet as policy in June 2011.
The beneficiation strategy provides a framework that seeks to translate the country’s sheer comparative advantage inherited from mineral resources endowment to a global competitive advantage. The strategy is aligned to a national industrialisation programme, which seeks to enhance the quantity and quality of exports, increase national productive capacity, promote creation of decent employment and diversification of the economy, including promotion of the
green economy.
Further, the strategy is contributory towards strengthening of the knowledge economy in support of the overall competitiveness of the economy. The strategy presents a countercyclical intervention, which is anchored on a range of legislation and policies such as the Minerals and Mining Policy for South Africa (1998). It will also advance the objectives of the Minerals and Petroleum Resources Development Act (MPRDA), the Broad- Based Socio Economic Empowerment Charter (BBSEE), the Precious Metals Act, the Diamonds Amendment Act, the energy growth plan as well as compliance with environmental protocols.
The strategy also identifies several instruments that constitute an enabling environment for beneficiation, which include policies, legislation, incentives etc. Furthermore, it illuminates prevailing constraints to the effective implementation of beneficiation that require an integrated approach to mitigate. These include, albeit not limited to:
- Access to raw materials at developmental prices (including) due to the counter developmental practice of import parity pricing). This is an expansion on the constraints to beneficiation. One of the causes for lack of access to raw at developmental prices is the use of import parity pricing.
- Access to and efficiency of infrastructure.
- Limited innovation and more broadly R&D investment, and
- Shortage of required critical skills.
The strategy goes on to recommend a set of integrated solutions to mitigate identified binding constraints across ten strategic mineral commodities, from which five pilot value chains were selected, namely:
- Iron ore and steel value chain.
- Energy.
- Titanium and pigment production.
- PGMs and autocatalytic converters.
- Jewellery.
The successful implementation of this strategy depends on intensive co-ordination across a range of government departments, the business community and international partnerships. As we are in the process of finalising the beneficiation implementation plan, engagements such as this with industry are invaluable. We will need to ramp up coordination and integration towards commitment from all stakeholders to actively contribute in the development and success of the strategy. The next such engagement will be in 2013, when we host the Jewellery Summit.
The work of the Beneficiation Strategy is not just about zero-sum redistribution, but about how we can grow the size of our economic pie. It is precisely in this context that I invite you as the business community to further engage and collaborate with my department to collectively champion the advancement of beneficiation along a trajectory of growth that benefits, not only the business community, but also the ordinary people of South Africa.
As government we will also be working to ensure that the fundamentals in the mining sector are right, even as we look towards a future of growth and diversification.
In this regard the Department of Mineral resources (DMR) has launched a new online licensing system called South African Mineral Rights Administration System (SAMRAD); a system which enables the lodgment of applications electronically, without the need for a physical visit to our regional office. The SAMRAD system not only enhances access and efficiency, it further improves:
- Accountability on the part of officials and applicants at all levels.
- Monitoring of compliance, and
- Competitiveness of the South African mining industry.
Ladies and Gentlemen,
While we work to strengthen the regulatory framework, and make it more relevant and engendering of growth, we beseech industry to commit themselves to renewed vigour in their compliance with the letter and spirit of the law when it comes to transformation.
The Mining Charter as amended contains essential undertakings prescribed for stakeholders to comply with in order to ensure empowerment of HDSAs and communities in the sector. These include:
- Human resources development.
- Employment equity.
- 3. Mine community and rural development.
- Housing and living conditions.
- Procurement, and
- Ownership and joint ventures.
There has been uneven progress across these pillars of transformation. We need to recommit ourselves to meaningful transformation, and effectively addressing all the pillars of the Charter.
Programme Director,
Our work on strengthening the regulatory framework is at an advanced stage with regard to the drafting of the amendments to the Mineral and Petroleum Resources Development Act (MPRDA). The purpose of the amendments is to, amongst others; remove any ambiguities that create room for multiple interpretations of the law and streamlining of regulatory requirements for mineral development. The amendments will also strengthen the tools at our disposal in creating an environment conducive to a vibrant beneficiation and value addition sector.
The DMR has also been undertaking a review of the Mine Health and Safety legislation, brought into force by the democratically elected government in 1996, to remove ambiguities, strengthen penalties, and align it with the MPRDA 2002.
In closing I would just like to say that, ensuring a fair return to the societies we operate in as an industry goes beyond social responsibility. It requires finding one’s relevance in the goals, and aims, of the people. Ours are enshrined in the PICC and its work on infrastructure, the NGP and its labour-absorbing growth path, the vision of a diversified value adding economy as enshrined in our Beneficiation Strategy and our Industrial Policy Framework.
I thank you again for inviting me, for showing your willingness and to work hand in hand in taking South Africa a step further in terms of its socio-economic development and the reversal of its shameful inheritance of inequality, poverty and unemployment. I have every faith that, with corporate citizens such as yourselves and dedication to a shared goal, we can achieve a better South Africa in our lifetime.
I thank you.
