Mr Didier Giard, President of the French Association of Gemmology,
Members of the Association,
Fellow Participants from other BRICS Countries,
Friends,
Ladies and gentlemen.
Introduction
On the behalf of the government and the people of the Republic of South Africa, I would like to extend a warm African greeting to you all. I am glad that you are taking on the historical and social context of the beautiful objects studied by gemmologists. Diamonds and jewellery are of course very dear to South Africa. We are a major source of these precious materials. That is in fact true not only for South Africa, but for our entire region. As you know, Africa accounts for two thirds of all diamonds in the world.
Historically, the riches of our minerals mean South African companies played a central role in developing diamond trade and market institutions. Indeed, you don’t need me to tell you how De Beers historically dominated the diamond trade. For our people, however, diamonds and precious metals hold very mixed feelings. Historically, the diamond and gold mines formed the pillars of colonialism and ultimately of the apartheid system.
That system took the life of Dulcie September here in Paris in the 1980s. In South Africa, it caused immense hardship to so many of our people. We as South Africans paid a huge price. Our miners faced dangers on the mines, low pay and oppressive conditions. Their families had to face the burdens of migrant labour. Many historians argue that the oppressive systems of colonialism and apartheid were designed largely to generate cheap labour for the mines.
The context
Today South Africa continues to sustain profound inequalities that were entrenched under apartheid. A central pillar of inequality is high unemployment. In itself, it shows how so many of our people have been effectively excluded from the benefits of economic growth. To this day, only four out of ten working-age South Africans is employed, compared to the international norm of six out of ten. In the former so-called “homelands,” where almost a third of our people live, only around two out of ten adults are employed.
A second pillar of inequality is unequal incomes in the workplace. Here, too, South Africa ranks amongst the worst in the world. Our managers and professionals have incomes comparable to the global north, while too many workers – especially domestic and farm workers and those in the informal sector – are paid at levels found in countries like Bangladesh and China.
A third pillar is unequal ownership patterns. We know this best from agriculture, where apartheid explicitly divided the land unequally amongst our people. But it is also true across the rest of the economy. After all, apartheid also prevented many of our people from setting up businesses or shops in towns; hindered them from obtaining credit; and even kept them from buying houses.
Mining and land ownership
In South Africa any discussion on mining or any mining-related beneficiation including that having to do with jewellery manufacturing necessarily bring the legacy of land dispossession inevitably to the fore. It is from the ground, from land, that gems are discovered and extracted. Ownership of land has therefore been a bitter source of conflict. In South Africa conflict over land goes way back to antiquity.
Struggles of land ownership and dispossession dates back to pre-colonial era, with the Khoi and San people to the colonial era including the Apartheid years, where indigenous people waged a bitter struggle against land dispossession.
The year 2013 marks 100 years since the promulgation of the Natives Land Act of 1913 which saw blacks being forcefully removed away from commercial land of their birth to the outskirts of the country where they were meant to die without enjoying the benefits of owning prime land. Mining and mining-related beneficiation represent one commercial activity from which the majority of South Africans have been historically denied ownership and benefit except to act as fodder for the supply of cheap labour.
With the dawn of democracy, government extended normal labour laws and labour rights to mining. It ended the residential restrictions on Africans that shaped migrant labour. The democratic government is also using revenues from taxes on precious stones and metals production to improve to improve the living conditions for our people.
We have built over a million new houses. Today, three quarters of Africans have electricity, where before 1994 the figure was only half. We have invested billions in schools and hospitals. Mining resources have therefore been the drivers of our economy.
Transformative policy interventions
Today, the democratic state, under the government of the African National Congress is intent on supporting sustainable economic growth through the following levers:
1. Land Reform
Noting that it is almost a century since legislation that denied blacks ownership of land was passed, the President of the Republic of South Africa, His Excellency, Mr JG Zuma, recently compelled the government to accelerate land reform so that the value and benefits that lie inherent in land as a factor of production can be derived.
2. The National Development Plan
We have adopted the National Development Plan as the country’s long-term vision to drive economic transformation. Cabinet has approved the recommendations of the National Development Plan. The NDP is the country’s vision, called Vision 2030. The NDP articulates aims and objectives including the appropriate actions it intends to undertake in achieving these.
Among the action it hopes carry out in achieving growth and employment is to:
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increase the benefit to the country of our mineral resources by:
- giving clear certainty over property rights (the right to mine)
- increasing rail, water and energy infrastructure
- structure a taxation regime that is fair, equitable and predictable and that recognises the non-renewable nature of mineral resources.
3. The New Growth Path
The New Growth Path was adopted in late 2010. It is the economic strategy designed to shift the trajectory of economic development, including through identified drivers of job creation. It places job creation, inequality and decent work at the centre of our economic policy. The strategy aims to encourage creation of five million jobs by 2020. The New Growth Path prioritises support for job creation within the mining value chain.
Among the practical measures the NGP calls for in support of job creation through mining is, Accelerating exploitation of mineral reserves by ensuring an effective review of the minerals rights regime, lowering the cost of critical inputs including logistics and skills in order to stimulate private investment in the mining sector, and setting up a state-owned mining company that would co-exist with a strong private mining sector and that promotes beneficiation, as well as greater utilisation of the mineral resource base of the country for developmental purposes, including potentially through a sovereign wealth fund.
The New Growth Path also projected that new jobs could be created through knowledge-intensive sectors that include mining-related technologies. It called for the development of a 10 year strategic plan around electricity, logistics and skills in an effort to support job creation in mining. As we all know, infrastructure is critical for the mining industry.
4. Mining Infrastructure
The Presidential Infrastructure Coordinating Council (PICC) represents another initiative and critical instrument towards achieving mining beneficiation. The Strategic Integrated Projects (SIPS) that are overseen by the PICC represent an opportunity to change the structure of the economy, apartheid spatial distortions, support beneficiation and industrialisation.
These projects are part of a 20 year rolling infrastructure programme that will eventually amount to more than 4 trillion. Some of the SIPs are directly relevant for the development of infrastructure relevant to mining.
SIP 1 involves unlocking the mineral belt north of the country. It entails investment in rail, water pipelines, energy generation and transmission infrastructure that will catalyse unlocking of rich mineral resources in Limpopo, north of the country, resulting in thousands of direct jobs across the areas covered. Mining includes coal, platinum and other minerals for local use and exporting.
SIP 3 involves the development of the node & corridor in the south eastern part of the country. It will result in a trans-shipment hub and port and rail upgrades to improve industrial capacity and performance. SIP 5 involves the development of the Saldanah-Northern Cape Corridor. It will result in rail and port expansion including back-of-port industrial capacity. All these are but some of the mining-related infrastructure developments government is undertaking to put our mining sector on an even keel.
5. Industrial Development Zones
A more specific way in which government is intervening to support the mining industry through readily available infrastructure and tax incentives is by constructing industrial development zones (IDZ). IDZ clearly delineated industrial estates which constitute a free trade enclave in the customs and trade regime of a country, and where foreign manufacturing firms produce mainly for export, benefit from a certain number of fiscal and financial incentives.
IDZs aim to attract export-oriented manufacturing investment by setting aside a physical area where investors will be given a range of incentives.
These include benefits such as tax breaks, waivers of industry regulations, exemptions from import and export duties, suspension of rules requiring foreign investors to make investments in conjunction with local partners, strict guarantees against expropriation, assurances of physical security and access to efficient communications and transportation networks.
In this regard, a development akin to a special economic zone is in the pipeline for the jewellery manufacturing sector in South Africa. Our Minister of Mineral Resources, in her 2013/14 Budget Vote, indicated that her department is busy finalizing the development of a jewellery hub in the city of Johannesburg in partnership with the Gauteng Provincial Government.
6. Targeted Beneficiation
Black economic empowerment represents the policy instrument through which economic inclusion is being implemented. In the mining sector, black economic empowerment is being promoted through the Mining Charter that seeks to change ownership patterns by working towards ensuring that by 2014 blacks own 26% of mining assets. The Charter also puts targets in place in terms of the employment equity of black employees and procurement from black suppliers.
Further to this, our Mining Charter addresses itself to enterprise and skills development, beneficiation, housing and living conditions and the management of human resources. Companies with mining operating licenses are expected to comply with these measures as they are intended at promoting the economic inclusion of those previously excluded.
7. Critical Skills Revolution
Concerning skills in the mining sector, our Minister of Minerals had this to say in her 2013/14 Budget Speech: “One of the critical components...relates to a program of creating appropriate skills and entrepreneurs in the jewellery manufacturing that will enable South Africa to become the global jewellery hub.”
While South Africa does not have a shortage of graduates in mining, it suffers from not having qualified individuals with sufficient experience - at least eight (8) years of experience for an engineer for instance. Experts in the sector maintain that this gap can be addressed through the industry giving already skilled individuals training that will bring them to the required level of competency to make our mining industry efficient and effective. The Human Resources Development Council that is headed by our Deputy President is already implementing these approaches.
By providing relevant mining technical skills including the use of advanced technology to design, cut and polish diamonds, industry-aligned colleges and other institutions of higher learning will be in the position to set targets and produce sufficiently-skilled individuals for our mining sector. There is no doubt therefore that without sufficiently skilled engineers, geologists and diamond cutters our mining industry will never become competitive.
Conclusion
I therefore like to conclude by inviting you to invest in our country especially its mining sector as we boast significant deposits of rich mineral resources from which companies based in your home countries stand to benefit through huge extraction opportunities. In turn our country will also benefit from the technology transfer that will attend your investments.
Working together in partnerships, we can enable new entrants, not only to acquire basic knowledge and skills but also to enter the global value chain.
Thank you!
