The program director
Host Minister for Foreign Affairs, Senator Bob Carr
Australian Minister for Resources & Energy, Honourable Gary Gray
Premier of Western Australia, Honourable Colin Barnett
Colleague Ministers from the Mother Continent of Africa
Members of the Diplomatic Corps
Executive chair of Paydirt media and founder of Africa Down Under, Mr Bill Repard
Esteemed guests
Ladies and gentlemen
It is once again an honour and a privilege to address this important Africa Down Under Conference, especially in its tenth anniversary. The conference convenes at a time when the global economic environment is recovering from the debilitating global recession, while African countries are smitten about the future due to the minerals, oil and gas development. These developments promise economic growth that must lead to gradual elimination of poverty, starvation and under-development.
Morgan Scott Peck, author of the road less travelled, agitates for the need to constantly acknowledge the more brutal and cruel realities of life, “The truth is that our finest moments are most likely to occur when we are feeling deeply uncomfortable, unhappy, or unfulfilled. For it is only in such moments, propelled by our discomfort, that we are likely to step out of our ruts and start searching for different ways of truer answers.”
This is more eminently pronounced in South Africa’s transition to democracy. Surviving the 1980’s and creating the early 1990’s was an act of historic heroism and leadership. During that transitional period, the then Chairman of Anglo American Chairman’s Fund, Mike O Dowd wrote a cynical and disengaged article in which he claimed that South Africa will muddle through the transition. This was a popular view held by many inside and outside of the country. Well, we reached an unprecedented apex through a dedicated, committed and swift leadership with humility.
The recent challenges facing the mining industry in South Africa must be appositely characterised as short term in nature. As JP Landman, a political economist at Nedbank Private Wealth told the Cape Town Press Club last week that South Africans should start looking at “long term view” and look beyond the immediate drama of country’s headlines. He further challenges the conventional wisdom that South Africa is on the verge of collapse, an implosion. To the contrary, economic growth recorded 3.1 percent in 2010, 3.5 percent in 2011 and 2.5 percent in 2012, which hardly confirms a disaster. The basis for growth is deeply rooted in democratic policies and fiscal discipline.
Our policies are informed by the notion that “there can be no true democracy without a functional economy and society”. Consequently, our policies recognise the need to grow the economy, balanced with the importance of redressing inherited man-made inequalities that continues to torment. This milestone has been attained through our regulatory reform, which effectively introduced the social license to operate.
What is needed today is implementation and not a conservation about models such as “resource nationalism”. In the recent years, this concept has been extensively exhausted and bedded in South Africa and elsewhere in the world. The renewed proponents of resource nationalisms are intent on reneging their environmental and social legacy, using arguments such as mitigating exposure to developing economies as being good for their share price. It baffles ones mind that such proponents leading companies founded in such developing countries can perceive their founding cradle as risky, least their intentions are clearly spelt out.
Our focal point should be accelerated towards optimising social capital by ensuring that we grow the industry in a socially and environmentally responsible manner. The social capital is that glue that holds a society together, the shared values and norms, without which one cannot put together a modern, successful society.
The government of South Africa adopted a National Development Plan (NDP), which aptly provides the national socio-economic vision 2030, in which the mining industry value chain has an important role to contribute. The NDP further provides guiding principles for the attainment of its vision, which is consistent with the mining growth strategy.
The government of South Africa is embarking on massive infrastructure build programme, which has, amongst others, prioritised mining and minerals development requirements, in line with optimal development of the sector and national socio-economic development. The fiscal incentives present an opportunity for a rapid growth and investment in research and development for the country’s mining industry, including exploration. These incentives are structured to allow up to 100% tax rebate for investment in the pre-defined categories of investment. The government has well established science councils such as Mintek and the Council for Geo-sciences (CGS) to enhance research and development initiatives in mining.
The development of the mineral beneficiation policy presents new and “game-changing” investment opportunities for further processing of minerals proximal to source of a great variety of minerals.
Reaffirming the stability of South Africa’s Systems
As we are about to enter the twentieth anniversary of the democratisation of South Africa next year, we are mollified to note that stakeholders in the mining arena have increasingly come to realise that their interests can better be achieved through an inclusive, consensus seeking process. It is through existing policies that this realisation gained root in the consciousness of both labour and capital in South Africa.
The Deputy President led process is a stakeholder response intended to bring about stability, peace, growth and transformation in the mining industry. The stakeholders need to commit swiftly to the “Framework Agreement for Sustainable Mining Industry”. As government, we continue to urge all parties to the process.
I am saying this with some modicum of confidence that our global investment community and partners in the mining sector know that there have been more days of halcyon for investors than the ephemeral bedlam of last August that should not be treated as a permanent feature of the mining sector in South Africa.
The test of a functional constitutional democracy is a subject of continuous process to ensure stability. To date, South Africa has held four consecutive, free and fair elections under the democratic dispensation, confirming a well entrenched constitutional democracy.
The mining and minerals industry is pivotal in the structure of our economy and has a significant multiplier effect on the economy through its linkages with other sectors such as, inter alia, manufacturing, services and transport. The current geo-scientific information corroborates the extended developmental potential of the mining industry over the next tens of decades, notwithstanding the residual exploration potential. Such development must be balanced with both social and environmental responsibilities, as inscribed in the Supreme Law of the country, the Constitution.
Conflicts that keep surfacing between stakeholders in the mining industry are often around the specific terrain. The late Prof JK Galbraith of Harvard University cautions that when people experience even the smallest improvement in their quality of life, their expectations increase exponentially. It is therefore important to appropriately balance all stakeholder expectations, including communities, investors and workers.
This year also represents another adversity in our national history, namely the centenary of the Proclamation of the Natives Land Act of 1913. The Act created a system of land tenure that deprived the majority of South Africans the right to own and work their land, resulting in major socio-economic repercussions. The Land Act was a consolidation of this system of dispossession that South Africa was already moving towards, with one of the legislations that laid the foundation for a spatially divided South Africa passed in 1894, known as the Glen Grey Act.
The Native Land Act was specifically configured to deal with the land, labour and franchise, all of which were geared towards disenfranchising blacks and forced them to provide cheap labour to the development of mines.
Ladies and gentlemen, one hundred years later, we are still grappling with the microcosm of societal effect of the Land Act, which had a profound effect on the African population across the nation. The efficacy with which the Act and subsequent repressive legislation of the apartheid government were implemented has left an African mineworker with a deep scar of hopelessness.
This brief history provides an appropriate context within which the conversation on Marikana and other mineworkers as well as mine community issues of today must be located. The government of the ANC began a journey to rewrite such repugnant policies of the past as corrective mechanisms and a means of normalising our society. The mining regulatory reform sought not only to correct 100 years of repression, but to balance this with development of the mining industry in a responsible and sustainable manner.
Let me also welcome and support a stance taken by the Public Investment Corporation (PIC) on voting against executive remunerations that various large gold and platinum miners proposed at their recent annual meetings. South Africa has one of the world’s largest pay differentials, with Chief Executives being paid about 40 times the average salary of staff. This behaviour perpetuates inequality and threatens the stability needed for long term development of the industry. For instance, one company spun off most of its lucrative assets and paid its Chief Executive in excess of R45 million, while the company’s production declined by 30% during the same period. There appears to be no clearly defined performance targets.
As leaders of the industry, the perpetuation of such effects of the Natives Land Act as its well entrenched migrant labour system cannot continue unabated. The memory of Marikana must serve as catalyst for renewed commitment to accelerated change, consistent with the longstanding policy and regulatory provisions.
One of the key building blocks for sustainable and competitive mining industry is development of requisite skills. The skills are also necessary to bridge the unsustainable inequality and highly differentiated remuneration between workers and executives. Our plans are afoot for accelerated skills development in the industry, which also requires dedicated support from our global partners.
As we traverse a journey towards regulatory stability, the Mineral and Petroleum Resources Development Amendment Bill was presented to Parliament with the view to provide for, inter alia, strengthening of existing provisions relating to the implementation of Social and Labour Plans to augment and substantially increase the socio-economic development impact through mining, enhance the provision relating to beneficiation of minerals as outlined in the approved beneficiation strategy, streamlining and integrating administrative processes relating to the licensing for exploration and mining as well as environmental and water requirements.
It is clear from the above that the objective of the Amendment Bill is not intended to strangulate investment opportunities enjoyed by our partners in development, but to achieve objects of the Administrative Justice Act and development. Our amendment of the Act is for the sole purpose of attracting investment for the country, in tandem with creating favourable investment opportunities.
Our labour laws are providing the necessary regulatory certainty needed by the investment community. The conditions under which employees can exercise their Constitutional right are clearly outlined in these labour laws and further amendments, which were passed last week, are intended to provide further certainty in respect of governing the employer and employee relationship.
Similarly, employers have a Constitutional right in terms of the Labour Relations Act, which provides further certainty and is balanced with the right of workers. As a result, employers should desist the temptation to project themselves as victims of inflexibility and rigidity of labour laws. By its nature and design, the Labour Relations Acts is well balanced and protects the rights of both workers and employers. Failure to exercise both rights creates anarchy and lawlessness, as it has been experienced in the recent past in the mining industry.
Honoured Guests,
It is my patriotic obligation to reiterate South Africa’s commitment to a development partnership with international companies. I am encouraged by the consistent political reaffirmation of Senator Carr to Africa’s burgeoning resources sector. I am even more heartened by Senator Carr’s emphasis on reciprocal benefit that must be enjoyed by Australian companies invested in Africa, which must flow through to Africa for its development.
The head of KPMG captured the essence of the opportunity in Africa at the previous Africa Down Under conference when he stated that “Avoid Africa at your own peril”. Africa’s agricultural, mining and energy resources could boost the continent’s economic growth and pave the way for a breakthrough in human development, according to the African Economic Outlook 2013, a report was provided by Mr Mario Pezzini, Director at the Organisation for Economic Co-operation and Development (OECD). Mr Pezzini said that the African continent’s economic outlook for 2013 and 2014 was promising, confirming its healthy resilience to internal and external shocks and its role as a growth pole in an ailing global economy. Africa’s economy is projected to grow by 4.8% in 2013 and accelerate further to 5.3% in 2014.
The report shows this growth has been accompanied by insufficient poverty reduction, persisting unemployment, increased income inequalities. “Now is the time to step up the tempo of economic transformation, so that African economies become more competitive and create more gainful jobs”, say the authors of the report. “Widening the sources of economic activity is fundamental to meeting this challenge.”
Having said, Africa must define its own fate and destiny beyond digging holes in the ground, as inscribed in the African Mining Vision (AMV). It is therefore critical that all assistance to Africans is located within the context of the African Mining Vision.
Program Director
I wish to conclude by calling upon the investment community to moderate their return expectations as we partner for development in Africa. This is necessary to balance exploitation of opportunities presented by mineral resources with crucial socio-economic development needed to secure long term stability and preservation of investment in the continent. It is essential that investments in Africa bear clearly discernible benefits to our shores.
Let me also announce that the table has been laid in South Africa and the entire African Continent, and what is left, is for our Australian friends to take their rightful place in African development. The African mining industry is indeed the best “real estate”, with a comprehensive set of investment opportunities. You are invited to explore this enduring sunrise industry.
I thank you
