B Sonjica: Beneficiation Strategy launch

31 March 2009

Read by chief inspector of mines, Mr Thabo Gazi

Keynote address by Minister of Minerals and Energy, Ms Buyelwa Sonjica

Programme director
Captains of industry
Leadership of the labour movements
Distinguished guests

The rising economic tide, which is wreaking havoc in our ordinary lives
requires not inactivity, but calls for unprecedented counter-cyclical policy
interventions and partnerships with all stakeholders in the economy.

We are gathered here today in the mist of a depressed global economy, from
which South Africa is not immune. Consequently, both demand and prices for
commodities have been severely affected, with the exception of a handful of
commodities that have remained resilient.

The trading structure of our mineral commodities is essentially premised on
a model that sought to sustain a colonialist political configuration and serve
its agenda. This has created vulnerabilities for the mining industry in South
Africa, which must be minimised through interventions such as today's
launch.

Since the implosion of the financial crisis at the beginning of the last
quarter of 2008, over 100 000 jobs have been lost in all sectors. Our learned
colleagues inform that a further 200 000 to 300 000 jobs could be lost this
year, as the crisis deepens. As you would know, every job in South Africa
supports at least eight other South Africans, demonstrating the severity of the
ramifications of the anticipated job losses. The bulk of these job losses are
in the mining and manufacturing sectors, both of which represent the backbone
of South Africa's economy.

I wish to draw from Dr Martin Luther King Junior's articulation, which is
relevant to this intervention, namely: "The ultimate measure of a man is not
where he stands in moments of comfort and convenience, but where he stands at
times of challenge and controversy." The current situation has reminded all of
us, as government, labour and business, of the need to co-operate at all levels
in order to contribute to our economic growth.

Government and business leaders across the globe are aggressively searching
for solutions to turn the current situation around and drive the world economy
out of the current slump. Developing countries cannot afford to wait for the
solutions being sought by the so called most powerful economies, but have to
find their own solutions which are adapted to address their specific
challenges.

It is also crucial that we put in place specific enabling environments
rather expeditiously, which will also position South Africa correctly to
leverage maximum benefit, when the global economy experience an upswing. I am
in no doubt that it is incumbent upon all in the South African economy to find
a path out of the downturn.

As part of the efforts to sustain the macro-economic goals of South Africa,
we hereby present to you the Beneficiation Strategy for the minerals industry
of South Africa. Beneficiation is a deliberate policy intervention seeking to
move South Africa from being a resource based, to a knowledge based economy,
creating economic sustainability beyond the mining phase.

At the crux of the strategy is the need for South Africa to derive the
maximum value from the mineral resources. This position requires your
imagination, resilience and ambition to identify real business opportunities,
build businesses and contribute to the country's economic growth and fight
against unemployment and poverty.

Our intention with the adoption of the mineral beneficiation strategy as a
policy position of South Africa is to incrementally grow our competitive
advantage and indeed our value addition per capita to acceptable levels,
benchmarked against the economically progressive countries.

In addition, the extent of the external vulnerabilities created by our
significant dependence on external markets will also have be reduced
somewhat.

Accordingly, this strategy will present opportunities for investment in the
country by South African and foreign investors, as per the Platinum Group
Metals (PGM) beneficiation, which grew from less than two percent in the latter
part of the 1990s to just over 20% in 2008.

We are also contributing to research and development in supporting our
beneficiation initiatives through our state councils such as Mintek.

The value proposition of the beneficiation strategy presents provision for a
framework within which South Africa can implement an orderly development of the
country's mineral value chains in order to leverage benefit from inherent
comparative and competitive advantages.

Essentially, the strategy is intended to support national programmes such as
the National Industrial Policy Framework (NIPF), consistent with the provisions
for a sector specific strategy and key action plans for downstream mineral
beneficiation as well as the development of the nuclear power capacity, for
instance, which is intended to diversify the country's energy basket and to
ensure security of energy supply.

Among a few milestones since implementation of the Mining Charter are the
amendments of the Precious Metals Act and the Diamond Act, which culminated in
the extension of the scope of the diamond board becoming the South African
Diamonds and Precious Metals Regulator and the establishment of State Diamond
Trader, respectively. These entities were created to expedite the creation of
an enabled environment to seamlessly effect local beneficiation of both
diamonds and precious metals. Their progress has also not been without
challenges, albeit remarkable success has also been noted in other areas. The
success of such entities depends on the full support and co-operation of all
stakeholders in the industry.

There are other minerals whose percentile beneficiation levels have remained
below a three percent threshold. The customary reaction we receive from some of
our stakeholders is a vehement opposition to such propositions – I am however
convinced that we are presenting a compelling proposition today, which will be
fully embraced and complemented by all key stakeholders with positive
contribution and indeed an indication of how best we can make such initiatives
as beneficiation work for the country.

As we present the Beneficiation Strategy for the minerals industry of South
Africa to you today, you are kindly invited to submit written inputs into the
document. We look forward to receiving your constructive input, which will
strengthen the implementation of the value addition program. The urgency of
implementation requires your full support.

In conclusion, I wish you well in your deliberations on the Beneficiation
Strategy for the minerals industry of South Africa. History will judge us
positively for fundamentally changing the economic landscape of South Africa
for the better.

I thank you

Issued by: Department of Minerals and Energy
31 March 2009