Minister Gwede Mantashe: Investing in African Mining Indaba

4 Feb 2019

Opening address by the Minister of Mineral Resources of the Republic of South Africa, Mr Samson Gwede Mantashe, on the occasion of the 2019 annual Investing In African Mining Indaba, 4 February 2019, Cape Town, South Africa

Organisers of the 2019 Mining Indaba
President of Ghana, His Excellency Nana Akufo-Addo
Cabinet Ministers and Deputy Ministers of the Republic of South Africa, Africa and across the globe here present
The Deputy Minister of Mineral Resources, Hon. Godfrey Oliphant
Leadership of organised labour
Captains of industry, and members of the investment community
Representatives of civil society and communities
Members of the diplomatic corps
Distinguished guests
Ladies and gentlemen

It is indeed an honour for me to welcome you to our beautiful country, as we host the 25th annual Investing in African Mining Indaba.

This event has continued to grow in stature and in numbers over the years, testament to the fact that the continent remains a key destination for mining investment.

Economic and mining performance

The past decade has been a challenging one for the mining industry both globally and locally as the world’s recovery from the global financial crisis remains both fragile and uneven, impacting both demand for minerals and profitability of mines. In the past two years there have been signs of a recovery in demand resulting in an upswing of some commodity prices. The future however remains uncertain, with the World Bank predicting global growth rate to slow this year, to 2,9%. Furthermore emerging market currencies such as the rand are also expected to experience quite a testing year ahead.

As South Africa we remain optimistic given the performance of the economy, considering that we emerged from a technical recession in the third quarter of 2018 with a 2.2 percent growth quarter-on-quarter. This was mainly due to higher contributions to growth in several industries, most notably in manufacturing, transport as well as finance and business services.

More recent data shows that mining production in SA rose by 0.5 percent year-on-year in October 2018, contributing R447 billion to the economy largely due to increased production of nickel, PGMs, diamonds, manganese and chromium ores. By the third quarter of 2018, the industry employed 457 000 people, slightly down from 463 000 people in 2017, with most of the jobs being shed in the gold and platinum sectors. However, this was offset by the increase in employment in other subsectors of the industry, such as coal and manganese. Last year 70 mining rights were granted by the Department and five new mines came into operation, most of them being coal mines, demonstrating that there is still keen interest from investors.

Policy and legislative framework

In September last year, the President of the Republic, His Excellency Cyril Ramaphosa, announced a stimulus and recovery plan for the South African economy. The finalisation of the Mining Charter, and provision of clarity on the Mineral and Petroleum Resources Development Amendment Bill, formed a critical component of the Plan.

To date, the Charter guidelines have been gazetted and the Mineral and Petroleum Resources Development Amendment Bill has been withdrawn to separate oil and gas from the mining legislation. A draft Upstream Petroleum (Oil and Gas) Bill is in the process of being developed. This Bill will provide certainty to the upstream petroleum industry and stimulate growth and development in this sector. In respect of mining, the Mineral and Petroleum Resources Development Act, 2002 as amended continues to apply.

We can therefore say with confidence that South Africa provides a conducive environment for investment, and that we have a stable regulatory framework which provides security of tenure for investors.

Additionally, to increase our competitiveness as a mining jurisdiction, Government is addressing the challenge of administered prices – including those for electricity, rail and ports, as well as the infrastructure bottlenecks which have been raised by investors as a constraint to doing business in South Africa. It is our view that administered prices can be used to stimulate the economy.

Recognising that the above interventions are not sufficient to address some of the structural challenges of the industry, Government, together with our Social Partners, signed a Compact with the leadership of organised labour and business in the industry this morning. The Compact contains eleven areas of focus that we as Social Partners believe provide the basis for a roadmap to attain our vision 2030. There will be an implementation plan developed to keep track of progress made and milestones reached.

During 2018, the mining industry experienced several accidents and a high number of disasters resulting in multiple fatalities necessitating that we move up the Mine Occupational Health and Safety Summit to October. The Summit created a platform for all stakeholders to engage and come up with solutions that will assist the industry turn the tide with regards to fatalities, injuries and diseases.  We should remain vigilant in ensuring we do not see a repeat of last year’s disasters so every worker can return from work unharmed every day.

The department remains committed to addressing challenges in our internal processes, which include allegations of double-granting of licenses, improper application of Section 54 of the Mine Health and Safety Act and backlogs in the issuing of licenses. We are also bolstering capacity in the most affected regions – North West, Mpumalanga and Limpopo – to support staff in those regions in the processing of applications. The investigative team that was established to look into these and other related will conclude its work soon, after which we will be able to provide a way forward.

We are keenly aware of the need to ensure an efficient licensing system to process applications. We are working to improve the online application system – SAMRAD - to ensure its transparency and efficiency are enhanced, and that it provides world-class service to investors.

Key projects                            

We realise the dire need to revitalise exploration activities, for which we have directed the Council for Geoscience (CGS) to enhance the geological mapping knowledge and fast track the exercise of delineating new mineral targets, drill and quantify the extent of mineralization, which will be used to foster sustainable development of the mining industry well into the future.

The mapping programme will bring South Africa in line with progressive exploration and mining jurisdictions and it is our intent to secure a minimum of 5% of the global exploration budget within the next three to five years. This will identify and affirm new mineralisation systems that are consistent with the new demand trajectory of mineral resources, such as battery minerals. Notwithstanding our long heritage of mining, we remain highly attractive for investment in the renewal of the mining sector that will discover world-class mineral deposits in the short term.

Beneficiation

The continent’s mineral wealth can form the basis for an Africa with prosperous and diversified economies that are not exclusively reliant on raw mineral exports. Recognising this and building from the African Mining Vision and Agenda 2063, the government of South Africa has as a policy imperative to use our comparative mineral advantage to develop downstream and input industries. The 2018 Mining Charter introduces the requirement for locally manufactured mining goods, with a view to leverage procurement capacity of the domestic mining industry to create a market for locally manufactured mining goods and services. 

The Charter further seeks to drive transformation in the supplier industry by facilitating increased participation by historically disadvantaged persons, women and youth-owned companies. Government also launched the Mandela Mining Precinct in September 2018 with initial funding of R210 million over a period of three years. The function of the precinct is to coordinate research activities toward the development of next-generation mining equipment and systems which will support the objectives of the Mining Charter to localise mining inputs.

The South African Diamonds and Precious Metals Regulator (SADPMR) has consulted the local jewellery manufacturing and beneficiation industry to understand the challenges it is facing in response to the decline in jewellery manufacturing and diamond beneficiation. The main concern raised by industry was the red-tape in processing of licenses. The SADPMR has therefore embarked on a project to prioritise and streamline the application processes. The processing time has been reduced significantly, in order to encourage new entrants and investors to enter the local beneficiation industry.  

With the world’s biggest platinum deposits, we are duty-bound to pursue cutting-edge research towards mineral beneficiation, especially in light of increased substitution of platinum and the move towards electric vehicles. As a result, Mintek has been designated by Government to host the Centre of Competence in Hydrogen Catalysis (HySA), specifically focusing on beneficiating platinum through its use in hydrogen powered fuel cells. Mintek’s area of specialisation is the development of PGM-based catalysts for fuel cell membrane electrode assemblies and technologies that feature in the early parts of the fuel cell value chain such as catalysts, the electrodes, and fuel cell stacks for low temperature PEM fuel cells.

We are already scaling up production of HySA fuel cell catalyst products on the path towards commercialization. Recently, an additional two HySA catalysts have been scaled to a commercially relevant 1 kg per batch and the materials validated to be on par with the lab-scale counterparts. The catalysts are being sold, through the HySA Catalysis spin-off company HyPlat, to local and international customers in the form of the catalysts alone or incorporated into membrane electrode assembles (MEA) – mostly at this stage for testing to establish their viability as alternative catalysts and MEAs to incumbent suppliers.

Working with other key players in the hydrogen fuel cell programme in South Africa, Mintek is confident that the next few years will lead to bigger achievements that improve the economic viability of the technology.

As part of their LED Mining & Enterprise Development Programme, the Bojanala Platinum District Municipality funded Mintek to train nine (9) active small scale miners in a two-week introductory course on small scale mining.  The training was successfully completed in June 2018. This training intervention has improved the knowledge of these miners and will assist them to run their existing mining co-operative more safely and efficiently.

Further to this, Mintek has been granted funding from the Mining Qualifications Authority (MQA) to conduct small scale mining training for 90 people in the Mpumalanga Province.  The training will focus on surface mining (including health, safety and environment) and will include communities from Bushbuckridge, Boekenhouthoek and White River.

As part of Mintek’s on-going SMME support and incubation programme, six (6) SMME’s were assisted in the last year.  These businesses focussed on Pottery Manufacturing, Clay Processing and Glass Beads and resulted in the creation of job opportunities for fifty-four (54) previously unemployed individuals. Mintek has provided these businesses with technical assistance, access to raw material for manufacturing and also helped to address the challenge with regards to design of products, branding and also market access.

Mintek has trained over fifty (50) learners in jewellery design and manufacturing in the last year. The learnership includes learners at level 2, 3 and 4.  The learners that benefited are from all corners of the country. We introduced new technologies Computer Aided Design (CAD) and 3-D Printing, which gave learners an opportunity to use the computer facilities at Mintek and the 3-D printer for improving product design and manufacturing.

Mine health and safety

The long-term sustainability of mining is dependent not only on its growth, competitiveness and transformation, but also on the lives of mineworkers. The Mine Health and Safety Council’s centre of excellence is now fully capacitated as all vacant posts were filled during this quarter and has completed a number of research projects with outcomes to address occupational health and safety challenges as identified by tripartite stakeholders. These projects include amongst others, development of Collison Avoidance System to reduce transport related accidents, development of a Rockmass Assessment tool to prevent falls of grounds accidents, and minimum standards for management of confined spaces.

The MHSC, through the centre of excellence, continues to support Regional Tripartite Forums, with the aim of disseminating best practices and innovative technologies to improve health and safety at mines.

We believe that despite three disasters in the sector last year, we are beginning to see a turnaround in the rate of fatalities and injuries in 2018, as we work towards the creation of a fatality-free industry. We urge stakeholders to not become complacent, but to continue to prioritise issues of health and safety.

Illegal mining

Government condemns the practice of illegal mining in South Africa, and measures are being undertaken to combat these activities. In the gold sector alone, it is estimated that over R70 billion per annum in revenue is lost through the smuggling of this commodity and similar negative impacts are also evident in other sectors, such as chrome, coal and diamonds. Communities are directly affected by the scourge of illegal mining in terms of environmental degradation, health risks, and gang violence emanating from rival illegal miners. 

In December last year, Government, through the Council for Geoscience, initiated a ground stability assessment around critical infrastructure in Johannesburg, amidst fears that illegal mining activities would cause the imminent collapse of this infrastructure. While these claims were indeed alarmist as the CGS found no immediate threat to infrastructure, it is imperative that efforts to curb illegal mining continue in earnest.

Government is taking decisive steps that will ensure that illegal mining practices are halted. In this regard, a multi-departmental body, National Coordination and Strategic Management Team (NCSMT), was established which comprises of representatives from DMR, South African Police Service, Intelligence Services and the Department of Home Affairs.

The NCSMT had adopted a three-pronged approach in dealing with illegal mining practices. It is firstly promoting legitimate mining practices through the authorisation of mining permits. Secondly, it is dealing with rehabilitation of derelict and ownerless mines, particularly in the sealing of mine entrances and shafts to prevent illicit access. And thirdly, the DMR works closely with law enforcement agencies to reduce incentives for people to enter the practice of illegal mining.

Following the implementation of these measures over the recent past, the Republic is beginning to make inroads in addressing some of the challenges that relates to illegal mining. For example, there has been an increase in mining permit applications by small scale miners. In 2017, mining permit applications increased by over 100 percent to 330 compared to 2016 and in 2018 alone mining permit applications surged to over 500.

Government, together with other stakeholders, will continue to fight against the practice of illegal mining in order ensure that South Africa’s mining activities are conducted in a manner that is sustainable.

Mining communities

Mining does not exist in a vacuum. The sector must therefore improve mechanisms to ensure it is able to coexist not only with other economic sectors, but with the communities in which mines operate. This is imperative for the long-term sustainability of the industry.

There must be meaningful and sufficient engagement with communities in granting and issuing of prospecting rights, mining rights and permits to determine rights, obligations, impacts and benefits for communities. It must be emphasised that the licensing function should remain with the State, as required by legislation, and not be assigned to communities. In this regard, Government is in the process of developing Community Resettlement Guidelines. These Guidelines are consistent with section 54 of the MPRDA which provides for engagement and compensation of communities for loss or damage as a result of mining development. They are intended to safeguard the rights and interest of communities where resettlement takes place and will be finalised in this financial year in consultation with communities and interested and affected parties.

Mining development must be able to harmoniously co-exist with communities and related developmental activities. This can be achieved only if all stakeholders are willing to engage meaningfully to find win-win solutions to challenges presented by mining and development.

Conclusion

Team South Africa will be a hosting a number of events over the next few days, to which we would like to extend an invitation to yourselves to come and engage with us further. You are also welcome to our Pavilion at the exhibition floor, where we will have a team from government to respond to your queries and provide the necessary assistance and guidance with your investment initiatives into the South African mining industry. The President of the Republic, His Excellency Cyril Ramaphosa, will also address delegates tomorrow afternoon.

In conclusion, I would like to re-emphasise that South Africa is indeed open for business, and we stand ready to work with you in achieving our respective objectives. I wish you all a successful week, and I look forward to the outcomes of your deliberations, as we together move the mining industry forward.

Ndiyabulela, Thank you