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Speech by the Deputy Minister of Mineral Resources, Mr GG Oliphant on the occasion of the Debate on the State of the Nation Address, Tuesday, 16 February 2016

Speaker of the National Assembly Chairperson of the National Council of Provinces Deputy Speaker of the National Assembly and Deputy Chairperson of the National Council of Provinces His Excellency, President Jacob Zuma and Deputy President Cyril Ramaphosa Ministers and Deputy Ministers Honourable Members Ladies and Gentlemen Comrades and Friends

Today, 25 years ago on 16 February 1991, Cde Bheki Mlangeni, an ANC Human Rights lawyer of Soweto was killed by a Walkman bomb. He died instantly, leaving his wife, Seipati and young child. He was only 35. Eugene de Kock, an Apartheid hit squad leader has since confessed to that gruesome murder.

The President has highlighted in his State of the Nation Address and on the occasion of the ANC`s January 8th statement, the significance of 2016 as it marks historical anniversaries of great importance that we, as a nation, need to appreciate, cherish and embrace.

By acknowledging and remembering the sacrifices of so many, they remain our lighthouse to guide and strengthen our democracy so that all may enjoy the freedom of equality, dignity and respect. This freedom was indeed, not for free.

Honourable Members, today is day 11 since the tragedy that befell our people at Lily Mine in Barberton, Mpumalanga. Please let us keep Comrades Yvonne Mnisi, Pretty Nkambule and Solomon Nyarenda and their families in our prayers. Regrettably, rescue services had to be suspended due to further major fall of ground and we are still awaiting further information.

We also wish to acknowledge the proactive leadership of Minister Zwane who has been seized with this matter from day one. The co-operation between mine management, trade union leadership and rescue teams has been remarkable and the support from the Premier of Mpumalanga plus the IMC consisting of Ministers` Zwane, Shabangu and Dlamini was a welcome relief to the community. For now we can only hope for the best outcome and prepare for the worst.

In the 9 point plan to turn around the economy that President Zuma enunciated, amongst others, Advancing Beneficiation is an integral part of our radical economic transformation agenda. Let us utilise both our comparative and competitive advantages in mining to realise the true meaning of this transformation. After all, without mining our mineral resources sustainably; the 9 point plan may be difficult to realise. Everything around us is either mined or grown.

The intersection between mining and farming is what has sustained humanity over many years and will remain as such for many more years to come. The African National Congress has further instructed us to advance people`s power in whatever we do and we dare not fail this glorious movement and the society it leads. The ANC Lives and the ANC Leads!

[Section 1: South Africa`s Geology Rocks]

On the occasion of the 104th AGM of the Chamber of Mines in 1994, former President Mandela said, and I quote, "South Africa is blessed with an exceptional geological heritage" - close quote. Indeed, Honourable Members our country has the most beautiful geology and endowment of various mineral resources. South Africa simply Rocks!

Notwithstanding the hundred years of formal mining we are assured of another hundred years plus of continuous mining given our country`s estimated R50 trillion of non-petroulem untapped resources. It is important therefore to utilise our knowledge, experience, lessons of history and mining expertise to approach the next century of mining differently. Working together on this front we should be able to push back the frontiers of our triple challenges of poverty, unemployment and inequality.

Despite the current global economic challenges, there is still a great deal of investors who see the economic potential right now and latent in South Africa and the continent. This was evidenced during the Annual Mining Indaba held last week in Cape Town where over 6000 participants gathered from across the world.

Madam Speaker, Honourable Members; it is stating the obvious that the world economy is in the throes of structural changes. Global financial imbalances continue to cause material and sustained volatility. Growing complexity in the geo-political arena further increases the uncertainty within the key regions of the globe, complicating the investment and business parameters worldwide.

One key manifestation of this evolving and unsettling global order is the ongoing currency volatility with massive swings, particularly in the currencies of the emerging economies. Our currency has not been immune to such dynamics either. Whilst Rand depreciation entails a number of undesirable effects on financial and business aspects of our economy, it nonetheless, assists our struggling mining sector. Given the down cycle of commodities and the fall in resource prices, many of our mining operations would face much tougher conditions had it not been for substantial Rand depreciation. Many thousands of jobs would have been at real risk.

In our analysis of the viability of the mining industry we need to bear in mind that it is the net effect of commodity price, adjusted for Rand depreciation that matters for investment and sustainability of operations in our mining sector. Clearly, there is no uniformity in the sector. Commodities have their own market dynamics. Nonetheless, it is safe to argue that one thing common across all mining operations is the fact that business operations and corporate structures need to respond to the new and prevailing order in this sector. Business as usual can no longer be sustained.

Going forward, the competitiveness of our national mining industry will, to a large extent, depend on the degree to which it adopts "green technologies," sound environmental practices, humane labour practices, and effective health and safety standards.

Let me also reassure you, Madam Speaker that we are not resting on our laurels. Through the Council for Geoscience, (or CGS), an institution that is over a hundred years old, we have successfully bid for and been awarded the privilege of hosting the World Cup of Geology right here in Cape Town, in August of this year.

We will continue to encourage a mineral development pattern that reverses the spatial inequalities of the past. We are thus focusing our resources on identifying relatively underdeveloped regions for quality mineral deposits for development. These include the enhanced exploration of the Tugela Terrain of KwaZulu-Natal and the Northern Cape. Next phases will focus on areas in Limpopo and Mpumalanga.

[Section 2: Global trends and South Africa]

The mining industry remains the foundation of our country`s economy and will continue to be central in achieving government`s objectives as expressed in the National Development Plan (NDP) and the African Mining Vision (AMV).

Let me emphasize, Madam Speaker, that the mining industry is a long term value business. Notwithstanding the above stated challenges, the African Continent leads investment in project development in the industry, with 30 large mining projects being commissioned in the Continent between 2015 and 2018. This immediate investment amounts to $18 Billion, of which South Africa has the lion`s share of 29%. The projects range from nickel, through platinum, gold, copper, diamonds to other minerals. This is a demonstration of the resilience of the mining industry, which is generally not a beneficiary of incentive support by host governments like other sectors of the economy. The Gross Fixed Capital Formation in the mining industry reached R80 Billion in 2015, confirming the confidence of the investment community in the business environment of South Africa.

[Section 3: Mitigating Job Losses]

To stem the tide of job losses in the mining industry, government, labour and business came together last year August to develop an intervention strategy to minimise job losses, and to ameliorate the impact on affected employees. The interventions, as agreed upon range from delaying the implementation of retrenchments to Investment promotion and market development.

Out of the 32 000 jobs under threat, close to 3000 have already been saved - unlike in Australia and the USA where 60 000 and 15 000 jobs were reported to have been lost respectively.

The facilitation by the CCMA - DoL, DMR, industry and Labour has paid-off some dividends. The good news is that commodities like gold are now doing well, diamonds are picking up and platinum is stabilizing in terms of capital investment in the medium term. However, out of the 53 commodities we are mining in approximately 1 700 mines and quarries, Iron-ore and coal are still lagging behind.

The Department of Mineral Resources has been working tirelessly in collaboration with the Department of Rural Development and Land Reform (DRDLR), the Department of Agriculture, Forestry and Fisheries (DAFF), the Department of Trade and Industry (DTI) and the Department of Labour to strengthen the collaboration between Mining and Farming for economic development.

One such success is the roll-out of Macadamia Plantations in the Eastern Cape. The main purpose of this project is to assist in alleviating the plight of rural communities and ex-mineworkers in labour sending areas by creating alternative economic activities.

So far two sites have started growing Macadamia nuts in the Eastern Cape based on a partnership between Communities, Private sector and Government. The business model is based on 300ha and each 300ha generates 300 sustainable jobs.

The first site at Ncera is at an advanced stage of Implementation with 60% (180ha) of the land cultivated and planted out of which 80ha is already sending tons of Macadamia nuts to the global markets since 2013. This site has already created 150 sustainable jobs and has a five star graded nursery which supplies trees to the macadamia industry in general.

The second site at Amajingqi in the Transkei Wild Coast (Willowvale) started planting trees in November 2015 and will have 75000 trees planted on 300ha by the end of 2016.The first group of 63 employees have secured sustainable jobs and more jobs are to be created as the project progresses.

South Africa is leading the world in producing the highest tonnage of macadamia nuts followed by Australia and others. Currently the biggest Macadamia nut producing Provinces in South Africa are Limpompo followed by Mpumalanga then KwaZulu Natal. The Eastern Cape is joining the industry through such an innovative model which has attracted the attention of the mining industry, the Ex-mine workers and the Department of Mineral resources. This is viewed by the DMR as an ideal approach to empower ex-mine workers.

The CEO`s of the mining industries will be visiting the Premier of the Eastern Cape on the 17/2/2016. The macadamia initiative is among the key initiatives to be shared with the mining industry. The current initiative in the Eastern Cape is poised to create 1200 new sustainable rural jobs with a potential to create another 3000 jobs if the Eastern Cape was to exploit its full Macadamia potential of 4200ha.

Another example that we are looking at is the Mogalakwena Agricultural Community Cooperative Project. This project by Mogalakwena Anglo Platinum Mine pioneered a co-operative training farm and training centre for the benefit of 32 villages with a population of 400 000 people.

[Section 4: Beneficiation]

Transformation of the industry also requires an integrated development of mineral resources through greater levels of mineral value addition. Consequently, the Department is working with the Departments of Trade and Industry as well as Science and Technology in implementing actions to advance beneficiation, which is one of the 9 points in the plan announced by the President to reignite the South African economy.

Through Mintek, government has spearheded the commissioning of a rare earth minerals refining pilot plant and has 20 more successful beneficiation projects most of which are rooted in townships and rural communities.

We have also started in earnest the investigation of the possibility of establishing a trading centre or bourse for key minerals and will begin consultations on these shortly.

Beneficiation of minerals does not only support our industrial development aims in line with the NDP, it also supports our aims and plans as regards food and energy security. The DMR will, to this end, be prioritizing, through the CGS, the assessment of uranium, thorium and related mineral resources in South Africa to support the diversification of our energy mix.

For instance, Cabinet has prioritized the following value chains:

Iron Ore and Steel
Plantinum Group Metals
Upstream mining inputs
Polymers and Energy Minerals
Titanium, and
Jewelry manufacturing (gold, diamonds and platinum)

We have many successes with Platinum Fuel Cells already such as the Naledi Trust Community in Kroonstad which has been powered by 60kva peak power fuel cell system via a mini grid. The system was designed, integrated and assembled in South Africa by local engineering companies. Fuel cell plant, mini grid and reticulation were done by local companies including the fabrication of methanol tanks. Government also supported the demonstration of 100kw fuel cell plant at the Chamber of Mines. In addition, we commissioned fuel cells in three schools in Cofimvaba region (Eastern Cape) to provide primary and standby power to rural schools that are piloting the DST`s Tech4Red Programme.

These fuel cells provide power to enable uninterrupted e-based learning at the school. The local fuel cells company, Clean Energy Investment, co-owned by DST, also installed a fuel cell for stand-by power at the Windsor East Clinic enabling uninterrupted service to patients. There are many more examples to demonstrate our local capability.

[Section 5: Policy and Regulatory Certainty]

We are mindful of the need to provide for regulatory and policy certainty as a precursor for development. We are encouraged by the President`s directive in his 2016 State of the Nation Address that the MPRD Amendment Bill be prioritised by Parliament for processing and finalisation. We urge this Parliament to heed the call and assist us to optimise our contribution towards nation building and transformation through optimal development of the mining and upstream petroleum sectors. We stand ready to provide all necessary support to enable Parliament to achieve this objective.

[Section 6: State Owned Mining Company (SOMCO)]

Strengthening of the State`s participation in the Mining and Petroleum sectors remains a priority of this government.

Through the African Exploration Mining and Finance Corporation (AEMFC) Bill we aim to clarify and strengthen the role of the state owned mining company or SOMCO.

The State Owned Mining Company Bill has been published for public comments - the Bill legislatively established the existing African Exploration, Mining and Financing Corporation (Pty) Ltd (AEMFC), which already holds a healthy portfolio of mining and prospecting rights, including an active coal mine that started operating in 2010. This company received its rights in terms of the provisions of the MPRDA and no special provisions are made for its existence. However, it is an opportunity for established companies to establish joint venture operation with this company, consistent with the Public Private Partnership model that proved successful here in South Africa and in other sectors as well as the partnership in other African jurisdictions such as Botswana, Namibia, Morocco, Niger and others, in which the State actively participates as a partner in the development of its natural resources.

As it stands the AEMFC already has a number of strategic projects in operation and development.

[Section 7: Transformation]

"Economic transformation and black empowerment remain a key part of all economic programmes of government", asserted the President.

This programme represents a deliberate intervention that seeks to normalise society, as provided for constitutionally. The mining and petroleum sectors led the charge in the introduction of these transformatory tools, the efficacy of which has been under review.

The mining charter in particular has advanced this agenda, albeit that more still needs to be done to achieve the ultimate objective of a normal society. It has substantially enabled participation of women in mining, which was previously prohibited by law. To this extent, women participation has substantially grown from an insignificant level in 2004 to marginally above 10 percent. Today, we have women owners of mines, such as Ms Daphney Mashila-Nkosi of Kalagadi, Board representatives, executives, scientists and engineers as active participants in the industry. This must be celebrated as an achievement under the democratic governance of this country that seeks to build a non-sexist, non-racial society.

Mine community development is one of the anchors of the mining charters, consistent with the Social and Labour Plan programme. In this regard, we have amended the Bill to allow for augmentation of the SLP of companies operating with the same proximity in order to optimise the socio-economic development impact of this programme. We have insisted on the SLP driving the IDP`s of District Municipalities within which they operate.

[Section 8: Ex-mineworkers]

We continued with the activities covering the provision of health and compensation services and access to other social protection benefits to ex-mineworkers especially in the labour sending areas in partnership with the Departments of Health and Labour, the Chamber of Mines, trade unions, ex-mineworker associations and development partners. Outreach and awareness activities were carried out in the Western Cape, Eastern Cape, Northern Cape, Limpopo, KwaZulu-Natal, Mpumalanga and Gauteng. Approximately 300 to 500 ex-mineworkers and dependents attended the different outreach activities. Yesterday we were also in Engcobo, Eastern Cape (Minister Sisulu).

Another milestone still to be realised is the streamlining of policy and legal frameworks for compensation of occupational injuries and diseases for mineworkers which still remains a major challenge for the government of South Africa.

South Africa currently has two statutory systems for compensating occupational injuries and diseases - the one under the Occupational Diseases in Mines and Works Act, (ODMWA) and the other under the Compensation for Occupational Injuries and Diseases Act, (COIDA). ODMWA, under the Department of Health, covers the response to work- related lung and heart diseases, including TB and silicosis, among mineworkers.

COIDA, under the Department of Labour, governs all other circumstances requiring workers` compensation, including lung and heart diseases and injuries in workers in the non-mining sectors.

Approximately 5 billion rands in pension, provident, unemployment insurance and compensation funds are due to the ex-mineworkers and substantial progress is underway. The development of a master database of workers and ex-workers which was fragmented and deficient in many areas. The Department of Health will be hosting this database as it covers biographic, demographic, health records and payment information of the individuals. The database will also assist with the surveillance system for occupational diseases and injuries as the integration of compensation systems will cover diseases and injuries at work.

Operation Ku-Riha was launched by the Minister of Health, Dr Motsoaledi and I with the mining companies and trade unions in May last year. This project is supported by the Gold mining companies and the Chamber of Mines and verified that there were 103 000 unpaid claimant files with 40 000 claims dating back to before the year 2000.

The track and trace project supported by the Gold mining companies and the Chamber of Mines, Rand Mutual Assurance, the trade unions and the World Bank will pay 1.5 billion rands from the Compensation Fund to the current and ex-mineworkers and make a substantial change to the lives and livelihoods of the individuals and families that are due the compensation payments especially in the labour sending areas within South Africa and in Lesotho, Mozambique, Swaziland and Botswana. I call on the members of this house to assist us in the track and trace project. In addition I have embarked together with Deputy Minister Nkosi Holomisa and Minister Oliphant a programme of linking ex-mineworkers to farming and other non-mining economic opportunities in various provinces.

As we enhance the services to current and ex-mineworkers, we will engage with all stakeholders and neighbouring country governments to gain the depth and breadth of wisdom in designing a better system for workers and delivering on our agenda as the ANC led government of a better life for all.


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