Budget Vote Speech by Ms Susan Shabangu, MP, Minister of Mineral Resources, to the National Council of Provinces (NCOP) Parliament
24 May 2012Honourable Chairperson
Deputy Minister Oliphant
As we present our Budget to this House, we take as our lodestar President Zuma’s call to action in his State of the Nation address in February with regards to eradication of poverty and inequality.
Those objectives are crisp, clear, and attainable – but they are also massively challenging. We shall realise these aims only through joint effort by all South Africans. As the President said, when ending his address: “I would like to appeal to all our people to join hands as they always do, as we deal decisively with the triple challenges of unemployment, poverty and inequality. Nobody will do this for us; it is in our hands. And we are all equal to the task.”
The African National Congress, the movement of the people of this country which I am privileged to represent, is celebrating a centenary of struggle and sacrifice. In doing this, it is not oblivious to the requirements that lie ahead - which are so crucial to our future. Significantly, this very year, 2012, marks a decade since the passing of the ground-breaking post-apartheid mining legislation: the Mineral and Petroleum Resources Development Act (MPRDA).
So we have to use the budget that we are tabling here today as one of the arsenals in the hands of the democratic developmental state in a quest to ensure that the minerals complex thrives for another hundred or more years. The task is to deracialise the sector and spread its benefits to all our people irrespective of ‘race, colour or creed’.
Budget allocation For 2012/13
To accelerate the realisation of the aforementioned agenda, the department presents to this House a budget allocation of R1.169 billion for the 2012/13 financial year, which is R130 million higher than last year.
My department will continue to manage its budget in line with good financial management principles as prescribed by the Public Finance Management Act (PFMA). Also, we have developed a clear action plan to address matters raised in the last financial year audit report. Supply Chain Management has been tightened consistent with the President’s call around this issue.
Review of the MPRDA and Mine Health and Safety
Based on the challenges that were experienced in the implementation of the MPRDA, we are currently reviewing Act. The main objectives of the review and amendments are to improve the current construct of the Act to remove any ambiguities, streamline the licensing process to avoid delays and inefficiencies and support the Beneficiation Strategy.
We do not seek to introduce any major policy shifts in respect of exploration and exploitation of South Africa’s mineral resources. We do, however, have to consider Beneficiation Policy to among others ensure that companies avail the requisite mineral inputs to the local beneficiators. In this regard, a lot of work still needs to be done to ensure that the industry contributes to the realisation of the constitutional promise of “a better life for all.”
We have held public consultations in various provinces to help resolve problems raised by communities to inform the envisaged amendments. This consultation process is almost complete and I will table these amendments in Cabinet by July.
We will also be reviewing the Mine Health and Safety Act in order to strengthen enforcement provisions; reinforce penalties, provide clarity in certain definitions and expressions and effect certain amendments to ensure consistency with other laws, particularly the MPRDA.
Last year I spoke of the online application system known as South African Mineral Resources Administration (SAMRAD), which had been launched on 18 April 2011 to improve efficiency, transparency and effectiveness. I am happy to announce that my department has managed to address teething problems associated with the submission of applications, and well over 3 500 applications have been successfully lodged in the new system.
I am satisfied to announce that the process of cleaning up our data is complete and the backlog on finalising applications received during the manual system period before SAMRAD came into effect has also been cleared.
Integrated Licensing System
The misalignment of the current timeframes for obtaining a mining right, water use licence and an environmental authorisation have led my department to work together with Departments of Environment Affairs and Water Affairs to put in place an integrated licensing system, which will not have a negative impact on the timeframes.
The extension of the moratorium in Mpumalanga owing to environmental complexities in that province culminated in 41 Rights that are located in Wakkerstroom and Chrissiesmeer being identified as those belonging to the category of ecologically sensitive areas. As a result, the department has taken a decision to prohibit mining in these areas. In addition, I lifted the moratorium on applications for prospecting rights in Mpumalanga at the end of September 2011, as I had promised.
In February this year I invited further public submissions on a process to auction lapsed or revoked rights. Having considered these submissions, I have decided to implement a process of auctioning these rights this year.
Communities in mining areas
Socio-economic sustainability can be achieved through correct implementation of genuine Social and Labour Plans (SLPs) consistent with the provisions of the MPRDA., The inconsistent implementation of SLPs by the mining industry remains an area of great concern to my Department. Whereas there are some pockets of excellence, a lot more still needs to be done to properly align these with Integrated Development Plans of Municipalities. We need to implement these in a way that creates sustainable communities beyond life of mine.
Sustainability demands that socio economic development be taken as seriously as the financial and environmental dimensions. It can therefore not be right that mining communities continue to be excluded from benefitting from the exploitation of the country’s mineral resources and expected to be forever grateful for projects conceptualised and implemented by mining companies for and on behalf of the communities without any meaningful consultation taking place.
We are particularly encouraged by the positive feedback that we have received from the Phola community on the positive impact of the opening of Zibulo Mine in Ogies. We welcome other new investments such as the Sasol Coal Mine in Mpumalanga and Kalagadi Manganese, a women owned mining company in the Northern Cape, which is managed by Daphney Nkosi.
In the same breath, I would like to commend mining communities and companies in the Richards Bay area, well endowed with heavy minerals, for their proactive resolution of the problems that I conveyed to you last year. It is my firm belief that working together we can do far better and far more to the benefit of all stakeholders without necessarily fighting over the resource.
Also, my department has conducted mining Charter Compliance audits to verify compliance reports submitted by companies and a closer scrutiny of the audit result reveals the following :
- Low levels of implementation of Employment Equity by some mining companies.
- Senior management, especially in decision making structures, that is devoid of demographic representation.
- Fronting especially by women who do it on behalf of men.
- Changing of approved SLPs without appropriate consent from the department.
- Unwillingness to transform by suppliers of capital goods in the mining industry and reluctance to transfer skills to the Black Economic Empowerment (BEE) entities.
- BEE entities tend to be contracted in for the peripheral services including catering, cleaning, toilet tissue supplies and gardening services where the procurement spend is insignificant compared to capital goods spend.
My department has put administrative processes in place to address the non-compliance resulting from the aforementioned. This was in a form of engagements with the companies concerned and orders to comply.
Mining and the environment
In order to ameliorate the negative impacts of mining, my Department will make sure that environmentally degraded land is put back to a sustainable useable condition. To this end, 124 sites have been rehabilitated. Sixteen of these rehabilitated sites are Derelict and Ownerless Mines (D&O) mines and 108 dangerous openings. Some of the sites are located mainly in the Northern Cape Province while the dangerous openings are in Gauteng.
My department has secured the services of an actuary to conduct the valuation of the liability associated with derelict and ownerless mines. The work is almost complete and a report will be presented this month.
We need to move to a situation where concurrent rehabilitation takes place. I am concerned about those companies that tend to undermine the current legislation with respect to environmental rehabilitation. Also, we would like to urge companies to resist the temptation to deliberately understate the extent of the potential environmental impacts resulting in significantly lower financial provisions for rehabilitation purposes.
Mining and job creation
Mining continues to play the critical role that it has played in our economy for the past century. In line with the department’s mandate together with its desire to contribute to the resolution of the triple developmental challenge, the department has pro-actively convened stakeholders in the industry to discuss issues relating to how to increase jobs through tripartite engagement. Action steps have been identified to optimise the sector’s extractive capacity, attraction of investment and job creation potential as reported last year. The new projects referred to earlier have thus far created over 5 000 jobs and this trend is expected to continue.
Skills development is also of critical importance to the success of the growth and development of the industry as well as the successful implementation of the Beneficiation Policy. To this end, the Department is collaborating with the Department of Higher Education and Training through the Mining Qualifications Authority (MQA) to improve skills development in the sector including training of artisans
Last year Cabinet took a decision to investigate the feasibility of shale gas in the Karroo. The Task Team that was set up to investigate the matter the Karroo, has completed its work. The report will be submitted to Cabinet for consideration.
Health and Safety
Honourable members, on 3 May 2012, I presented to this House, issues regarding health and safety in our mining sector.
We continue to be greatly concerned about the mining industry’s health and safety track record. The department will continue to use the Mine Health and Safety Act and related legislation to take appropriate action to ensure that workers have a safe and dignified work environment; that their right to sanctity of life is protected, and that they can return to their loved ones safely.
Although there is improvement in respect of Health and Safety, the marching orders for zero harm have been given, loud and clear and accepted by stakeholders. The department has a responsibility to ensure that the industry does not violate workers’ constitutional right to life by ensuring that the industry provides a healthy and safe working environment.
Consistent with the commitment I made last year to elevate health issues in the mining sector, my department established a new Chief Directorate of Health in 2011. This will improve health and safety in the industry
We will continue to monitor, through the Mine Health and Safety Council, the implementation of commitments that the stakeholders made during the Mine Health and Safety Summit held last November, Stakeholders agreed on commitments which include eradication of Silicosis, elimination of Noise Induced Hearing Loss and achieving the target of zero fatality and injuries.
The department has established tripartite structures in the provinces which will be supported by the Mine Health and Safety Council to ensure that the implementation of the summit outcomes is effected. This will go a long way in ensuring that the work of the Council is brought to the “Coal Face” where it most matters and where the “Tyre Hits the Road”.
The department has received blasting complaints from some communities located close to mining operations. An Experts’ Task Team was established to deal with this matter and will be submitting a report to the Mine Health and Safety Council for consideration.
Honourable Members, Illegal mining is starting to rear its ugly head again as illicit activities have recently been reported in the Northern Cape, Free State and Gauteng in the Ekurhuleni area. This happens after remarkable improvement has been achieved in the Free State and Mpumalanga provinces.
We continue to be greatly concerned about the negative impact of illegal mining activity on the country’s economy, which was estimated to amount to more than R5 billion per annum in 2008. The department will continue collaborating with the relevant law enforcement agencies including the National Multi-Agency Task Team and social partners to ensure that there is co-ordination in combating illegal mining.
I have also established a task team, made up of the relevant stakeholders, in Gauteng to determine and implement effective measures for preventing illegal mining activities in the Ekurhuleni area. The work has already commenced with a process of, among others, identifying and sealing of underground access points to restrict the activities of the illegal miners. We will use similar processes that we use in the Free State and Gauteng to address illegal mining activities in all other provinces
Finally, I want to thank the entire staff at the Department of Mineral Resources (DMR) for their commitment and dedication.
I thank you.
Issued by: Department of Mineral Resources
24 May 2012
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