NCOP Budget Vote Speech by Mr Godfrey Oliphant, Deputy Minister
24 May 2012Honourable Chairperson
Honourable Minister Shabangu
Director General and senior officials of The Department,
Ladies and gentlemen,
It is indeed an honour to have the opportunity to address this chamber on the occasion of our Budget Vote for 2012/2013.
For our mining industry, this year marks the end of the first decade of the Mineral and Petroleum Resources Development (MPRD) Act of 2002. This was a landmark transformational piece of legislation. By transferring the trusteeship of our natural endowment of all mineral and petroleum resources to the state, the MPRDA was a critical first step towards the normalisation of our political economy landscape. It also paved the way for the alignment of our mineral regulatory framework with the sound and responsible practices elsewhere in the globe.
By its nature, the regulatory framework is fluid and dynamic. In recognition of this reality, the MPRDA provided for a review of the Act after 10 years to ensure that the Act does not become static and potentially counter-productive. This review process is now nearing completion.
As we reflect on the state of our mining sector taking into account lessons of our past decade of modern regulatory framework for the mining industry, it is safe to suggest that we face a number of challenges that require determined and systematic resolution. The catalogue of current issues that require both political and technical leadership includes a range of items such as illegal mining, matters of health and safety of the workforce, rehabilitation of the environmental legacy, the need to boost exploration and prospecting investment, mineral beneficiation and the revitalisation of the mining regions across the country. With your permission, I like to deal with these issues in some details in this Chamber.
Whilst the act of ‘illegal mining’ is a matter for the state law enforcement agencies, the socio-economic factors that lie behind such activities can be traced back to unemployment, poverty and the human quest for survival. In this regard we have to exercise leadership in engaging the communities to better understand the implications and risks of such activities. At the same time we need to exert every effort to create alternative employment opportunities for the poor communities.
Another major challenge is the rehabilitation and environmental restoration of the previous mining sites. As the honourable members are aware, there are over 6000 of such sites in our country. Whilst on the face of it such sites are a clear liability, it is also true that the rehabilitation of these sites might well offer opportunities for creating jobs and livelihood. It is easy to imagine that a national programme of environmental rehabilitation of the old mines could well generate 1000s of job opportunities. In many sites, the rehabilitated areas could be further used for agriculture and other economic activities.
Inter-linked with the environmental issues is the critical matter pertaining to the health and safety of the workforce. It is common knowledge that South Africa’s mining in many commodities is getting deeper and deeper under-ground every year. The trade-off between safety and short-term productivity and profitability becomes more and more pressing. Conventionally, the safety of the workforce has received secondary attention- short-term profit is put first! This needs a paradigm shift, something that needs urgent and ongoing attention.
Another area that requires our focused attention is the field of exploration investment. Despite our country’s considerable natural endowment of resources, South Africa’s share of global exploration and prospecting investment has declined considerably over the past two decades. We need to reverse this trend if we hope to promote ‘junior’ and ‘emerging’ mining companies. Prospecting is the only route to the establishment of growing mining companies, and it is the practical means of replacing our old and aging mines.
At the same time, our national interest calls for a systematic and integrated mineral beneficiation drive. We cannot continue to mine and export ore and other raw materials for processing elsewhere, as this severely limits the benefits we can derive from the exploitation of our resources. There is therefore a need to increase value addition to our minerals before they are exported, in line with government’s new mineral beneficiation and industrialisation priorities.
In the recent past there has been a great deal of debates and controversies about mineral beneficiation. In the process much emphasis has been placed on narrow ‘down-stream’ opportunities for mineral beneficiation. As part of our mind-set change we need to re-examine notions of beneficiation, and broaden our definition in line with the realities of socio-economic and financial benefits that both ‘up-stream’ and ‘down-stream’ opportunities offer in each and every commodity.
The history of socio-economic development in resource-rich countries such as USA, Brazil, Australia, China, Russia, and many others including South Africa itself demonstrates clearly that industrialisation and mineral beneficiation are inseparable. The emergence of national utilities such as Eskom, Water Boards, Transnet (railways, and harbor logistics), petrochemical and explosive industries was in large part due to the mining industry. In effect, then, these were the clear opportunities for industrialisation, and hence socio-economic benefits, arising from the development and expansion of mining sector. Much the same way, today South Africa enjoys a considerable range of opportunities for integrating our mineral beneficiation and industrialisation programmes in order to enhance the pace of social development and economic growth.
Such an approach to mineral beneficiation and industrialisation calls for a much higher degree of coordination within the public sector and across the private and public sectors.
As we approach mining and mineral beneficiation differently, in a number of areas we have to consciously, proactively and systemically do things differently. In amongst them is the design and operations of our post-Apartheid cities. Learning from our own history, we should avoid the emergence of dividend, inefficient and operationally expensive Apartheid-like cities of the past. Instead, we ought to focus on energy-efficient, socially integrated, and operationally efficient and competitive cities. As we enter the new century of mining and mining related industrialisation, we need to now reflect on the legacy that we like to leave behind. The urban and environmental landscape that we bequeath to our children has to be dramatically different from what history has bequeathed to us. This is our collective responsibility and it will arise from our collective choices today.
The reality of our country’s economic development profile is synonymous with vast regional differences. Apart of the normal differences, there are the special cases of old mining towns and regions. In these communities, the closure of mines and the termination of mining activities create considerable social and economic distress. As an example, let us take an area that I am very familiar with, namely Namaqualand. With the end of diamond mining, this area has experienced rapid decline, poverty has intensified and unemployment has soared. Situations like this require urgent and considered attention. If such cases are not taken care of, we can rest assured that social desperation will lead to activities such as illegal mining and other activities that have adverse social consequences.
In my recent visits to the various regions and provinces, it has been encouraging to note the vast potentials in nearly all provinces and regions. Once again, whilst diamond mining in Namaqualand has come to end, but the region has the largest single zinc deposit called Gemsberg. Clearly, part of the solution to the decline of the region lies in the rapid replacement of the old activities with the new ones. This in turn calls for a much higher level of coordination between the private and public sectors. In particular when we can integrate our mining and mineral beneficiation activities, and further coordinate them with all the associated infrastructural requirements, it is well within our reach to create hubs of mining and mineral beneficiation around the country.
It is our collective obligation to ensure that our considerable mineral wealth is utilised to generate socio-economic benefits and integrated development for our nation. Our communities across the land look to us to achieve this. To do this, we need to draw lessons from our past century of mining, to avoid the undesirable consequences, and to ensure a mining industry that is socially progressive, environmentally sustainable, and economically competitive.
In short, if South Africa is to succeed in extracting maximum benefit from its mineral endowment, it must do things differently. As we shift the paradigm, we need to be mindful that the competitiveness of our national mining industry will, to a large extent, depend on the degree to which it adopts ‘green technologies’ and sound environmental practices. It is a fact that all over the world, the mining industry is synonymous with the destruction of the environment and the land potentially useable for agriculture and food production. This dichotomy has to be managed carefully and responsibly via sound and concurrent environmental rehabilitation management practices.
As the Minister has repeatedly emphasised, Government and our Department are alive to the considerable mineral wealth of our country. With the focused attention that our Government is placing on creating an enabling environment, we remain highly optimistic that our mining industry stands at a yet another prosperous and expansive phase over the next few decades.
I invite you and all other stakeholder to join forces in accelerating the pace of collaboration and cooperation for the benefit of our nation. It is our collective responsibility to unlock the potential inherent in our national resources endowment.
I thank you.
Issued by: Department of Mineral Resources
24 May 2012
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