Address by Honourable Minister of Mineral Resources, Ms Susan Shabangu, Gordon Institute of Business Science
12 Jun 2012
Ladies and Gentlemen
Let me begin by congratulating Gibs and the participants here today for engaging in such constructive discourse, we need more of this and I am honoured to be part of it. This comes just a week after the Mining Lekgotla which brought mining sector stakeholders together to discuss pertinent issues and current challenges in the mining industry. Today’s discussion provides an opportunity for us to build on that in contemplation of the future of the mining industry. The future of mining in South Africa is predicated on sustainable growth and meaningful transformation.
We have already recognised this fact as stakeholders of the mining industry. In 2010, while the rest of the world was still busy pointing fingers at each other in the wake of the economic crisis, in South Africa, we came together under the auspices of the Mining Industry Growth and Development Task Team (MIGDETT) to make a joint declaration on the future of mining, and placed at the centre of that sustainable growth and meaningful transformation.
Not too long ago, mining was considered a sunset industry. However, history has vindicated the more visionary, for today the mining industry is living up to its potential as a bastion of economic growth, catalyst to infrastructure investment and industrial development. The future of the industry will necessitate that our focus should centre on the following pillars of transformation and sustainable growth:
- A vibrant and competitive governance framework that is responsiveness to the national developmental agenda.
- Ensuring meaningful transformation of the mining industry.
- A safe and healthy mining work environment.
- An industry that is environmentally sustainable.
- An industry that has a skilled and dynamic workforce and contributes to the overall national skills base.
- An industry that thrives from and contributes to the development of infrastructure.
- An R&D and innovation regime that supports growth of the sector.
- An industry that contributes to the beneficiation of our minerals and the broader industrial and economic development vision of the country, and
- A thriving state owned mining company that contributes to the national strategic vision.
In terms of the future of mining in the governance space, the Department of Mineral Resources, noted through on-going monitoring, evaluation and stakeholder engagement certain challenges experienced in the implementation of the principal legislation, the Mineral and Petroleum Resources Development Act, MPRDA (2002), and we are currently reviewing it.
The main objectives of the review and the proposed amendments are to improve the current construct of the Act and to remove ambiguities. The review further seeks to streamline government’s administrative processes and avoid inefficiencies through the introduction of an integrated licensing system. Finally, the review will also seek to support the Beneficiation Strategy, by ensuring that the requisite mineral inputs are made available to support local beneficiation in strategic value chains.
I emphasise again that the review seek to improve the current construct of the Act, it does in no way introduce any major changes in the governance of the exploration and exploitation of South Africa’s mineral resources.
The other key piece of work in the governance space is the review of the Mine Health and Safety Act (MHSA) passed in 1996. The objective is to strengthen progress towards the zero harm principle, by strengthening enforcement provisions and providing clarity on certain definitions. The review of the MHSA will further seek to align the MHSA with the MPRDA.
Again in the governance arena, we will continue to place the necessary resources and focus to ensure a smoother, more efficient and transparent administrative regime. In April of 2011, we introduced an online application system, known as South African Mineral Resources Administration (SAMRAD). As with any new system, teething problems were experienced, but these have been addressed and to date, well over 3 500 applications have been successfully lodged in the new system. We will be expanding the system by developing additional modules as part of our objective to develop a fully-fledged mining cadastral system integrating all mining and geological information with other critical data such as infrastructure.
Meaningful transformation of the mining industry is about more than just governance and administration. It requires much more commitment from the men and women, and if we are honest, it is still mostly men, who yield power in the shaft and in the boardrooms day in and day out.
Anecdotal evidence about the slow pace of transformation to date has been rife and emotive, but the evidence collected by my department in their audit of Mining Charter compliance reports submitted by mining companies reveals the following;
- There are unsatisfactory levels of implementation of Employment Equity.
- Progress is even worse at the senior management level, especially in decision making structures, which remain largely devoid of proper demographic representation.
- Fronting is rampant, in particular by women on behalf of men.
- There is a growing practice of unilateral changes to approved Social and Labour Plans.
- Lack of willing of suppliers of capital goods to transform and to transfer skills to the Black Economic Empowerment (BEE) entities.
- The tendency of BEE entities to be contracted only in peripheral services including catering, cleaning, toilet tissue supplies and gardening services where the procurement spend is insignificant compared to capital goods spend and lacks the industrial development rationale.
This is no future for the mining industry without meaningful transformation. My department has put in place administrative processes to address the non-compliance as identified above but meaningful transformation as I said is not just about improved governance from the state, but about industry taking responsibility and showing leadership, which means:
- Ensuring the active involvement of HDSAs in the management and decision-making of the mining enterprises.
- Ensuring the Active participation of women in operations and in management
- Local procurement and supplier development that creates sustainable entities, and contributes to local manufacturing capacity.
- Human resource development, that develops HDSA for management and growth in their organisations and contributes to community skills development.
Meaningful transformation will also require that communities are engaged and brought on board as partners and not as inconveniences or vacant vessels to be managed.
Historically the drive to improve mine health and safety was focused on improvements in engineering or design controls; the focus has shifted to organisational factors.
A culture of safety is now recognised as the single most important factor and indeed central to the future of mine health and safety. Visible leadership and presence in times of trouble is often more effective than the most rigorous drills and colourful of charts.
The future of mine health and safety I hope will hold fewer invocations of Section 54 of the Mine Health and Safety Act, but this cannot come at the expense of the life of a mine worker. One life lost, is one life too many. So the only way that we can realise reduced incidences of Section 54 invocations is through greater cooperation between the regulator, industry and labour to ensure increased understanding, transparency and compliance with the legislation. In this regards, we need to ensure that every miner worker has a decent working place and the security that they will be returning home to their loved ones at the end of a hard day’s work.
As part of a concerted effort to improve the health and safety of employees on the mines, a Mine Health and Safety Summit was held in November last year. The Summit brought government and its social partners together to review the state of health and safety in the mining sector. Commitments that flowed from that process include:
- The implementation of a culture transformation framework with a view to significantly improving the standards of health and safety in the sector.
- The establishment of a Centre of Excellence to undertake research, training and capacity-building for implementation of best practice.
- To focus on long term implementation of TB and HIV/AIDS programmes as interventions into one of the gravest health challenges to the mining industry.
- To significantly improve the quality of living conditions of mine workers.
This is where the focus for mine health and safety should be in the future and where the department’s focus will be in its engagements with stakeholders. We look forward to strengthening implementation of those commitments and tracking that progress at the Summit biannually.
While we have largely focused on issues of transformation so far, these as we had acknowledged are inextricably linked to issues of sustainable development and growth. Central to sustainable development of the mining sector is the issue of environmental sustainability.
Currently in South Africa we are faced with the legacy of irresponsible, unsustainable mining practices of the past as manifested in the backlog of un-rehabilitated derelict and ownerless mines. We have embarked on a process of quantifying the liability through the assistance of an actuarial scientist which will assist the department in prioritising the sites for efficient implementation of a rehabilitation strategy.
While we continue to deal with the problem of derelict and ownerless mines, we also have to move to a situation where concurrent rehabilitation is the norm.
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. In this regard, our focus will shift towards ensuring that companies properly plan for and allocate adequate financial provision to address full rehabilitation.
Related to the issue of mining and the environment, is sustainability in respect of global warming. The exploitation of our mineral resources should continue to take cognisance of global warming issues to reduce our carbon footprint. In this regard the industry must be innovative in implementing more environmentally friendly technologies.
Long gone are the days of 'Fanagalo' in the shafts. The sector has seen dramatic changes in skills composition, in technology and work organisation over the past few decades. Restructuring has taken place and/or is underway at several levels: at mining-group level, as well as company and workplace levels. Technology and the rapid pace of technological development have also had a profound effect on the sector and have greatly enhanced the efficiency of the industry, impacting every aspect of the mining process.
Analysis of labour demand shows that mining in South Africa is still relatively labour intensive and is likely to remain so in the near future, however, technological advancements have brought about changes in the skills required of people in the industry and will continue to drive skills needs into the medium- to longer-term future. To address these inexorable shifts we need to ensure that incumbent workers are supported in acquiring the skills requisite in this dynamic industry.
As the sector grows in the context of a sustainable development framework, we expect the demand for artisans to rise commensurately We will need more mining engineers, metallurgists, chemical engineers, geologists, electrical engineers, mechanical engineers, analytical chemists, environmental managers, mine surveyors, and so on.
Of all these skills, besides perhaps mining engineering, the mining sector faces another challenge, in that it competes with other sectors of the economy. Mechanical engineers and electrical engineers are absorbed by financial services companies, consultancies, contractors or equipment service providers.
To compound this, South Africa also continuously loses mining engineering skills to other countries such as Australia and Canada, who are aggressive recruiters of skills.
While as a country we produces a significant number of mining engineers than other English-speaking countries, the supply pipeline is too small and the output still insufficient to counter international losses at the same time as replace the aging engineering and artisan population. This places the industry at a severe disadvantage in respect of future growth.
The future for skills development in mining is education, basic literacy and numeracy, training and dialogue. Basic literacy and numeracy of mine workers needs to be encouraged with improved cooperation with the ABET systems of the Department of Higher Education of Training (DHET).
We welcome the plans of that sister department, DHET, to launch new tertiary institutions in the Northern Cape and Mpumalanga, traditionally under skilled and underdeveloped yet well-endowed mining jurisdictions. I am hopeful that as the curricula of these institutions are designed, their mineral endowment and history will be taken into consideration and leveraged upon to create skills and centres of excellence relevant to the mining industry. We will also be working with the DHET to explore the possibility of introducing a comprehensive jewellery course at FETs in the country.
Skills development in the sector will require continued partnership between government, labour, business and community. As part of this effort to address the backlog in skills development and prepare for the future, government and its social partners have come together to make tangible commitments towards the shared vision through the Basic Education and Skills Accords of 2011. Under the skills accord, stakeholders committed to:
- Expand the level of training using existing facilities more fully; both private and public.
- Make internship and placement opportunities available within workplaces to address the backlog of student with only this as an outstanding requirement to qualification to professional bodies.
- Set guidelines of ratios of trainees: artisans as well as across the technical vocations, in order to improve the level of training.
- Improve the funding of training and the use of funds available for training and incentives on companies to train, and,
- Set annual targets for training in state-owned enterprises.
Ladies and gentlemen,
As a sector we were greatly encouraged by the ambitious plans unveiled by the President in his State of the Nation address as concerns infrastructure development. Through the Mining Industry Growth Development and Employment Task Team (MIGDETT) structures, we have identified the provision and efficiency of infrastructure as a binding constraint to the development of the sector and its capacity to create much needed jobs.
Those who participated in those processes will see the sites targeted for prioritisation by the Presidential Infrastructure Coordination Commission, the Waterberg coalfields, the Northern Cape iron ore and manganese lines reflecting those priorities highlighted by MIGDETT stakeholders in 2010. Going forward we need to ensure we continue this constructive engagement on short to long term infrastructure requirements underpinning the envisaged growth and linkages of the mining industry.
Also critical to ensuring sustainable growth and development of the industry will be instilling a culture of innovation and investment in research and development (R&D) in the mining sector. This is important for the continuous development of productivity and competitiveness, as well and managing costs. In this regard, the country should focus its R&D and innovation efforts in the fields of geology, mining technology and mineral processing. Government has already started to invest in increased geological R&D which will support increased exploration expenditure through the Council for Geoscience.
The future of the mining industry also requires a concerted effort to support domestic mineral beneficiation. Beneficiation of South Africa’s minerals is a critical component of the nation’s industrial and economic development framework. It is the vehicle through which South Africa’s resource based comparative advantage, can be transformed into a national competitive advantage.
To this end, a beneficiation strategy has been developed, to maximise the returns from the exploitation of our mineral resources. It is not our intention to force mining companies into being manufacturers, but rather to address the challenge of the inaccessibility of our raw materials as an impediment to greater local beneficiation. I am delighted with the initiative shown by some mining companies to support the aims of the Strategy but we need a more coordinated approach and that is the aim of the implementation framework that is being developed with five value chains as pilots.
Subsequent to the Cabinet decision of December 2010 to establish the State Owned Mining Company, SOMCO, it has begun operations towards its mandate which is to contribute to key national objectives, such as the beneficiation of strategic minerals for industrial development and employment creation as well as the imperative of ensuring long term energy security.
To date, the state owned mining company trading as the African Exploration Mining and Finance Corporation, African Exploration, Mining and Finance Corporation (AEMFC) has launched its first mine, Vlakfontein, on 26 February 2011 with a formal supply agreement completed with Eskom later that year. Thus far the mine has produced 844 thousand tons of coal and employs over 250 people. Another project in the pipeline, the T Project is now in the post-feasibility phase, and will upon operation produce 4.6 million tonnes of coal per annum for 33 years, creating almost 1000 jobs. While this is just a modest start, the future of mining in South Africa will see a thriving state owned mining company that contributes to strategic national objectives and supports long term economic growth.
This fledgling role in addressing the priority placed on ensuring security of supply for energy generation is a sign of things to come.
There has been much speculation as to what the ultimate result of the policy discussions of the ANC will be on the issue of nationalisation. I have expressed my views on this matter and I further want to make an appeal that we allow the policy process of this organisation, the oldest liberation movement on the continent, to run its due course.
I urge stakeholders to apportion more energy to renewing commitments in the areas of meaningful transformation of the mining industry, meaningful community engagement, health and safety, skills, infrastructure, and contributing to beneficiation and economic development. Let us bring the focus of the debate back to the real issue.
This industry can do more and can really set an example to others in term of contribution to economic and social development, and I believe it will do in the future. Towards this end, my department will be holding provincial mining indabas, to assess challenges and explore appropriate solutions that will take the industry to higher levels and brighter future.
I thank you.
Issued by: Department of Mineral Resources
12 Jun 2012
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