[ Home ] [ Speeches & statements ]

Chairperson, members of the diplomatic corps, ladies and gentlemen, in my Ministry's budget speech at the National Assembly in May 1997, we reported that the top priority for our Department was to render effective service to the public.

As our second priority, we pledged to change our Department's staff composition in order to improve the balance between the various population groupings of our society. Towards this end, we had to change the management philosophy and practice as well as the Departmental culture. This has encouraged the enhancement of performance, responsiveness and accountability. I am pleased to announce that the department has achieved this goal.

Minerals and mining policy -

In the Ministry's budget speech we also advised the House of the pending release of the Green Paper on Minerals and Mining Policy for South Africa. The budget speech highlighted the complexity of the issue of mineral rights in South Africa, in particular, the current dual system of ownership of minerals rights which effectively excludes the majority of South Africans from entering the industry. The problem is further compounded by the sterilisation of these rights since there is no obligation to the private mineral rights holders to exploit some. Without any financial cost for holding these rights ad infinitum, there is no urgency to prospect or develop them. Limited access to mineral rights is also a deterrent for potential foreign investors

The Minister on 3 February 1998 launched the Green Paper on a Minerals and Mining Policy for South Africa at a media conference in Pretoria.

In a nutshell, the Green Paper, proposes a policy which is, inter alia envisaged to achieve the following:

- Creation and maintenance of a stable macro-environment that supports economic growth in accordance with the GEAR strategy and in which the minerals industry will operate profitably.

- Facilitation of access to opportunities in the minerals industry to those previously excluded and ensuring security of tenure of mining rights.

- Promotion of exploration and investment by new players, leading to increased production and employment in pursuance of GEAR and RDP objectives.

- Preventing hoarding and sterilisation of mineral rights by applying a "use- it-or-lose-it" principle and by adopting a long-term objective to have all mineral rights vest in the State as contemplated in the RDP.

- Encouraging and facilitating the development of the small-scale mining sector.

- Promotion of the establishment of secondary and tertiary mineral-based industries aimed at adding maximum value to raw materials in direct support of the GEAR strategy.

- Undertaking and promoting research and technology development that will stimulate the optimal development of the country's mineral resources.

- Facilitating education and training in the mineral industry.

- Improving the social consequences of sizeable downscaling and mine closures

- Promotion of mining and mineral development whilst maintaining the protection of the environment (including affected communities) through reasonable, attainable, affordable, responsible and effective standards, based on the "polluter-pays" principle.

- Upholding high standards of health and safety in and around mines.

- Encouraging co-operation amongst countries in Southern Africa on mining and mineral development, based on the principle of mutual benefit.

- Conducting all regulatory and promotional activities in a consultative, transparent and efficient manner.

- Ensuring uniformity in the management and regulation of the mineral industry in all the Provinces.

The Green Paper that we have now released for public comment is the result of a comprehensive process of consultation with the various stakeholders.
We have invited written comments and the closing date is the 31st of March 1998. All efforts have been made to facilitate the availability of the Green Paper. Copies are available at all the Department's offices right across the country. Advertisements in this regard have also appeared in the national press over the past weekend. The entire document is also available on the Internet.

During April this year, my Department will revise the document, based on the comments received. It will then be submitted to Nedlac and after the relevant amendments, it will be converted into a Draft White Paper for consideration by Cabinet.

Following approval by Cabinet, the Portfolio Committee on Minerals and Energy will conduct public hearings and can propose amendments.

The final step will be consideration by Parliament and publication of a White Paper, which will then formally represent Government Policy. Our provisional target date for this event is September 1998.

Although the publication of the White Paper will conclude the policy process, it will have to be followed immediately with the next logical process, namely to translate the policy into appropriate legislation

Gold industry -

Although South Africa has the world's largest gold reserves, it is currently centred around high-cost deep-level mining operations. This makes it sensitive to fluctuations in the gold price. The industry is a central pillar of both our overall mining industry and the economy as a whole and is a major foreign exchange earner. Gold mining employment levels contributed 64% of total mining wages and employment in 1996.

The decline in the dollar gold price over the past year has been sharp, although partially moderated by the depreciation of the rand against the dollar. However, we are hopeful that the situation will improve.

In the meantime, given the present gold price, the mining industry has warned us to expect a significant number of retrenchments in the gold mining industry during 1998.

At the current gold price there are believed to be l2 gold mines which are operating at a loss and a further 2 which are marginal (those with a profit/revenue ratio of less than 5%). These 14 endangered mines currently employ about 110,000 employees.

A range of solutions are currently being considered jointly between the Department and the affected mines to alleviate the situation. These include encouraging and improving efforts to promote downstream activities (benefaction) related to mining, and gold in particular.

We are also providing short-term subsidies related to water-pumping to relieve some marginal mines. Other efforts include promoting smaller operations and mining activities which may be mined profitably on land which larger companies find unprofitable or insignificant.

We have also made efforts to get clarity from central banks on their policy intentions regarding gold reserves.

Fast-tracking discussions around a social plan - reinforcing the progress already made at NEDLAC and encouraging initiatives to find new local development possibilities and encourage new investment in ways which enable best use of the extensive infrastructure and population in declining mining towns.

Setting up systems for encouraging investment and informing about investment opportunities.

Diamond Industry -

A commission chaired by Judge Dennis Levy has, in the last year been gathering evidence from participants in the diamond industry as well as all other interested parties. The focus of the enquiry has been the status of the industry and recommendations of measures that could be effected to ensure that the diamond industry benefits all South Africans.

Judge Levy concluded the first stage of hearing evidence on 23 December 1997. We are now expecting to receive the compiled report by March of this year. Once we have analysed the recommendations, we will implement changes which we consider to be necessary to improve the diamond industry.

Due to the enormous importance of Alexkor to the people and economy of Namaqualand, the restructuring of this State asset has to be handled with the utmost care and sensitivity.

Several possible models have been debated within the National Framework Agreement structures, including the possibility of management contract with the state retaining its shareholding. This is currently being discussed by the Sectoral Task Team (STT). The STT's latest recommendations are due to be considered by the Inter-Ministerial Cabinet Committee (IMCC) later this month.

Mine Health and Safety -

The Mine Health and Safety Act, no 29 of 1996 came into operation on 15 January 1997. However, in terms of proclamation R4 of 1997, sub-sections 86(2) and (3) of the Act were excluded. This was because there was some disagreement between labour and business on the "onus of proof' and negotiations ensued between these parties on the introduction of the administrative penalty system that would replace subsection 86(2) and (3). Consensus has now been reached and on January 15 1998 all sections of the Mine Health and Safety Act 29 of 1996 came into operation.

Energy -

With a population of some 42 million people in our country, it is quite evident that the task of satisfying the demand for energy supply in all its various forms that are applicable to our situation, must be a little more than daunting.

It is therefore not surprising that my Department has dedicatedly applied all of its resources - both human and material - in a national endeavour to tap all of our country's available energy resources for the benefit of all of our people, in particular those people who were artificially denied access to energy resources in the past and our environment.

As government sets out a macro-economic policy on growth, employment and redistribution of the country's resources, the energy sector continues to present interesting challenges to our Department regarding the transformation of industries, governance systems, social-economic trends within communities, and even peoples' attitudes towards the use and importance of energy. Government is committed to the promotion of access to affordable energy services by small business, disadvantaged households, small farms, schools, clinics, rural areas and a wide range of other community establishments.

Towards the realisation of these goals a Draft White paper on Energy will be released in March this year. Stakeholders have made their input to this policy document whilst it was still a discussion document.

Government will increase social equity by promoting access to energy services for disadvantaged households, small business, farms, and community services. Rural areas will no longer be enclaves of the forgotten, because we shall focus on alternative energy resources to cater for their needs.

Capacity in my Department shall be considerably strengthened in order to enable us to better formulate and implement our energy policies.

I may just mention that we have sent no less than five of our junior technical staff members to Washington DC in January 1998 to spend two months at the US Department of Energy (DOE) for training in various energy supply disciplines, under the auspices of the SASUS Binational Agreement.

Government will encourage competition within energy markets. This is particularly true of the electricity supply industry.

We will work towards an investor-friendly climate through good governance, stable regulatory regimes, and other policy instruments.

Government will lead the restructuring process regarding all state assets.

Government will work towards the establishment and acceptance of broad national targets for the reduction of energy related emissions that are harmful to the environment.

Energy taxation will continue to be an option within government's fiscal policy, although it will be exercised with more consideration for the economic and behavioural impact of such policies.

The National Electricity Regulator (NER) will determine minimum standards for electricity supply to industrial, mining and commercial consumers

Government will strive to optimally develop all the country's energy resources i.e. fossil fuels (such as coal, oil, gas and uranium); and renewable energy (such as solar, wind, pumped storage and hydro schemes).

Now, turning to the energy resources spectrum, I would like to highlight the following:

- Currently, South Africa commands electrical power generation capacity of about 38 000 mega watt, while the demand is about 26 000 mega watt. We estimate that generation capacity will grow to about 40 000 mega watt by the year 2005.

- A further 1 400 mega watt may be possible from the Cahora Bassa hydro scheme by next year, depending on successful negotiations between ourselves and our Mozambican and Portuguese counterparts on the tariff question.

- As you may be aware, our Deputy Director General of Energy is the current Chairman of the Permanent Joint Committee of all three parties, which is government, labour, Eskom and local authorities. The government position on restructuring of the EDI is contained in the ERIC Report.

- The renewable energy industry is growing very rapidly in the country. Previous studies undertaken by the Department on wind patterns nationally (aminometry) have led to the production of a detailed Wind Atlas. This is currently being used to formulate future policy on tapping wind power, particularly along the coastline of the Eastern and Cape Provinces. By the same token, insulation data has been gathered over the years on solar energy patterns in the country. This is now being intensely studied by the Department, while also utilising the data in planning our solar energy projects.

The Department intends to step up our delivery of solar energy systems in the country, particularly in rural areas. We intend to locate the expertise and control of all of our solar energy projects within the Department. This is important in order to enable us to attract more foreign assistance. (e.g. from the US, Denmark Norway and Germany) for our solar energy projects.

The Department has embarked on a number of projects in the solar energy area, such as providing solar cookers to indigent communities, design and development of solar home systems for lighting and TV entertainment as well as provision of solar water heaters to households.

Energy efficient housing schemes have been delivered in Kimberley. Most of these projects have involved foreign participation on a joint implementation basis. A study is currently underway for the design and delivery of a "show case" solar village powered by a 10 - 15 MW stirling engine.

On the gas sector, my Department has made equally impressive progress. We have participated in far-reaching discussions with Namibia on the gas reserves in the KUDU field.

We will shortly be signing the Joint Agreement on Kudu Gas with our Namibian counterparts. Mozambique and ourselves are also about to enter into an agreement to tap the gas reserves in the Panda field.

Sasol intends to invest in a 350 km gas pipeline that would bring gas from this field into the Gauteng area in the near future. All of these developments will eventually contribute significantly to the development of the gas market in South Africa, which is still in its infancy stage at present.

The liquid fuels industry is currently experiencing a great deal of dynamism. With the country s daily requirements of some 450 000 barrels of crude oil, and a total production capacity of some 650 000 barrels per day, there appears to be still a need to increase capacity in order to match expected future growth.

Other topical issues in the liquid fuels industry are deregulation, introduction of blacks in the sector (both upstream and downstream ends) and restructuring. Our recent visit to Saudi Arabia has brought in light more ideas on what may be achieved by government through joint venturing or partnerships.

The synfuels industry is another area where great interest is continuing to emerge.

Joint oil exploration ventures between government and other players are not uncommon.

On the east coast of Kwazulu-Natal, the American firm Phillips, government (Soekor) and other players have recently signed a joint venture on oil exploration. At ORIBI, Soekor and Energy South Africa also succeeded in jointly producing the '"first South African oil" recently.

On biomass and coal-bed methane, my department has been quite pro-active. We are conducting a study to collate all available information in the country on both these subjects. Landfill sites seem to be well documented for South Africa, and are a rough-and-ready source of biogas from biomass.

Our Department is also reviewing the following pieces of legislation with a view to align the energy sector with the new societal imperatives.

The Nuclear Energy Bill is nearing completion. It effectively separates the functions of the AEC and the CNS (Council for Nuclear Safety) thus, obviating a situation wherein the AEC would be both the referee and the player in the industry. In terms of the proposed Bill, the CNS will be responsible for the regulation of industry whilst the AEC remains the participant.

Nuclear Safety Bill proposes radical changes to the governance of mine safety and redefines the role of the CNS. The question of the IAEA Safeguards is still an issue for further debate, as it also involves the Department of Foreign Affairs.

The US Nuclear Regulatory Commission (NRC) has offered to assist us to review both the Nuclear Energy and Nuclear Safety Bills.

The Electricity Regulatory Bill is being drafted to govern the regulation of the electricity industry by the NER.

The Gas Regulatory Bill has been submitted to the Ministry for signing and presentation to parliament during the current parliamentary session.

The Energy Bill which will be informed by the Draft White Paper on Energy Policy, among others, will define the line function responsibilities of the Department.

I thank you.

<EOD>