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INTRODUCTION

Energy, Mineral Development, Mine Health and Safety, and Management Services are the four branches that comprise the department of Minerals and Energy.

The focus in today's briefing is: Electricity distribution industry, Natural gas pipeline project, and Mining.

ELECTRICITY DISTRIBUTION INDUSTRY - EDI

The objective of restructuring EDI is to end fragmentation. The challenges we have in EDI have been with us for a number of years. Numerous studies and consultations took place e.g. National Electricity Forum NELF, the Electricity Working Group EWG and Electricity Restructuring Inter-Departmental Consultation (ERIC).

In 1997 Cabinet approved the recommendation of ERIC the key one being the consolidation of EDI; which would follow consultation with stakeholders.

An EDI Holding Company as an interim measure will be the first step, followed by the Regional Electricity Distribution whose configuration is still to be determined. Government is committed to the REDS as an end state model. EDI Holdings will have to make sure that the REDS are financially viable and technically competent.

The EDI requires that Eskom Distribution Division be separated completely from Eskom and be merged with municipalities who are in distribution. The 415 Municipalities distribute electricity which is 40% of the sales volume with the 60% sales volume served by Eskom. The transition will be driven by EDI Restructuring Committee (EDIRC), which has representation from Provincial and Local Government Departments; Department of Minerals and Energy, Department of Public Enterprises; SALGA, MECs of Local Governments.

EDIRC will appoint supervisors and technical advisors. DME is preparing the Terms of Reference for technical advisors and call for the proposals to be considered in the September EDIRC. The Technical team should start to work in early 2000.

The Department will be proceeding with faster electrification. We will be placing greater emphasis on quality control especially where Eskom has outsourced the installation work. The Electrification roll-out by Eskom has already reached the 2 million mark. The RDP target was 2 million customers by year 2000.

NATURAL GAS PIPELINE PROJECT

In the area of natural gas, both SA and Mozambique are keen to see gas introduced into their economies. Mozambique has gas which we intend to bring to SA through a gas pipeline which reserves in a Public and Private sector partnership.

Part of this process will involve harmonisation of the regulatory dispensation between SA and Mozambique. We have task teams with officials from both countries which have been working for the last 6 months. The teams will in future be assisted by CEF Consultant (the State Gas and Oil company) while Mozambique is assisted by ENH their State Oil and Gas Company. On Friday SA and Mozambique Ministers will meet to take the work forward.

SA is diversifying sources of crude oil; and we are happy that Nigeria has made this allocation for us. Our officials in DME, DFA will be looking at the modalities of transporting it, this deal will help to strengthen relations between our two countries.

MINING

In Mining the Gold Crisis has dominated our work in the last month, but it was and still is important to do what we can to assist the Gold price. We are also planning an overview of the Mining sector and in this regard, we will focus on Gold, Diamond, Palladium, Platinum. We will issue a sector analysis report for the Mining industry. The Mining industry employs about 230 000 people in SA making it a key but unstable employer.

We have commissioned an industry review to assist us to gain insight in this sector, which will lead into a publication, on the state of this industry. We have also agreed with labour and industry to start working towards the Mining Summit, which we have agreed should be before the end of this year.

We do not think the falling of the Gold Price and actions by central banks is a passing phase and an isolated event. We think it is important to master the trends and to ensure that we strengthen the industry. We therefore need not only short term responses. We also seek to profile the other minerals we have in the country.

We also assist in shortening the turn-around time to people in providing services through in our Regional and National offices when seeking information and provide easier access to support institutions such as the Geoscience Council and Mintek.

Regarding Gold, the price went down from 290 US$ in May 1999 to 254 US$ per ounce in July 1999, it went up again August 1999 to about 260 US$ and today it is trading at 253 US$. Clearly this fluctuation puts us in a difficult position. We started the campaign collectively with Labour and Business and continued to separately pursue at Government to Government levels. We visited all central banks and the IMF, during the month of August 1999 and together with SADC countries we attended ACP-EU, where we raised this issue.

We also had a separate forum with the British Minister re-UK sale as a SADC delegation. Around the issue of central bank sales, we started a campaign to look on the medium to long term measures in dealing with the issue.

The situation is such that we have not been able to stop their sales despite the very intense discussion we have had. However we have agreed with all central banks about he need to use a central facility for official sales. In future, the Ministers of Finance of the affected countries in SADC are now discussion the matter and Minister Manuel is leading the SADC team that is continuing the discussions with their counterparts in the G7 countries. Minister Manuel is leading these discussions in his capacity as the current chair of the SADC Mining Minister's Committee.

Regarding the Gold Crisis Committee, we are re-visiting it to ensure that its primary aim, that of limiting retrenchments is fulfilled and that it enhances productivity of all stakeholders in the Committee. We are reviewing the mechanisms applied by employers, i.e. prior 1st notification to the GCC that they intend to retrench, to ensure that more vigorous consultation happens at the mine level, between employers and workers before GCC is notified.

We are also considering changing the name from that of a Gold Crisis Committee, to one that captures the intentions of developing the Mining Industries and promotion which will include a fight to protect Gold and to plan ahead. We want to urge the industry to look at it's internal problems such as efficiency, safety and productivity issues to solve some of the problems. Obviously the crisis has hit the marginal mines differently than the well established ones. We do not believe that the current Gold Crisis justifies more established mines to conduct massive retrenchments because for many of them, their Gold is already hedged.

ERPM

Immediately after the court decision on 19 August, the Department arranged with the provisional liquidators to go into a holding operation to protect the underground assets (i.e. gold reserves). This entails continuation of the pumping to prevent flooding of the mine as well as limited gold recovery to generate funds for this purpose.

The Department has also arranged with the provisional liquidators to keep the retrenched workers on the mine premises and to provide them with food and accommodation for at least a period two weeks from the date of the Court decision. This will allow an interdepartmental team (DME, Labour and Provincial and Local Government) to provide all possible assistance to the workers by way of counselling, and provision of retraining and unemployment benefits. Assistance by way of the Social Plan Fund is also envisaged to those communities which are directly or indirectly affected by the job losses.

The Department, the NUM and the liquidators are also in continuous discussions with potential investors, particularly in so far as the continuation of the underground operations are concerned, as well as the re-employment of some of the workers. No final decisions in this regard have been made as yet.

The next step in the liquidation process is for the Master of the Supreme Court to convene a statutory creditor' meeting by way of a notice in the Government Gazette. This is expected to be done in the next few weeks. At this first creditors' meeting, all creditors' will have to prove their claims and nominate final liquidators. Appointment of the final liquidators by the Master of the Supreme Court will follow immediately thereafter.

The final liquidators will then perform their functions to wind up the company in terms of powers granted to them by the Master and the insolvency laws. This will mostly entail selling of the assets and distribution of the proceeds to creditors.

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