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10 June 2008

Chairperson
Honourable members
Invited guests
Ladies and gentlemen

In 1955, staring down the jackboot of apartheid, people from all walks of South African life, black and white, men and women, gathered at what history would come to name the Freedom Square in Kliptown and declared, in a show of defiance, that "South Africa belongs to all who live in it, black and white" and that no government can claim legitimacy unless it is based on the will of the people.
Twenty one years later, high on the inspiration of the words – Africa my beginning, Africa my ending, the young lions of our country entered the belly of the apartheid beast and ripped it open for the world to see. With only rubbish bin lids, bricks and Molotov cocktails, they stared an army down and said they would die for liberation before they could live the life of the oppressed.

Chairperson, honourable members, I present to you the department's budget vote – the second during my tenure - in remembrance of that fateful day of 16 June which triggered a domino effect whose base was the momentous day of the Freedom Charter, a document so simple in expression and yet so profound in meaning.

The Department of Minerals and Energy (DME) 2008/9 budget

The department's budget of R3, 595 billion for the 2008/09 financial year indicates an increase of 5, 21% from last year's budget of R2, 925 billion of which 0,93% was unspent. This budget includes 79,77% that is to be transferred to the state-owned entities (of which 66,95% is set aside for the national electrification programme).

Electricity

In the light of the energy challenges confronting our country, this budget seeks to give concrete expression to the words of Professor Z K Matthews who said: "The peace and security of the modern world demand that the problems of Africa should be tackled with energy, determination, the skill, the ingenuity and the collective wisdom of all interested parties."

This is particularly the case in light of the fact that South Africa is in the grip of an emergency with regard to the generation and supply of electricity. Therefore unless drastic interventions and sacrifices are made we are going to be in this dire situation for many years to come. In order to respond to the emergency we have established the National Emergency Response Team (NERT) – a partnership between governments, business, labour and civil society to mobilise all these sectors and ensure that all South Africans respond to the emergency.

We will introduce interventions such as energy efficiency and demand side management, accelerated co-generation, use of renewable energy sources as well as a concerted public education campaign.

Chairperson, that it can't be business as usual, is no longer a cliché. Our circumstances call for the strange combination of the daring and the caution of a high-wire trapeze artist. We have no choice but to achieve our target. Failure to do so will have consequences that are too ghastly to contemplate.

Electricity distribution

A recent National Energy Regulator of South Africa 's (NERSA's) audit paints a dim picture of R7 billion maintenance and infrastructure backlog in our distribution network - which is increasing annually. That concerns me gravely. We have commissioned Electricity Distribution Industry (EDI) Holdings urgently to analyse this untenable situation and suggest some solutions.

Yesterday and today we are hosting a maintenance and distribution summit with the aim of discussing, with all the role-players, issues bedevilling this important tier of the electricity industry. It is clear to us that filibustering must stop. The deep and isolated pockets of resistance must be eliminated so that real commitment can be displayed by all so that we can achieve the capital and infrastructure investment the sector needs in order to create six viable, integrated and dynamic Regional Electricity Distributors (REDs).

EDI Holdings and my department have visited all the nine provinces and we are heartened by the support we have received, 121 of the 187 municipalities that distribute electricity have to date signed co-operative agreements with EDI Holdings.

Also on this issue, four metros out of the six, Eskom and 13 other municipalities have completed the process of ring-fencing their electricity distribution businesses. May I take this opportunity to express my appreciation to all the premiers, MECs, mayors and officials involved in this transformational and developmental step.

Integrated National Electrification Programme

The absence of bulk infrastructure, especially in rural areas has put a strain on the delivery of the electrification programme. Last year an amount of R 282 million was set aside for bulk infrastructure developments, resulting in a reduced number of connections planned for the year. This year, once more, out of R1, 4 billion allocated for household electrification, a further R380 million has been set aside for the building of 10 substations with primary emphasis on the provinces with the least development, namely Limpopo, KwaZulu-Natal (KZN) and the Eastern Cape.

This year we will electrify 150 000 households, 2 500 schools and improve the quality of electricity supply in preparation for the year 2010 and beyond. We have eradicated the backlog of electrification of clinics and aim to achieve universal access to schools by end of the 2009/10 financial year.

Out of the current electrification expenditure of R1, 4 billion, R894 million was utilised for empowerment initiatives. Of this amount, 52% was spent on Black Economic Empowerment (BEE) Companies. These figures reflect a positive commitment towards the socio-economic upliftment of the Historically Disadvantaged South Africans (HDSA), especially women.

Last year a total of 5 594 jobs (479 women, 146 disabled and 3 661 youth) were created through the electrification programme. As far as learnerships are concerned we exceeded our target and reached 1 599.

Liquefied petroleum gas (LPG)

We are increasing the sources of introducing natural gas into the South African economy for thermal applications of energy. This will be a long journey. We will start with liquefied petroleum gas (LPG), followed by liquefied natural gas (LNG) and hopefully ending up with natural gas from our own shores or our neighbours.

Current LPG retail prices are too high. This has prompted us to investigate an appropriate and cost effective way to deliver LPG to our people. We have embarked on pilot programmes in partnership with municipalities.

We launched two pilot projects in Tshwane and Mpumalanga. With regard to the Atteridgeville (Tshwane) project we aimed to connect 20 000 households, but to date more than 18 252 household have been connected. The Thembisile (Mpumalanga) pilot project has connected over 8 616 households. A total of 26 868 have been connected to LPG and 3 132 are still outstanding. This demonstrates that the LPG uptake is on the increase and that households are keen to use it. My department has developed draft regulations in respect of the maximum retail price of LPG supplied to residential customers. The objective of these regulations is to regulate the price of LPG to make it more affordable for households. These will be promulgated during this financial year.

We intend developing this pilot into a fully-fledged project and expand it throughout Atteridgeville. We will also start a new pilot project in Mamelodi which will be based on natural piped gas taken from the Sasol pipeline running past the township.

Energy security

The demand for petroleum products in South Africa has grown by 12% in the past four years and it is likely to grow even more as government's plans to accelerate economic growth bear fruit. This means that the infrastructure for the storage, refinement and transportation of these products has to be expanded.

As government, we fully endorse Petroleum, Oil and Gas Corporation of South Africa (PetroSA's) plans not only to explore our coastlines to ensure gas supply for the Mossel Bay refinery and industry but also to build a mega, world-class crude refinery at Coega. The Coega refinery will have a capacity of producing 400 000 barrels per day. It will create 8 000 direct and 39 000 indirect employment opportunities and once commissioned it will bring much needed commercial activity to that part of the country.

Accordingly PetroSA has advanced plans to import LNG for power as well as fuel production. This step will go a long way towards establishing a viable gas market in South Africa.

Safe paraffin appliance pilot project

As we talk fuel supplies, we dare not forget the equally important issue of safety that must go with their provision. My department, through the Central Energy Fund (CEF) has commissioned an external organisation to conduct a safe paraffin appliance pilot project in selected areas. The main aim of the project is to test the robustness and safety of newly designed, table height, paraffin stoves to minimise accidents associated with the handling and usage of paraffin-fuelled and related appliances. The results of the pilot study will feed into the South African Bureau of Standards (SABS) paraffin stove standards that are currently under review.

Also on the safety front we, at the DME, in collaboration with municipalities and other stakeholders, will embark on a paraffin awareness campaign in the next few months to educate communities on how to handle and use paraffin appliances. The campaign will take a holistic approach to communicate various messages related to energy such as alternative energy sources, energy efficiency and safety issues.

Integrated energy centres

One of the many approaches that we have developed is aimed at addressing energy poverty through deliberate interventions in the 2nd economy. This we seek to achieve through such interventions as the Integrated Energy Centres (IeCs) programme. This is a one-stop energy shop owned and operated by the community co operative and organised as a community project. We are partnering with relevant stakeholders, private sector, municipalities and communities in establishing these centres. This is a public-private partnership (PPP) venture. PetroSA has joined Sasol and TOTAL South Africa as our partners in this regard.

These are:
* Kgalagadi and Moshaweng in Kuruman
* Mutale in Thohoyandou
* Caba Mndeni in Matatiele
* Ratlou in Makgobistad and
* Eshane in Greytown.

These have been operational since we initiated this programme a few years ago.

Eight other IeCs are at different stages of development and these are:
* three in the Eastern Cape, Qamata, Mbizana and Qunu,
* three in KZN, Amajuba, Zululand and Mbumbulu,
* one each in the Free State, Qwaqwa and Western Cape, Lainsburg as well as Mpumalanga in Bushbuckridge.

Mine health and safety

The recent tragic accident at the Goldfields' South Deep mine has once again focused the attention of the entire nation on the appalling state of safety in the mining industry. Since the beginning of this year to the end of May we have lost 71 mine employees compared to the same period last year where we had 103 fatalities.

This figure excludes hundreds of people who have been permanently maimed during mine accidents. I have repeatedly expressed my extreme displeasure in the many interactions I have been having with the mining industry. They (mining companies) should not and cannot put profits before human lives. We expect chief executive officers (CEOs) of mining companies to take personal charge and responsibility with regard to safety in their operations.

We are currently reviewing the Mine Health and Safety Act to improve sanctions for non-compliance and extend the application to cover corporate bodies. The Bill will also establish the mine inspectorate as an entity of government to help us to deal with the acute skill shortage in this area. This review will effectively regulate occupational health and safety at mines.

The Bill empowers the Mine Health and Safety Council (MHSC) to appoint its committees to deal with current and emerging sector challenges. This review will enhance the effectiveness of council as an advisory body on mine health and safety.

Meanwhile, the safety audits conducted by our mining inspectorate on the instruction of President Mbeki attest to a dismal and abysmally dark side of our mining industry. The Mine Health and Safety Inspectorate (MHSI) will be finalising its report for submission to the President soon. The report will be completed before the end of the July. This cover the findings and recommendations from the audits conducted on the 333 high-risk mines that were identified and targeted.

Mineral and Petroleum Resources Development Act (MPRDA)

In the same vein we are pleased to report that as a consequence of this act employment figures have now breached the half a million mark for the first time in many years. When this Act was passed there was one junior mining company. There are now 21 junior mining companies.

With regard to social and labour plans, it is our desire to ensure that, in conducting their operations, mining companies, do not exclude communities residing in the affected areas. We intend to enforce the letter and the spirit of the law. This we shall do without fear or favour. History has charged us to be pioneers in the service of the people residing in areas where mining activities take place. We have to implement the injunction of the Freedom Charter that, "The people shall share in the wealth of the country."

Rehabilitation of ownerless and derelict mines

We have been assigned with the responsibility to reduce government's environmental liabilities as a result of pollution emanating from the unrehabilitated derelict and ownerless mines. Last year 13 projects were executed with a budget of R55 million. The focus was on the asbestos mines because of the potential health hazards posed by these mines.

The conversion of old-order mining rights still remains a challenge. We have finalised 24% of the applications that we have received. This has been due mainly to compliance challenges in respect of the Mining Charter. In order to improve the levels of compliance and expedite the process, we are holding monthly workshops with mining companies.

With the implementation of the MPRDA and the Mining Charter, there is an increase in the number of women participating in this industry (although a lot still needs to be done).

The most significant transactions approved recently saw the creation of black owned companies. Anglo Platinum sold a majority stake in the Lebowa Platinum Mines to Anooraq, a Historically Disadvantaged South Africans (HDSA) controlled company. This makes Anooraq the third largest producer of platinum in South Africa. Furthermore, Anglo Platinum sold its 22% shareholding in Northam to Mvelaphanda Resources, making Northam a black owned and controlled mine. Anglo Platinum also sold 50% of its stake in the De Brochen Project to Mvelaphanda making this project a 100% HDSA controlled.

In relation to coal, Anglo Operations through Anglo Coal, facilitated the creation of a new coal company, Anglo Inyosi Coal, wherein HDSA own 26% of its equity. Kgalagadi Manganese is 80% owned by an empowerment company, Kalahari Resources, will be developing a mine and a sinter plant at Hotazel in the Northern Cape.

A number of community projects have been approved, wherein communities are holders of mining rights. Some examples of these are the following Itereleng Bakgatla Resources, Marula Platinum as well as Lesizwe Platinum.

We have beefed up our ability to enforce compliance. We have conducted 10% of the planned inspections. Last year we achieved our target with 1 865 environmental inspections conducted as a consequence of which we cancelled rights of the companies that were not complying with the terms and the conditions of their rights.

Mineral Policy and Promotion

We have continued to support the small, medium and micro enterprise (SMME) sector through small scale mining and beneficiation projects. Last year 38 SMMEs were supported by way of financial and technical assistance. We are doing this through the Small Scale Mining Board funds.

We recently launched a small scale mining project in Kgautswane, Limpopo, which has the potential of employing ± 100 people. The number of women employed in the mining sector increased to 24 876 in 2007, representing five percent of the total workforce in this sector. The department is also pleased with the outcomes of its pilot projects on careers in mining.

During the financial year feasibility studies were concluded for sixteen viable beneficiation projects, including the Olifantsfontein Jewellery Cluster - which is a Private Public Partnership (PPP) Project. This cluster will be made up of a profit driven jewellery design and manufacturing facility, internship training for post-graduates as well as an incubation system for SMME development. The cluster will provide a secure environment with the necessary infrastructure and technical support where the trainees and SMMEs will benefit from the centralised services.

The DME has continued to support the Kgabane Jewellery Project. R2, 8 million was transferred to the project last year for advanced training, product development and marketing. We have begun a process to transfer this project to Mintek.

We also launched the Gold Chain Technology Project in the Northern Cape in May. This project speaks to both the issues of beneficiation and skills development.

The South African Diamonds and Precious Metals Regulator (SADPMR) and the State Diamond Trader (SDT) were officially launched in February 2008. With the launch of the two entities there is an increase in enquiries and applications in relation to diamond cutting and polishing projects. Accordingly we will move with speed to ensure that the involvement of the three spheres of government as well as development finance institutions.

We have also embarked on a project to close unsafe shafts in the Witwatersrand Basin. Most of these shafts are located within the informal settlements and pose serious health and safety risks to the affected communities. Since the start of the project we have closed 108 shafts and we employed about 50 local community members as part of this project.

Social and labour plans

We commend companies that are taking active steps in this regard and encourage those that are not doing so proactively to take steps to improve the social conditions of the affected communities. We are aware of the problems that have been reported in some communities relating to mining. For an example last week, there was a march to my regional office in Limpopo where the community handed a memorandum with demands relating to mining in Maandagshoek. As a department we take the issues raised by the community very seriously and we have undertaken to deal with them as a matter of urgency.

I had the privilege to officiate at the formal opening of a women dominated brick making venture flowing from the social and labour plan commitments of Lafarge at Engcobo in May.

Youth and women empowerment

We have continued to implement a number of programmes specifically designed to benefit vulnerable groups in the country.

We have continued with training interventions in niche areas of beneficiation particularly stone setting in jewellery manufacturing to alleviate the shortage of skilled labourers in the jewellery manufacturing industry.

We hosted in November last year the Women in Mining Colloquium in order to deliberate on issues and challenges facing women entering the mining sector. For almost two years (2006 to 2008) we run a sustainable development project where women and the youth were targeted for training and skills development in beneficiation, mining and rehabilitation. The mining communities in Griekwastad, Prieska and Kuruman participated in this project. Training in the Free State and Limpopo focused on crushing of waste rocks to produce aggregates for the construction industry. Approximately 173 beneficiaries were trained, 54% of whom were male and 46% female.

As part of our outreach programme, we have organised information and awareness campaigns in all the provinces, focusing on opportunities within the minerals and energy sectors. Further to facilitating the participation of women and youth in the minerals and energy sectors, we have facilitated the creation of the Youth in Energy and Mining (YEM) organisation, whose objective is the facilitation of the youth in economic empowerment projects. We will continue to work with other youth structures such as the Umsombovu Youth Fund (UYF), with a view to diversifying opportunities that are available to young people of our country.

People issues

We continue to implement with vigour internship programmes. A total 392 interns have been enrolled in the department this year. This is an improvement from the 253 appointed last year. Seventy five (75) of these interns are part of the Integrated National Electrification Programme (INEP) Training Programme and are placed within the municipalities, 28 interns are placed with Gold Fields and two interns are to be placed at Mintek.

Last year we spent R16, 049 168 on skills development interventions. This year we have granted 117 bursaries to our employees. A furthermore eight South African Citizens have been granted DME bursaries to further their studies in Nuclear and Radiation Sciences.

Conclusion

I must express my sincere appreciation to all those that I have worked with in this portfolio. I want to thank the Director General Advocate Sandile Nogxina and the rest of the department for the excellent manner in which they have carried out their functions. I want to thank members and the leadership of the labour movement especially the National Union of Mineworkers for the excellent working relationship we have had since my arrival two years ago. Finally, let me thank the honourable members of this house for their continued support.

I commend my budget for support.

Issued by: Department of Minerals and Energy
10 June 2008