Speech delivered by the Honourable Ms Susan Shabangu, MP and Minister of Mineral Resources, at the Africa Down Under Conference, Perth, Australia, September 1 2010

Programme Director,
Ministers present,
Your Excellencies,
Distinguished guests,
Ladies and gentlemen

I am honoured to be an invited guest to this prestigious event, which brings together a high calibre of international delegates from the mining industry with particular interest in Africa. It is therefore fitting for me to take a moment to congratulate the organisers of the Africa Down Under Conference for continuing to facilitate this high level forum of information sharing and knowledge exchange among stakeholders in the global mining industry.

The world-economy is steadily recovering from the financial crisis of 2007-2009. The global mining industry was severely affected by the financial crisis, leading to a sharp decline in most commodity prices resulting in significant deterioration in the economic outlook for mining countries in the short term.

There are growing signs that this financial crisis is coming to an end. However, sections of the global economy remain vulnerable to financial and fiscal stress. Despite such concerns, as indicated in the recent PriceWaterhousecooper's publication, Mine 2010: Review of Global Trends in the Mining Industry, the global mining industry is Back to the Boom. Markets have strengthened, with nearly all minerals and metals prices at levels significantly above their long run historical trends. These conditions have laid a solid foundation for the next upswing in the global mining industry.

To take advantage of the opportunities created by the emerging boom in the minerals and metals sector, mining countries all over the African continent have had to rethink their mining and economic policies in order to create an environment more conducive to investment.There is greater realisation among African leaders that mining can be a catalyst for Africa's economic growth and social development, and that the continent requires more investment and trade rather than aid to stimulate its socio-economic development.

As a result, a number of African countries are devising policies and strategies to encourage private sector participation and to attract new capital investments into their mining industry. This, coupled with the end of wars and internal conflicts in a number of key resource rich African counties, has resulted in the intensification of competition for mining investments in the continent.This is a welcome development.

South Africa acknowledges that it must remain internationally competitive in order to attract and retain mining investment. To this end, we have introduced a number of interventions designed to improve the global competitiveness of our mining industry and to ensure that the mining industry continues to make a meaningful contribution to the sustainable development of our economy.

At the beginning of this year, my department embarked on a major re-engineering initiative to streamline our licensing administrative processes. This exercise sought to improve our turn-around time in issuing licenses, achieve more transparency and root out any potential for maladministration and corruption in the system. In this regard, we have committed to reducing the turn-around time for mining rights applications from the current 12 months to six months, while prospecting right applications will be reduced from six to three months.

The re-engineering exercise coincided with a major project that my department and sister departments have undertaken in partnership with mining industry stakeholders (trade unions and industry associations) under the auspices of the Mining Industry Growth, Development and Employment Task Team (MIGDETT). The project has sought to explore with all the leadership of the mining industry a broad range of issues aimed at promoting the sustainable growth and meaningful transformation of the industry and provided a platform for debating the many obstacles that limit South Africa's mining industry to make a meaningful contribution to the sustainable development of our economy.

As their point of departure, the leadership of the mining industry had agreed that there was an urgent need to grow and transform the mining industry in a manner that would meet the expectations of the industry's stakeholders, investors and our country's citizens. The leadership also recognized that transformation and global competitiveness were inseparable and mutually reinforcing. This is the perspective that informs our programme to enhance the industry's global competitiveness.

We are committed to arrest the declining trend in the mining industry's contribution to the national economy, which has become a source of grave concern among industry stakeholders and government.Our collective project has culminated in the formulation of a strategy for the sustainable growth and meaningful transformation of the mining industry, which has identified a number of constraints that need to be overcome to put the industry on a new long-term growth path. This has enabled us to craft a holistic plan to ensure that the mining industry develops on a sustainable basis and that the economy is able to fully benefit from the country's mineral resource base.

As we are all aware, infrastructure is one of the key drivers of competitiveness with material impact on the potential growth of the mining sector. However, shortages of critical infrastructure such as rail, ports, electricity supply can act as constraints to further growth. To overcome this challenge, South Africa's mining industry stakeholders have established an Integrated Long Term Infrastructure Planning Mechanism for the mining sector, evaluated short to long-term infrastructure requirements of the envisaged growth path of the mining industry and engaged the relevant national authorities with a view to ensuring that the mining industry's infrastructural needs are taken into consideration when planning for future economic expansion is considered.

Demand for mineral resources is projected to grow into the future and will in turn determine the rate at which these minerals are extracted. However, mining can be harmful to the environment if not managed and carried out in a manner that promotes the sustainable use and exploitation of the resources. Carbon dioxide and methane emissions have doubled since the evolution of mining in South Africa.

The ever increasing consumption of water and energy resources needed to extract minerals and metals, as well as the increasing pollution generated by the extraction processes, are real constraints to sustainable mining. For the industry to prosper and reap benefits from the projected demand, it is imperative that certain changes are effected in the way we conduct mining and that mining technology needs to move towards a green economy paradigm.

To assist the industry to move towards the new paradigm and to ensure that our mining activities do not compromise the ability of future generations to meet their needs, the South African mining industry is developing and implementing a National Action Plan for the management of acid mine drainage, adopting a regional approach in dealing with integrated and cumulative environmental impacts resultant from mining, embarking on research and development initiatives directed towards mine closure efficiencies and mining environmental legacies, strengthening linkages of mining with other industries to ensure sustainable mining ‘beyond a hole in the ground', andworking towards the development and effective implementation of the ‘Mining Vision 2030'.

If South Africa is to succeed in extracting maximum benefit from its mineral endowment, it must do business differently. We cannot continue to mine and export ore and other raw materials for processing elsewhere, as this limit 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 industrialisation priorities.

The value addition or local beneficiation proposition is a natural progression from a resource-based economy to a secondary and tertiary economy. This is in line with the developmental path of many developed economies in the world. Moreover, this will present enormous investment opportunities in the country for both South African and foreign investors.

It is very gratifying to note that there is general support for local beneficiation, which is designed to unlock the intrinsic value of South Africa's minerals. We, however, need to enlist the support of strategic international partners to facilitate skills and technology transfer for the benefit of local beneficiation. We shall be engaging our international allies, including Australia and other countries, regarding our proposals for beneficiation.

Our quest to build the global competitiveness of our mining industry has forced us to re-examine the transformation commitments we made when we adopted the Black Economic Empowerment (BEE) Mining Charter in 2004. I am happy to report that my department has completed the Charter review exercise and the outcome of the review will be released within the next month or so.

The shortage of skilled human capital, particularly of mining engineers, technicians and inspectors, not only poses a major threat to the sustainable growth of the South African mining industry but also contributes to the fatalities and injuries sustained in the industry. In consequence, we have had to seriously examine our options in order to find effective solutions to deal with the challenge of skills shortage.

In this regard, my department is implementing a new Human Resource Development Plan that addresses the severe shortage of inspectors.These include bursary schemes and learnerships as well as internal training programmes. The Mining Qualifications Authority has started the implementation of training programme for more than 100 mining inspectors. Simultaneously, in partnership with one of our universities, we are currently rolling out the mine inspector training programme as a long-term measure.

The Australian Minister for Trade, Honourable Simon Crean, whom I had the privilege of meeting in South Africa early this year, has agreed to cooperate in the area of skills development. We appreciate Minister Crean's commitment in this regard. Technology and skills transfer are central to building a resilient mining industry, which will ultimately help social development and benefit the investor community.

I am mindful that over the past few weeks or so, media reports and comments from analysts and other observers have expressed negative sentiments about our regulatory framework due to the prospecting rights that my department has awarded to two small companies.A number of unfounded allegations have been made in relation to the awarding of these prospecting rights, which have fuelled perceptions of maladministration and/or incompetence on the part of my department.Needless to say, these allegations threaten to tarnish our country's mining reputation and have created perceptions of uncertainty about our regulatory framework.

I have carefully examined these allegations and found no evidence of maladministration or irregularity in the manner in which these two prospecting rights were granted. However, I have discovered that the Mineral and Petroleum Resources Development Act (MPRDA) of 2004, our principal Act, contains a number of ambiguities. In general, we have found that some of the provisions of the law are open to multiple interpretations.

It should be noted that the MPRDA is a fairly new piece of legislation. As a result, there is no well-developed jurisprudence around the MPRDA which could assist with interpretation of the law. In the absence of such precedents, officials have commonly applied the letter of the law as opposed, for example, to interpreting the spirit or intentions of the law. This has proven to be a major source of differences in interpretation between the officials and some industry players, thus engendering allegations of corruption and maladministration.

In order to address these weaknesses in our regulatory framework, I have directed a joint Stakeholder Task Team to identify all the amendments that need to be effected in the MPRDA. These will be submitted to Parliament for processing soon.

With effect from 1 September 2010, information on the status of applications for exploration and mining licences will be accessible on the Department's website. This is in the interest of promoting transparency and ensuring that all stakeholders, including members of the public, will have access to our new electronic administrativesystem. In the interim, my Department has developed a totally new, integrated system of ‘licence-process-tracking' which will be ready for public access within the next six months.

I have also imposed a six month moratorium on the receiving of prospecting applications. This is intended to provide us with the opportunity to complete a comprehensive audit of the licences granted since the promulgation of the MPRDA. This will further enable us to clean up our database, thus paving the way for the incorporation of uncorrupted data into our new integrated electronic application administrative system.

I am confident that these measures and a host of others that we have introduced to deal with ambiguities in our law will produce the desired results and ensure that South Africa continues to rise in the global rankings as a reputable mining jurisdiction.

As government, our resolve is to continue building, through a dynamic and progressive regulatory framework, a resilient mining industry capable of competing with the best in the world.South Africa has the potential to be a mining investment destination of choice. We are committed to achieving this goal. And we invite you to support our endeavour to nurture a competitive, growing and transforming mining industry that meets the expectations of the industry's stakeholders, investors and our country's citizens.

I thank you.

Issued by the Department of Mineral Resources, September 1 2010

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