Address by Hon. Minister Susan Shabangu, MP and Minister of Mineral Resources, at the Annual General Meeting of the Chamber of Mines
6 Nov 2012
The President and Chief Executive of the Chamber of Mines,
Members of the executive council,
Distinguished guests,
Ladies and Gentlemen
The overarching theme of my address this morning is about the journey of collaboration we have to traverse collectively to tackle the challenges that continue to confront us as stakeholders in the industry. We meet at the time when the industry is confronting unprecedented levels of unrest in the industry under the democratic dispensation. These moments are reminiscent of the dark days of the mineworkers' action of 1987, and few more that preceded, all of which were directed towards ensuring that the dignity of mineworkers is restored.
Today, we have the benefit of hindsight and jurisprudence, on the basis of which we can critically retrospect and introspect the efficacy of our collective journey under the government of the people that sought to build a sustainable and relevant mining industry in a democratic society.
This industry was a trailblazer for transformation in the country, with the sector's regulatory reform and the introduction of a sector charter at the dawn of the millennium. The South African mining industry has changed significantly since the early 1990's when a handful of corporations dominated mining activities in the country. At this time, the industry was still in the grip of political sanctions imposed on the country by the global community, which had forced the industry to pursue growth opportunities within the domestic economy.
You may recall that the dual ownership of mineral rights system, then in place, enabled the large dominant companies to hoard substantial mineral assets, restricting access of new players to exploitable minerals. With long term plans for mining held in safe custody these dominant groups played a significant in marginalising potential players in the industry - they in fact monopolised the mining industry and eve some of the associated industries.
By the mid 1990s, however, a new democratic dispensation paved the road for the stranglehold on the range of economic activities to be lifted. As a result, major mining companies began re-assessing their priorities and activities, which resulted in unbundling and divesting from "non-core" industrial-related projects and a new drive to search for mining opportunities in the rest of Africa and elsewhere in the world.
Despite the attrition and the disappearance of many once large and dominating entities, our mining industry has performed reasonably well since the dark days. For instance, a cursory examination will demonstrate that there have been significant increases in cumulative capital investment in mining and the volume of commodities produced for sale on world markets and the total sales value of these commodities have increased by noteworthy proportions in real terms since 1991.
The central pivot of all mining and mineral industry transformation is the Mineral and Petroleum Resources Development Act (MPRDA) of 2002, promulgated on 1st of May 2004. The main revolutionary change introduced by the new law was that mineral resources should be vested in the State. Furthermore the new law embedded the principles of security of tenure, environmental stewardship and social responsibility. The other main principle is the requirement that the industry undergoes transformation and provides opportunity for the previously disadvantaged.
Accordingly, the promulgation of the MPRDA introduced an important document essential to the transformation process, namely, the Broad Based Socio-Economic Empowerment Charter, or the Mining Charter as it is widely known.
We have come a long way since the implementation of the Act and the Charter. There success that can be pointed out - however, I am sure most of you will agree with me when I say that there are still major challenges that we are facing. As regulators, we have acknowledged this and believe that we need to enhance the legislation. You would also appreciate that policy and legislation are issues that have to be continuously monitored and updated. It is precisely for this reason that we are finalising amendments of the MPRDA, benefiting from a decade-long jurisprudence, to, amongst others, strengthen the construct to remove ambiguities inherent in the law, streamline licensing processes, and enhance provisions for sanctions to non-compliance. We have evaluated the negative effect of fragmented approach to licensing requirements for mining, as a result of which my colleague Minister of Water and Environmental Affairs and I have initiated a process towards an integrated licensing approach in government.
Our respective officials are already at an advanced stage of finalising recommendations for the "one-stop shop" approach to licensing requirements for mining, including both environment and water requirements, which is aimed at rationalising this process, enhancing turn-around time.
This process is needed in order to ensure the future health of our industry, which is particularly fortunate to have such an exceptionally diverse and immensely rewarding mineral endowment.
This only demonstrates the proverbially long and arduous road we have travelled collectively. You would also recall our intense process of engagement, which culminated in the commitments towards the stakeholder pact in June 2010, i.e. the declaration of stakeholders. This declaration became the foundation for the revision of the mining charter and the development of the mining strategy in the same year. The former was augmented with clarity of the scorecard, which delineated targets we are working towards in 2014. It is my firm belief that what we have achieved in re-formulating mineral policy, legislation and ultimately regulation will eventually be judged as an honest and realistic attempt to redress inherited legislation that was patently unjust and out of kilter with equivalent rulings in Africa and elsewhere in the world.
Although we have progressed well on reformulation of the regulatory framework, we place have to place much greater emphasis on accelerating implementation with tangible results.
The annual progress reports indicate that the cumulative annual investment in skills development by the sector has reached 4.6% of total payroll, excluding the statutory skills development levy. Given the size of the payroll of the industry, this reported percentage expenditure is not insignificant by any imagination. However, a significant number of mineworkers remain unskilled and the industry is reeling from severe shortages of skills required to grow it. This observation confirms a contradiction that necessitates that we re-evaluate our skills development initiatives to ensure that they are indeed responsive to the needs of the industry.
I am also informed that the industry losses more than half of technical graduates in the first five years of employment to other sectors of the economy. This figure increases to above 70% in 10 years of employment. Introspection is necessary to evaluate ourselves and determine why we are unable to retain the very skilled workforce we need to secure our future.
The well entrenched migrant labour system remains applicable in the mining sector today as it did when the Land Act of 1913 was introduced to force Black South Africans to service the mining industry. We know how this system has destroyed families, became a breeding ground for disease and created all sort of social ills. It is therefore imperative that this sector modernises to be consistent with the attributes of a normal society we are seeking to build. I am encouraged by the targets set in the mining charter amendments that seek to eliminate the apartheid styled living conditions of mineworkers and encourage you to work harder to increase the pace of implementation.
Despite an attractive geological terrain for exploration, we have unfortunately lost eminence in the exploration activities and associated expenditure in the past decade or so. It is important for the industry to secure its future through activities that will ensure discovery of new deposits. To this extent, my department is working with the relevant science councils, including Mintek and Council for Geosciences, to ensure that we can create an enabling environment for exploration and scientific research to thrive.
The empirical evidence before us indicates that research and development for mining has been steadily declining over the past years. The research facilities that were installed to support the century-long of mining have dissipated, while our traditional mining research institutions of higher learning are battling to survive. I implore you to do everything in your power to work towards restoration of the research and development prowess we were once proud of, which will enable the sustainable growth and meaningful transformation of the sector.
I cannot emphasise the need for the sector stakeholders to work towards production efficiency and competitiveness of the sector. We can only achieve this objective if our mineworkers are proud shareholders of the very means of production they work tirelessly to exploit and their working and living conditions resonate with the production pressures we expect of them. We would also achieve this if our host and major labour sending areas are visible beneficiaries of the industry.
At the same time, we have to act in concert with the notion of allowing the industry to become an anchor for the industrialisation of the economy and a stimulus for associated industries such as specialised services, consumables and capital good.
This industry must use its creativity to leverage the procurement strength in support of local manufacturing, which will compliment and accelerate the socio-economic development priorities needed to address poverty, unemployment and inequality.
Notwithstanding tremendous progress made by the industry on health and safety matters in the past few years, I remain gravely concerned about the performance of some sectors, especially the platinum sector. It is clear that we have to do much more to improve both fatalities and occupational diseases in the industry through our intensified programmes. The department is also reviewing the Mine Health and Safety Act to create an enabling regulatory environment to speed up our efforts to continuously and massively improve our collective performance on health and safety in mining. I implore you to strengthen your resolve towards a "zero harm" industry.
It is my conviction that we must focus on a number of areas to be responsive and enhance our readiness to contribute towards additional creation of decent employment in the following areas:
- The procurement of goods and services from local sources that manufactures in South Africa;
- Aggregation of social development requirements (Social and Labour Plans) to meaningfully increase the footprint and impact of the industry towards development requirements;
- Utilisation of South African based facilities for analysis of all samples across the commodity value chain from exploration, through mining and metallurgy to value addition - this requirement will resuscitate the analytical facilities that were developed to support the mining industry prior to the democratic dispensation, which have emigrated to offshore;
- Execute concurrent mining rehabilitation, where possible, to bring forward post mining rehabilitation responsibilities and ensure sustainable land use; and
- Support for mineral beneficiation, as contained in the strategy that was adopted as policy last year.
At its inception, the chamber was created within a specific context, which defined its content and structure to pursue its mandate. The dictates of constant change have actuated global dynamism, which requires agility to adapt to the constantly changing operating environment. The political changes in South Africa aggravated the pace and form of this notion of constant change, to which none of us can continue to be as glaringly oblivious.
Our pride in the mining industry and its contribution to the country's economic development dictates that we must protect it with our lives. To this extent, urgent change in the content and structure is necessary for us to remain relevant. The nature and character of this change must be informed by the prevailing context of socio-economic and political transformation. The change must be tangible, have substance and content, but most certainly not artificial change disguised as fronting.
We have pockets of excellence in our cooperation and collaboration as stakeholders. In the past, we created collaborative structures responsive to specific challenges, which have worked exceptionally well. I recall the time of the gold crisis as well as the mining charter crisis when such structures delivered results successfully, but were disbanded as soon as desired results were achieved. The recent example of this collaboration is aptly captured in our collaborative work of Mining Industry Growth, Development and Employment Task Team (MIGDETT), the Mining, Growth, Development and Employment Task Team, which is constituted by us as Government, business and organised labour. As you know, MIGDETT constitutes our collaborative response to the vagaries of the financial crisis and has borne good results with job losses contained to a figure much less than originally forecasted.
There are many challenges that still face the mining industry today, which require everlasting cooperation and collaboration among stakeholders. It is a long held view of my department that we need to work closer with our stakeholders and to create a thriving climate for the mining industry. I am convinced that as you deliberate during your Annual General Meeting (AGM), you will be redefining your content and structure and ensuring that it becomes relevant to today's context. There is room of coexistence among us as stakeholders, brought together by a common dynamic. I look forward to meeting the new leaders of the Chamber, post this AGM.
I call upon you as a collective to stand up and be counted as mercenaries of sustainable transformation and growth. Let us work towards a common vision as contained in our most recent pact of 2010, duped the "declaration for sustainable growth and meaningful transformation of South Africa's mining industry".
I challenge the incoming leadership of the Chamber of Mines to work towards reversing the effects of the Land Act of 1913 that became the basis of continued repression of marginalisation of the majority to the benefit of the its members at the time. It would be wonderful for the Chamber to stand up next year and say, "hundred years later, we have moved towards total eradication of the policies of despotism to reclaim our legitimacy to the democratic society of South Africa".
I thank you.
Issued by Department of Mineral Resources, November 6 2012
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