Address by Ms Susan Shabangu (MP), Minister of Mineral Resources, at The New Age business breakfast, Sandton Convention Center
3 Sep 2012
Programme Director, Peter Ndoro
The Editor and staff of New Age newspaper
The leadership of organised labour
The leadership of business
Honoured guests
Ladies and gentlemen
It was just over a year ago when I presented my inaugural address to your very first business breakfast in August last year. We have traversed a long journey since, and I am reasonably pleased with the steady progress and the inherent gains of this process towards the ultimate intent of building a truly democratic, non-racial, non-sexist and a thriving society. I am equally not oblivious to the fact that this process is not without challenges, which require constant nurturing and curative measures from time to time.
The ANC policy conference of June this year unambiguously recommended greater State participation in the economy, consistent with the developmental State agenda of the movement adopted in its 52nd Elective conference in December 2007. We have established a State Owned Mining Company by resuscitating the African Exploration, Mining and Financing Company (AEMFC) that was instituted as a subsidiary of the Central Energy Fund (CEF).
The Cabinet of South Africa has endorsed the process of hiving off the AEMFC from the CEF and establishing it as a standalone State Owned Mining Company. We are finalising modalities of hiving off the AEMFC and resourcing it appropriately to be optimally functional. This company already holds several prospecting and a mining right in the country and has launched its first coal mine in 2011. The State Owned Mining Company is already operational and its creation is supported by many mining industry stakeholders.
The dawn of a democratic dispensation represented a true beacon of hope to most South Africans, especially the majority who have been precluded from participating and benefiting from economic activities within their own country for centuries. These ordinary South Africans, who work tirelessly to make the country work, continue to live in anticipation that their livelihood will change for better in a democratic dispensation. We continue to harbour this hope that the generation of our children and generations thereafter, would not be subjected to the same working and living conditions that we endured.
It is these ordinary South Africans who stood patiently in long queues to cast their very first vote for a democratic government that will bring meaningful changes to their lives. They have voted three times thereafter to maintain this 18-year democracy. As they evaluate the progress and fruits of their democracy, some are beginning to wonder if indeed their livelihoods have not deteriorated further into the dungeons of poverty.
In my visit to Australia last week, I was informed that ordinary Australian mineworkers earn a respectable salary, live in decent conditions near operations, are provided with meals and modest recreational facilities, operate in safe working conditions and fly home every-weekend to their loved ones.
In fact, I am told that Australia is facing an interesting challenge of mass exodus of teachers and other professions that are joining the mining industry. Despite all the costs associated with providing a respectable working environment for mine-workers, the Australian mining industry still features among the most competitive mining jurisdictions. I am sure that there are important lessons to be drawn from the Australian experience.
In South Africa we have worked very hard with mining stakeholders to create an enabling environment for the mining industry to be competitive whilst simultaneously ensuring that there is meaningful transformation. The Drakensberg Mining Summit concluded a blue print declaration of commitment by stakeholders to the mining strategy for sustainable growth and meaningful transformation.
Further, the mining strategy was emphatic on symbiotic inclusivity of both competitiveness and transformation elements as the cornerstone for sustainability of the industry and that one element could not take precedent over the other. The work of this strategy has already advanced the acknowledgement of the industry as being amongst the top five priority sectors of government.
As such, the mining infrastructure requirement features eminently in the Presidential Infrastructure Coordinating Commission which coordinates the national infrastructure investment programme recently announced by President Zuma. These constitute examples of some significant progress on our collaborative work.
One of the critical components of the mining strategy pertains to proper realisation that South Africa must embrace local mineral value addition. Resultantly, my department has developed a minerals beneficiation strategy that was adopted as policy in June last year. We are now finalising the mineral beneficiation implementation framework that will give effect to the beneficiation policy. Let me demystify the myth that government intends to steer the mining industry away from its core business and coerce them to beneficiate minerals.
What we expect from the mining industry is to support the strategy and ensure minerals are available for beneficiation. It is proper that I commend some mining companies that have implemented agreements of the mining sector strategy. These companies are already enjoying the benefits of effecting meaningful transformation and becoming more competitive compared to their peers in South Africa and elsewhere.
Notwithstanding these gains, there are some observations of concern in the mining industry, some of which are:
- Although there has been an improvement on health and safety, the department is still greatly concerned with the fatalities, injuries and occupational diseases reported by the mining industry, especially in the gold and platinum sectors,
- The migrant labour system remains deeply entrenched in the industry with ordinary mineworkers resultantly leading dual lives,
- Labour sending areas are largely not benefiting from the mining industry and are generally treated as a postscript,
- Wage and salary disparities between the lowest and highest paid employees are reported to be outrageously high and this inequity grew much faster in the recent past, culminating in order of magnitudes of over 152 times in certain cases,
- The budget set aside and reported for Social and Labour Plan projects is consumed by never-ending work of consultants, many of whom know little about the conditions of life in poor communities. In fact, the development solutions for the poor are designed through a prism of a consultant's view, whose interest is only to make as much profit out this budget as possible,
- Most companies allocate their SLP expenditure as corporate social responsibility, as a result of which the SLP expenditure is automatically a subject of tax rebates. Effectively, this means that the people of South Africa are subsidising the mining industry for them to secure and retain their license to operate, while such expenditure only benefits a handful of traditional beneficiaries who remain unbelievably untransformed in most cases,
- There are continuing and escalating tensions between mines and host communities. Some of these tensions are created by some companies which don't endeavour to understand the communities they operate in,
- Appalling living and working conditions of mineworkers. In my view this issue contributes enormously to the many social challenges facing the mining industry today,
- Insignificant and declining investment in research and development by mining companies. Whilst this does not directly impact on social issues, it negatively impacts on the future sustainability of the industry,
- Persisting challenges of requisite skills in the sector, and
- Numerous fronting mechanisms employed to undermine transformation.
It is indeed my measured view that the afore-stated observations are telling. The transformation framework that identified elements of transformation was collectively developed by stakeholders, including labour and business. It is this transformation framework that was meant to give effect to the realisation of the democratic beacon of hope for ordinary South Africans, especially mineworkers and affected communities. What we need to ask ourselves is whether or not the implementation of this framework is achieving its objectives. I'll leave you to ponder the response thereto.
The unfortunate occurrence of the Marikana tragedy some two weeks ago, has added to the many historic "black spots" in our country especially in the mining industry. The Marikana issue should not be viewed in isolation to all other inadequacies of our beloved mining industry. Whilst we acknowledge the significance of the Marikana ordeal, it is apt for the industry to have a conversation about the underpinnings of such a problem, anticipate other potential challenges, and recommend a concrete plan of action that will ensure responsible action from all stakeholders. In brief, we need to address the root cause of the problem with urgency. I support and welcome the Presidential Judicial Commission of Inquiry on Marikana.
Ladies and gentlemen, it should not come as a surprise that workers are becoming increasingly impatient and societies alike are losing their faith in the tools we have developed for them to progress towards realisation of hope of systemic improvement in their lives. To what extent is this likely to threaten not only the very democratic gains of the past 18 years, but sustainability of the very mining industry in South Africa?
In my humble opinion, this is not a complicated question that requires overly academic debates - it is about going back to basics and doing the right things. On my part, I have finalised amendments to the MPRDA and they will soon be in Parliament, where the public will have an opportunity to comment. While we have focused on removing ambiguities in the legislation and streamlining our administrative processes, amongst others, we have also strengthened corrective provisions to non-compliance. The current provisions on sanction for non-compliance in the legislation have not been sufficiently corrective, other than the ultimate revoking of the license.
In evaluating the negative effect of fragmented approach to licensing requirements for a mining, we have initiated a process towards an integrated licensing approach in government, in conjunction with my colleague the Minister of Water and Environmental Affairs. Our respective officials are already at an advanced stage of finalising recommendations for the "one-stop shop" approach to licensing requirements for mining, which is aimed at rationalising this process and improving turn-around time. I must emphasise that the process will not compromise the protection of the environment. Environmental protection will continue to be an integral part of our mineral resources management.
I would also be releasing guidelines to the provisions of the amended mining charter soon, a document developed and agreed upon by all stakeholders in its revision in 2010. These guidelines will be intended to ensure that the reporting of all elements of the charter is appropriately streamlined across the industry. Whilst government will address the necessary policy loopholes, all stakeholders will have to play their part. In this regard I am expecting the leadership of business to come to the forth and responsibly steer the mining industry towards meaningful transformation and sustainable growth.
We need to build a mining industry that cares, a mining industry that is proud to be part of the transformation agenda of South Africa, because transformation is about bottom line and not just a compliance issue. Furthermore, and most importantly, we need to build a mining industry that investors would proudly claim association to. The foundation of such an industry should ensure that genuine and legitimate Social and Labour Plans are put in place.
Social and Labour Plans are intended to be a holistic programme whereby the resources in the ground are brought to account in a sustainable manner, which includes both the management of the labour force and sustainable re-investment into the local economy over the lifecycle of the mine. Resource depletion must result in the economic growth of the areas in which the mines are operating as well as the labour sending areas, in order to sustain the economy during and post mineral resources depletion.
Empowerment of the local and labour sending communities cannot be an afterthought matter. Mines must ensure that local procurement takes place to enhance economic activities and expand opportunities in communities. In this regard, these opportunities should contribute towards creation of decent jobs and widen scope for market access of South African capital goods and services. Human Resource Development, including employment equity are also vital components for the creation of a sustainable mining industry.
Accordingly, skills development programs must provide a variety of skills ranging from ABET, learnerships, portable skills, artisan training to provision of bursaries to both employees and community members. Career progression, internships and mentorship plans have to be put in place to ensure that workers are provided with the necessary support to achieve workplace diversification in terms of employment equity objectives.
There are transformation criteria and targets applicable which the industry must achieve by 2014, as set out in the scorecard. The tendency to opt for the path of least resistance and cosmetic transformation can no longer be tolerated by government. As a result, my department will be focussed on holding every company accountable to these targets. I call upon the investment community to increase their vigilance in evaluating the performance reports they receive from the industry captains and ensure that the return they receive and enjoy are not at the expense of workers and host communities.
Further, that the quality of leadership they charge with the responsibility of leading this industry is indeed reflective of their responsible investments with modest returns and contribution to broad development of traditional developing countries. I cannot emphasise enough that unless the mining industry can claim its legitimacy to all its stakeholders, namely investor, workers, host communities, host government, etc, it cannot claim its authenticity.
Consequently, the South African mining industry has to do more to claim such legitimacy and ensure long term sustainability of the industry. I do not wish to restate the elaborate process of cooperation we have embarked upon with mining stakeholders since 1994, as part of creating an enabling environment within which the industry would operate. It is our understanding that the process of collaboration with the industry was intended to champion the transformation character of a model industry we seek to achieve under the democratic State. We have indeed travelled a long journey to this point and I have all the confidence that this model industry is indeed achievable through this collaborative approach to development.
It is with utmost and grave concern that all this collaborative work is constantly met with pessimism by the very beneficiaries of this industry. I cannot help but wonder if the South African mining industry is subjected to a persistent and "Convenient Uncertainty" of the regulatory framework in the global environment. I further contemplated about the extent to which our own articulation as industry stakeholders in various platforms subjects us to a vulnerable position on this notion of "Convenient Uncertainty"
I look forward to a more elaborate discussion during this breakfast session and urge stakeholders to be frank in such deliberations. This will enable us to generate ideas and contribute to the resolution of immediate challenges and ensure a thriving and proudly South African mining industry.
I thank you.
Issued by the Department of Mineral Resources, September 3 2012
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