DOCUMENTS

The state of the mining industry - Ngoako Ramatlhodi

Minister says our legislation and regulations continue to provide certainty and guarantee to investors (Oct 8)

Speech delivered by the Minister of Mineral Resources, Adv. Ngoako Ramatlhodi at the 2014 Joburg Indaba, lnanda October 8 2014

Program Director
Chairman of the Joburg Indaba -Mr Bernard Swanepoel
Leaders, CEO's and Captains Of Industry
Leadership of Organised Labour
Office bearers of Organised Business
The Investment Community at large
Delegates
Distinguished guests
Ladies and Gentlemen

Thank you to the organizers for extending an invite to deliver an address at this august occasion under the theme "Investing in Resources and Mining in Africa". It is indeed an honour.

As a Government department responsible for regulating the mining industry, we welcome the opportunity to engage with all stakeholders on pertinent issues facing the sector, and to together find lasting solutions to ensure the sector is poised for long-term growth and sustainability.

We are encouraged by the sector's willingness to engage in dialogue, through which we can collectively chart a way forward for such a critical sector in the South African economy.

Global context and stabilization Of the industry

The mining sector has recently come out of a period of prolonged labour relations unrest, a situation which has had an adverse impact on the economy. Recent figures released by Statistics SA show that the contraction in GDP that was attributed to the strike was considerable. In the first quarter, sales of total minerals declined by 24, 7%. This had narrowed to a 9, 4% contraction in the second quarter.

A sustained improvement in the labour relations environment is a critical factor in sustaining South Africa's reputation as a key investment destination for mining. Stakeholders committed at the Mining Lekgotla, two months, ago to continue engaging robustly and constructively on issues affecting the industry.

In addition, the Mining Industry Growth Development and Employment Task Team (MIGDETT), which was formed in 2009 on the back Of the global financial crisis, has been reestablished. It is only through continuous engagement that we will be able to find each other, and to build mutually beneficial relationships, which balance the needs and expectations of all role-players.

Commitment to policy and regulatory certainty

Since the birth of the democratic dispensation in South Africa, we have worked tirelessly and systematically to introduce a conducive environment for doing business in the country' - a dispensation underpinned by political stability and sound macro-economic fundamentals.

Our socio-political objective has been and remains the creation of a society characterised by its "unity in diversity" - We are fully alive to the fact that the mining industry has been under tremendous pressure following the global financial crisis.

The boom before the financial crisis disguised the fundamental structural fault-lines and contradictions between workers and employers amidst the prosperity that was visible during the commodity boom, albeit not equitably shared by all.

In addition, the recently published Ernst & Young report on Business risks facing Mining and Metals, 2013-2014, makes a noteworthy observation on capital allocation and access to capital as the greatest business risk facing mining companies.

We are concerned about the ramification of this constraint and further implore the investment community to consider balancing the requirement for a return with development. This balance is of utmost importance, as it is contributes to securing long-term sustainable development Of the mining industry.

Given the immense potential of the mining sector and its contribution to the economy, The Mineral and Petroleum Resources Development Act NO. 28 Of 2002 (MPRDA) was amended. However, we note that there are concerns on some aspects of the Bill. There are processes in place to attend to these concerns.

The landmark ruling Of the Constitutional Court of the 18th April 2013 removes the longstanding uncertainty of ownership and property rights affecting investments in the mining sector. This ruling allows the government to facilitate necessary collaboration with local and international partners to deepen and strengthen the country's investment climate in mining.

We have noted with some concern developments in the industry where mining companies come to the Department as a last resort before making major announcements on disinvestments and or expansion of their companies, which has the potential to impact on the economy.

These are not helpful, and go against the spirit of open and transparent engagement. As Government we respect the rights of individual companies to decide what is in the best interest of their shareholders, however as the custodian of the country's minerals on behalf of the people Of this country, we also have the long-term interests Of South Africans to protect. We therefore require cooperation in this regard.

Transformation of the minerals sector

The radical transformation of our economy, a key resolution of the ruling party at its 53rd National Conference in 2012, is a central objective of this Government. South Africa has a long, painful history which saw the exclusion of the majority of our people from the mainstream economy.

There is no doubt that given our history and therefore the legacy of our past, the social challenges we face are huge. We have historical, political and Constitutional imperatives to respond to these challenges.

Since 1994, Government has developed and implemented policy aimed at redressing this imbalance. In the long term, the creation of jobs ensures that more and more people engage in economic activities that will provide income for the majority of our people, so that we can eradicate the triple challenge of unemployment, poverty and inequality.

Ladies and gentlemen, in June 2010, mining stakeholders committed to a "Declaration for Sustainable Growth and Meaningful Transformation of South Africa's Mining Industry". This declaration was a precursor to the development of the Mining Strategy, the amendment of the Mining Charter and the recent amendment of the Principal Act, the MPRDA.

The amendment of the Mining Charter represented a recommitment by mining stakeholders to a renewal of the mining industry, recognising the mutual inclusivity of competitive and sustainable growth Of the industry, together with meaningful transformation.

In accordance with the Charter scorecard and the 2010 Stakeholder Declaration, final reporting for the 2014 milestone is due by March 2015.

An assessment of compliance by mining companies with the Charter, on transformation targets to be achieved by the end of 2014, is currently underway.

Importantly, all stakeholders committed in 2010 to the total eradication of the apartheid-styled hostel system by 2014. The amended Charter provided better clarity on the scorecard and I have every confidence that the end of the first ten years of implementation will represent vast improvements on the contribution of the mining industry to workers and community development, consistent with its eminence in the national economy.

Mineworkers are the bedrock of this industry - decent working and living conditions should thus be non-negotiable. To this end, government further established the Mining Sector Consultative Forum, whose main objective is to discuss the implementation of the Framework Agreement for a Sustainable Mining Industry, which was entered into by Government, Organised business and Organised labour in 2013.

For the Framework Agreement to be achieved; the labour relations environment must be conducive; peace and stability in the sector must prevail; Improvements in housing and living conditions of mineworkers must be expedited.

In November, we will be hosting the 2014 Mine Occupational Health and Safety Summit under the theme. "Every mine worker returning home unharmed every day - striving for zero harm". The overarching objective Of the Summit will be to review the current state of health and safety in the mining industry and to decide on new targets to improve health and safety of mine workers.

Linked to this is the need to upskill the existing workforce for the rapidly evolving needs of the sector. Given the demand for skills in the area of mining both locally and globally, the need to expand the pool of skills to supply the industry has also become more critical. The Department is enhancing collaboration with the Department of Higher Education and Training and Other stakeholders through the Mining Qualification Authority, to improve skills development of the youth and mineworkers.

In partnership, we will place bursary-holders, interns and students at various universities and mining companies for training in critical skills.

We urge industry to continue to do the same, so that the mining industry is better equipped to face future opportunities and challenges.

As I conclude, allow me to emphasize that as government will continue to prioritise opportunities and encourage investment to grow the economy of the country to deal with the triple challenges of inequality, poverty and unemployment.

As alluded to earlier, our legislation and regulations continue to provide certainty and guarantee to investors and therefore also investors should guarantee the country compliance and ensure that that we create a balance between industrialization and the protection and preservation of the environment.

In collaboration with other government departments we will have to address the social responsibility program for beneficiation for our communities.

I have no doubt that if we accelerate community empowerment and expand beneficiation then we are well on our way to make South Arica and the rest Of Africa the future of the world. The African Union (ALI) Charter emphasizes that communities should be equal beneficiaries.

I therefore urge and encourage all parties to remain committed to the spirit of collaboration to maximize the transformation agenda for one another for sustainability of the industry. Stakeholder engagement is key to address all issues pertaining to the future of mining in this country. I wish you well in the deliberations.

I thank you.

Issued by the Department of Mineral Resources, October 10 2014

Click here to sign up to receive our free daily headline email newsletter