Hon Chairperson, Deputy Minister Oliphant, Deputy Minister Sotyu, hon members, the chairperson of my portfolio committee - a very important person - hon Gona, ladies and gentlemen, I am honoured to present this budget, right on the very first day of the landmark month of June, when we remember the sacrifices and gallantry of the June 1976 generation, who literally laid down their lives for the freedom and democracy that we are enjoying today.
I would also like to welcome the hon Deputy Minister Oliphant to the department. His presence has made it possible for the Ministry to, amongst others, have a continued presence in the strategic engagements of the portfolio committee.
We dedicate this Budget Vote to the youth of 1976, who irrevocably changed the course of our history. We should also not forget that it was at this time - in the same month of June - in 1955 that our movement, the ANC, together with its partners in the Congress Alliance, adopted the Freedom Charter as a blueprint for a just society, the Freedom Charter which today forms the foundation of our democracy.
The budget we are announcing today gives concrete expression to our determination to ensure that the minerals and mining industry continues to contribute to addressing the fundamental socioeconomic challenges facing our country, including job creation and sustainable development.
We present our budget at a time when we have to contend with a mix of geopolitical and financial dynamics that have led to a rise in the price of commodities, especially precious metals. There has been a substantial increase in the price of gold, which is favourable to our marginal gold mines. This will invariably help the gold sector with regard to further expansion projects, as well as job creation and retention. We are a department that has a mandate to regulate the country's mineral resources in such a way as to effect transformation, safety and sustainability, as well as achieve growth.
In order to achieve the objectives which we have outlined in our strategic planning document, we are pleased to present a budget of R1,036 billion for the Financial year 2011-12. We present an increase of R40 million on the previous budget of R995 million. This budget is allocated for departmental programmes, which are as follows.
R247 million is for administration to, amongst others, implement the departmental human resource plan with the following elements: talent management and retention, and the development of skills in the following occupational areas - electrical and mechanical engineering, geology, metallurgy, and others.
Mine health and safety gets R147 million and R160 million for mineral regulation, while R480 million is allocated to mineral policy and promotion.
This budget includes an amount of R438 million earmarked for transfers and subsidies to departmental and state-owned enterprises. They are the Council for Geoscience, which will receive an amount of R153 million, and the Council for Mineral Technology and Research, Mintek, the SA Diamond and Precious Metals Regulator and the Mine Health and Safety Council, which will receive about R167 million, R39 million and R5,3 million respectively.
An amount of R18 million has been budgeted to subsidise marginal mines for pumping extraneous water from underground holdings. This is in addition to an allocation of R17 million included in the transfer to the Council for Geoscience to conduct research, and develop and implement strategic solutions for mine water management. The department has managed to align its budget with its programmes, and has accordingly completed the compilation of detailed monthly spending plans.
As we said last year, we will continue with the implementation of our cost containment measures in a bid to ensure that taxpayers derive maximum benefits from our programmes. We will do so and we are doing everything in our power, to stem the tide of the rising costs of goods and services which remains a huge challenge.
Last year I informed this House that the director-general had undertaken a visit to all regional offices. It was with the express purpose of reviewing administrative processes, cleaning up data that was on the National Mining Promotion System, NMPS, and subsequently designing a system to improve efficiency. In this regard, we imposed a six-month moratorium on new prospecting applications. At the same time, we went about correcting and improving our regulatory and administrative processes. Audits that took place during the moratorium were done through inspections and reviews, which were part of the overall plan. It was a process - rather than an event - of improving administrative processes to achieve the optimal utilisation of mineral resources. The outcome of these audits pointed to cases ranging, from administrative errors such as double granting, a lack of proper administrative systems, fronting, and nonpayment of prospecting fees, to noncompliance with approved environmental management plans, EMPs, as well as rights holders who could not be traced.
Furthermore, the administrative process in the department has now been endowed with efficiency, transparency and accountability, and I am satisfied. This has been done through, amongst others, the online licensing system, which is called the SA Mineral Rights Administration system, in short, Samrad. Since the launch of the system on 18 April this year over 627 applications have been successfully lodged.
South Africa's mining sector is the backbone of the country's economy, with a current conservative in situ value estimated to be US$2,5 trillion, and with an economically exploitable lifespan of 150 years.
Moving from this premise, together with our social partners, who are organised labour, business and other state departments, we have developed a growth and transformation strategy. The strategy identifies binding constraints to the sector's growth potential, and recommends action required to optimise the sector's extractive capacity, and attract investment and job creation. These have been captured in the New Growth Path of the country, thus ensuring that the growth of the mining sector is not an island, but is placed in the context of the broader growth of the country.
I also announced last year in my Budget Vote speech that work was under way to establish a state-owned mining company. I must say I am pleased today to report that we launched the African Exploration Mining and Finance Corporation, AEMPC, in February this year. This forms the nucleus of the state-owned mining company. The President has launched the first coal mine project in Mpumalanga. They have an off-take agreement with Eskom, and an undertaking to supply coal to Eskom by June this year, which is now.
In order to improve the general competitiveness level of our economy we are steaming ahead with addressing domestic issues. These are issues such as infrastructure bottlenecks, challenges in the regulatory framework, and human capital constraints, as well as other capacity shortcomings as identified by the sectoral mining growth strategy, which we, together with the stakeholders adopted in June 2010.
There is a general stakeholder agreement of which the focus, in order to optimise the contribution of the mining sector to the economy, must be on the entire minerals value chain, not just exclusively the mining sector. Countries of the south, such as China and India, have got this balance right, as evidenced by the proliferation of their beneficiation industries. They are doing this to the extent that they are taking the world's market share and job prospects from countries such as South Africa.
We already have a large supplier base that provides goods and services in the mining sector. We need to move beyond the traditional and established form of beneficiation of locally mined minerals. Working together with our partners and the Department of Science and Technology, DST, and other science institutions such as the Mintek, Council for Mineral Technology, and the Council for Scientific and Industrial Research, CSIR, we will collaborate on issues related to research and development. To this end we have now reached a stage where we are taking the beneficiation strategy through the Cabinet process.
Critical to this is the creation of a policy regime that offers positive incentives like a deeper skills pool, a favourable tax climate, and the lowering of the cost of capital. Included is the realisation of the need to urgently address the inherent limitations imposed on the mining industry by, amongst others, the smallness of our rail and energy infrastructure.
Last year, I announced the results of the impact assessment of the mining charter, which revealed serious instances of a lack of meaningful transformation, as well as the fact that the 2009 targets, as contained in the mining charter, were not met.
Whilst that is so, we are pleased that there are individuals in the gallery today like Ms Daphne Mashile-Nkosi. She has overcome formidable odds, including personal tragedies, in launching sustainable mining projects as a black woman. A few weeks ago we participated in the launch of a manganese project in Kgalagadi, in which she has already created 1 400 jobs. These are the formidable products of a company with a 60% black women ownership. [Applause.]
Today I am pleased to refer to another company, also in the manganese sector. This is UNK, which again involves real black economic empowerment, BEE. These are black owners who are making a difference in a real sense in the whole value chain, and contributing to skills development in the area of the Northern Cape.
Regarding the collaboration of stakeholders, I am pleased to announce that we have improved the construct of our Mining Charter by including definitions. It also sets up clear targets - thus eliminating ambiguities and multiple interpretations - accompanied by a clear scorecard with clear measures for the 2014 assessment. This process was finalised in September last year. The mining industry is therefore expected to submit the first set of compliance reports from mining companies by the end of June 2011.
The review of the Mineral and Petroleum Resources Development Act, MPRDA, is under way. This is aimed at improving the current construct of the Act, removing ambiguities, making provision for consultation processes, and streamlining the licensing processes. In this regard, we will be strengthening the law in areas where it allows the Minister to invite applications for mining rights in areas where they were previously granted, issued or revoked, or have even expired. The amendments currently include the strengthening of the regulation of the environment in respect of minerals and mining. We will continue to consult with all the affected and interested stakeholders. As we speak today, the Bill is currently serving before the Cabinet, and will soon serve in the portfolio committee.
In addressing these issues we have identified the need to entirely review the Mine Health and Safety Act. This review will strengthen enforcement provisions, reinforce penalties, provide clarity in certain definitions and expressions, and effect certain amendments to ensure consistency with other laws, particularly the MPRDA. We are currently at the tail end of consultation on these issues, and anticipate that these amendments, as well as new regulations, will be tabled soon.
We are well aware of the problems currently besetting the diamond sector, including a lack of access to rough diamonds. We are in the process of finalising our country's diamond strategy, and the Deputy Minister will elaborate on this matter.
As we said last year, we have had to contend with the consequences of more than a century of mining in this country. One of these is the legacy of derelict ownerless and unrehabilitated mines. These mines pose significant environmental, health and safety risks to neighbouring communities. We have embarked on a programme to permanently eliminate environmental damage by getting the land impacted by the mining activities back to a sustainable usable condition. So far, five derelict ownerless mines have been rehabilitated during this financial year. We have also developed a new set of comprehensive measures to ensure that we do not have a repetition of the status quo.
In February this year, we imposed another moratorium on shale gas exploration. I hope the DA members will be very pleased about this. I am happy that we have set up a task team, which has been endorsed by the Cabinet, for us to explore this further and say how we should best position ourselves and ensure that the studies which are conducted will inform us on taking this matter forward.
One of the issues which are of concern to us is the matter of mine health and safety. I want to say as I stand here today that we saw an improvement in mine health and safety last year, and there was a reduction in fatalities. However, this year we are worried, very concerned. In the first quarter, we saw 53% more than last year, which was 49% during this quarter. This is a cause for concern for us. On the basis of that we will be moving towards making sure that we look at how best we can amend the Mine Health and Safety Act.
We are taking all these steps whilst enhancing our internal capacity in the department. This includes the establishment of regional compliance and investigation units. The department will embark on interventions which include, among others, stoppages of unsafe mines in line with our legislation, to ensure that corrective measures are implemented and maintained.
I am satisfied, after studying the long-awaited report, the presidential review on mine health and safety, that we are ready to release that to the committee.
From our side I must say that in regard to the Mining Qualifications Authority we are committed to skills development in the country. We are also committed to meeting the challenges in the industry, where we are not able to grow and impact on the economy of the country due to skills shortages.
In conclusion, I want to thank my officials and the rest of the staff of the Department of Mineral Resources, DMR, for their continuous commitment and dedication in advancing the cause of the department.
I want in particular to thank the Director-General, Adv Sandile Nogxina, who has given 14 years of dedicated service to the Department of Minerals and Energy in the past and now to the DMR. He has accomplished various tasks in the department. He inherited a department that was totally untransformed and, as we know, today we are looking at a department which responds to the challenges with which we are faced in South Africa. We now have a transformed department, a department which has men and women of integrity in the top echelon.
As he will be leaving the department at the end of this month to go on early retirement, we bid him farewell and release him. I hope he will be able to have new interests and look after his garden at home! Nevertheless, I must indicate that we can't afford to allow him to go completely and lose the experience and knowledge he has gathered over time. [Applause.] We will continue to tap into the knowledge he has acquired through the years as a cadre of the ANC, and as an agent who contributed to transforming South African society, mainly the mining industry. I thank you. [Applause.]
Thank you, hon Chairperson. Hon Minister, and let me join you in welcoming the hon Deputy Minister, other Ministers and Deputy Ministers present here, the leadership of organised labour, some of whom I've seen, the leadership of organised business, some of whom I've also seen, and officials of the Department of Mineral Resources, led by the outgoing director-general, Adv Nogxina, I greet you all. Let me join the Minister upfront in bidding you, Adv Nogxina, farewell and saying that we appreciate the contribution that you have made.
Comrades and fellow South Africans, let me from the outset state that the ANC supports this Budget Vote. There are very good reasons for us to support it. [Interjections.] Just keep quiet!
We are basing our support of this budget on the agreed theme: "Let there be change for the better in the mining industry." This theme is based on the fact that, since the discovery of minerals in this country in the 18th century, citizens of the country who were classified as nonwhites, including black women - and let me emphasise that, including black women - have been prohibited by law from ownership and from occupation of positions of power in this industry. Currently, meaning 17 years into our democracy, not enough progress has been made to change this situation. We will explain why we say that. This is a theme that is more relevant than ever to all stakeholders in the mining industry, particularly in our present-day circumstances.
Once more, hon Chairperson, allow me to dedicate this speech to the thousands of mineworkers who have perished in this industry over many years of mining in this country, and who continue to die. We are particularly concerned, and I am confirming your statement, hon Minister, about the increase in fatalities reported in the first two quarters of this year. This Parliament indeed extends its heartfelt condolences to their families and their loved ones.
Historically South Africa's mineral industry, largely supported by gold, diamond, coal and platinum group metals production, has made an important contribution to our economy. It has provided the impetus for the development of an extensive and efficient physical infrastructure, and has contributed greatly to the establishment of the country's secondary industries. Mining remains South Africa's largest industry in the primary economic sector, followed by agriculture.
Mining continues to be South Africa's principal earner of sought-after foreign exchange, although levels of earning are continuously declining. During the 1990s mining directly generated about 41% of total exports, approximately the same as the fast-growing manufactured goods export sector. From the year 2007 onwards real fixed investment in the mining sector improved by 14,8%. Unfortunately, this improvement was insufficient to compensate for the declines that took place in 2004 and 2005, with the result that production fell by 1,5% in 2006.
We further recognise the fact that, notwithstanding the sometimes jittery mood of the investor community, due to some perceptions of uncertainty regarding our mining policy, these are far from the truth, as confirmed by you, hon Minister. When you analyse our mineral strategy and reflect on our sustainable mining declaration, as agreed to by the Mining Industry Growth, Development and Employment Task Team, MIGDETT, we are continuing to refine government's commitment in both attracting and retaining domestic and foreign direct investments in the mining industry. This is more than clarified. The portfolio committee will continue playing its expected role in addressing both the genuine concerns and the perceptions of the investor community.
The mining industry continues, among others, to lead job creation in various sectors. We are of the firm view that this industry, through its leadership in MIGDETT and the guidance from the Ministry, will respond positively to the clarion call made by His Excellency President Jacob Zuma in his state of the nation address early in this year, 2011, that this year should be approached as the year of job creation.
The New Growth Path gives clear direction on how and where the mining industry should play its pivotal role in addressing this national objective. This is more urgent now than ever before, given the fact that the country is faced with an unemployment level currently at a staggering 25%, as reported by Statistics South Africa in its report on the first quarter of 2011. In this regard we acknowledge and applaud the role played by MIGDETT, a multistakeholder team that was established in 2008 as a direct response to and an attempt to mitigate the negative impact that would result from the global financial crisis.
Indeed, these efforts have been successful in reducing the potentially high numbers of job losses in the mining sector, in that we have seen that instead of the approximately 100 000 jobs that could have been lost at that time, only plus-minus 35 000 jobs were shed. This figure is still high when one considers the number of dependants of these mineworkers. However, this intervention demonstrates the correctness of our general theme in the ANC: "Working together, we can do more."
It is important for us - I want the opposition to pay particular attention to this section of my speech - to remind this august House that the people of this country from all walks of life converged at Kliptown in 1955, but not for political grandstanding and not to pretend to identify with the poor people of this country, as we have seen in the gimmicks and political posturing of the DA in these recent local government elections. [Applause.] In this real Congress of the People, we, the people of this country, declared that: "The people shall share in the country's wealth!" I will expand on this point later in this input.
We would further like to remind you, and refresh the memories of the people of this country, lest we forget, that the people's liberation movement, the ANC, in its watershed Morogoro Conference in 1969 adopted a strategy and tactics document. This document defined in clear terms the character of the national democratic revolution. I can see the hairsplitting! I repeat that it defined in clear terms the character of the national democratic revolution in relation to the apartheid sociopolitical relations that this democracy was meant to eliminate.
Before our colleagues on the left benches get terrified by this big term "national democratic revolution", NDR, and before they invoke the rooi gevaar [red danger] and the swart gevaar [black danger], let us define this term - as part of a political education that is free. The definition is: the NDR is a process of struggle that seeks to transfer power to the people and transform society into a nonracial, nonsexist and united democratic society.
Among other measures used, we will attain this noble goal through pursuing economic growth, development and redistribution so as to achieve a better life for all. These ideals remain as relevant today as they were before, and they inform our intervention in the mining industry. [Interjections.]
Hon members, order! Order, please!
Both the historic and the current factors discussed have been made possible by the fact that South Africa is endowed with mineral resources. It has been confirmed by the internationally renowned financial institution known as Citigroup Inc that this country is the world's richest with regard to mineral wealth. We are home to the most vital and diversified mineral reserves in the world. [Interjections.]
This extensive mineral wealth is a common heritage to all South Africans. Section 24(b)(iii) of the Constitution of this country guarantees everyone the right to -
secure ecologically sustainable development and use of natural resources while promoting justifiable economic and social development.
Through this section and other provisions in our Constitution, we as public representatives are enjoined to ensure that benefits that accrue from the development of our minerals are enjoyed by all South Africans. Therefore, the question is: Do we all benefit equally from these mineral resources? [Interjections.]
Let us get to the matter that my learned friends on my left are in a hurry to get to. Let me remind you that we want to debunk this myth that government only acts when pressured by the opposition. That is far from the truth. It is this ANC-led government that assisted in the recent establishment of the more than R3 billion Impala Trust Fund that will benefit the workers and the mining community. It is this ANC-led portfolio committee and government that resolved the matter of Taung community in the North West Province. It is this ANC-led portfolio committee that, in conjunction with the Department of Mineral Resources and the Northern Cape government, will hand over no less than R4 million's worth of royalties owed to the community of Smithdrift this weekend. [Applause.] It is this ANC-led Parliament that is issuing a subpoena to Namaqua Development Trust for them to account for funds they have handled on behalf of the community.
It is this ANC-led government that has also taken up the issue of Aurora and brought it to the attention of Parliament. [Interjections.] It is not you, not you as the opposition. We as the portfolio committee and the Department of Labour have seen to it, and made sure that the matter of Aurora is receiving attention and closure; it was not at your instigation as the opposition. Therefore, do not claim credit for any work that you have not done. [Interjections.]
The portfolio committee discussed and unanimously adopted the Department of Mineral Resources' Strategic Plan and this Budget Vote. We are satisfied with the distribution of the available funds to the four programmes, which are Administration, Promotion of Mine Health and Safety, Mineral Regulation, and Mineral Policy and Promotion. There was nothing to the contrary. If they come and stand here and deny that they unanimously adopted the report at the portfolio committee level, they will be misleading this House. It was adopted unanimously.
We are particularly pleased with the attempts to build capacity within the department, especially the establishment of the Compliance Inspectorate Unit, which will, among other things, ensure compliance by companies with mining law. We applaud both the Ministry and the Department of Mineral Resources for the review of the licensing system, which we have mentioned here, and the resultant establishment of the SA Mineral Resources Administration System, Samrad.
However, both the Department of Mineral Resources and the National Treasury need to pay more attention to capacitating our research and development institutions such as Mintek, the Council for Geoscience and the Safety in Mines Research Advisory Committee, Simrac. In fact, South Africa as a developmental state needs to spend a greater percentage of its gross GDP, domestic product, on research and development relative to its counterparts in the world. For example, South Africa spends less than 1% of its GDP on research and development generally, while Brazil spends about 1,05% of its GDP, and Canada and Australia spend above 2% of their GDP on research and development. Hon Chairperson, let us once more debunk this myth that government will act only at the behest of the opposition parties; it is not true. In the Portfolio Committee on Mineral Resources, the ANC-led team is the one that brings up issues and challenges that are facing the people of this country, and we resolve them.
[Inaudible.]
Sifuna ukuthi kubantu bakuthi, siza kuhlala singurhulumente wabantu. Siya kusabela ngalo lonke ixesha kwiingxaki eniza nazo, siqinisekise ukuba niyaxhamla kubuncwane beli lizwe.
Ningabajongi aba ntamolukhuni benza ngathi bayanithanda xa befuna ivoti yenu, babe kwelinye icala befuna ukunincukutha. [Uwele wele.] [Kwaqhwatywa] Abanamsebenzi nani into abayifunayo yivoti kuphela. Bajonge ngoku apha eKapa, abantu abatyebileyo ngabona bafuna iinkonzo, abantu abamnyama abangathathi ntweni abafumani zinkonzo. Kungoku nje imvula iyana, kunzima eKannaland abantu bagcampuza emanzini ... (Translation of isiXhosa paragraphs follows.)
[Mr M F GONA: We want to reaffirm to our people that we shall forever remain the people's government. We will always respond to the problems that you put forward and ensure that you benefit from the country's wealth.
Ignore these white capitalists who pretend to love you, but are after your vote, and on the other hand want to exploit you. [Interjections.] [Applause.] They do not care about you, except for wanting your vote. Take Cape Town, for example, where the rich people are the ones demanding services and poor African people do not get services. Right now, it is raining and people in Kannaland are wading in the floods ...]
... as we speak today.
But, we are happy to note that the ANC's national executive committee, NEC, has taken a very progressive decision, that it will review the formula that we use to allocate resources to municipalities. This means that those municipalities that do not have sufficient resources will now get more resources with the new formula that we are going to bring in. Thank you. [Applause.]
Order, hon members. We thank the hon Gona. Hon members, may I request that when you cheer or howl you don't make it too loud please?
Hon Chairperson, it seems to me that Mr Gona and the ANC feel threatened about something - we will probably establish in the course of business what it is all about. However, can I just say that I have been briefed to say, Mr Gona, that you appear to be on acid mine drainage, and there are some problems with your logic, but we will leave that for later. [Interjections.]
Chairperson, South Africa missed the last commodities boom due, inter alia, to load shedding by Eskom, unbridled threats of nationalisation from certain quarters and a poor regulatory regime, as well as ageing rail and port infrastructure which limited exports. It is therefore imperative that the department establishes the most enabling environment for growth so as not to forgo the next expected growth cycle in the minerals sector, a sector which contributes approximately 5% directly to South African's GDP.
A picture for concern appears to be emerging in the mineral sector when one considers the following important issues.
Firstly, the recent High Court case won by Agri SA against the department decided that the Mineral and Petroleum Resources Development Act, MPRDA, is unconstitutional in so far as it intends to expropriate mineral rights without compensation, which is required in terms of section 25 of the Constitution. The judgement is supported, as it sustains the argument against ill-advised and unrealistic calls for nationalisation without compensation. [Interjections.]
The appointment of a task team by the ruling party, the ANC, to determine whether nationalisation is feasible is misguided and reckless. This type of action leads to the creation of unsubstantiated expectations in order to divert internal pressures for a limited period of time. Nationalisation is unworkable and unconstitutional, and leads down a road to poverty and misery. The recent portfolio committee tours to Chile, and especially Bolivia, as well as other international experiences, have proven this.
Then, the hiving off of the state-owned African Exploration Mining and Finance Corporation from the Central Energy Fund group of companies to compete against the private sector is disingenuous. The decision to take part in a highly competitive economic sector with the accompanying risk of major financial losses to public funds generated from taxes is questionable.
The role of the state should be limited to providing an investor-friendly and stable regulatory environment, wherein benefit to the state and society is generated from increased economic activity, an improved skills base, and taxes generated from profitable mining. The creation of a state-owned mining company in South Africa underlines the need for an independent mining regulation body, and not the department. This will ensure that the state is not a player and a referee at the same time, such as is the case with Icasa locally and in major mining jurisdictions. For instance, in Brazil an independent regulatory authority regulates the approval of applications for mineral rights.
Thirdly, the events pertaining to the water issue at the Grootvlei and Orkney mines are clearly a disaster in portraying South Africa as an attractive and stable mining destination. The recent decision by the Master of the High Court to dismiss certain liquidators, and the subsequent dismissal of none other than Aurora Resource Management Services, are welcome developments, albeit very late and at the expense, Mr Gona, of 5 000 real-time mining jobs affecting , Mr Gona, up to an estimated 40 000 people.
It was an unfortunate decision to allow an inexperienced and unknown ANC politically connected entity to run the intricate affairs of mining operations, leaving the objectives of the transformation agenda as implemented by the ANC with serious concerns and criticisms. The untold human suffering of the families of mineworkers dismissed due to no fault of their own has not received the attention of the department it deserves.
Fourthly, any fatality at a mine is deplorable. It is also the duty and responsibility of the department to ensure that all mining and other ventures, new and established, adhere to proper mining standards. Failure to do so results in a failure of the system for the families of those mineworkers who die due to the department's inability to ensure that mines adhere to proper standards.
The department's reactionary role is not sufficient, as the law requires it to visit mines and disapprove of unsafe mining conditions. It should co- share the blame for any death suffered on mines. Slamming the mines for unfortunate deaths without proactively enforcing acceptable standards is not good enough.
Then, whilst the Mining Industry Growth, Development and Employment Task Team, MIGDETT, initiative is supported, the department still has to indicate how it intends to fulfil its undertakings to which it has agreed. The mining charter has been amended by agreement between government, the mining companies and the mining unions, with little, if any, input from communities who are supposed to benefit. This at least has been clear, Mr Gona, from a visit to the mining communities of Carletonville and Klerksdorp earlier this year, as well as many other complaints which are received annually by this committee.
Sixthly, the implementation of the new SA Mineral Resources Administration on-line system, following major disarray in the regional offices last year, has led to a bottleneck of applications waiting to be finalised.
In the seventh place, the amendments brought about by the Diamonds Second Amendment Act of 2005 have caused severe problems in the diamond industry. One such concern is the State Diamond Trader, whose mandate is to ensure broad access to uncut diamonds in order to develop the local diamond cutting and polishing industry. The failure of the State Diamond Trader to do so and the financial difficulties which it has encountered, have led to a different approach, arguably leading to less accessibility.
This strategy of buying 10% of the so-called run-of-mine rough diamonds from producers and making them available to all was changed to a strategy of obtaining pre-financing when approaching producers in accordance with their statutory obligation to provide 10% of their run-of-mine rough diamonds, and of selling to a select few and, contrary to the Act, their being exported.
Allegations have recently surfaced that contraventions of the Kimberley Process have occurred in South Africa. The Kimberley Process is an international agreement signed by governments from diamond-producing countries. This was to ensure that diamonds did not fuel conflicts. A contravention of the Kimberley Process therefore has serious ramifications for the offender.
In flagrant disregard of the prohibition on the trade in diamonds from the Marange diamond fields in Zimbabwe in accordance with the Kimberley Process, it has been alleged that Linda Makatini, the chairperson of the State Diamond Trader, illegally imported a parcel of rough diamonds from the Marange diamond fields. These are surely very serious allegations and warrant an investigation by the relevant authorities, as required by the Kimberley Process.
The question, hon Minister is: What will you do about it? Other questions that automatically come to the fore are the following: Will you support such an investigation against a senior official allegedly acting in her own personal interest and against the interests of the country, being a member of the Kimberley Process? Secondly, will you agree to co-operate with such an investigation to determine the veracity of your role in what can be described as undermining the Kimberley Process? It is not good enough, hon Minister, to make a blanket denial and to wish the matter had not been raised. Supporting any illegal trade in diamonds from the Marange diamond fields in Zimbabwe, as Ms Makatini is alleged to have engaged in, is tantamount to discrediting the Kimberley Process. Will you also indicate the role played by South Africa in Africa with regard to diamonds on the African continent, and in particular the Kimberley Process? I think the hon Minister owes us an answer.
In the eighth place, the recent Constitutional Court case, in which the department's decision to allocate a mining right to a mining company, following a failure to consult with the community on whose land an application for mining rights was lodged, was overturned, is also indicative of the failure by government to apply its mind properly, in granting applications without communities' being adequately consulted or their interests' being duly considered.
Then there is the recent High Court action between Kumba and Imperial Crown Trading, ICT and the intended joinder application of ArcelorMittal regarding the dispute of mineral rights granted to Kumba and ICT which is once again an unknown, politically connected entity. This has highlighted the fact that the department was not even-handed in granting prospecting rights to ICT where 100% of the mining rights had already been granted to Kumba. Why did the department want to give them to ICT when it couldn't?
Ninthly, the negative ratings by the international Fraser Institute reflect poorly on South Africa's mining dispensation. South Africa has consistently been downgraded, with a poor rating of No 67 out of 79 mining destinations, a position where South Africa ranks at the bottom end of the scale of mining jurisdictions attempting to attract investment.
This situation prevails despite the Minister's recent visit to Canada and other countries to proverbially "talk up" South Africa as a mining jurisdiction. South Africa now also ranks as the fifth largest international gold producer, due to limited investment. Last year it was ranked fourth, a few years ago third, and a decade ago first. The implementation of considered steps is required to create a balanced regulatory regime which encourages local and international investment.
Finally, Chair, due to time limits I have not attempted to address other important issues, such as the acid mine drainage, which Mr Gona would know more about. The interministerial report that was made public and where no action has been taken, the payment of an estimated R9 billion in mineral royalties, of which the communities have seen no benefit ... [Interjections.] [Time expired.]
Chairperson, on a point of order: I would like to know whether it is parliamentary ... [Interjections.]
I missed the beginning part of your question. Would you start from scratch?
Chair, I am rising on a point of order: I want to know whether it is parliamentary for a member, and a Minister at that, to show a fist to another member in a threatening manner. The Minister showed a fist to our Chief Whip in a threatening manner. [Interjections.] I want to know if it is parliamentary.
Order! Hon member, that is not parliamentary; we agree with you.
Chairperson, would you please then ask the Minister to explain this, or please to apologise for threatening our Chief Whip with a fist and showing that she was going to hit him. [Interjections.]
Hon member, we will go into that. Let us proceed with the debate. [Interjections.] Order! Order, please. Let us not turn this hon House into a dojo karate training hall with a lot of kumite sparring!
Chair, my five-year-old daughter is watching, so you had better be nice to me! Her name is Maya and she is sitting at the back. [Laughter.]
Minister, Deputy Minister, and the director-general, to whom I am also paying tribute after long years of service in this department, I am here to support the Budget Vote. [Applause.]
At the same time this speech is dedicated to the memory of the godfather of rap, Gil Scott-Heron, who passed away earlier this week. He was famous for his unique style of fusing music and poetry, which he dedicated to the liberation of his people. He was also a friend of Africa and a fearless anti-apartheid activist. He was famous for the anthem, The Revolution will not be Televised.
People say that things are not related, and that what happens in one place does not influence another. Yet the working class and the poor of our country will tell you that that is not true. What the state does, and what the bosses ask it to do, all lead to the same objective unless we resist them - more ruthless influence for more ruthless exploitation. Minister, your department is standing at the abyss, despite all your best efforts. Secrecy is the blanket that the corrupt, the exploiters, the bourgeoisie and those in power use to hide the nature of their nefarious activities. Secrecy is how they use and abuse, and take what is not theirs and never have to account for it.
Let us talk about the "national democratic revolution". If the government of the day has its way, the counter-revolution will not be publicised.
If the government of the day has its way, we will not hear about the workers of Grootvlei mine who have been ripped off by the families of the ruling elite, because the counter-revolution will not be publicised.
If the government of the day has its way, we will not read about the toxic mine dumps, where children go and play with radioactive material, because the counter-revolution will not be publicised.
If the government of the day has its way, we will not hear about the corrupt lawyer and his partner, who steal mining rights and sell them to the highest bidder or to the highest office in the land, because the counter-revolution will not be publicised.
If the government of the day has its way, we will not hear about the so- called liquidator, brought in to liquidate the working class, who had been convicted of fraud but was rehabilitated to do this dirty deed, because the counter-revolution will not be publicised.
We will not hear about the nationalisation of derelict mines, and about fracking and wrecking in the Karoo. We will not hear about Imperial Crown Trading, ICT, about Kunene, Sunelo, Kumba, Mutala, Aurora and Nersa, about radioactive Robinson Lake, about asbestos at Ga-Mopedi and Ga-Mshushu, about Siltek Investments and its directors, and about the case numbers 837/11/1978, 207/7/1989 and 85/3/2010. Minister, look them up. We will not hear about mine deaths, silicosis, and profits before workers' safety. We will not see Alexkor on TV, making its first profits in 10 years and then going to invest them in Zimbabwe, or a CEO who does not work at the mine, but shops in Sandton. We will not hear about this, read about it, or even see it, because if the government of the day has its way, the counter- revolution will not be publicised.
In terms of the Protection of Information Bill [B6-2010], the revolution will be over. Everything I have said here will be classified as secret. [Interjections.] The revolution will not be publicised. [Applause.]
Chairperson, Minister, Deputy Minister, the department and colleagues, the Department of Mineral Resources was split from the Department of Minerals and Energy, and became a standalone from 1 April 2010. The objective of the department is to: promote and regulate the minerals and mining sector for transformation, growth, development and ensure that all South Africans derive sustainable benefit from the country's mineral wealth.
There has been a slight increase in the allocation for the budget of the department for the 2011-12 financial year. We do appreciate the fact that this department has managed its finances well.
However, the concern that we have now is how we are going to deal with the rehabilitation of the ownerless and derelict mines. The added problem is our water situation in the mines.
The IFP remains concerned about the Mine Health and Safety programme. It is important to train mine inspectors who will be responsible for enforcing compliance with the Mine Health and Safety Act. We recognise the problem that is caused by trained inspectors' being enticed to join major firms for higher salaries. In the future we must find ways of being able to retain our trained and experienced staff.
Let me once again touch on two subjects that are close to my heart. The first one is small-scale mining. The department has done quite a lot in order to be able to grant the historically disadvantaged prospecting licences. However, by and large it has not been able to produce the desired effect. The problem is basically the inability to acquire funds in order to do prospecting. The finance houses are not prepared to risk investing in prospecting. The banks are really only interested in mining licences because they become bankable documents.
It is important that the department and the portfolio committee investigate ways and means to assist disadvantaged groups to enter the mining industry. The IFP believes that this will avoid the exploitation of people who firmly believe that they are going to make an honest living by those with deep pockets, and also that it will result in developing a self-supporting middle class. May I suggest that we have a special meeting to address this problem. The IFP appreciates the new system of granting prospecting and mining licences.
The second one is beneficiation. Beneficiation is another possibility in order to add to our financial gains, and we are a country with large mineral resources.
First of all, may I clear the air and explain that the mining companies are already doing beneficiation by mining minerals with the gravel and then separating the waste from the particular mineral, such as gold or platinum. That is adding value.
However, we need to go a step further in the beneficiation process and manufacture finished products. The IFP knows that great strides have been made in the jewellery industry. Why do we not go further and build engine blocks, camshafts, etc? This will create more jobs and promote skills.
At the beginning we will have to source the technology, which will eventually be transferred to the locals. If we do not begin soon, it will cost much more at a later stage. The IFP admits that one of the disadvantages is that we unfortunately do not have a huge home market because of the size of our population. However, we can develop an export market. Let us develop our country and aim to be competitive. We are aware that this issue is with the Inter-Ministerial Committee.
We need to look at new technologies to make our coal environmentally friendly. Coal is going to be with us for a while, because it is still a cheaper method of firing our power stations. This has to go hand in hand with seeking other clean fuels.
In conclusion, I would like to state that it is important that we do prospecting for crude and gas. We are also stuck with the use of crude oil for some time to come. Gas is a clean form of energy. It is important to protect our environment. We owe this to future generations. The IFP supports this Budget Vote. I thank you. [Applause.]
Hon Chairperson, Minister Shabangu, Ministers and Deputy Ministers present, hon members, leaders of the trade union movement, leaders of the business community, ladies and gentlemen, and comrades and friends, it is amazing how time flies, and perhaps the Nobel Laureate for Literature, Nadine Gordimer, is correct in observing that:
Time is change; we measure its passing by how much things alter.
It has been a remarkable seven months since I was deployed by the President of our movement, the ANC, to this critically important portfolio of Mineral Resources. I would like to express my gratitude to these two great institutions for having confidence in my ability to discharge these responsibilities.
In the Department of Mineral Resources, DMR, I have joined a team of dedicated professionals who go about executing their tasks with the diligence and fortitude that the demands of our time impose on them. It is perhaps what Ayi Kwei Armah had in mind when he wrote in The Beautyful Ones Are Not Yet Born, and I quote:
Alone, I am nothing. I have nothing. We have power. But we will never know it; we will never see it work. Unless we choose to come together to make it work.
I have also been humbled and impressed by the warmth with which I have been received in the department, which can only bode well for the successful execution of our mandate and urgent tasks. In this regard I want to thank the Minister for her leadership and guidance during this exciting period. To the Director-General, Adv Sandile Nogxina, thank you, Mdengentonga, for your support. Give him a big hand. [Applause.]
Let me take this opportunity to welcome two comrades, Duma Nkosi and Solomon Mandla Rasmeni, to the offices of the director-general and the Deputy Minister respectively. These two servants of the people were right here in Parliament during the period of the drafting of the Mineral and Petroleum Resources Development Act, MPRDA. I have no doubt that they will add a lot of value to our work as a department. They will be right in the thick of things as they serve as a nexus between the legislature, the executive and the department.
It is in the context of the recognition of our achievements that we have invited two erstwhile leaders, doyens, of the trade union movement, Comrades Cyril Ramaphosa and James Motlatsi, to attend today's Budget Vote debate. These stalwarts were founder members of the National Union of Mineworkers, NUM. Through this gesture we are honouring their role and contribution to the achievements of our democratic mining jurisprudence. [Applause.]
As we start this month, we must reflect on our programmes that are intended to support young people, and assess how far we have gone in implementing the vision of the Freedom Charter. As the mining industry it is our duty to ensure that we do not fail these young people, and we see to it that the 1,5 million of them who started Grade 1 this year finish Grade 12 without disappearing from the system.
Last week we were told that a huge number of those who walk the streets looking for work are youth between the ages of 16 and 35. This is a call to action for us who went through the June 1976 struggle to do our utmost to honour the youth through providing them with opportunities for decent work.
As we meet today, we are a mere month away from July 18 and from celebrating our international icon, former President Nelson Mandela, who, very much like former ANC President Oliver Tambo, is the unifier of the nation and the organiser of victory. Former President Mandela, a former mineworker, was in fact elected in 1989 as the honorary life president of the National Union of Mineworkers.
The mining industry will therefore need to play its part in keeping the activities in line with the noble values of sacrifice and selflessness that Madiba has come to symbolise. Nelson Mandela's name should ordinarily be appropriated by, among others, the democratic trade union movement and progressive forces that have at their frontline cadres who share his values.
I believe there is no better tribute we can pay to Nelson Mandela than to get the mineworkers and mine bosses to work together to improve the living conditions of people within and outside of this industry. We will wait for the instructions of president Zokwana of the NUM and the general secretary, Mr Baleni.
In 2007 this House, Parliament, resolved that the living conditions of mineworkers should be investigated and improved, that we should support the initiatives of the NUM in building a workers' museum, and that this democratic Parliament should give consideration to naming some of its buildings after J B Marks, the leader of the African Mineworkers' Union. We are called upon to see to the implementation of this resolution.
When we visited India recently, we were reminded by one of the Cabinet Ministers from the Silicon Valley who said, and I quote:
It is indeed an honour and a privilege to live during the same time as Nelson Mandela, the greatest revolutionary of our time.
We salute you, stalwart, Isithwalandwe, Seaparankoe. Re a leboga. [Thank you.]
The Minister has already outlined the budget that has been allocated to the department, and after all budgets are but a numerical expression of policy. The Minister's budget statement represents a programme of the ANC-led government to use the vast mineral resources of our country to contribute to the overall objective of lifting our people out of the grinding poverty and underdevelopment that currently afflicts them.
The Minister has requested me to deal extensively with the diamond industry, and I see that our hon members are also interested to know what we are doing to revitalise the diamond industry for growth and job creation. Listen and learn.
As instructed by President Zuma in his state of the nation address, it is our belief that we can use the possibilities offered by the diamond industry to meet the twin imperatives of job creation and economic growth.
South Africa is one of the few countries in the world that are involved in the entire spectrum of the diamond value chain, which includes exploration, mining, rough and polished diamond trading, cutting and polishing, jewellery manufacturing and ultimately retail. This is understandable, as South Africa is a major diamond producer and ranks sixth in the world with regard to volume, that is carats, and fourth with regard to value.
It is, however, worrying that we remain a small player in the downstream sector of the diamond value chain, with a disproportionately small and underdeveloped beneficiation industry. The situation has been further exacerbated by the impact of the recent global recession, which has forced small businesses, particularly the small businesses involved in rough and polished diamond trading, and cutting and polishing, as well as jewellery manufacturing, either to close shop or reduce production substantially. As a result, thousands of people have lost their jobs.
However, the 2011 outlook for the diamond industry is very positive, and we have witnessed a strong recovery in rough diamond prices and demand. This bodes well for the downstream diamond beneficiation industry. We produce enough diamonds to satisfy the demand for our downstream diamond beneficiation industry. Other diamond cutting and polishing centres around the world, like India, Belgium and Israel, continue to thrive, partly due to their dependence on diamond supplies from South Africa.
The country's diamond beneficiation industry remains significantly small and its development has an immense potential to stimulate further economic activities and to create thousands of new jobs. It is precisely for this reason that we have, through consultation with the diamond producers, the diamond task team of the Chamber of Mines, the State Diamond Trader, the SA Diamond and Precious Metals Regulator, the United Diamond Association of South Africa and others, sought to gain a better understanding of the factors that have constrained the sustainable development of our country's diamond beneficiation industry.
The findings of our consultative engagements have revealed that there are four broad categories of challenges that need to be addressed systematically in order to reposition and revitalise our downstream diamond beneficiation industry for sustainable growth and development. Briefly, these challenges are the following.
Firstly, the challenge is the lack of access to finance. Diamond beneficiation is a capital-intensive industry that requires funding, particularly for small players. This is so because of the costly nature of the industry's raw materials and equipment, and the time-honoured persistence by the main rough diamond producers in having their clients pay cash on, or even before, delivery. As a result, no substantial trading and cutting business can flourish without a supportive banking environment. Lack of capital prohibits business growth and access to modern technology.
In South Africa, only two commercial banks, namely Nedbank and ABN Amro, are currently providing funding for the sector and mainly focus on preferred clients or sightholders of the Diamond Trading Company, DTC, which are normally large established companies. The local small and medium- sized manufacturers have no or very limited access to sources of finance. The Industrial Development Corporation, IDC, has provided funding to some companies in the sector. However, the majority of beneficiating entities do not have access to funding.
We are currently studying different diamond funding models, like the Antwerp Diamond Bank, Israeli banks and the State Bank of India, in order to propose to local financial institutions, and especially the IDC, that they consider developing a South African diamond funding model to support our local beneficiation industry. Oh, my time is flying!
There are other issues concerning the skills shortage and lack of markets that I wanted to deal with here. However, I will not have the time to do that.
I thought I would also speak about the security of supply. Regarding security of supply, I would like to express our gratitude to the Chamber diamond task team and the DMR which, when it was approached to provide short-term relief in the plight of small cutters and polishers, rose to the challenge and made certain carats available for cutting and polishing. This gesture of goodwill is appreciated and indeed demonstrates the mature relationship that we have in this sector. We will work towards importing diamonds from Angola, Zimbabwe and the Democratic Republic of the Congo,