It would be seen as a giant that can work for us all and produce the employment and growth that we seek.
The legislation and the Mining Charter have caught mining companies in a web of rules that continue to raise the costs of and the difficulties in mining successfully. One major mining company tells me that it has had to employ 20 more people at head office simply to deal with compliance. That is a high-level issue. Twenty highly skilled people do not come cheaply. All of that adds to the cost of mining in this country. All of it is a disincentive.
There's an argument that one hears in government circles. That argument is that we have so many minerals that mining investors will have to come to us and mine on our terms, so we don't need to worry about attracting them. The poverty of that argument is made clear by the unemployment statistics that I have already mentioned. People's jobs are at risk. We are missing opportunities for poverty relief, which will not wait. We need to act now.
Let's look at some specifics, starting with one of the major reasons cited by mining companies for the current fall in production. To begin with, there are safety stoppages in terms of section 54 of the Mine Health and Safety Act. The Chair of AngloGold Ashanti, Tito Mboweni, has described these stoppages as a sledgehammer. Miners everywhere complain that whole mines are closed for relatively small infractions. For example, if the tail- light of a vehicle operating on the surface is broken, the whole mine is shut down for 48 hours. [Interjections.] I assure you it is. Another example is if the fire extinguishers are past their expiry date. Now, rather than issue a section 53 instruction, which would give the mine some hours to comply, the whole mine is closed down and two days of production are lost. These are factual cases. I repeat, these are factual cases.
The problem is not section 54 in itself, but the way it is applied through the guideline that strips inspectors of discretion. That's what is meant by a sledgehammer.
Now I can predict a response, or one of them. One of them is to use this as a political football and say, "What about the workers?" Well, what about the workers indeed? Let's regulate efficiently rather than indiscriminately, because those who allow indiscriminate regulation will cost workers jobs and their livelihoods, as has already happened to so many. We can't continue to use this issue as a political football.
Our department is responding. We have heard some of that today. It says it is working more closely and constructively with mine management, but is this happening fast enough, Minister?
As this so directly affects production, we'd like to see a lot more money from this budget put into the retention and hiring of inspectors. Early and frequent inspections, where the inspectors can use reasonable discretion, would mean fewer closures and less lost production. We are aware of the difficulties in this area, but we think this is such a key thing that it merits more vigorous intervention.
There's much talk of beneficiation as the new way in which we will extract more money from the mining industry. As good as it sounds, this is unfortunately unlikely to be the easy solution it is portrayed to be.
For one, beneficiation operations generally demand a lot of electricity. That's one thing we don't have. One company wanted to build a chrome smelter near Rustenburg. They went to Eskom and asked if there would be power available. Eskom said yes, from 2017. That company is building the smelter, but it is building it in China. [Interjections.]
Efforts to beneficiate through the gold and diamond jewellery industry have been an utter failure. Our cutting and polishing industry is a shadow of what it used to be. In the late 1990s there were 4 500 people in this industry, but today there are fewer than 700. [Interjections.]
The State Diamond Trader is supposed to promote local beneficiation. That aim is clearly not being attained. Rumour in the industry is that the State Diamond Trader is supplying only three clients with the majority of its sales. A few people are benefiting and the industry is failing. Government should not be involved in this business. We think the State Diamond Trader has failed manifestly and it should be closed. [Interjections.]
Now, we have heard that this government's slogan is, "Let there be change" - I couldn't agree more. But make them the right changes, so that you not only save jobs, but create new ones. The most important thing the state needs to change is its attitude towards mining. The Minister usually says the right thing, with a very notable exception today, but investors are not the only ones to be unconvinced. [Laughter.]
When the legislation and regulations are reviewed, and that should happen soon, it should be with an eye to removing the shackles that bind the industry, to set it free to do what it does best, that is, to mine, and not to apply social policy or beneficiate. Government must move away from trying to make mining companies do what they are not good at. It must listen to them. If the mining industry is treated sensibly and as a partner, and not as an adversary, it could turn into the engine that drives employment and economic growth; it could turn from a monster into our economic saviour. [Applause.]