Hon Minister, in the light of the fact that the DA is a party of the future, I would like to direct my speech in particular to the 21 future CEOs sitting in the gallery, unlike the ANC which, I suppose, is not open to change and alternative methods.
Could I just state that within the international framework and with R2,6 trillion's worth of estimated natural resources - $1 trillion dollars more than Russia, the second placed - South Africa must maximise its comparative advantage?
The introduction of a mineral resource rent tax and the proposed introduction of a carbon tax in Australia, the approval of a new ad valorem tax and royalty-sharing arrangements on certain minerals by India, Indonesia's calling for a 20% duty to be imposed on their mining exports, and the consideration by Ghana and, dare I say, Zimbabwe to drastically raise windfall taxes, will undoubtedly help the South African mining sector to obtain the competitive edge it requires if we manage it correctly. This is provided that we do not follow the same route by introducing carbon taxes and resource rent taxes, and increasing royalties and the like. Some local mining companies have already indicated that they are moving away from larger-scale South African projects to hasten returns and cut risk.
Luring and retaining investment is a real concern. BHP, one of the world's largest mining companies, recently closed down a coal mine in Australia owing to a lack of return on investment, labour unrest and other factors. An aluminium plant in Canada is also going to close down, as is the case in other mining jurisdictions. Canada has indicated that it will be easing immigration rules for skilled workers to alleviate mining labour shortages by attracting skilled workers in short supply.
In South Africa, many mining companies have blamed labour action, lower than anticipated production volumes, and lower grades as some of the causes for the drastic reduction in gold produced. We should take all reasonable steps to establish a thriving mining industry - one of the mainstays of this economy - the so-called "mining and energy complex" economy.
The State Intervention in the Minerals Sector report, mandated by the ANC and calling inter alia for the imposition of a 50% tax on windfall profits, will achieve exactly the opposite by not attracting investment, and will place us in the same position as, for example, Australia!
It has also been pointed out that had the South African government become the owner of mines in 2009, the South African Treasury would then have had to fund the difference between the capital investment and the dividends paid in that particular year - an amount of R26 billion. Talk of nationalisation is damaging the mining sector, especially in the context that nationalisation without compensation is unconstitutional, whilst nationalisation with compensation is unaffordable. Resource nationalisation, the touted alternative, amounts to nationalisation by stealth.
A 40% reduction in platinum group metals, an 11,5% reduction in gold output, an overall fall in mineral production of 14% compared to February last year, and a 17% reduction for April in the export of coal from the Richards Bay Coal Terminal indicate the real concerns of the mining industry and investors about the policy direction, or rather the lack thereof, of the Ministry.
Any steps, therefore, to introduce beneficiation, however much needed, should accordingly not come at the cost of competitiveness, lest production in the mining industry be further reduced, with the consequent reduction in much needed jobs. As indicated earlier, the figure from Adcorp indicated that the employment rate fell sharply in mining - down by 11,8%.
Growth and the accompanying increase in jobs in the industry are critical. This will require a 180 degree turnaround in policy formulation, such as from the inconsiderate policy by this government leading to Botswana becoming the next diamond hub in the world, with De Beers shifting its London-based diamond trading centre to Botswana.
With the capital cost required for developing a new mine being as high as R12 billion, investment in a stable and sound regulatory and political environment is imperative. The recent decision by Argentina to nationalise a Spanish-owned oil company led to the stern warning by the Glencore CEO that they would not hesitate to withdraw investments in countries where governments changed the terms of existing contracts in order to start taking a bigger profit or started introducing resource nationalisation. We should take note of these comments, hon Minister.
We all agree that mining companies have a social responsibility towards the communities within which they operate. Employee share ownership plans, Esops, which allow workers to share in the profits of the mines, are an important empowering tool. The pre-tax amount of about R500 000 paid to every qualifying Kumba employee is clearly an empowering tool. The mining companies and the department should ensure, too, that the agreed social and labour plan targets, which are aimed at benefiting communities, should be implemented to their fullest, thereby ensuring the continued successful operation of mines within the communities they operate in.
The National Development Plan being considered by the National Planning Commission and the Presidential Infrastructure Co-ordinating Commission, which intends to unlock the mineral wealth of the "northern mineral belt" in order to expand the infrastructure by developing various transport corridors for minerals, is supported.
With the intended increased participation of the state-owned mining company in the mining production sector, it is imperative that an independent licensing structure be established to ensure integrity within the process. At present the government is assuming the proverbial role of player, selector and referee, all with dire consequences.
Although we support the integrated approach in respect of the licensing process, as announced by the Minister today, we are of the view that an efficient one-stop independent service centre is crucial. Mineral rights applicants are then afforded the opportunity to interface with the departments handling mineral regulation, water and environmental affairs, and other required competencies, such as the Council for Geoscience, resulting in a speedy and effective application process.
Inherent to the success of this proposal is the determination of predetermined geographical areas where no applications will be accepted for certain predetermined and well-known areas owing to, for example, environmental and cultural reasons. Unnecessary costs, time wastage and lost opportunities for mining companies will therefore be prevented.
We do not share the Minister's views that the outcomes of a number of High Court decisions are an impediment to transformation. In fact, the high number of court cases in which the department has recently been involved and lost, is concerning.
In the very recent decision of the Constitutional Court in the Maccsand and Winelands District Municipality cases, in which the DA-governed City of Cape Town and the DA-controlled Winelands District Municipality took the department to court, the constitutional right of municipalities and provincial governments to regulate mining activities within their demarcated areas by virtue of their zoning regulations and land-usage schemes was confirmed. The Department of Mineral Resources was acting unconstitutionally by disregarding the rights of property owners affected by mining licences and by allowing mining to continue where no rezoning of the land had taken place. In most instances, the department allowed mining to continue against the well-established rights of property owners where land had been zoned differently.
The recent ...