Chairperson, hon Minister, Deputy Minister, hon members, departmental officials, and the House at large, the strategic plan of the department recognises the importance of our resources sector in growing the state's future deracialised economic prosperity through increased business investment, regional development and opportunities for employment and skilling, balanced against key environmental and social objectives.
Generally, the exploration and mining sector requires predictable procedures for access to land, security of exploration and/or mining tenure and predictable regulatory processes, in order for it to commit to higher risk for investment in mineral resource exploration, new mine development and the life of mine operations.
However, under the watchful and visionary leadership of the ANC it cannot be tolerated that the country becomes a pollution heaven, as seems to have been the case during the previous regime. Ownerless and derelict mines are a result of poor environmental regulation by the then uncaring minority government. Thus the department has established the mineral regulation programme to curb environmentally harmful mining practices, among other things.
Hon Ministers, in my constituency, near Allenridge, there is a place called Stinkdam. In winter it is very dusty and the people staying around the area cannot cook and eat because white dust settles on their pots, beds and tables. People are coughing.
In summer, when it is wet, it stinks so much that the people say they get asthma. That was the work of Anglo-Vaal in those days. There were no regulations that forced them to rehabilitate the land. This brings me to the issue of prospecting for oil in the Karoo. I agree with hon Sinclair and I think it is a good decision that the Minister has put together a task team to further investigate whether the technique used does not ultimately result in permanent environmental degradation, or, most important, constitute a hazard to communities in the area and the country at large.
In such cases the department must recognise that community confidence will only be gained where industry and the community work together co- operatively, openly and in good faith to develop and achieve mutually acceptable outcomes that are strictly enforced by government.
Perhaps as the country tries to attract investment in this sector, we should also consider, without causing what economists call a "regulatory chill", that exploration and mining companies - like they do in Australia - may need to obtain from the community what we call a social licence to operate, as part of establishing long-term working relations with all stakeholders.
The mineral policy seeks to develop new policy, review the existing policies and amend legislation to promote investment growth and achieve transformation in the minerals and mining industry.
According to Mr C Oman of Ghana, in his paper entitled, "Policy Competition for Foreign Direct Investment: A Study of Competition among Governments to Attract FDI", competition between governments to attract corporate investments appears to have heated up in the recent years.
He says that the reasons postulated for this include -
... large numbers of developing countries that have moved from closed to market-friendly economies in the 80s and 90s; the fact that the Organisation for Economic Co-operation and Development, OECD, governments have also moved to more deregulated and liberalised economies and are seeking to attract more investments; the increased mobility of capital; and reduction in barriers for international investments.
South Africa, being endowed with vast mineral reserves, has not escaped this competition, as is particularly evident in the mineral sector. He further points out that the debt crisis combined with deterioration in developing countries' terms of trade has led to a global movement away from state control of the mineral sector which began in the late 70s and gained momentum in the late 80s and 90s.
Thus, at the turn of the millennium, international investors faced an increasing number and variety of geologically interesting countries with acceptable legal and fiscal frameworks. Consequently, countries have had to compete among one another to attract investment into their mineral sectors on a continuing basis.
Whilst the ANC-led government is grappling with the right policies that have to be put in place to attract direct investment, it should not be a race to the bottom in so far as the environment and the health of communities are concerned.
In addition, mineral policies must combine with broader economic reforms. The mining industry, because of its highly capital-intensive nature and the high level of risk inherent in the activity, has led to the establishment by large multinational companies of a particular, refined system of contractual guarantees for the protection of their investments - to the detriment of the indigenous people.
Small-scale mining faces challenges because mining is very capital- intensive in nature and is very skills-intensive. As such, small companies or small, medium and micro enterprises, SMMEs, in mining need skills and capital in order to survive and not be kept on the periphery of recycling dumps and mining dumps.
Illegal mining is still taking place in parts of the Free State and in Mpumalanga, especially around Barberton. The reason for this is that these places are easily accessible. It is especially easy to find gold in Barberton because of the Greenstone Belt. These people know exactly where to find gold. In order to survive, they link up with syndicates involving big businesspeople who buy their gold. As a result, this continues.
However, we are aware that the department is clamping down on them and it is evident because I met one of the shopkeepers in G-hostel. He has a shop and butchery there. During the time when there was clamp-down on illegal miners he said he could only make a quarter of what he was meant to make because those chancers were the key people who were buying the stock.
Looking at other issues, the hon Van Lingen stated that with regard to the GDP the mining sector has decreased from 7% to 5%; that is true. The reason is that the mining industry these days has been in decline from the 70s.
Its contribution to GDP is nothing compared to the retail industry and the financial sector, because these two sectors - financial and retail - are the fastest growing in South Africa. As a result, the contribution of mining will automatically decrease.
However, what is worrying - I used to be a miner myself at Anglo-American - is that it was a strategy of Anglo-American during the 70s that, by 2020, they should have extracted less than 20% of the mineral resources in South Africa; that was the mineral intelligence of the department by then. So they moved to Ghana - they went out of the country to other places - because minerals there, gold and such, are still found close to the surface.
They still pay the people there low wages; that is why it is cheaper for them to mine outside South Africa. This is because when you mine gold in South Africa, as you go deeper and deeper the temperature increases due to the geothermal gradient, and so it becomes much more expensive to mine.
Due to the policies that have been put in place, South Africa is not on the top 10 list of fast-developing countries in Africa because the investors look to see where they can get their returns immediately.
South Africa was pollution heaven so those companies polluted those areas and did not rehabilitate. Now, as the country develops, mining becomes expensive because a developed country makes sure that people benefit from the mining sector.
Thank you, Chairperson. I think now that hon Gunda has joined the DA, he can sing his neocapitalist policies. That is all I can say. [Time expired.]