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.]