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.]