Susan Shabangu – South African Minister of Mineral Resources – 2011 African Mining Indaba Conference Speech

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South African Minister of Mineral Resources – Susan Shabangu – 2011 African Mining Indaba Conference Speech – Cape Town, South Africa (February 8, 2011)

Honourable Ministers present
Captains of industry

Distinguished Guests

Ladies and gentlemen

Programme director

This forum continues to grow every year and brings together the best and the biggest in the mining industry. This year is no exception. Most of you have come from far and wide in search not only of opportunities but also for clarity. I hope I will do justice to your expectations this morning.

When I delivered this address last year, the world was just emerging from a deep recession. The resultant recession cut deep into the mining industry, however the economic recovery seems to have begun in earnest, with growth forecasts being constantly revised upward in the past few quarters. It is expected that the global GDP will grow at levels in excess of 4% by next year, with emerging economies being the fulcrum of this growth.

The expected economic growth is essentially driven by fiscal spending plans, mainly on infrastructure programmes in emerging economies, as well as increased household consumption, both of which are demand drivers for minerals.

It is for this reason that the mining industry is expected to grow at an average 4-7% in volumes terms during 2011, recovering to the levels preceding the crisis. The mining industry’s absorptive capacity of jobs to meet the demand and availability of expertise to respond to the emerging growth in mineral demand is currently in place, as a result of which it is expected that the 40 000 jobs that were lost during the crisis will be created during the course of this year.

The mood of the commodities outlook session of yesterday afternoon confirmed our view of a positive outlook in a short to medium term, even though the Eurozone economic situation remains a dark cloud over the global recovery pace.

South Africa is in an enviable position in that we have a meeting of minds between the three critical stakeholders of this industry, namely Government, business and organized labour, as evinced in the tripartite task team under the auspices of Mining Industry Growth Development and Employment Task Team.

It is exactly this approach of inclusivity that has guided this government’s participation and lead role in MIGDETT. When the industry said that we are not where we should be in relation to other mining jurisdictions, we did not hide our heads in the sand. We listened and acted.

The fact that our mining industry contracted during a boom which saw our peer jurisdictions recording average growth in volume terms of five percent was alarming and said to us something drastic needs to be done.

We were not even swayed by voices of doom that ascribed this contraction solely to regulatory uncertainty. MIGDETT sought to holistically investigate contributory factors to negative performance in order to distinguish fact from fiction. This work further identified other binding constraints to competitive growth of the mining sector including infrastructure, skills and research and development, to name but a few.

This MIGDETT process confirmed that even though the overall architecture of the legislation is robust, stakeholders identified gaps that presented elements of ambiguity which created room for multiple interpretations and inconsistent application of the law.

Synchronously I had also announced at the beginning of last year our intention to streamline our administrative processes for licensing in order to reduce the prescribed turnaround time for prospecting and mining rights applications by half.

I am delighted that yesterday I launched an online mining cadastral system, as an instrument to ensure consistency, transparency, accountability, and introduce uniform application, licencing evaluation procedures. This system is a vast improvement from our previous single layered NMPS to a 264 multi layer system which includes consideration for environmentally sensitive areas.

Further details of the new system and its functionality are available at our stand number 3010.

The launching of the system is a culmination of an extensive and detailed audit undertaken by my officials during the standing moratorium on lodgment of new prospecting right applications.

This audit revealed that despite a huge number of prospecting rights that we have issued since the promulgation of the MPRDA, there has not been a reciprocal exploration activity in the country. It appears that there is another wave of rights hoarding which may compel me to consider the “use-it or lose-it” provision imbued in legislation. To this end, over 800 notices in terms of sections 93 and 47 have been issued.

As part of enhancing administrative efficiencies, we embarked on a process of data clean-up of our NMPS system which also looked at cases of double granting. I need to inform delegates that of over 26 000 applications received since the inception of the MPRDA, errors or cases of double granting discovered todate amount to 122.

Lessons learnt from this audit will be infused into the compliance inspection framework in future. During the same period we also detected tendencies of announcing transactions to the public that have not passed the regulatory test. We would like to urge the industry players to act in a responsible manner.

As part of the process of removing elements of ambiguity we have strengthened the construct of the Mining Charter as well as its scorecard. We further recognized industry connectedness to other sectors and departments and therefore embarked on a process of sequencing our pieces of legislation that affect our licensing in order to eliminate the fragmentation in the licensing process. We are engaging all other affected departments to develop a seamless one-stop-shop for all licensing requirements. All of these processes are directed to further strengthen our mining regulatory environment.

The MIGDETT process further illuminated in critical infrastructure shortages as a binding constraint to growth. Whereas infrastructure is not a competence of the mining stakeholders, we recognize national infrastructure planning processes that have previously not considered mining-specific infrastructure requirements in their implementation.

As Government I am proud to say we have imbued an intergrated planning mechanism that will henceforth prioritise significant infrastructure requirements of the economic growth points of which mining is one. The New Growth Path has identified both mining and mineral value addition as one of the key contributors to economic growth and job creation.

In addressing the critical shortages in requisite skills that sought to underpin competitive growth of the sector, stakeholders have agreed to ramp up investments in human resources development, targeting the greatest areas of shortage such as plumbers, electricians and so on.

I am however concerned about the lack of investment into research and development in this sector. Notwithstanding the pockets of excellence in a handful of research initiatives, the South African mining industry features at the lowest ebb relative to high performing jurisdictions in terms of growth.

Mindful that this industry is water and energy intensive, in a country where demand supply balance of these critical commodities is fairly precarious, it is important that efficiency with which we consume both is expeditiously ramped up. For instance, Mintek has initiated a project in this space aimed at improving the efficiency of water and energy usage. In this regard the use of sensor ore sorting to better separate ore from waste, thereby improving project economics and better utilising ore resources, is a very promising technology option.

The Council for Geoscience is working hard on mapping out the availability of coal reserves in the country. As you all know, coal plays a vital role in South Africa’s domestic economy and particularly as a source of energy for power generation and revenue from exports. Currently 61% of local coal sales are used for power generation in South Africa and this figure is expected to rise sharply with the imminent increasing demand for energy.

Programme director

All of these activities demonstrate the commitment of stakeholders to collectively address the challenges of growth in the mining industry and unlock the inherent value of our minerals sector.

It is my firm view that this work will result in a more buoyant and robust minerals sector that will benefit all of those who are involved. I would also like to take this opportunity to encourage all of you to contact us should you have information that seems out of sync with what we have presented here today. With these few words, I would like to welcome you to our beautiful country and hope that you will use this opportunity to visit other areas of interest of which they are plentiful.

The Mining Indaba is indeed, the right address for global players in the industry presenting opportunities for sharing knowledge and developing partnerships for all of us who have a common interest in unearthing the mineral reservoir within the belly of Mother Earth.

The socio-economic plight of Africa hinges on the responsible development of its mineral endowment in partnership with yourselves.

On behalf of the Government and the people of South Africa, you are all welcome to our country, particularly to the Mother city and wish you all the success in your deliberations.

I thank you!