I am honoured to be addressing you today, at yet another sign of the growth of an industry once considered a sunset industry. This event takes place less than fifteen (15) days since I launched a bulk sampling manganese project in the Northern Cape.
These events are especially significant in the year of the Centenary celebrations of the oldest liberation movement in Africa. It is also striking that Council for Geoscience, a strategic State Enterprise charged with geological mapping of the country is also celebrating its hundred years.
There is nothing quite like such a milestone to force reflection, and to reinvigorate collective efforts towards shared goals. In South Africa, the shared vision is the eradication of poverty, and the reduction of unemployment and inequality. Central to achieving all of those, is a jobs rich economic growth path.
It is worth noting that mining contributes about 9.6% to our country’s GDP, and currently employs more than 500 000 people. Also important to note is that more than 60% of the country’s energy, and more than 90% of electricity generation is derived from activities associated with mining.
Against this background, therefore, today, as we celebrate the opening of this Thubelisha Shaft, there can be no doubt of the critical role coal will continue to play in our country’s energy landscape long into our nation’s future. With the pivotal role that coal play in our energy mix, I am heartened by Sasol’s R3.5 billion investment in this shaft and the fact that this investment will extend the lifespan of the Twistdraai Colliery to beyond 2039. This project would create another 1600 new jobs.
While South Africa has through its multilateral commitments and the Integrated Resource Plan 2010, made clear its intention to rebalance its energy mix, there is still a vital role envisioned for coal generated energy. This is even more so in the present. This is an area where the state owned mining company will play a strategic role.
Cabinet approved the Beneficiation Strategy during June 2011. Since the approval of this strategy, work has begun on developing frameworks for focused implementation of the Strategy across five pilot value chains; iron ore and steel, energy, autocatalytic converters and diesel particulates, titanium and jewellery fabrication. For these to be coherent and support industrial development and job creation, we will need certainty in the supply of energy.
With our sister departments, the Department of Energy and Public Enterprises and stakeholders such as yourselves, we are looking forward to making much needed headway towards a cohesive strategy to ensuring that the supply of coal does not constrain socio-economic development.
I am also pleased to announce that the Council for Geoscience has completed the first phase of the study commissioned on the “Coal Resources and Reserves of South Africa”. Without pre-empting the release of those results shortly, I can say that there are exciting implications for coal mining industry and for contributing to this on-going challenge of security of supply.
The role played by this industry is supported by the vast resources illustrated in the country’s world rankings. The country is ranked number 8 in terms of reserves and is the world’s 7th largest coal producer.
Government has stepped up its efforts to intervene in key bottlenecks to job creation, and in the case of the coal industry this includes the provision of infrastructure. It is works such as that being undertaken by the Council for Geoscience and on-going engagement with industry that will help us plan more effectively for the sector’s future infrastructure needs. This includes bulk water, communications, and freight rail and logistics infrastructure currently constraining potential in regions such as in Mpumalanga, Waterberg, etc. Here the challenge has been escalated to the level of the President through the Presidential Infrastructure Coordination Committee or PICC.
While there have been positive developments in the industry, there are challenges that stakeholders need to address. My Department is committed to the growth and sustainable development of the sector. To this end, we undertake our work through extensive consultation with other stakeholders through the Mining Growth, Development and Employment Task Team (MIGDETT). It was through this forum that infrastructure was identified one of the binding constraints to growth, and government’s elaborate plans to address were outlined in detail by the President during his State of the Nation Address this year.
Having said that, I need to indicate my concerns about pace of transformation and the areas that continue to undermine the gains we have made thus far. Areas such as low levels of implementation of Employment Equity by some mining companies, and low level of women representation at senior management level especially in decision making structures. Fronting, especially by women who do it on behalf of men.
During the implementation of SLPs, we have also detected an irregular practise by some companies that often change approved Social and Labour Plans (SLPs) without appropriate consent from the Department, and without properly consulting communities. I can only say that this constitutes a recipe for conflict and instability and must be avoided.
Procurement in the Mining industry
Procurement within the mining industry is another area of concern to my Department. Procurement, if properly implemented, has the potential to reconfigure the manner in which historically disadvantaged people have a real stake in the mining economy. It is disturbing that procurement benefits for BEE entities are often limited to peripheral areas such as catering, cleaning and gardening services. I do hope that as a company, Sasol would not want to be associated with this approach to procurement.
This is compounded by the so called ‘evergreen contracts’ which are open ended and never ending. We call on the mining industry to embrace the new transformation mind-set, and effect meaningful procurement. There is also a need for transformation champions within mining companies to mirror demographics in society, and not to remain entrenched in the past. It is an issue I will be raising during my meeting with MIGDETT principals later this year.
Integrated Licensing System
A fragmented regulatory and mining licensing system is identified as one of the impediments to investments and therefore the competitiveness of the South African mining industry, often leading to some mines operating without certain regulatory authorisations. This is caused by the fact that the current timeframes for obtaining a mining right, water use licence and an environmental authorisation are not aligned, which results in prolonged processes and unnecessary delays.
Together with the Departments of Environment and Water Affairs, we are reviewing the regulatory framework in an effort to put in place an integrated, and streamlined licensing system.
The performance of the coal industry with regard to safety has not been without progress but remains a challenge. Despite some improvements across the mining sector, we must guard against complacency which left unchecked has the potential to reverse the recorded gains of the recent past.
So the marching orders I wish to give to coal industry leaders, to Sasol, the managers of Twistdraai colliery, and the supervisors of the Thubelisha shaft is that one life lost, is one too many. Mine responsibly and with due consideration of the SLAM (stop, learn, assess and mitigate) exercise that has become an important standard in the mining industry, and the hallmark of South Africa’s recent safety gains.
Let me reiterate, that the coal industry will continue to play an important role in the economy of the country for the foreseeable future but it must reposition itself so as to changing global domestic priorities. In this regard, the industry needs to raise the level of investment research and innovation that mitigates the negative impacts resulting from the exploitation of this endowment.
Finally, I would like to close by once again congratulating Sasol and the Twistdraai family on this occasion. Working together on issues of the growth and sustainability of the industry we can indeed do more.
I wish you well.
I thank you!