Host Minister for Foreign Affairs, Honourable Bob Carr,
Ministers from the breadth and width of the African Continent,
Members of the Diplomatic corps,
Mr. Bill Repard, Executive Chairman of Paydirt Media,
Captains of industry,
Ladies and Gentlemen,
I am profoundly honoured to address you today. This conference has become a key part of our engagement with the global mining community. Each year we appreciate the opportunity to engage with this forum, which convenes protagonists in the mining industry, including, albeit not limited to key policy makers from the African Continent, mining entrepreneurs, analysts and academics.
The African Continent has begun the journey of the African Century, which is focussed on accelerating socio-economic development, to eradicate poverty, inequality and ultimately enhance the living standards of the African people. This journey started with Africa cleansing herself of the ravages of wars and political instability that previously characterised the Continent. She chose democracy to prevail over all else, as confirmed by the incremental geo-political stability in the Continent over the past few decades. It is this geo-political stability that set the tone and pace for economic development, incremental investment and ultimately prompted the journey towards sustainable development of the Continent.
This journey is also characterised by a sterling track record of the fight against disease that threatened the optimal realisation of Africa’s true potential. For instance, the fight against HIV/Aids in the Continent is beginning to yield desired results, with infection rates on a steady decline throughout the continent.
The mineral development potential of the African Continent is unparalleled. Notwithstanding limited geo-scientific knowledge of the Continent, it is host to most of the minerals needed for development the world-over. Nevertheless, Africa remains grossly under-explored for its mineral potential. For instance, the exploration expenditure per square meter averages 65 US dollars in Canada, Australia and Latin America, whereas the African equivalence remains below 5 US dollars per square kilometre. The mineral exploration prospect in Africa remains extremely high, requiring both local and international partners and investment to unearth.
This requires responsible investment in the continent, not based on exploitative principles centered solely on expectations for unrealistic rates of returns that are disguised on the principle of high risk – high return. As you know, mining is a long term investment and not about quick wins. Those who balance Africa’s mineral development with growth will ultimately receive the greatest reward in a long term.
A few weeks ago I had the privilege of accepting the responsibility on behalf of the South African and the entire African geoscience community, to host the 35th International Geological Congress (IGC35) in Cape Town in 2016. Let me congratulate the Australian government and the geosciences community for the excellent work achieved through hosting of the IGS34. It is our intention to work collaboratively with the entire African countries and indeed international partners to focus on enhancing geo-scientific knowledge in the African Continent for development. The huge impact of the increased demands on Earth’s shrinking resource base as result of unprecedented population explosion of recent years will be even more important in 2016 for Africa’s mineral development. In addition, the constant need to address the legacy of mining and the effect it has had on the environment will become even more important, not to mention the increased pressure on world-wide water and energy resources.
The Australia-South Africa relationship is best expressed in the respective national rugby teams, which epitomises the extent to which trans-Indian ocean nations can co-operate vigorously in pursuit of a common objective. I’ll curb my enthusiasm to declare the leading nation in this relationship.
While we have the world most abundant resources and reserves of platinum group metals in South Africa, the sector experienced a supply demand imbalance last year. This resulted mainly from a significant slow-down in demand from the traditional consumers of platinum, reaching its lowest ebb during the course of this year. For the mining industry and platinum mining jurisdictions, the ramifications of depressed demand for platinum are severe, especially at the time when the cost inflation for production is reportedly high.
As a consequence, I established a task team under the auspices of the well established tripartite in the mining industry, namely, the Mining Growth, Development and Employment Task Team (MIGDETT) in June this year to investigate both short and medium to long term interventions sought to mitigate against the negative impact of the afore-stated challenges on development and indeed employment in the platinum sector. While the task team was progressing exceptionally well to execute its mandate, the platinum sector and the nation at large faced the unfortunate events that unfolded at Marikana two weeks ago.
As a responsive Government, President Zuma immediately visited Marikana few hours after the tragic developments there, not only to convey condolences, but to immediately establish an inter-ministerial committee consisting of 10 Cabinet Ministers to provide immediate support to families and relatives of victims. The President further established a Judicial Commission of Enquiry to investigate how a labour dispute between mineworkers and employers rapidly degenerates into violence and such a tragic national issue. The President and people of South Africa are determined to isolate bad elements in our society that are seemingly committed to undermine the democratic gains of the country to date.
In keeping with our industry’s well established culture of tripartism and supportive of the President’s afore stated work, we held the work of the platinum sector task team of MIGDETT in abeyance to focus on the national crisis at hand. I commend the leadership of the organised labour movements in the industry and business for working with Government in seeking to collectively develop modalities of ensuring that the Marikana tragedy is never repeated anywhere else in this industry.
South Africa is a progressive Constitutional democratic State, which enshrines the right of workers to organise. We are equally a country with laws within which such a right can be duly exercised. At the time of introducing major regulatory reform in mining a decade ago, we imbued this framework with the notion of “social license to operate”, which became a benchmark shift from traditional Corporate Social Responsibility. This notion included transformation of the mining sector in terms of, amongst others, living and working conditions of mineworkers, community development and workplace diversification.
In my pronouncement of the mid-term progress in 2010 in respect of transformation of the mining industry in South Africa, I highlighted major inadequacies in the implementation of the mining charter (with emphasis on social and labour programmes). Whereas this is not the time for us to be pointing fingers, let me re-emphasise that the mining industry cannot grow sustainably unless it can claim its legitimacy to its host jurisdictions, employees and host communities. The investment in the mining industry cannot continue to demand unrealistic and perpetual short-termism in expected investment returns, whereas this is a long term industry by its very character.
The continued negligible social investment in communities proximal to mines and fetid living conditions under which most mineworkers are subjected to, whilst rushing for immediate returns are unfortunately some of the risks to the sustainability of the mining industry all over the world and require immediate attention, in addition to all other elements of the transformation framework that was put in place a decade ago.
Let me hasten to reaffirm that we are a nation that has faced, with courage and determination, grave challenges to our shared and continued prosperity in this democratic dispensation, we are determined to uphold this principle to defend our hard fought and earned democracy. In so doing we urge our investors, incumbent and prospective, to take comfort in the solid foundations set by our Constitution, government, legal and civil institutions and the leadership shown by our government as well as various other institutions of significance in our society.
I had mandated my former Director General and subsequently senior advisor to address this forum in my absentia last year. You may recall that at this time, there were huge speculations on the debate in South Africa around the role of the mining sector in contributing to the national priorities of addressing historic inequalities and economic perversions. As we indicated last year, that debate will reach its conclusions within the ruling party in 2012.
We are in a process of finalising modalities of hiving off a State Owned Mining Company to participate in the mining industry on equal footing and not receive any favours from Government. It is for this reason that I have withdrawn the Gazette that sought to exempt this company from certain provisions of the law. This presents opportunities for joint-venture developments with the State Owned Mining Company on new as well as well established mining and mineral beneficiation companies to explore the value proposition of these opportunities of partnerships in mineral development in South Africa and outside of the country.
We have a tradition in South Africa of banding together in times of crisis. We did this in the eighties and early 1990s while some skittered nervously around the prospect of a non-racial democracy. We did this again when we embarked on a program of transformation while some warned against it, advising a business as usual stance that surely would have undermined progress made since in the name of stability.
We did this yet again when the world was in the grips of an economic crisis, the scale of which we have not seen since the 1930s and the cause of which we are told was the irresponsible, predatory profiteering of some delinquent capitalists.
In 2008, the South African mining industry tripartism carved the mining sector strategy, as a response to the crisis and the basis to the shared vision for the future. The product of that endeavour, the “Mining Industry Sector Strategy” set as the pivot of the future of mining and emphasised on the inextricable nature of transformation and sustainable/competitive growth in the country’s mining industry.
As a responsible regulator, cognisant of the need for stability in investment decisions, we ensured the seamless implementation and limited potential disruption of this landmark reform by allowing for a transitional process. We have now concluded the review and amendments of the Mineral and Petroleum Resources Development Act of 2002, which will be presented to Parliament shortly. These amendments will effectively remove any inherent ambiguities in our legislation, streamline our administrative processes and enhance provisions for more appropriate sanctions, amongst others.
Excellencies, honourable delegates, ladies and gentlemen
Ensuring a fair return to the societies in which we operate as an industry goes beyond the cliché of corporate social responsibility. It requires finding ones relevance in the goals, and aims of the people. In South Africa, the goals of the country with regards to the mining industry go beyond growing the number of sustainable, transformed enterprises, mines and operations. Central to South Africa’s economic goals is transforming our comparative advantage in minerals into a competitive advantage on which a vibrant mineral beneficiation industry as linked to our national industrial development framework should be harnessed.
Notwithstanding the current platinum market imbalances, the potential for use of platinum in the catalysis market underpinning the hydrogen economy is not insignificant. We are exploring this potential, amongst a suite of other potential energy supply solutions that consume our minerals. This evaluation is located within the mineral beneficiation policy of the country, as a continuum of opportunities for investment and further development. These solutions are not only intended for South Africa, but as the global solution to such challenges as energy security and global warming.
It is clear that the mining industry has a fundamental role in the “derived market” for its own products. The industry has opportunities to partner with other parties to jointly explore future uses of its own products that will diversify uses of the mineral and also contribute towards its own sustainability. South Africa has created an enabling environment for this partnership to be explored in the country.
Programme Director, South Africa is ready and open for business. We are working very hard to ensure that mining infrastructure requirements are adequately featured in the Presidential coordinated infrastructure build program to address issues of maintenance and efficiency in our considerable network of existing infrastructure and building on that stock to unlock the mineral potential in non-traditional mining development nodes, such untapped mineral resources nodes of coal, platinum, iron ore, and manganese across the country.
Excellencies, honourable delegates, ladies and gentlemen,
I acknowledge the growing presence of Australian companies in mineral development across the continent, especially in the past decade. For instance, Australia has established 52 diplomatic relations with African countries. Accordingly, trade and investment amongst Australia and the African countries has grown steadily with an average annual growth of 6 percent over the past decade, cumulatively reaching 5.8 billion dollars by 2010. There are over 220 Australian mining and oil companies in Africa with 600 projects spread across 42 African countries.
This demonstrates the confidence of the Australian business in Africa, while the African Ministers, Deputy Ministers and Senior Government officials from Africa are here to reciprocate the confidence of Africa in Australian companies. This relationship must benefit both host mining jurisdiction and the investor alike and not one over the other, as the current characterisation of this relationship prefers the investor over others. There is sufficient experience to confirm that the latter presents the greatest risk to both the company and the host government in a medium to short term.
I have every faith that we shall compliment each other’s strengths to lessen our individual weaknesses.
I invite you to be part of an exceptional journey towards the African Century – in which all participants in this journey have something to celebrate.
On behalf of the Government and the people of South Africa and the entire African Continent, let me express our sincerest condolences to the people of Ethiopia for the recent and untimely passing of Prime Minister Zenawi.
I thank you