2.1 Point Of Departure

2.2 Background Information And Perceptions

1. Racially discriminatory practices rooted in the early origins of the mining industry have been carried through into South Africa's democratic era.

2. Middle and senior management positions in the mineral industry are occupied predominantly by whites, largely as a consequence of apartheid legislation and practices.

3. The racial ownership patterns which grew in the diamond and later gold mining industries, provide the origins of today's situation wherein significant control of the major mining houses lies in the hands of a small group of exclusively white shareholders.

2.3 Issues and Arguments

1. The principle of equity must be applied to overcome past discrimination and to realise the optimum potential of all participants in the mineral industry.

2. The competitiveness and long term success of the mineral industry will depend fundamentally on the development of all available human resources.

3. Training, development and career advancement programmes are being implemented by companies to enhance the contribution made by all employees and hence their progress to higher occupational levels.

4. To create conditions in which employees of all races can compete equally on the basis of merit, companies are committed to remove any discrimination which still exists and facilitate the development of disadvantaged persons.

5. The challenge facing the industry is to recruit more black people and to ensure they occupy positions of real power and discharge their responsibilities with competence.

6. Black ownership and participation in the mining industry is essential for South Africa's development as a democracy.

7. There is much to be gained by creating among mining and other employees an understanding of the opportunities for share acquisition through the stock exchange.

8. Measures to increase black participation and ownership require a long term approach to mobilise the necessary capital and to acquire attractive operations.

9. Nationalisation is not necessarily an effective method to effect equity and efficiency changes to conglomerates and would divert scarce resources to compensate existing owners.

10. There is a need to democratise the mining industry, both in terms of its ownership and in terms of worker participation in decision making. Mechanisms need to be developed to allow workers to take ownership stakes in mining companies and influence their policies.

2.4 Policy Proposals - Views Expressed

1. Commit stakeholders to remove discrimination which still exists and facilitate the development of disadvantaged persons.

2. Investigate measures to increase black ownership and participation in the mining industry.

3. The recruitment and deployment of black people into positions of real power should be achieved through voluntarism and emphatically not through Government intervention, particularly if the latter were to involve compulsory quotas.

4. Affirmative action programmes, based on human resource development strategies, must be adopted at every mine to increase the proportion of blacks at senior levels.

5. A Workplace Anti-Discrimination Act should be passed to provide for an official audit of the extent of racial discrimination at every mine and to put in place a procedure, backed by law, to remove racial discrimination.

6. The Department of Mineral and Energy Affairs must be transformed by an appropriate affirmative action plan, based on a transparent and detailed programme for change that will lead to the department becoming reflective of a democratic country.

7. The evolution of a better spread of ownership should take place through natural business activities and not through Government intervention.

8. The State should take a constructive interventionist role in altering the patterns of ownership in the industry and promoting black ownership at all levels.

9. Measures to dilute control of the mining industry by a minority of shareholders and increase participation by a wider spread of citizens through steps such as effective employee share ownership schemes and management and worker buy-outs should be investigated.

10. To allow workers to take ownership stakes in companies the following mechanisms should be investigated:
    • Using retirement funds that have significant investments in the mining industry to entitle workers to nominate directors to the conglomerates that administer the mines;
    • Changing the Companies Act and tax laws to make employee share ownership plans a real option for mineworkers and their retirement funds to take control of certain mines through leveraged buy-outs;
    • Setting up trust institutions to allow mineworkers, on a collective basis, to accumulate meaningful equity stakes in the mining industry. This process should be encouraged and facilitated by the Government as part of its programme of black empowerment.

3. Resource Management

3.1 Mineral Rights

The policy shall recognise State as well as private ownership of mineral rights and shall encourage utilisation of such rights within prevailing economic conditions.

3.1.2 Background Information And Perceptions

1. The South African mineral rights system is a dual one in which mineral rights are held by both the public and private sectors. These mineral rights can be classified into four further categories: mineral rights in respect of tribal land and owned by the State or tribes; mineral rights owned by the State; mineral rights owned by the surface owners, e.g. farmers; mineral rights owned by mining companies.

2. Aside from parts of the USA and South Africa, and a few exceptions elsewhere, most countries assume public (crown or State) ownership of mineral rights. In countries such as Canada and Australia, management of crown mineral rights is transferred to the Provinces or States.

3. Many countries, particularly emerging countries in Africa, the East and more established countries such as Argentina, Brazil and others have reviewed, or are actively reviewing their mineral rights and related policies, and the international trend has been towards the public ownership of mineral rights.

4. Presently, in South Africa large companies are identifying suitable deposits amongst their mineral rights holdings and exploring how to make these opportunities available to small scale operators. Some foreign mining companies already have a presence in South Africa and other are discussing joint ventures and acquisition of mineral rights with local companies.

1. To recognise State as well as private ownership of mineral rights and to encourage the use of such rights.

2. It has been stated that private mineral rights should be returned to the State as is the case in much of the rest of the world, including those countries which have successful mining industries and in which small- and large-scale mining takes place side by side. This latter aspect is an important feature of many other countries which have successful exploration and mining industries.

3. It is also argued that the system of private mineral rights has been ideally suited to the effective utilisation by the private sector of South Africa's unique ore bodies which have required substantial investment. This has been achieved by ensuring the security and continuity of tenure which are essential to investors' confidence to undertake large-scale and long-term projects.

4. It is notable that a system of State-held mineral rights has not prevented high-cost, long term mining projects in countries such as Chile and Australia.

5. Private mineral rights owned by mining companies are largely related to deposits unsuitable for small-scale exploitation and are held as part of current or long-term, large-scale mining plans. Local owners should also be judged on their outstanding track record for the development of complex ore bodies.

6. Criticism has been made that private ownership of mineral rights has resulted in the freezing of mineral rights and barriers to entry of new investors. Some mining companies consider South Africa as a low priority exploration locality due to the un-competitive system of privately held mineral rights. It has also been noted that whereas South African companies and their subsidiaries are quite amenable to competitive exploring and mining in other countries with State-held mineral rights systems, these companies in effect seek to prevent a more competitive system in South Africa by arguing for a retention of privately held mineral rights.

7. Optimal exploration and exploitation of South Africa's mineral resources is required to ensure that mineral rights are not sterilized and that a healthy small commercial mining sector can develop side by side with the large mining industry.

8. Mechanisms should be set in place, e.g. a Small Mines Bureau, to support and organise small-scale/artisinal mining on a managed basis.

1. Security and continuity of tenure for mineral exploration and mining is essential to encourage high-risk exploration and to ensure that companies marshal large sums of money to undertake mining, and that there is certainty of the right to proceed from exploration to mining, provided pre-defined criteria are met.

2. The power to grant mineral licences should reside with one authority and not be subject to overlapping or concurrent jurisdictions (the lack of clear rules will hinder the orderly development of mining).

3. A suitable legal framework for small-scale mining (organized micro-scale mining) may be necessary, such as the creation of special mining zones with a high small-scale mining potential. Appropriate mechanisms should be introduced for organised artisinal mining to access mineral rights which could have the potential for mining.

4. Companies and individuals should be encouraged to establish joint ventures, and review and give up unused mineral rights to the State. A properly managed system should be created to allocate these rights to small miners and junior companies. This should be done on the basis that exploration is conducted according to acceptable business and technical plans over structured periods of time. A participation or equity right should be available to the original owner in the event of a discovery.

5. Mineral rights must be returned to the State (publicly owned) and a system of State (Crown) held mineral rights, which are leased to companies, be introduced.

6. State-held mineral rights should be more accessible, especially (but not necessarily) for small-scale ventures.

7. Where the State is the holder of mineral rights, a system of licences or rights should be introduced, consisting of prospecting, exploration and mining licences with limited periods and work commitments, which will ensure a turnover of exploration properties and encourage new investors. The minimum work requirements should be substantially less than any mineral rights tax to encourage the return of privately held rights to the public domain. Mining licences must be of sufficient duration to make exploration and development commitments worthwhile and retention licences be granted for projects that are not economically feasible at any point in time due to clearly demonstrated economic circumstances.

8. The existing system of public and private ownership of mineral rights should be retained.

9. Any change to the existing system of mineral rights should be made with circumspection as it has served the country well.

10. The freezing or sterilising of mineral resources in areas of privately owned mineral rights should be discouraged and the imposition of a mineral rights tax, deductible against any exploration expenditure, should be considered. If the private owner of mineral rights abandoned them to the State, he/she should have first option on an exploration license over the same area, in exchange for submitting all past exploration data on the property.

11. To prevent monopolisation of territory, it may be necessary to limit the number of licences that can be granted to any one company or group of related companies.

3.2 Security Of Tenure

The policy shall provide for indisputable security of tenure with regard to mineral rights and prospecting and mining authorisations.

3.2.2 Background Information And Perceptions

1. The process of exploring and developing a mineral project is a high-risk venture that becomes increasingly expensive with each stage in the process. Certainty of mineral tenure is essential in providing the individuals and companies committed to exploration and development, and the investors who choose to support them, the confidence that their investment is protected, and that new investment will follow.

2. Security of tenure includes certainty that upon obtaining an exploration license an individual staking a claim, that individual is exclusively entitled to further explore, develop and acquire the mineral rights under claim and develop the property and project through to production, as long as all statutory and regulatory obligations are met and required approvals obtained.

3. On the other hand, governments need some latitude to manage public resources during periods of rapidly changing public policy. The challenge to governments, therefore, is to balance the needs of the mining industry and other stakeholders so that the industry has a high degree of certainty with respect to mineral tenure and governments can continue to develop public policies, subject to clear guidelines on issuing and modifying or revoking mineral tenure.

1. To ensure certainty and continuity with respect to mineral tenure and the process for acquiring the right to mine as described in legislation.

2. To ensure that confidence is created by total security and continuity of tenure as offered by the present system, which allows private ownership of mineral rights.

3. To ensure that Government has, and communicates, clear policies on mineral tenure, revocation and compensation.

4. To ensure that, for companies in compliance with regulatory requirements, revocation of mineral tenure is used only in extraordinary circumstances and that appropriate compensation occurs in a fair and timely manner.

1. Security and continuity of tenure must be assured.

2. There must be a high degree of certainty with respect to mineral tenure. Government must be able to continue to develop public policies, subject to clear guidelines on issuing and modifying or revoking mineral tenure.

3. Excessive cross cutting legislation which may impact detrimentally on security of tenure must be minimized and mechanisms must be set in place to trigger interaction between different government departments to ensure that issues (eg. environmental legislation) that may impact on mineral and mining projects and security of tenure thereof, can be addressed in an appropriate and timeous manner.

4. Exploration

4.1 Points of Departure

1. The policy shall ensure equitable and orderly access to and optimal exploitation of the country's mineral resources.

2. The Government shall support and co-ordinate surveys, investigations and research which are essential to stimulate the optimal development of the country's mineral resources but which cannot be conducted within the normal business-risk limits of private industry.

4.2 Background Information and Perceptions

1. Mineral exploration is a costly, high-risk activity, which nevertheless requires to be maintained at a high tempo as a means of establishing new sources of ore in the course of the continued development and growth of a mineral industry. Cognisance must be taken of the fact that all mineral deposits are finite; moreover, they should be regarded as a wasting asset in that, once exhausted, the minerals they contain cannot be replenished.

2. South Africa is well-endowed with an extensive variety of economic minerals. While some of these are found in vast deposits, there are those which occur in accumulations of limited size. Consequently, if South Africa is to retain its status as a reputable mineral exporter and continue to meet its commitment to the local market, it remains imperative that its portfolio of mineral availability be expanded; a basic necessity for this is the creation of a buoyant climate for ever-accelerating exploration endeavours.

3. The most important aspects determining the attractiveness of a country for mineral exploration are: geological potential; general investment climate; availability of basic geological and exploration-related information; access to prospective geological terrains; and the regulatory environment.

4.3 Issued and Arguments

1. The degree to which the mineral rights system allows for access to prospective geological terrains.

2. The degree to which the investment climate is conducive towards attracting exploration activities.

3. The current availability and accessibility of basic geological and exploration-related information. Present structures allow only for fragmented access to information. Records of previous exploration data can legally be made available only after 15 years, and in practise are not made available at this time.

4. The capacity of the Council for Geoscience is regarded as a favourable factor; however, the status of this institution as a statutory body is viewed as a drawback in respect of development of the industry, due to the fact that it is required to generate a proportion of its operating budget from contract work.

5. The mobilisation of funds for exploration by small mining companies is inhibited by the regulatory structure of the Johannesburg Stock Exchange.

4.4 Policy Proposals - Views Expressed

1. Government should supply a sound information and research base in respect of geological and exploration- related data.

2. Information must be readily accessible to all potential prospectors, by means of, eg. a "One Window Approach", including aspects such as geology, mineral rights, fiscal and regulatory matters, statistics, etc.

3. Prospecting data should be furnished to the State.

4. Historical exploration information should be available to prospective investors.

5. Historical exploration information in respect of State-owned mineral rights should be made available immediately once the rights of the prospector lapses.

6. Exploration activities should be encouraged by means of incentives, such as tax benefits.

7. A basic infrastructure should be maintained by Government in order to facilitate effective exploration activities.

8. Potential areas for exploration should be turned to account (ie. explored) and not be sterilised ("use it or lose it" principle). The mineral rights system should be reviewed to ensure that areas do not become sterilised and that a healthy small exploration and mining sector is encouraged, but also that security of tenure is ensured for long-term capital-intensive projects.

9. Prospecting data in respect of privately held mineral rights constitute valuable intellectual property obtained at risk and expense and free market principles should be recognised in the publication and trading of such data. The commercial interests of the prospector should not be jeopardised.

10. The Council for Geoscience should revert back to being a government department in order for it to be able to concentrate fully on its developmental and investment promotion functions.

11. The practise of withholding prospecting information (15 year period and extension thereof) on land that is no longer being explored should be replaced by a system that requires the submission of all exploration data to the State authority and the release of this information after a much shorter period or immediately once mineral rights are given up.

12. The Government should examine whether or not prospecting is freely encouraged on State-owned land and that existing prospecting data in respect of State-owned mineral rights are available to potential investors.

5. Environmental Management

5.1 Point Of Departure

5.2 Background Information And Perceptions

1. Sustainable development in South Africa would require the optimum utilisation of all the natural resources of the country. Government will, therefore, have to ensure that the costs with respect to the environment are not inequitably externalised by the activities of the mineral industry. However, it would also require that much needed economic development not be abrogated by unscientific and emotional pressures in respect of the environment. This will call for:
   • A greater public awareness of environmental considerations;
   • A coordinated and integrated approach to the planning, management and utilisation of all natural resources;
   • Realistic and effective standards for environmental protection, the prevention of water and atmospheric pollution, and the rehabilitation of surface areas affected by mining operations;
   • Ongoing research with a view to upgrading the standards and practices in operation for the preservation of the environment and the control of water and air pollution.

2. Given that mining activities have an impact on the environment, there are three areas of environmental challenge: Minimising the environmental impacts of exploration; ensuring that for currently active and future mine sites, regulatory mechanisms and financial assurances are in place that achieve both environmental protection and economic viability; and rehabilitating sites where a mining activity has ceased.

3. Experience from other developing countries has shown that uncontrolled artisanal mining frequently causes severe environmental damage and has other deleterious implications for the country.

5.3 Issues And Arguments

1. The maintenance of a balance between encouraging development and maintaining high standards of environmental management.

2. Potentially cross-cutting environmental legislation and regulation introduced by different State departments and private member's motions.

3. The management of environmental damage caused by small-scale and artisinal miners.

4. The establishment and administration of rehabilitation funds.

5. Acid mine drainage from the sulphur-rich gold and coal mines.

6. The cost and administration of the Environmental Management Programme Reports (EMPR's).

7. Future trade barriers could be based on the environmental effects of production methods that do not take into consideration environmental degradation.

8. Consultation with local communities and others affected by mining operations.

9. Certain countries have adopted a positive approach towards prospecting and mining in protected areas and specifically in national parks. Prospecting is permitted in these areas subject to certain conditions. If an economically viable ore is identified, the issue then becomes the conditions and controls attached to the mining licence. This policy accepts that mining is only a transitional form of land-use and attempts to prevent the mineral wealth of the country from being sterilised.

10. The environmental impact of mining can be minimized by: careful exploration; mine design and operation, including risk assessment; and appropriate management policies, programs, and procedures. Prevention of post-closure impacts requires effective site reclamation and monitoring. Voluntary programs emphasizing a comprehensive risk management approach can anticipate and prevent problems and supplement a regulatory approach.

5.4 Policy Proposals - Views Expressed

1. A balance must be maintained between environmental concerns and economic development.

2. The "polluter pays" principle should apply.

3. To investigate the feasibility of a one-stop shop for processing mining-related environmental legislation and regulation through the establishment of the DMEA as the lead agent with seconded professionals from the Departments of Environmental Affairs, Water Affairs and Forestry, and Agriculture.

4. To educate small-scale miners on environmental management as a pre-requisite to being granted mining authorisation.

5. To provide for intensified State management of areas where there is a high spatial concentration of small-scale miners.

6. To provide for broad consultation on mining environmental issues at planning and EMPR stage, particularly with the communities directly affected by the mining.

7. To introduce State-managed water management schemes in catchment areas affected by acid mine drainage, the costs of which would be met on a pro-rata basis determined by water quantity and quality, as is done for the SIMRAC programme.

8. To create mine-specific trust funds instead of the current format of rehabilitation funds, and to have these funds to cover all aspects of mining impact, managed by boards of trustees which would include all stakeholders, particularly the affected communities.

9. To make the funds more affordable by replacing the up-front single sum guarantee by a production related sinking fund based on estimates of costs of rehabilitation at cessation of operations.

10. If Government wishes to encourage artisinal mining, as distinct from small-scale mining, it will need to put in place special mechanisms to ensure effective environmental management, the costs of which should be borne through explicit budgetary allocations.

11. To investigate applying a mining levy, part of which should be used to repair past damage where the perpetrator cannot be identified and future damage that cannot be linked to a specific producer.

12. South Africa should endeavour to ensure that the environmental policy complies with international norms of mining.

13. South Africa's environmental regulations should take cognisance of the stage of economic development of the country as it cannot afford that environmental protection regulations follow the example of highly developed countries, where prospecting and investment in mining have been substantially diminished as a direct result of ever-higher standards.

14. Subject to environmental factors, mining should continue to take precedence in use of land.

6. Small Scale Mining And Mineral Development

6.1 Point Of Departure

6.2 Background Information And Perceptions

1. A flourishing small-business sector usually increases competitiveness in an economy and is an efficient vehicle for the creation of jobs. The development of small-scale mining and of mining in underdeveloped regions would also increase the portfolio of minerals being produced and could lead to the exploitation of resources that would otherwise have been sterilised. In addition, it could provide a channel for increased access to the mining industry.

2. Small-scale mining already takes place on a sizeable scale in South Africa, much of it concerned with the utilisation of aggregate and other mineral deposits used as construction materials.

3. The provision of housing and related infrastructure is one of the main objectives of the RDP. To meet this objective, aggregate and sand will be required in sufficient quantity and at acceptable costs.

4. Exploration and mining operations vary from artisanal to small, or micro, scale mining, through junior resource companies to large-scale activities. Developing and expanding a junior resource sector has different requirements to the small-scale sector.

5. In many countries with large mining industries, both small and large exploration and mining companies compete competitively and successfully side by side. This allows for the exploitation of small (low capital) and large (high capital) projects and provides opportunities for more entrepreneurial operators.

6. Worldwide, it is apparent that many new and major ore deposits have been located by small and lean exploration companies, who make decisions efficiently and rapidly. Typically these companies locate deposits and then go into joint ventures with large companies, who provide capital and technical expertise to develop major projects, thereby providing a healthy synergy between big and small operators.

6.3 Issues And Arguments

1. South Africa has a noticeably inactive micro- and small-scale mining sector (outside of aggregate and sand production), principally due to the following factors:
   • lack of access to mineral rights;
   • lack of a comprehensive support system and an appropriate institutional and legislative framework;
   • the presence of an active anti-small-scale mining tradition.

2. Some large companies include in their mineral rights holdings deposits that are amenable to small-scale mining.

3. Government, itself, should play a constructive role in making State-owned mineral rights available to small-scale operators on State-owned land.

4. A comprehensive small-scale mining support system should be established. Such a system will go a long way towards encouraging small-scale operators to cooperate with the State, thereby resolving to some degree the common problem of "illegality" of Small Mining Enterprises (SMEs).

5. The small-scale mining sector should be developed through finance and support of the Small Business Development Corporation (SBDC) or similar funding organisations, which require that the enterprise be run in accordance with sound business practice.

6. Previously, small companies have been floated on the JSE and abroad for the purpose of operating small scale mining projects, but many did not succeed because of poor technical and financial decisions, and a tendency to speculate rather that create sustainable mining ventures.

7. Presently, it is difficult to raise venture and risk capital to allow the financing of small companies.

8. The Department of Mineral and Energy Affairs and the mine inspectorate should develop a programme to address health and safety problems on small-scale mines and mining operations. These mines have particular health and safety problems and inadequate resources to address them.

9. Entrants to the small-scale mining sector should not be unfairly advantaged by lowering standards of safety, health and environmental management to the detriment of established operators.

10. The construction materials industry has become more concentrated as more firms have closed down due to economic instabilities. This will require new and old quarries to be opened at the potential construction areas in order to meet RDP housing targets.

11. Due to the fact that the economic exploitation of low-value, high-bulk commodities such as aggregate and sand is very sensitive to transport costs, resource development and the future availability of these materials is endangered by the sterilisation of resources due to uncoordinated and unplanned urban development.

12. Although the mining industry has made a major contribution to the macro-economy of South Africa in the past, its activities have often led to unequal and inequitable spatial patterns of distribution of economic activity and benefit. By and large, mineral exploitation activities had little lasting benefit to the inhabitants of the underdeveloped regions of the country.

6.4 Policy Proposals - Views Expressed

1. Methods must be considered for lowering barriers to entry to small and medium exploration and mining enterprises.

2. Small scale mining should only be encouraged where it can provide safe employment at a decent wage and will rehabilitate the environment.

3. Micro-mining should be controlled and supported but not encouraged, unless it stands a good change of transformation into a viable, medium-scale enterprise.

4. There should be no lowering of safety and health and environmental standards for new entrants to the small-scale mining sector.

5. The inspectorates of the department of Mineral and Energy Affairs, Labour and Health should systematically target medium and small scale mines to ensure that they follow the same minimum conditions as set in the laws and regulations that exist at present. Employers who infringe these standards should be systematically prosecuted.

6. Small operators should have access to State-owned mineral rights.

7. With regard to construction materials, the potential for SMEs in supplying building materials should be investigated.

8. Further investigation could be carried out into the utilisation of old, currently uneconomic, mines and mine dumps by small operators who might have lower overhead costs.

9. A proper institutional framework is a prerequisite to the establishment of a viable and sustainable small-scale mining sector in South Africa. The establishment of a Small Mines Bureau is proposed.

10. Small-scale mining entrepreneurs should have access to a Small Business Development Council, or similar, funding conditional on enterprises being run on sound business principles.

11. Options and instruments that would promote lasting benefits of mining operations to surrounding inhabitants should be explored.

12. Policy on small scale mining goes beyond the narrow focus of mining as an end in itself and it is recommended that small scale mining should be used as a vehicle and nucleus around which other small manufacturing enterprises could be established.

13. The effects of legislation intended to facilitate urban development on the sterilisation of resources of construction materials and other minerals should be addressed.

14. The small-scale mining support system should include financial schemes, technical advice, exploration support, marketing research, research and development aid, technical, financial and managerial training, mineral processing support, organisational structures and monitoring of environmental issues and health and safety systems.

15. Special attention should be given to the well-known problems of environmental degradation associated with small- and micro-scale mining. In this regard special rehabilitation funds covering small-scale mining zones with a small levy on sales could be considered.

16. The current mineral rights dispensation in South Africa will have to be changed if small-scale mining is to be promoted. The problem of access to mineral rights could be addressed in the short term by direct negotiations with the current holders, and in the medium term by the introduction of a system, such as tax, which will ensure that the mineral rights revert back to the state.

17. A system of licences of rights with a specified time period could be immediately introduced over State-held mineral rights to avoid sterilisation of the country's mineral resources.

18. The creation of special mining zones, with exploration and mining regimes that are friendly to the small operator, over terrains with high small-scale mining potential should be considered.

7. Exploitation

7.1 Points Of Departure

1. The policy shall ensure equitable and orderly access to and optimal exploitation of the country's mineral resources.

2. Provided there is effective competition in both producer and end-use markets, expansion of the country's supply capacity must be approached with circumspection because of the likely damage to price and hence to the ability of existing South African producers to create wealth for the country.

7.2 Background Information And Perceptions

1. In view of the major role played by South Africa's mineral industry in the national economy, it is vitally important that the maximum benefit be derived from the country's exceptional mineral wealth. Accordingly, a heavy responsibility rests on the State and private enterprise alike to ensure that efficient mining practices are followed. It would also place a responsibility on the mineral industry to turn opportunities in respect of mineral exploration and exploitation to account, subject to the realities of mineral markets.

2. The focus of South Africa's minerals industry has been very much on large-scale mining, primarily gold, diamonds, platinum, coal, iron ore, manganese and an assortment of other base minerals. However, it should always be borne in mind that minerals are a non-renewable resource (or a wasting asset) that must be carefully husbanded to give maximum service to the nation, including future generations.

7.3 Issues And Arguments

1. While iron ore, coal, the platinum group metals and chromite mining have a long term future, the gold mining and diamond mining industries are mature and will decline in the longer term. As these two minerals represent about two-thirds of total value, employment and contribution to the balance of payment and other aspects of the economy, this presents a major economic and political problem for the future. Awareness of this problem and farsighted planning around the optimal exploitation of resources and downscaling of the industry is essential. The priorities facing the industry include:
   • The extension of the life of what mineral resources remain;
   • The discovery of new resources through investment in exploration;
   • The exploitation of known, but unexploited, mineral deposits;
   • Increased focus on the optimisation of mineral exploitation;
   • Increased incentives to add value to minerals prior to export, and disincentives for exporting unbeneficiated ores;
   • Management of the downscaling of the industry in terms of employment.

2. The system of variable taxation linked to profitability has allowed the gold mines to successfully negotiate difficult periods and has given the state a reasonable share of windfall rent and differential rent. In this respect, the formula has been very successful. It is desirable that the extension of formula tax to non-gold mines be investigated as a means for stimulating the industry as well as ensuring its long term survival and for giving the state a fair share of mining rents.

7.4 Policy Proposals - Views Expressed

1. Measures to enhance the optimal utilisation of all mineral resources need to be devised.

2. Legislation should define what is meant by optimal mining, and have sufficient powers to enforce optimal mining practices.

3. Incentives and disincentives need to be built into the tax and royalties regime to encourage optimal mining (at the lowest possible cut-off grades) and the optimal use of South Africa's minerals (through beneficiation before exports).

4. To consider the extension of formula taxation to all mining (not just gold and uranium), but with mineral specific formulas.

5. To reassess ring fencing in order to encourage development of otherwise uneconomic mineral deposits. However, the removal of ring fencing should be qualified and discretionary.

8. Downscaling

8.1 Point Of Departure

8.2 Background Information And Perceptions

8.3 Issues And Arguments

1. Mining companies are acutely aware of the painful social consequences of mine downscaling and eventual closure, for the individuals retrenched, for their families and for the communities dependent on the mine. As part of their social involvement programmes some companies have established programmes to equip retrenched employees and others with skills to enhance their prospects of finding jobs outside the mining industry, and companies have also invested in a variety of community development projects.

2. Nevertheless, companies believe the government has a socio-economic obligation to assist in alleviating the consequences of sizeable downscaling or closure through a combination of counselling, training and other initiatives targeted at the retrenchees and their dependants and other measures aimed at stimulating the demand for labour.

3. A law similar to the 1968 Coal Act in Germany, which set up the Federal Commission for Coal Mining is needed. This body dealt with all aspects around the planned downscaling of coal mining in Germany on a national and co-ordinated basis.

4. Substantial benefits can accrue to the country if mines could continue to operate until their resources have been fully exploited. It would be in the national interest to provide some form of assistance for those mines which still have considerable future production potential - such mines provide employment, both for mine employees and those who work in down- and up-stream industries, as well as valuable foreign exchange.

5. Awareness of the problem of downscaling requires foresighted planning and management of the industry.

8.4 Policy Proposals - Views Expressed

1. A national plan is required to address all aspects of downscaling of the industry, including the question of sustainable development to replace the declining contribution of mining to the economy and the use of infrastructure created around mining operations after cessation of mining. Such a plan should also include measures to promote the reskilling of redundant mine labour.

2. Consultation with and involvement of the affected communities is essential in any process intended to deal with the consequences of mine downscaling and closure.

3. Closure planning incorporating sustainable development around: mining infrastructure; redeployment of the work force; reskilling; and social reconstruction should be a prerequisite for mining authorisation in much the same manner as the EMPR is in terms of environmental planning and management.

4. In respect of closure planning, a closure fund for displaced workers should also be introduced in the same fashion as mine-specific rehabilitation funds are required to be in place for mining authorisation to be granted.

5. Government has a socio-economic obligation to assist in alleviating the consequences of downscaling and closure.

6. The "Social Plan Act" should become law. This is the NUM solution for ensuring that all change in a mine is thoroughly negotiated with democratic participation by workers and unions, and that people badly affected by the change are retained, counselled, and compensated financially.

7. An "Industry Downscaling Act" should ensure national planning for the downscaling of mining. The law will allow for regional investment promotion to build new industries to replace old and set up a tri-partite body (the Permanent Mining Commission) that will manage and co-ordinate the process of change.

8. Specific acts of parliament should nationalise particular mines that do not co-operate with the downscaling process or which merit state stewardship as part of the downscaling plan. (This will follow the example of certain mines in Sweden).

9. There should be state aid for marginal mines, in the form of targeted assistance to allow them to slow down their contraction and provide time for re-training. This should be introduced immediately, but will later fall under the Industry Downscaling Act.

10. There should be a change in the Insolvency Act to give workers precedence as creditors when a mine becomes bankrupt.

9. Mining Safety And Health

9.1 Point Of Departure

9.2 Background Information And Perceptions

1. The recommendations of the Leon Commission of inquiry into safety and health in the mining industry and the report of the Parliamentary Mineral and Energy Portfolio Committee have been accepted in principle by the Cabinet.

2. The Minister of Mineral and Energy Affairs has initiated the formation of tripartite bodies, as recommended by the Commission, to implement its recommendations as a matter of urgency.

3. In light of the drafting of new legislation and regulations on safety and health in a parallel process, the recommendations contained herein are supplementary to those efforts.

9.3 Issues And Arguments

1. It is of major concern to employers, employees and the State that the current death, injury and disease rates in the South African mining industry is unacceptably high.

2. The safety of employees is a primary concern of employers and the trade unions.

3. The State has the responsibility to regulate safety, and owners and managers have the responsibility to implement these regulations. Employees must in turn accept the obligation to comply with safety standards.

4. Four internationally recognised basic worker rights for health and safety must be endorsed and applied in all aspects of the mining and mineral policy, namely:
   • The right to representation and participation in health and safety matters;
   • The right to health and safety information;
   • The right to health and safety education and training;
   • The right to refuse to do dangerous work.

5. The introduction of means to secure employee participation in planning of safety systems with enhanced basic worker rights and obligations is necessary to improve the effectiveness of safety systems. Representative tripartite bodies are required to review legislation and regulations.

6. The control of occupational health problems and workman's compensation has been inadequately provided for in the current regulations and needs to be addressed in revised regulations.

7. The employers recognise the need to promote the good health of their employees and have built up a sizeable medical facility to provide for the needs of mining industry workers. The industry is currently reviewing the restructuring of its health care facilities to permit access by retirees and dependants of some categories of employees in an affordable, equitable and sustainable dispensation.

8. The employers, in consultation with other stakeholders, have established ongoing programmes to limit the spread of HIV/AIDS and mitigate its potential effects.

9.4 Policy Proposals - Views Expressed

1. The recommendations of the Leon commission for the drafting of a new health and safety in mines act should be implemented without delay. Responsibility for the drafting of the new act and companion regulations to rest with tripartite bodies.

2. It is imperative that regulations governing safety in mines should be realistic and practically enforceable and are focused on areas where most needed.

3. Policy should have as its objective the creation of an affordable, equitable and sustainable health-care system for employees.

4. Trade Union and Association representatives should be included on decision making committees dealing with safety and health matters.

5. The Department of Mineral and Energy Affairs should be restructured to create a separate administrative agency for health and safety on the mines. The responsibility of this inspectorate should be to enforce the new health and safety act and monitor the health and safety policies of every mine.

6. The mines inspectorate within the DMEA should be provided with increased resources to perform the role contemplated for it in new health and safety legislation.

7. The employees of the inspectorate should reflect the general population and opportunity should be made for career progression.

8. The Department of Mineral and Energy Affairs and the mine inspectorate should develop a programme to address health and safety problems on small-scale mining operations. These mines have particular health and safety problems and inadequate resources to address them.

9. Safety and health training for employees should take a priority position in the training programmes of the mines.

10. The state must recognise the cost to society and to rural communities of disabled and ill mineworkers and ex-mineworkers. It must be recognised that these persons have little or no chance of re-employment and must rely on disability payments or pensions. In light of this:
    • A programme must be developed for the industry that ensures the physical, psychological and vocational rehabilitation of disabled workers to enable them to earn a living;
    • A national database on occupational health must be developed that reflects the prevalence and incidence of occupational disease among mineworkers and ex-mineworkers;
    • Compensation pensions should be linked to inflation and the cost of living, and should be reviewed to ensure that they are adequate;
    • Medical facilities and proper medical care should be made available to disabled and diseased ex-mineworkers in the rural areas and efforts made to trace and compensate ex-mineworkers who have contracted occupational disease after returning to the rural areas;
    • A coherent and comprehensive policy towards HIV/AIDS must be developed by the State in consultation with the stakeholders that will state the manner in which sero-prevalence is determined through epidemiological research and the manner in which mineworkers are counselled, educated and treated.

11. The ILO Convention and Recommendation on Health and Safety in the Mines must be ratified and it should form the foundation of the new health and safety act.

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