OPENING ADDRESS BY MS BUYELWA SONJICA_ MP_ MINISTER OF MINERALS

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OPENING ADDRESS BY MS BUYELWA SONJICA_ MP_ MINISTER OF MINERALS Powered By Docstoc
					    OPENING ADDRESS BY MS BUYELWA SONJICA, MP,


MINISTER OF MINERALS AND ENERGY, AT THE MINING INDABA,


          INTERNATIONAL CONVENTION CENTRE,


                     CAPE TOWN,


                  10 FEBRUARY 2009
Programme Director
Honourable Ministers
Captains of Industry
Distinguished Guests
Senior Government Officials
Ladies and Gentlemen


A hearty welcome to this, the 14th consecutive Mining Indaba!


Reuel Khoza, one of the leading business architects of the project for
the renewal of the African continent, recently wrote:


      If not us, then who?
      If not from Africa, then whence?
      If not now then, then when?
      If not for Africa and humanity, why not?
      Let Africa rise to this the quintessential challenge.
      It is our date with destiny!


Khoza wrote these words on board an aircraft bound for the World
Economic Forum in Davos in 2005, at the time when NEPAD was the
proverbial talk of the town in Africa and the world. African leaders had
decided that the phrase “if not us (Africans), then who?” was going to
change our continent for the better.


When Khoza boarded his plane for Davos, our economy was
experiencing a sustained level of growth last experienced in the early
1980s. We have been on this positive growth path for the past fifteen



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years, with high growth levels of 5% for the past three years, i.e. 2005,
2006 and 2007; this growth was also experienced by the continent.


Travelling to Davos myself, earlier this month, and this being my first
attendance, I learnt that the atmosphere was different from what has
been experienced by the “regulars”. This Davos meeting was more
subdued as we grappled with finding solutions to help the world get out
of the quagmire it is in. it was clear that while bailouts are important in
dealing with the “symptoms”, we needed to find answers for the root
cause of the crisis.


South Africa like many other countries has felt the impact of the global
financial meltdown albeit at a relatively lower scale. However the
mining sector being key to the GDP is the one that is causing harm to
our economy. Well as we will appreciate South Africa’s is an export led
economy, the depreciation in the price of commodities, global demand
that has shrunk to almost the lowest levels in a long time, the industry
is suffering; more so the small players. We are seeing smaller mines
close down, bigger ones reducing their investments and in the process
the much needed jobs being lost.


As President Motlanthe noted in his State of the Nation Address last
week, “our economy remains largely reliant on mining…”. The
President continued, “..because we are integrated into the world
economy, demand for our (mining) exports has declined; access to
finance and inflows of capital have turned for the worse; lower demand
has precipitated a scaling-down of production; the creation of jobs
negatively (has been) affected and in some sectors (such as ours)
retrenchments have become a reality”.


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The biggest challenge with this meltdown is that it is still unfolding and
nobody knows for certain when it will come to an end. The challenge
therefore for governments and all of us is that we cannot conclusively
quantify the impact and develop strategies to mitigate against the
problem.


However, government is ceased with this matter and a multi-
stakeholder task team led by the Minister of finance has been
established to continuously monitor the situation, interrogate the issues
and recommend the course of action that government must embark
upon.


As a direct consequence of the crisis bedevilling this sector, my
department, led by the Director General, has initiated a multi-
stakeholder Task Team to recommend short, medium and long-term
interventions. An interim report was released on the 18th of December
last year, which highlighted a number of short-term measures to
minimise job losses in this important sector of the South African
economy. I urge you to implement these recommendations of the Task
Team, whether or not you are within the Chamber of Mines,


But we are urging mining companies to refrain from issuing media
statements announcing possible retrenchments even before they
engage with their own stakeholders such as trade unions.


We are however continuing with infrastructure development, an
enabler for investors, for example:
         1. We are improving the 38 000 kilometres of national and
            provincial roads which carry freight.


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2. The Gauteng Freeway Improvement Programme
  comprises three phases. Phase 1 will concentrate on
  expanding the capacity of existing freeways and will cost
  R15b (march 2007 figure); phase 2 comprises developing
  new freeways at a cost of R7b between 2010 and 2020; as
  well as phase 3 which will be long-term freeway
  development post 2020. The total cost for upgrading and
  new routes amounts to approximately R22b.
3. The Mpumalanga Coal Haulage Network which straddles
  the District Municipalities of Gert Sibande and Nkangala,
  and which carries the traffic volume of 800-900 truck trips
  per day, will be rehabilitated and constructed at a cost of
  between R3b and R3.5b. Eskom has contributed R550
  million for the design and maintenance of the priority
  sections of the road network to allow for the safe
  movement of commuters and freight on these roads. This is
  currently being finalised by a task team comprising the
  Department of Public Enterprises, Department of
  Transport, Eskom and Transnet Freight Rail.
4. We have requested an amount of R1b to assist us with the
  construction of the road infrastructure in relation to the
  Medupi Power Station in Limpopo and the resultant activity
  between that part of the province and Gauteng.
5. We have also developed an integrated Port and Rail
  Master Plan which will address all the requirements of the
  three regional groups of the western ports of Saldhana
  Bay, Cape Town and Mossel Bay; the central ports of Port
  Elizabeth, Ngqura and East London as well as the Eastern
  Ports of Durban and Richards Bay.


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         6. We shall spend an additional R19b improving our airport
              infrastructure which will be funded through Acsa’s balance
              sheet.


As you will appreciate, the introduction of the Mining Charter was
aimed at transforming the mining industry, consistent with the political
landscape as well as keeping pace with global developments.


The Charter is due for review as provided for in the law. To this end,
the Department of Minerals and Energy convened a multi-stakeholder
mining summit late last year, intended to assess progress and to
consider amendments during the review process.


It is worth noting that since the promulgation of the MPRDA in 2004,
some limited progress has been made towards attainment of the
objectives of the Charter. To date, the custodianship of all prospecting
and exploration rights has successfully been transferred to the state. I
am pleased to report that almost all the big players (with the exception
of two or three companies) have submitted their applications for
conversion.


There will be no extensions beyond the deadline of 30 April, and failure
to convert will not be without consequences.


We have received an unparalleled number of applications for
prospecting, exploration and mining since May 2004, peaking above
18 000 and resulting in the development of several new projects. We
are firmly committed to processing all prospecting/exploration



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applications within six months, while mining rights will be processed
within a year.


The Charter has not been without challenges. We have concluded a
large number of BEE transactions in the mining sector. But only a few
of these have embraced the true spirit of broad-based economic
empowerment. We have to move beyond a few familiar faces as we
conclude these deals. One of our biggest challenges is “fronting”. We
shall continue to root out this scourge from the mining industry for it is
done by exploitable people without any sense of self worth and dignity.


We remain concerned about the tensions between the mining
companies and communities in the areas where mining activities take
place. Such tensions are more prevalent in Limpopo and the Eastern
Cape. We believe that communities would not oppose mining if they
were real and meaningful beneficiaries. The Act makes provision for
mutually beneficial relationships between these stakeholders,
consistent with broad-based empowerment objectives of the Charter.


The Social and Labour Plans translate into a social contract between
rights-holders and communities and therefore constitute a social
licence to operate.


We are unhappy with the continued danger that is continuously being
faced by mineworkers in the execution of their daily tasks. The results
of the Presidential Safety Audit demonstrated 66% compliance with the
required safety standards. This is totally unacceptable. It is a blot on
the conscience of this important industry. We urge all mining
companies, irrespective of whether or not they are members of the


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Chamber of Mines, to embrace this report and ensure that they
implement its recommendations without reservation.


We need to heed the call of the President of the National Union of
Mineworkers, Senzeni Zokwana, when he said: “Mineworkers have a
right to work with the full knowledge that when they enter the mine,
they will be able to go home alive and safe…”.


While the parliamentary process has run its course on the
amendments to the Safety Act, my door remains open to those players
who think that these envisaged amendments have the potential to
create a flight of desperately needed skills from our shores. We shall
steadfastly continue with our efforts to ensure that this industry is safe
and in full sync with its counterparts in other parts of the world.


I am certain that, as we embark on our beneficiation route, all
stakeholders will leverage benefit from the country’s comparative and
competitive advantages. The extent of the external vulnerabilities
created by our significant dependence on external markets will also
have to be reduced.


Accordingly, this strategy will present opportunities for investment in
the country by South African and foreign investors. It is our intention to
increase the “value-addition” per- capita in South Africa to create jobs,
eradicate poverty and contribute to economic growth.


It has thus become abundantly clear that downstream manufacturing is
becoming an increasingly important contributor to South Africa’s
rapidly growing economy.


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We are also contributing to research and development in supporting
our beneficiation initiatives through our state councils such as Mintek.


Mintek conceived the ConRoast process in 1994, at the same time as
the start of our country’s democracy, but it was only in 2006 that
Braemore Platinum Smelters (Pty) Ltd Resources partnered with
Mintek to develop this process to the point of commercialisation.
Mintek and Braemore have just successfully doubled the facility’s
smelting capacity for the production of Platinum Group Metals (PGMs)
in Randburg.


I would like to express my appreciation to Northam and Anglo Platinum
for supplying this smelter in Randburg with their ore. Lonmin also
supplied their ore in the early days of proving the technology. This has
assisted us in making resources available that will be beneficial to the
economy of our country.


Our sustained economic growth has created a situation where energy
supply has been found wanting. Accordingly, and in order to ensure
continued growth, we are moving with speed to invest in energy supply
infrastructure. These challenges became apparent when we
experienced unprecedented levels of load shedding.


Projected economic growth means that we need an additional 40 000
MW of electricity to support such growth. Our revised build programme
indicates that we will add at least 2 000 MW from various projects that
are currently being undertaken this year. As you are all aware that the
next nuclear power plant has been postponed, measures are in place
to ensure that there will be no shortage of electricity by 2018.


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Investigations have already been initiated to close this gap. Our two
projects; namely Medupi and Kusile are expected to add an additional
7 000 MW by 2015. I am therefore confident that our energy shortage
will be addressed through this process.


All these efforts will be buttressed by the implementation of demand-
side management initiatives to reduce overall demand by 10%. The
Power Conservation Programme (PCP), Demand Side Management
(DSM) and co-generation form the pillars of the national demand
management strategy.


We, therefore, urge energy-intensive industries like smelters and other
value-addition processes to establish co-generation power plants from
their vast heat and gas- producing processes.



In conclusion, I wish to reiterate that the impact of the global economic
slowdown on the mining and minerals industry should be viewed as a
short-term scenario and companies are urged to make careful plans
that will allow them to respond quickly to another cycle of commodity
boom.

I know that even now there are those who are strong financially and I
urge them to take advantage and invest more because surely there is
mutual benefit for all of us, while we grapple with solutions for a
problem that affects the whole of humanity.


I thank you.




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