SA seeks closer Canadian
ties as overhaul of mining sector continues
SA Deputy President Kgalema Motlanthe
Photo: Bloomberg
By: Simon Rees
27th November 2013
TORONTO
(miningweekly.com) – The South African government is keen to foster closer ties
with Canada’s mining industry and to attract Canadian expertise, two top
government officials told audience members at the Canada-Southern Africa
Chamber of Business on November 26.
The
country is also committed to continue improving its mining legislation, to
tackle inefficiencies, and to enhance domestic levels of beneficiation.
OVERCOMING OBSTACLES
South
African Deputy President Kgalema Motlanthe is on a State visit to Canada
and underscored the mammoth progress made and the immense difficulties faced by
South Africa since the inception of democracy in 1994.
“South
Africa is a country of contrasts,” he said. “On one hand we have sophisticated
and advanced systems, such as those within the financial sector and mining
sectors. At the same time, we have the part of South Africa that is
underdeveloped, unskilled and poorly educated. These are accumulated
disabilities that have confronted our country since 1994.”
“Our
government is determined to direct resources towards tackling social problems,
which, once addressed, will help propel the country forward,” he added.
Canadian
expertise and assistance will be especially welcome. “South Africa and Canada
have a lot in common, and Canada has certain strengths that would be of great
help for South African development, particularly in areas such as mining,
engineering and education. We aim to strengthen and cement the bonds between
our two countries,” he said.
In
discussing South Africa’s future and the mining sector’s role, the Deputy
President first underlined the importance of infrastructure development and the
need for new rail lines.
Recognising
this, the government has established the Presidential Infrastructure
Coordinating Commission. “[The commission] seeks to align and streamline the
processes of delivering infrastructure,” Motlanthe said.
“More
rail lines need to be built to seaports. And therein lies an opportunity for
private engineering, infrastructure and manufacturing companies to participate
in the massive programme that the government has identified,” he said.
At
the same time, permitting and licensing processes are also being updated. “We
are aligning the licensing requirements, ensuring an application can be made to
the Mineral Resources Department and the Water and Environmental Affairs
Department at the same time. This means that the response to those obligations
can then be met at the same time,” Motlanthe said.
“We
realise that a sequential approach leads to costly and unnecessary delays … [so
we are] sharpening the turnaround time,” he added.
Motlanthe
also conceded that there were government inefficiencies, although he added that
these had been identified and that moves were being made to overcome them,
particularly through education and by improving bureaucratic skills and
training.
LAW OF THE LAND
Many
of the Deputy President’s thoughts were mirrored by Mineral Resources Deputy
Minister Godfrey Oliphant, who discussed the process of updating South
Africa’s primary mining legislation, the Mineral and Petroleum Resources
Development Act.
“[It’s
one of] the most stable laws in the country for regulating mining and stretches
back to 2004,” he said.
“It
was put into place for a ten-year period to take us from the old to the new.
The old was reckless mining that left the country with enormous environmental
damage that we are still trying to deal with. [And] there are other issues from
the past that also damaged the image of mining in our country,” he added.
“So
we’ve had ten years of corrective measures, ten years of transformation and ten
years of distribution and redistribution. We’ve also had ten years for
companies to ensure the working and living conditions of their workers are
better, with improvements [made to] health and safety, ownership, skills
development, procurement processes and social licences,” he said.
“The
ten-year period is coming to an end [and] we now speak about amendments to
improve the law and to recognise some of the problems we’ve been dealing with
in the past,” he added.
Tax
and royalties are also being examined, with the government seeking out the
mining industry’s opinion via the recently appointed Davis Tax Committee. “The
[South African] Treasury … is looking at mining, taxation and royalties, and
seeing how we can improve and where we can become more efficient in the sphere
of taxation,” Oliphant said.
In
relation to junior companies, South Africa recognises more needs to be done to
overcome inefficiencies.
“We
have a lot of junior miners complaining in South Africa about inefficiencies,
many of which arose from manually dealing with applications,” he said. “We’ve
changed the system to an electronic one, although this has had its fair share
of problems in terms of delays. But we’re now covering a lot of the backlog.”
However,
the Deputy Minister also stressed that some of the delays were owing to
companies not matching prerequisite requirements under South African law that
relate to finance, expertise and the ability to undertake environmental
rehabilitation.
“We
will [always] implement the law in full to protect the mining sector’s
integrity,” he said.
On
beneficiation and adding value, Oliphant stressed that the government’s
approach builds on previous policy. “Section 26 of the current law that
regulates mining already encourages beneficiation,” he said. “For example,
every producer in the South African diamond industry is obliged under law to
make 10% of their production available for local value addition.”
Oliphant
then acknowledged the concerns surrounding energy costs and issues relating to
the government’s view of strategic metals and minerals.
“The
industry has complained about energy insecurity [arguing] that energy is
becoming increasingly expensive in the country, but the major input for power
generation in South Africa is coal and yet Eskom [the nation’s primary power
supplier] must compete like everybody else for coal and buy at international
prices. We say that this cannot be correct,” he argued, although adding that
the debate had yet to be finalised.
In
another example, Oliphant considered steel. “In building up our infrastructure
we’ll need a lot of steel. But how do we ensure that the necessary [steel]
resources will be made available to the local market and not just exported?”
Finally,
Oliphant was keen to stress the importance of ongoing discussion and debate.
“It’s not about making decrees, it’s about engagement,” he said. “We’re
not taking a reckless approach because mining matters to us, it’s the backbone
of our economy and we must treat it with care.”
Edited by: Henry Lazenby
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