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SA seeks closer Canadian ties as overhaul of mining sector continues

27th November 2013

By: Simon Rees

Creamer Media Correspondent

  

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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
Creamer Media Deputy Editor: North America

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