Stability and policy and regulatory certainty, as well as the rebuilding of trust, have been the key themes in Mineral Resources Minister Gwede Mantashe’s first year in office.
When, on February 27, 2018, he took the reins of a government department that oversees one of the most difficult and fragmented industries in South Africa, Mantashe, a former mineworker and union leader, found an industry “in self-doubt, believing that it is about to die, with suspicion and mistrust at a high level”.
However, he believes this was not inevit- able but is convinced that a ‘new dawn’ is possible, while, nonetheless, conceding that there needs to be more trust and confidence in the sector to return it to the business of mining.
On being appointed, Mantashe set about rebuilding relationships with business, labour and communities in the vicinity of mining operations.
Compared with a year ago, there has been an improvement in the level of engagements between the social partners, he says, noting, however, that there is still room for improvement.
“Mantashe has opened the doors to engagement and, while the parties do not always agree, there is willingness on both sides to hear the other out,” says Minerals Council South Africa CEO Roger Baxter.
Over the past year, extensive discussions have taken place between the Department of Mineral Resources (DMR) and sector- specific leadership forums about the challenges faced by each sector and how to find solutions that will ensure the long-term sustainability, growth and transformation of the mining industry, the council notes.
These engagements, coupled with President Cyril Ramaphosa’s redoubled efforts to bolster investment in South Africa, have helped in turning a corner, changing the prognosis for South African mining from “completely negative to something approaching positive”.
“Instead of deep pessimism, there is today a knowledge and recognition that government leadership is making efforts to resolve the country’s myriad socioeconomic challenges with integrity,” the Minerals Council says in response to questions posed by Mining Weekly.
During his first year, Mantashe has prioritised dealing with incipient legislation, which resulted in the gazetting and implementation of Mining Charter III; providing clarity on the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill; addressing administrative issues and challenges in the DMR’s internal processes, which include allegations of the double- granting of mining licences, improper application of Section 54 of the Mine Health and Safety Act (MHSA) and backlogs in the issuing of licences; and ensuring the health and safety of mineworkers.
“Among the key priorities I have since identified are the need to bring certainty in the areas of policy and regulation, thereby hastening the legislative framework, and to refocus the industry and the department on the importance of paying attention to health and safety in the workplace,” Mantashe explains.
“Thirdly, [there is need] to confront the complexities that cloud the granting of mining rights and bedevil applications for mining licences and, fourthly, to develop an effective approach to combating illegal mining [and] its related criminal activities.”
The gazetting and implementation of Mining Charter III has been the most signifi- cant achievement for the Minister, the DMR says, adding that the MPRDA Amendment Bill has been withdrawn to separate the oil and gas sector from the mining sector in the legislation.
“One of the immediate results [of the Amendment Bill’s withdrawal] has been the speedy setting up of Total Exploration & Production Southern Africa’s Deep Sea Stavenger Rig operations, 180 km off Mossel Bay, in the Western Cape,” the department tells Mining Weekly.
Another outcome is the Fraser Institute’s recognition of the improvement in South Africa’s mining sector, particularly in terms of investment attractiveness and the attractiveness of the country’s mining policies, reflected in the institute’s latest yearly global survey of mining jurisdictions, released on March 1.
In terms of the attractiveness of its mining policies, the survey ranks South Africa 56 out of 83 countries, compared with the 2017 ranking of 81 out of 91 countries.
In the investment attractiveness stakes, the country improved from 48 out of 91 countries in 2017 to 43 out of 83 countries in 2018.
“The ratings recognise the work done by government in providing stability and certainty on the policy and regulation of the mining industry over the past 12 months,” Mantashe says.
“We have worked hard to remove all policy and regulatory uncertainty to unblock all bottlenecks to investment. We have grown to appreciate that investment is a catalyst for economic growth, the generation of earnings and contribution to the development of mining communities,” he adds.
Meanwhile, a draft Upstream Petroleum Bill is being developed to provide certainty for the upstream petroleum industry and stimulate growth and development in this sector.
The DMR aims to submit a draft Bill for consideration early in the sixth Parliament.
“We can therefore say with confidence that South Africa provides [an] environment [conducive to] investment, and that we have a stable regulatory framework that provides security of tenure for investors,” the Minister says.
South Africa’s mining production edged up 0.5% year-on-year in October 2018 – contributing R447-billion to the economy – with the growth attributable to increased production of nickel, platinum-group metals, diamonds, manganese and chromium ore.
The sector contributes about 7% to gross domestic product (GDP) and accounts for about 40% of the country’s foreign earnings.
“It is my considered view that the sector has the potential to increase its contribution to GDP to about 10% in the next five years,” Mantashe avers.
As of the third quarter of 2018, the industry employed 457 000 people, slightly down from 463 000 in 2017, with most of the job losses occurring in the gold and platinum sectors.
Meanwhile, last year, the DMR granted 70 mining rights, while five new mines came into operation, indicating that investor appetite remains.
Policy certainty and a drive to rebuild trust are starting to yield positive results in terms of investments.
At the Presidential Investment Summit, held in October 2018, the mining sector collectively pledged to invest almost R100-billion, with the highest pledge – R71.5-billion – made by Anglo American.
Vedanta Zinc International has earmarked $1.6-billion (R21.8-billion) for investment into the newly launched Gamsberg zinc mine, in the Northern Cape, $400-million of which has already been spent.
“The Minerals Council is pleased that there is more regulatory certainty, though there are still some aspects that concern us, particularly the absence of full recognition of the continuing consequences of past black economic empowerment ownership transactions in [Mining Charter III],” the council says.
Further, while progress has been made, the interventions are inadequate to deal with some of the structural challenges of the industry.
To rectify this state of affairs, in February, government, organised labour and business signed a compact comprising 11 areas of focus that will provide the basis for a roadmap. An implementation plan will be developed to keep track of progress made and milestones reached.
The parties have also collaborated on issues that affect the mining industry and the country at large, and this has included the establishment of an engineering task team to assess the challenges at State-owned utility Eskom’s power stations, Baxter says.
Further, the DMR is working to resolve the challenge of administered prices, including those for electricity, rail and ports, as well as the infrastructure bottlenecks flagged by investors as a constraint to doing business in South Africa.
Encouragingly, Mantashe believes that administered prices can be used to stimulate the economy and increase South Africa’s competitiveness as a mining jurisdiction.
The DMR is currently dealing with ongoing deficiencies in the online licensing system to eliminate the challenges faced by investors in the processing of applications.
“There are backlogs on new mineral rights applications stretching as far back as 2012. There are no internal systems to detect delays in the processing of mineral rights applications,” Mantashe points out.
The DMR aims to revamp the entire information and communication technology system so that it becomes a fully functional licensing system, with a central management and storage system that will improve the turn- around times for the processing of applications, internal and external information requests and compliance, besides others.
“This will reduce information silos by integrating the existing information systems that facilitate the application for rights and permits, the management and administration of mine health and safety information, mineral commodities information and revenue collection for the DMR,” he explains.
Health and Safety
Health and safety remains a challenge for the mining sector, however. The sector reported the lowest-ever number of fatalities in 2016 – 73 – but this was followed by a notable regression to 90 fatalities in 2017. A 10% improvement was achieved last year, when the industry reported 81 fatalities.
“We are hopeful that this is the beginning of a much-needed turnaround in fatalities, and that mines will continue to prioritise this issue moving forward,” Mantashe says.
Five fatalities have been reported to date in 2019, a 69% improvement on the 14 fatalities recorded during the corresponding period in 2018.
Association of Mining and Construction Union (AMCU) president Joseph Mathunjwa has called on Mantashe to work with the union in amending the MHSA to include criminal prosecution of mining bosses, noting that, without radical policies and legislation, negligence that leads to fatalities will not be curbed.
Mantashe notes that criminal charges would be laid where fatalities could be attributable to negligence; however, this “cannot be a formula for dealing with mine accidents”.
Following the Mine Health and Safety Summit in October 2018, which was brought forward a month, owing to the urgent need to improve occupational health and safety performance, the stakeholders committed to achieving a series of safety-focused milestones.
The summit, hosted by the DMR and the Mine Health and Safety Council (MHSC), unpacked the causes of injuries, diseases and fatalities, covering critical topics such as falls of ground, seismicity, noise-induced hearing loss, HIV/Aids, tuberculosis, the right to refuse to do dangerous work, occupational lung diseases, fires, explosions and the implementation of the Culture Transformation Framework.
“The DMR will continue engaging and collaborating with its social partners through the MHSC and the Regional Tripartite Forums.”
A task team comprising the DMR, the MHSC, the Council for Geoscience (CGS), Minerals Council South Africa, the National Union of Mineworkers, AMCU, Solidarity, Uasa and the South African Institute of Rock Engineers (Sanire) has been established to tackle seismic and gravity-induced fall-of-ground accidents.
Further, in collaboration with the Mining Qualifications Authority, the MHSC and the CGS, 40 Sanire learners have been identified for training in the fields of rock engineering and seismology.
Meanwhile, to tackle illegal mining, the DMR is working with law enforcement agencies, and has approached the Department of Police and mining companies to establish and fund a unit to deal with this scourge.
Mantashe has called for security at mines to be enhanced.
The DMR has also granted some illegal miners in the Northern Cape and Limpopo artisanal mining licences in an attempt to curb the illegal activities.