Deputy Minister of the Department of Mineral Resources and Energy, we have stop calling her hon Hlongwa, we are calling her hon Bavelile. Chairperson of the Portfolio Committee, the Whip,
members of the Committee, hon members, invited guests, ladies and gentlemen, the Department of Mineral Resources and Energy, although merged into one department, I will present two separate budgets.
Today we table Budget Vote 29 for Mineral Resources, and tomorrow we will present the Energy Budget. Two billion rand has been allocated to Mineral Resources for the 2019/2020 financial year; of which 52% goes to entities in our portfolio and this demands of the department to be more efficient, especially in these tough economic times, very tight budget and a lot of work.
We must, nonetheless, give practical expression to and execution of the electoral mandate to grow South Africa. We must do so in line with the seven priorities outlined by the President in his State of the Nation Address.
Directed by the President's reconfiguration of government, we are working in earnest to merge the minerals and energy departments. Mining and energy are critical to economic growth and development. Merging the departments asserts their mutually
reinforcing nature; and, thus enables streamlining of processes, integration in the value chain from upstream to downstream, and ensure alignment of the policy and regulatory framework for stability and investment.
Reconfiguration should result in a department that is adequately capacitated, efficient and responsive to needs of the people.
Now we recognise that the Budget Vote occurs in a dire economic climate, nationally and internationally. The economy contracted by 3.2% in the first quarter of 2019 we should always use that as the point of reference because our contribution to the overall performance of the economy is quite critical. Mining declined by 10,8%, contributing 0.8% to the overall 3.2% decline. Load shedding, electricity pricing and five months long strike in the gold sector account for the decline in the main. Therefore, a reliable secure supply of energy for the growth of the sector is critical.
Hon members, South Africans we met in our elections campaign, called on us to invest in job creation. The employment figures
for the first quarter of 2019 are a positive sign. Of the 22 000 jobs created, 6 000 are in mining. We are talking to the industry to sustain and grow these positive indications.
The nonferrous metals sector also show signs of growth in the first quarter. Mining is a sunrise industry, I believe that and I confirm that mining is a sunrise industry. We must prospect, explore and exploit the world class mineral deposits we have. We will resuscitate green field exploration to capture a minimum of 5% of the global exploration share, which average of US$10 billion per annum. The investment will attract a minimum of R8 billion into the exploration sector. To this end, the state has deliberately decided to invest in the geosciences mapping program, through the Council for Geosciences.
At this point in time though we aim to get 5% of the global budget we are now only attracting about 1% of that budget. But in terms of deposit we having there is nothing that stop us from attracting 5% of that budget. Long-term sustainability and stability of mining depends on coexistence with others, that is,
we must coexist with agriculture, environment, tourism and mining communities.
Mining companies must, therefore, prioritise and be proactive in engaging with these stakeholders. This coexistence is affirmed by recent court judgments on the regulation of mining and exploration rights, which emphasizes meaningful consultation with communities and lawful occupiers of land, also cooperative governance between organs of the State. That is one responsibility we are accepting and reservedly. We will work with everybody to make mining sustainable and we will share information with everybody who is relevant to mining.
The Department's councils for science, together with private and other public entities, are developing local resources of phosphates, a primary feedstock to manufacture fertilizers. The Elandsfontein Phosphate deposit on the Cape West Coast, will significantly improve South Africa's self- sufficiency in fertilizer feedstock; once fully operational. So we are paying our attention the development of that deposit.
Global demand for alternative sources of energy, in particular clean energy, present new opportunities for minerals such as; lithium, vanadium, cobalt, nickel, manganese, carbon, copper and Rare Earth Elements, REE, which support this trend. Hence there is investigation into these minerals that contain elements for clean energy technologies.
We have progressed with the geo-environmental baseline study in Beaufort West, with the impending drilling of a stratigraphic borehole to ascertain the makeup of the Karoo formations. This will inform an appropriate monitoring and evaluation regulation for the development of the shale gas prospects inherent in the Karoo. These initiatives constitute our effort to create a seamless transition to a low-carbon energy generation.
This point is very important because the recent judgements that prohibit us from fracturing is incorrectly interpreted and says that there is nothing happening. We can access that gas if we use other methodologies besides fracturing and that is what we are going to focus on.
The Molteno coal fields, spanning the southern part of the Free State and a large part of the Eastern, are being evaluated for their suitability for energy generation. Early indications are that the coal fields could be utilised as thermal coal for the electricity generation. A programme for carbon capture and storage, to ensure continued use of our coal resources in an environmentally sustainable manner, is underway. So, CGS and SANEDI are working together on this project and it is at pilot stage now
The policy and regulatory framework are stable and predictable. Our principal Act - MPRDA - as well as Section 11 thereof, are clear on requirements for current and potential investors. Together with stakeholders, we are developing a growth and competitiveness strategy; conscious that growth, transformation and competitiveness and sustainability are all critical for the long term sustainability of the mining sector.
Therefore, it is not transformation or it is both competitiveness, efficiency and transformation together will sustain the mining industry in the long term. Now, significant
investments, totalling to R45 billion and creating an estimated four thousand permanent jobs, poured into the sector in the past year. Among them; R21 8 billion by Vedanta Resources in the Northern Cape, Sasol's R14bn mine replacement programme at Shondoni and lmpumelelo in Mpumalanga, and Exxaro's R3,3 billion mine investment in Belfast, Mpumalanga. These are an endorsement to South Africa being an attractive destination for mining investment. This is demystifying the distorted concept of old mine when we invest on existing money people called it the old money, money is not old until it reaches the industry. Once it reaches the industry it is reinvested and it may be directed to Greenfield investment can be directed to other forms of investment extending the lives of the mines. So, these investments are appreciated.
Over the period from 2018 to 2020, the total of 60 mineral resources projects are in the pipeline, with an investment estimate value of R1 10 billion, and a projected employment of 32 000 jobs.
These are projects in exploration, expansion, new mines and processing plants. We recognise the growth of junior miners, who are significant players in exploration.
To meet these initiatives and demands, we have set aside R20 million in the current financial year to improve and develop an integrated licensing system over the coming two years. We have made significant strides in processing the backlog in licence applications, in our Mpumalanga, Limpopo and North West regions. These offices have now been reopened. Turnaround times to process licence applications are under review. Timeframes must be short, without having to effect major legislative amendments, by adopting more effective and efficient internal processes. This will ensure that we are more responsive to the needs and requirements of our applicants.
There is relative stability in mining sector, as a result of collective efforts by government, business and labour. We are emphasizing point because it is not government or business or labour, it is working together as stakeholders in the sector, then the sector will be stable. As we approach the wage
negotiations in the platinum sector, our appeal is that all stakeholders to engage in good faith, in the interest of the employees, the sector, and the economy at large.
Our manifesto enjoins us to transform the economy, to serve all the people, through interventions that promote a developmental growth path. Beneficiation has the capacity to grow the economy and create decent employment. We should use administered prices as an interventionist tool to grow the economy and support localisation. Steps to address administered prices, in electricity, port and rail tariffs, that hamper investment and growth are being considered.
These are attempts at attracting beneficiation projects locally. We will work with other departments to achieve this objective. At this point in time beneficiation remains a dream as long as the price of electricity is at level it is. High electricity prices are enabling factor to beneficiation as a dream Mintek is in the process to develop a rare earth element manufacturing industry. This will meet the global demand for rare earth
elements, used in applications for electric vehicles and wind turbine generators.
Following the initial investment of R100 million, we are investing R150m to revive the declining ferroalloys sector - mainly ferrochrome and ferromanganese - over the next five years. This work will be undertaken by Mintek. A significant portion of local ferroalloys smelters were mothballed over the years due to high electricity costs; and the ore is currently being exported. And our view is that if we use administered prices as a deliberate intervention we can reverse that trend.
Mintek has also developed a solution for acid mine drainage (AMD), by removing its environmental impact and transforming it into usable water. The solution has passed industrial testing scale and is ready for full implementation.
An investment of R12Om, over the next five years, will go into Mintek's development of high-value diagnostic products and a manufacturing infrastructure to supply the products on the commercial scale, as part of beneficiation initiatives. These
point of care diagnostic test kits - for example, kits for HIV, malaria, TB and Rift Valley fever; use nanoparticles of gold as an active ingredient. They are currently supplied to public health facilities in five provinces; and outperform commercially available products in terms of shelf life.
Their usage will reduce South Africa's reliance on imports of diagnostic kits and utilise South Africa's gold. We are hoping that Mintek will work together with PELCAM to commercialise these products. They are together now in the department and they can actually double the production of these products if they work together.
In South African context, Platinum Group Metals, PGMs, form the largest portion of our untapped resource, conservatively valued at US$ 2.5 trillion. To take advantage of the country's abundant platinum resource, the Hydrogen SA, HySA, flagship project was launched to beneficiate platinum through the use in hydrogen powered fuel cells. The project aims to achieve the local production of 25% of the global demand for beneficiated platinum
in fuel cells by 2020.
The Kloppersbos Explosion Testing facility, one of the few remaining in the world, is being transferred to the Mine Health and Safety Council in the current year. The CSIR will continue to manage the facility, in the interim, until the transfer is completed. The facility will be upgraded to continue with research on the reduction of coal dust and methane explosions.
We are investing in a seismic monitoring network to monitor seismic activity that could potentially affect the integrity of private, business and critical infrastructure. On skills development, in response to the Presidents priority of education, skills development and training; R800 million is allocated to fund, amongst others, bursaries, apprenticeships and internships in the fields of geology, electrical, mechanical, mining and rock engineering, as well as artisanal training.
The Mining Qualifications Authority, MQA, currently supports 1700 bursars. In terms of health and safety, mining is about
people, it is about workers who translate investment into wealth.
Therefore, health and safety of employees is paramount. The total number of reported fatalities this year stands at twenty- one; lower that the forty- five reported for the same period in 2018. This is 53% improvement, year on year. The year is not over yet, the industry is unpredictable when it comes to these issues, but we are reporting progress. There is also an 11% improvement in mine injuries, from 1 193 to 1 063 cases reported. We are collaborating with the Department of Health on a project to investigate the capacity and possibility of mine hospitals.
Illegal mining is another project. Illegal is a criminal activity, illegal mining is a criminal activity, you can put a different argument, but it is a criminal activity. We decisively deal with the source of illicit mining and trafficking of our minerals. South Africa, and other Member States, tabled a draft resolution to the United Nations Commission on Crime Prevention and Criminal Justice during the 28th Session held from 20 to 24 May 2019.
The resolution is about combating transnational organized crime and its links to illicit trafficking of precious metals and illegal mining, including by enhancing the security of supply chains of precious metals. Member States were urged, in line with their respective domestic legal framework, to consider criminalising illicit trafficking of precious metals if you want to do that, you want to traffic precious metals, I can only wishes you good luck.
Now, we reaffirm that mining is a sunrise industry. It can contribute to the delivery of government's priorities, revive the economy and boost growth and development in the country.
And I think I must thank the work of the team, DMRE in preparation for this Budget in general ...