SPEECH BY
">SPEECH BY
THE MINISTER OF MINERAL RESOURCES AND ENERGY,
MR GWEDE MANTASHE (MP),
ON THE OCCASSION OF THE SONA DEBATE SPEECH,
Speaker of the National Assembly,
Chairperson of the National Council of Provinces (NCOP)
His Excellencies, the President and Deputy President of the Republic,
Chief Whip of the Majority Party, the African National Congress (ANC),
Honourable Members,
Ladies and Gentlemen.
With the performance of our economy at the centre of attention, requiring all our efforts to turn things around to realise our aspiration to grow the South African economy together; the President enjoins us to be prepared to go where we have never been before.
The economy contracted by 3,2% in the first quarter of this year, with mining contributing 0,8% to the overall decline, falling by 10,8%; and electricity (energy) declining by 6,9%, a 0,1% contribution to the GDP decline. Mining production data released by StatsSA earlier this month indicate that, compared with the first and fourth quarters of 2018, production of most commodities declined in the first quarter of 2019.
The biggest contributor to negative growth is loadshedding; causing mines to produce at only 70% of their capacity; and creating negative spill-over effects on other sectors of the economy. The electricity pricing is also another challenge that impacts on growth.
This situation requires that we invest into mining and the primary sectors of the economy.
Madame Speaker,
Against this backdrop;
“Justly the world now demands –
“Wither is fled the visionary gleam,
Where is it now, the glory and the dream?”
(kaIsaka Seme P, 1906, Regeneration of Africa)
And we again reply with courage that,
“Trying times need courage and resilience. Our strength as a people is not tested at the best of times …, we should never become despondent because the weather is bad nor should we turn triumphalist because the sun shines”
(Mbeki T, 2008, Address to the Nation)
As we implement our Election Manifesto in this sixth Administration, we are ever mindful of our tasks. Our economy still depends to a large extent on the minerals and energy cluster for its growth and development. These sectors will continue to play a significant role in the future of the economy. Merging the two portfolios under one Ministry enables more attention and focus on them and greater policy alignment, for certainty to the sector and the greater economy.
We remain highly attractive for investment in mining. To improve its overall performance, we must return it - particularly the major mineral groups, to a growth trajectory.
For the period 2018 to 2020 there is an estimated 60 mining projects in the pipeline with an estimated investment value of R110.1 billion and projected employment estimated at 32 000 employees. Of these, 10 are exploration projects, 26 are expansion projects, 12 are new mining development projects, 4 are new processing plants, 4 are sustainability projects to extend the life of mines, while the remaining balance of 5 are unspecified.
Integral to investment attraction, the Council for Geoscience’s mapping programme is critical to identify and affirm new mineralisation systems that are consistent with the new demand trajectory of mineral resources, such as battery minerals. The programme aims to secure a minimum of 5% of the global exploration budget within the next three to five years.
In 2018/2019, non-ferrous metals and minerals production grew by 9.4 percent quarter on quarter; with major contributors to the production growth being zinc (52.7 %), titanium (16.6 %), copper (8.1 %) and cobalt (1.0 %). This affirms our assertion that the demand for battery minerals is growing. These minerals will assist the move towards cleaner energy options, and the sector must position itself to take advantage of the opportunities presented.
The jobs numbers that were released earlier today are an indication of positive signs. Of the twenty-two thousand jobs created, six thousand jobs are in mining.
Most importantly, we must urgently address reliable electricity supply to support our growth ambitions.
Our key priorities on energy are the following: ensuring energy security of supply through long-term planning; providing universal access to energy; lowering the cost of energy, addressing municipal sustainability; and investment in research and development on new energy delivery models - energy storage technology will make renewable energy, coupled with storage, a viable option going into the future. This will replace the traditional power systems premised on large centralised power stations, delivering electricity over large distances to a captive consumer base at a load centre.
Working towards the country’s energy mix options, we must move away from the polarized views that characterize the energy debate today. It should not be about coal versus renewables. Rather, how to best balance our requirements to grow the economy and guarantee development; by ensuring security of energy supply along with our obligations to address climate change considerations.
The Integrated Resource Plan 2019 will outline our primary energy requirements; in respect of coal, nuclear, gas and other energy minerals, plus solar, wind, biomass and regional hydropower resources. To ensure investment in the required energy infrastructure - including power plants, refineries, pipelines, transmission and distribution wires, storage facilities for oil and gas; we must ascertain that all the enablers thereto, particularly legislative and institutional arrangements, are in place.
The mining and energy sectors present a huge potential for exploration, production and beneficiation. For this reason, the restoration of a stable and predictable policy and regulatory environment is a priority.
Uncertainty that delayed the development of the mining industry was removed with the finalisation of the Mining Charter; and the separation of petroleum from the regulatory framework governing traditional minerals. The process of developing a Petroleum Resources Development Bill, which will in due course be subjected to public participation, Cabinet and Parliamentary processes, is underway. The Bill will further provide regulatory certainty to the upstream petroleum industry and stimulate growth and development of this sector.
Mineral beneficiation is critical for industrialisation. We must address, amongst others, the matter of high administered prices to trigger growth and development of the economy. This with the intention to reverse the current situation, where the bulk of our chrome and manganese resources are beneficiated in Asia; in Malaysia in particular. Further example of how high electricity tariffs undermine our efforts to grow the economy and create jobs.
Implementation of the Mining Charter will also boost beneficiation by
• allowing mining right holders to support local mineral beneficiation entities or where feasible undertake mineral beneficiation in lieu of their BEE ownership obligation.
• intensify localisation of inputs used in the mining industry by leveraging demand for capital goods, consumables and services through the procurement element. Growth in local manufacturing of inputs and consumables will have a demand-pull effect on mineral based intermediate products such as steel, polymers and chemicals; thereby increase the value realised from local beneficiation of minerals.
Further, through Mintek, these programmes to identify and support local beneficiation opportunities are underway:
• the development of hydrogen fuel cells, based on South African developed technology that utilises platinum, through the Hydrogen South Africa (HySA) programme.
• the development of a Rare Earth Element value chain (aimed at the development of a local Rare Earth Element manufacturing capacity).
• the commercialisation of new technology to reduce the costs in the South African ferrochrome sector,
Post our national general elections, journalist Palesa Morudu wrote;
“Last week’s 57% win by the governing party was met with a grudging sigh of relief from a gatvol nation – relief that the polls were over, that it could have been worse.”
“South Africans, once again, held it together and broke with the global trend that is embracing greater extremes.”
“So, here we are again. The voters have provided a corrective to some of SA’s worst excesses. But time is running out. The possibility of building a non-racial, democratic and prosperous SA based on equality for all and the rule of law has not been extinguished … Much depends on what (Government does) over the next year”.
(Morudu P, 2019, Only Nation-Building Can Help SA Tackle Economic and Social Challenges, Opinion, Business Day)
In response to Palesa and all South Africans, in the July 2019 Budget Vote debates, we will further outline in detail our plans for growth of the minerals and energy portfolio; how they can make a positive contribution to the economy, eradicate poverty, create employment and equality in our society.
Mr President, I can assure that we take your command. We will do all in our power, to contribute positively to the growth and development in our society.
I thank you.