SPEECH BY THE HONOURABLE MINISTER OF MINERAL AND PETROLEUM RESOURCES MR GWEDE MANTASHE (MP)
BUDGET VOTE 34
DEPARTMENT OF MINERAL RESOURCES AND ENERGY
NATIONAL COUNCIL OF PROVINCES
25 July 2024
Chairperson of the National Council of Provinces, Ms Refilwe Mtsweni-Tsipane Deputy Minister of Mineral and Petroleum Resources, Ms Judith Nemadzinga-Tshabalala Honourable Members
We are tabling this Budget Vote 34 of the Department of Mineral Resources and Energy (DMRE) while the Department is being reconfigured into two Departments to ensure that there is sufficient focus on key issues.
The fact of the matter is that, over the past five years, the petroleum sector has been a second fiddle to other forms of energy, in particular the renewable resources. We are, therefore, convinced that the formation of the Ministry of Mineral and Petroleum Resources will end the neglect of the petroleum sector. We fully accept the mandate entrusted to us of promoting and advancing the sector for South Africa to benefit from its petroleum endowment.
Honourable Chairperson, despite headwinds that beset our country’s economic growth which include, but not limited to, geopolitical factors, port and rail inefficiencies, interrupted electricity supply, and further compounded by depressed commodity prices, the mining sector contributed 444.2 billion rands to the country’s Gross Domestic Product (GDP), amounting to 6% of the total GDP in 2023. Although the mining sector employs 489 000 mineworkers, we are concerned about the retrenchments specifically in the platinum sector. In response to these worker layoffs, we have pulled our social partners together and are in discussions to craft an approach to minimise them. In addition to this, we are making significant progress at the National Logistics Crisis Committee (NLCC) and National Energy Crisis Committee (NECOM) where we have formed partnerships with industry players to improve the state of infrastructure to support mining.
Honourable members, the department has been allocated at least R8.84 billion in the 2024/25 financial year, which amounts to R1.4 billion decrease from the previous financial year. This low allocation talks to our view that the state does not invest in productive sectors but emphasise social spending which is not sustainable without sufficiently spending in productive sectors that generate resources.
Of the total budget allocated to the department during this financial year, R6.4 billion will be transferred to public entities, municipalities, and other institutions or implementing agents.
As part of governments’ concerted efforts aimed at achieving universal access to electricity, the department resolved to disburse R3.94 billion of our budget allocation to Integrated National Electrification Programme (INEP) as follows:
Notwithstanding the decrease in the funding for this programme, this allocation means the department can continue to connect the people of South Africa to electricity thereby adding to the 837 189 households connected through the national grid during the sixth administration, and a further 7 780 households connected through non grid technology (Solar Home Systems).
Informed by our determination to eradicate energy poverty and guarantee energy security, the department has since the gazetting of the Integrated Resource Plan (IRP) in 2019, procured 6 094 megawatts (MW) from a diversified energy mix to meet the country’s growing electricity demand while reducing carbon emissions. Of this capacity:
In addition to this capacity, a further 8 231 MW of new generation is currently being procured with requests for proposals having been issued in the following areas:
We are making significant progress on the procurement of 2500 MW of Nuclear New Build Programme to be implemented at a pace and scale that the country can afford. Having completed the procurement framework study, the department is currently consulting with various stakeholders, including Eskom and National Treasury, on the optimal ownership models for the implementation of the programme. A Request for Proposals (RFP) will be issued to the market soon after the consultations have been concluded.
The National Development Plan (NDP) envisions a South Africa with an adequate supply of liquid fuels by 2030. To realise this vision, the department has through the Central Energy Fund (CEF) concluded a transaction on the sale of assets located at the SAPREF Precinct. While we appreciate the return to full operation of the Cape Town refinery, we are mindful of the need for investments in new refining capacity, particularly in light of the recent oil and gas discoveries both in the South African and Namibian shores.
In cognisant of the Supreme Court of Appeal decision to afford applicants an opportunity to cure identified defects in application processes, we must challenge the foreign-funded Non-Governmental Organisations (NGOs) that oppose every initiative to explore oil and gas under the guise of protecting the environment, while halting seismic data acquisitions and consequently discourage investments in this sector. The successful 3D seismic data acquisition in April this year on the west coast by Searcher has proven that these operations can be done responsibly without any harm to the environment.
Honourable Chairperson, while the Mineral and Petroleum Resources Development Act (MPRDA) has largely delivered on its intended goals, we accept that this has not been without challenges and shortcomings. To this end, the Department is currently drafting amendments to the MPRDA to ensure that areas that have been challenged legally are strengthened against international best practice. The amendments will include the review of the licensing regime, given the forthcoming efficient and transparent mining licensing system developed by PMG Consortium.
These amendments are a continuation of the regulatory and policy adjustments we initiated during the sixth administration, including:
Chairperson and honourable members, in our pursuit for evidence-based policy making, the department is currently drafting a report on “The State of Mining” which will consider several factors such as the contribution of mining to the GDP, performance and trends of each commodity (Production, Explorations, Exports, Sales and Prices) as well as Challenges and interventions. We are also developing the “Critical Minerals Strategy” which will be the country’s blueprint policy for the exploitation and processing of these minerals, we will be launching this strategy in October this year. We are convinced that at the conclusion of this work, we will have a better understanding of the state of the South African mining industry and have pointed answers on how to address the challenges facing the sector.
Given South Africa’s endowment with considerable mineral reserves of strategic significance to the global economies, we are on course with the implementation of the country’s exploration strategy having established the R400 million exploration fund to support emerging and junior miners. By the 11th of July 2024, we had received a total of 15 applications to the first funding call focusing on copper, nickel, lithium, rare earth elements, and graphite. We understand that this number has since increased following a flood of applications received on closing day, the 12th of July 2024. We intend to intensify our engagements with several fund managers and the investor community to secure additional financing to sustain the fund into the future.
In addition, the department has allocated R72 million to fund artisanal and small-scale miners, including women and youth-owned companies, of which 21 applicants that responded to the funding call are expected to receive funds towards their projects following the conclusion of contracting agreements with the Industrial Development Corporation (IDC) not later than September this year.
Honourable members, owing to our strategic partnership with our social partners, we have improved the mining sector’s performance on the health and safety of mineworkers towards the zero harm goal. This is demonstrated in the decline in mine fatalities, injuries, and occupational diseases, as evidenced by the 49 fatalities being the lowest on record in 2022. Even though, we had set sights on breaking this record in 2023, the regrettable disaster at the Impala 11 Shaft that killed 13 mineworkers and many other fatal incidences in various mining operations contributed to the 53 fatalities reported in 2023.
We have also noted with great concern the emerging trend of fatalities related to motor accidents and disasters involving illegal miners. In response to this trend, the department has entered into an agreement with the industry on the development of minimum standards and guidelines to mitigate against road fatalities, while intensifying the fight against illegal mining. To this end, we have drafted the General Laws Amendment Bill which to synchronise the provisions contained in the MPRDA, Diamonds Act, and those in the Criminal Procedure Act. These amendments define illegal mining as a criminal act, thus empowering police to arrest illegal miners for their criminal deeds. This Bill is ready for submission to cabinet to allow the minister to table it in Parliament.
The department has further reprioritised R181.9 million from the INEP to fund the government’s programme of rehabilitating derelict and ownerless mines, therefore bringing the total allocation to R310.82 million in the 2024/25 financial year, which will enable the department to intensify its rehabilitation programme.
Social and Labour Plans (SLPs) have proven to be an effective instrument through which host and labour sending communities have received tangible benefits through infrastructure projects such as schools, clinics, bridges, and water supply systems. To this end, during the sixth administration, the industry implemented and completed 534 SLP projects in various provinces totalling more than R2.5 billion, as part of the social license to operate. We urge members of this house to join us in future when we launch more of these projects in various provinces.
House chairperson, at the beginning of the sixth administration, we had state-owned entities with limping governance structures where, in most of them, there were no boards and no CEOs. Most of them had disclaimers and qualified audit outcomes. Following our intentional approach to ensure good governance and thereby appointing competent boards, we have seen, at least eight of our eleven SOEs obtaining either a clean or unqualified audit outcome in the 2022/23 financial year. The two in the red are NECSA with a qualified audit outcome even though they have improved from a disclaimer in the prior year, AEMFC which obtained a disclaimer, thus affecting the overall CEF group to a qualified audit outcome.
Honourable chairperson, I present to this august house, the Budget Vote 34 for further deliberations and adoption.
I thank you