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National Union of Mineworkers

National Union of Mineworkers. Establishment of State Owned Mining Company: submission to the Portfolio Committee on Mining 28 May 2010 Madoda Sambatha: Parliamentary Head. Introduction. Background Political and Policy Perspective Submission to the Public Hearings Conclusion.

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National Union of Mineworkers

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  1. National Union of Mineworkers Establishment of State Owned Mining Company: submission to the Portfolio Committee on Mining 28 May 2010 Madoda Sambatha: Parliamentary Head

  2. Introduction • Background • Political and Policy Perspective • Submission to the Public Hearings • Conclusion

  3. Background • The NUM’s submission is derived from the previous Congress resolutions and the recent Mining Summit • NUM Congress Resolution, May 2009: - “To campaign for and ensure the re-nationalisation of SASOL and Mittal Steel, the operationalisation of the State Owned Company in mining industry with an ultimate aim of nationalising and socialising the commanding heights of the economy in line with the vision of the Freedom Charter”.

  4. Background cont. • Chamber of Mines figures and facts, 2008 – Contribution of Mining to the Economy: • Had a total income of R364bn and total expenditure of R383bn, of which R144.6bn was spent on procurement, R64bn on capital expenditure, R58.6bn on salaries and wages and R25bn returned to owners of capital. • Directly accounted 8% of GDP – totalling 18% after considering indirect multiplier effects and the induced effect of mining.

  5. Background cont. • Chamber of Mines figures and facts, 2008 – Contribution of Mining to the Economy: • Directly accounted for 9% of total fixed investment in the economy –13.3% of total private sector investment. • If the multiplier effect is taken into account, mining helped generate 18% of investment in the economy. • Contributed directly about R218.8bn to SA merchandise exports or 31% of the total. The sector accounted for 50% of merchandise if beneficiated minerals are added to primary minerals (e.g. catalytic converters, ferro alloys, steel, and chemicals).

  6. Background cont - Paid R32bn in direct taxes, equivalent to 17.3% of company tax. • Was the world’s largest producer of ferrochrome, chrome and platinum group metals (PGMs). The industry was also a significant supplier of: aluminium (9th in the world); coal (6th); manganese (2nd) gold (2nd) iron ore (7th). • Employed 518,585 employees, equivalent to 6.1% of non-agricultural formal employment and 7.8% of total private sector non-agricultural employment.

  7. Political and Policy Perspectives • Freedom Charter: • The Freedom Charter’s clause on the people sharing in the country’s wealth states, “The national wealth of our country, the heritage of all South Africans, shall be restored to the people; the mineral wealth beneath the soil, the banks and monopoly industry shall be transferred to the ownership of the people as a whole; all other industry and trade shall be controlled to assist the well-being of the people; all people shall have equal rights to trade where they choose, to manufacture and to enter all trades, crafts and professions"

  8. Political and Policy Perspectives cont. • Road to South African Freedom, SACP 1962: • SACP programme, “The Road to South African Freedom”, under Economic Development states that “the Party will press for the strengthening of the state sector of the economy, particularly in the fields of heavy industry, machine tool, building and fuel production. It will seek to place control of the vital sectors of the economy in the hands of the national democratic state to correct historic injustices, by demanding the nationalization of mining industry, banking and monopoly industrial establishments, thus also laying the foundation for the advance to socialism. At the same time, the state should protect the interests of private business where these are not incompatible with the public interest. It should offer assistance, by way of state loans, to non-monopolist producers, in return for state share in their undertaking, thus paving the way for gradual and peaceful transition to socialism”.

  9. Political and Policy Perspectives cont • Morogoro Strategy and Tactics, ANC 1969: • ANC Strategy at Tactics adopted by Morogoro conference says “In our country - more than in any other part of the oppressed world - it is inconceivable for liberation to have meaning without a return of the wealth of the land to the people as a whole. It is therefore a fundamental feature of our strategy that victory must embrace more than formal political democracy”. • Further says “To allow the existing economic force to retain their interests intact is to feed the root of racial supremacy and does not represent even the shadow of liberation”.

  10. Political and Policy Perspectives cont • 52nd Polokwane National Conference Resolution, ANC 2007: • The 52nd National Conference of the ANC (the first conference following the passing of the MPRDA) resolved, among others, that “the use of natural resources of which the State is the custodian on behalf of the people, including our minerals, water, marine resources in a manner that promotes the sustainability and development of local communities and also realizes the economic and social needs of the whole nation.

  11. Political and Policy Perspectives cont - In this regard, we must continue to strengthen the implementation of the Mineral and Petroleum Resources Development Act (MPRDA), which seeks to realize some of these goals.”

  12. Policy and Political Perspective cont • 23rd National Conference Resolution, ANCYL December 2008: • ANCYL 23rd National Congress which calls for “the State [to] be custodian of the people in its ownership, extraction, production and trade of mineral wealth beneath the soil, monopoly industries and banks”.

  13. Policy and Political Perspective cont. • NUM 13th National Congress Resolution, May 2009: • Congress acknowledges the adoption of the Mineral and Petroleum Resources Development Act (MPRDA), reverting mineral rights to the state as the custodian of our mineral wealth and land in this regard Congress mandates the NEC to engage government on the following:

  14. Policy and Political Perspectives cont. • The strategy and legislation for the State Owned Company in Mining • To call for improved beneficiation of minerals and measures to regulate and stimulate the fabrication of raw materials into finished and semi-finished products.

  15. Policy and Political Perspectives cont • NUM Central Committee, 13-14 May 2010: Mining Strategy • CC mandates the NEC to engage Government, Industry and Investors on a new strategy on the Mining industry which should include but not limited to, (a) Comprehensive Mining Strategy for South African Mining Industry (b) Mining as sunrise and not sunset industry (c) Ensuring that Mining careers are fashionable and remuneration is competitive and attractive (d) Clear investment in Mining and Labour sending towns (d) Recognition of the Mining industry and Mine workers on their role within the SA economy (e) Environmental protection and rehabilitation plan

  16. Political and Policy Perspectives cont • NB: Whether Parliament take a decision on Nationalization or not- the reality is that any decision will ultimately need an implementation Arm/vehicle. Our view as the Union is that the current debate on nationalization and this public hearing should be seen as integral and re-inforcing each other.

  17. NUM Submission • On the basis of the invitation, our submission would be two pronged: • Areas of Interventions required from Parliament(2010-2014) • State Mining Company

  18. NUM Submission cont • Areas of Intervention required from Parliament: • Moratorium on any sale of government stake in the Mining sector in all the spheres and funding entities of government. (implementation of the Cabinet decision- 09 August 2009)

  19. NUM submission cont. • Government to investigate and quantify the involvement of the state in the Mining through IDC, PIC and other state investments in all the spheres. • Contextual relationship between Skills Development Act and Social Labour Plan, Employment Equity on prescription of White women as HDSA’s and then the contextual relationship between decent housing and conversion of hostels into family units • The time frame for the three elements above be June- November 2010.

  20. NUM submission cont. • Cabinet to finalize the Mineral Beneficiation strategy and that this strategy be included in the IPAP2. • Minister of Labour to legislate minimum wages for the Mining Industry (including Mining Contractors and Small scale mining). The need to contextually engage on the ANC manifesto call for decent work and whether decent work can co-exist with Labour Broking • Parliament should develop a Comprehensive Mining Strategy for South Africa(Planning commission, DMR, organized labour and organized business should play an active role on this development)

  21. NUM submission cont. • Parliament should develop a common approach on Community or Traditional Authority ownership in the Mining industry • Establishment of the Mineral Resources Bargaining council(Industry based and compulsory) • Parliament and the Industry to commission a comprehensive study on alternative technology to detect possible seismic occurrence with date and time accuracy and exact work place • The time frame for the six elements above be January- June 2011.

  22. NUM submission cont. b. State mining company • The MPRDA and Royalties Act remain the central legislations to be used as the basis for the establishment of the State Mining Company. • Change the structure of the economy in a way that absorbs large number of the masses, create new sites of accumulation and support developmental objectives.

  23. NUM submission cont. • Change ownership patterns and empower the state to drive development agenda: 1. Building affordable economic infrastructure. 2. Raising revenue for human development & other economic objectives.

  24. NUM submission cont. • Cabinet and government should proceed with the Establishment of the State Mining Company as per the decision of the Mining Summit, in this regard NUM will be engaging government on development of Legislation(June-November 2010) for the state mining company that must include but not limited to: (a) Nature of the Company (also deal with the extent of its involvement in both new and old mining rights) (b) Constitution of the board (including Labour representativity, powers of the shareholders vs fiducial responsibility)

  25. NUM submission cont. (c) Remuneration of the board, executives and the workers (closing the wage gap) (d) Channeling of its proceeds to fund (Health, Education and Rural Development) whilst other percentage should be re-invested in the State Mining Company (e) Restructuring licensing process from 2014 to prescribe on the new mining rights that:

  26. NUM submission cont. 1. 49 percent share holding (Private investor irrespective of race and gender) 2. 31 percent shareholding (State Mining Company) 3. 10 percent shareholding (Employee Share Ownership Schemes) 4. 10 percent shareholding (Community/Traditional Authority or Worker co-operatives) NB, on the basis of success or any lessons learned out of this process, old order rights be subjected to this scenario by 2019.

  27. NUM submission cont. • Immediately after, Government has investigated and quantified the involvement of the state in the Mining through IDC, PIC and other state investments in all the spheres, All the state involvement should be consolidated into one, under the State Owned Mining Company (its name to be JB Marks SA Consolidated)

  28. NUM submission cont. • Take responsibility of the beneficiation programme and that in the strategy to stipulate that (a) Beneficiation as the responsibility of the State Mining Company (state with 60% and private investors irrespective of race and gender with 40%). (b) The strategy to prescribe that 10% of all raw minerals extracted by any company would be handed over to the State Mining Company for beneficiation purpose.

  29. NUM submission cont. • The State Mining Company should be established(June 2011) and be under the direct responsibility of DMR and not Public Enterprise, this should then lead to: • Taking Mining Licensing and applications to Department of Trade and Industry, inspectorate to the DOL • Determine on the basis of strategy and available resources (financially), what would be the operational model of the State Mining company in relation to old mining rights and new mining rights

  30. NUM submission cont. c. Consider whether it would not be possible to establish a Mining Investment and Development Bank similar to DBSA and Land Bank but still under responsibility of DMR d. Ring-fence revenue for minerals (royalties and taxes) from March 2011.

  31. Conclusion • We hope that this public hearing will not only be the platform for submissions but also a step towards the actual implementation of the State Owned Mining Company as per the ANC 2007 resolution, NUM 2009 resolution and Mining Summit 2010 agreement. • The implementation of the recommendations above and other submissions will naturally kill the question as to whether Nationalize or not.

  32. Thank youwww.num.org.za

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