Keynote Address by the Minister of Foreign Affairs of the Republic of South Africa, the honourable Dr Nkosazana Dlamini Zuma, at the 10th Annual Investing in African Mining Conference, Cape Town, 8 February 2005

Distinguished Guests

Ladies and Gentlemen:

Firstly, I would like to thank you for inviting me to address this esteemed audience at this 10th Annual Investing in African Mining Conference. This gathering happens on the eve of the Opening of the South African Parliament and in the eleventh year of our democracy.

South Africa is being transformed hence the South Africa of ten years ago differs fundamentally from South Africa today. This transformation is still continuing including the mining sector. Mining occupies the pride of black in Africa's economic development.

The past was one of deliberate enslavement, dispossession, colonial plunder and colonial rule resulting in landlessness and impoverishment followed by neo-colonialism that largely resulted in deepening poverty and instability.

The results of these centuries of foreign and indirect rule, have been, in the words of Ali Mazrui in his masterful work, The Africans, that:

"African states since independence have experienced a bewildering and rapid sequence of military coups and economic shifts and turns … It started with the slave trade, which dragged African labour itself into the emerging international capitalist system. This was the era of the labour imperative in relations between Africa and the West. But colonialism was the era of the territorial imperative, as the West demanded from Africa not just labour but territory and its promise in all its dimensions."

Yet, as Mazrui also suggests, one view is that the "the kind of capitalism which was transferred to Africa was itself shallow."

"Western consumption patterns were transferred more effectively than Western production techniques. Western tastes were acquired more quickly than Western skills, the profit motive was adopted without the efficient calculus of entrepreneurship, and capitalist greed was internalised sooner than capitalist discipline."

All this, he argues, "is quite apart from the anomaly of urbanisation without industrialisation."

It was only well into the last century, especially in the 1960s, that ground-breaking work was done by African leaders through struggle and freeing their people from colonial rule. These African heroes embarked upon African unity and declared that the freedom of the African continent would only be realised when all African countries would be free.

The dreams of that generation of leaders who liberated Africa have not been realised. They dreamt of an Africa free and united. They dreamt of an Africa where there is strong solidarity amongst different countries. An Africa that is developed and its people skilled and healthy.

An Africa that does not export raw material. An Africa that exports manufactured goods.

An Africa that is at peace.

A prosperous Africa.

An Africa that takes care of its environment.

An Africa very different from Ali Mazrui.

I believe that each and everyone of us in this hall can contribute if not already contributing to that Africa.

Africa has most if not all the strategic minerals needed for the global economy. Therefore mining must be part of the driving force for the economic development of Africa.

Unfortunately the United Nations report on the millennium development goals which include amongst other things food security, poverty alleviation, reduction of child and maternal mortality and primary education.

The findings indicate that Sub-Saharan Africa demonstrates a widespread shortfall for most of the MDGs, with increasing food insecurity, rise in extreme poverty, high child and maternal mortality, large number of people living in urban slums, undernourishment remains high, no progress in primary education, persistent gender inequality, high disease prevalence rates (hiv/aids, malaria, TB), no significant progress on access to safe drinking water and sanitation and lastly Africa records substantial environmental degradation that is eroding it natural resource base. The report boldly asserts that Sub-Saharan Africa is the epicenter of crisis and as a consequence requires specific poverty scale-up interventions by all.

Fortunately the same report makes the bold assumption that the MDGs can still be achieved by 2015 if there is renewed and intensive effort by al parties.

We are of the same view that Africa can still achieve the MDGs provided we all act together. Africa has a critical mass of leadership who together embrace change for the African continent and have seen the need for the creation of investment friendly environments and the nurturing of conditions in which entrepreneurs and intellectuals, business leadership and innovators, can arise organically and through their deeds can help to take Africa to greater heights.

Thus, in the last decade we have been seized with putting in place the necessary structures and cultivating the necessary conditions to guarantee our future and those of our children.

In this new century and new millennium I believe that as Africans we are indeed poised to determine our future.

Through the African Union we have began to re-organise our continental so that we can turn Africa into a peaceful democratic secure and stable continent. A continent of hope.

Through NEPAD Africa is restructuring its economy and its relations with the rest of the world.

Africa recognises that unless we can feed ourselves we have no hope of economic progress. Agriculture and opening of markets is important and therefore the Doha development round has to be concluded.

Africa must shift from exporting raw materials to exporting value added goods. It must broaden its industrial base. Special attention has to be paid to infrastructure development.

The human resource development ensuring acquisition of technical skills and technologies including information and communication technology and bio-technology.

Mining is a driving force in the restructuring of the economy. China is an example whose economic growth has resulted in an increased demand of many commodities including minerals and metal ores.

China is now the largest importer of Iron Ore, of copper. China imports from Africa Iron Ore, copper, platinum nickel, lead, diamonds amongst others.

Africa would not need to import any of the strategic minerals from outside its shores.

In Africa mining is very important if it handles poverty it will be at the centre of economic growth.

The mining sector needs to begin investing in the beneficiation of all these minerals.

Small mining companies can contribute a lot to the alteration of poverty to creating and to creation of jobs and also the development of rural villages. The value addition would stimulate further small and big business thus empowering the communities and providing wealth instead of extracting the minerals and leaving huge gaping holes and poor communities behind.

The mining sector can be a driving force in the development of technologies and we see here in our country and elsewhere but it can therefore help in technology transfer to the rest of the continent.

The starting points has been for Africa to reclaim ownership and management of its own minerals. For the industry to be sustainable African must fully participate not only as providers of cheap labour but as owners and managers of the industry.

President Mbeki had this to say addressing the High Diamond Council last year among other things:

"Undoubtedly, the need, extent and intensity of economic empowerment would differ in each diamond producing country but could involve some or more of the following:

• Participation of Women: sensitising the diamond industry to its role in developing women as major stakeholders in the industry.
• Since gender is crosscutting, it's needs to be placed in the mainstream of the whole value chain, starting from access to resources e.g., land and mining rights, finance, capacity building and transfer of skills up to ensuring that it accommodates race, culture, class etc. and therefore overall gender needs and concerns.
• Ensuring broad-based empowerment that would include communities and workers in the industry.
• Skills development constitutes a critical part of the industry's growth strategy. Audits of skills should be undertaken and be utilised in order to identify gaps and develop sector implementation plans. Of course, these activities should build on current interventions. Existing legislative frameworks should be utilised to strengthen the process particularly as they relate to resources and institutional base for delivery.

Diamonds, like al minerals commodities are non-renewable resources. Accordingly, dependence on raw materials subjects a country's economy to primary commodity price fluctuations and cyclical volatility.

I believe that it is both incumbent upon, and would be of benefit to the international diamond industry to support and invest in the beneficiation and value-adding projects in African diamond producing countries to ensure economic sustainability beyond the depletion of the diamond resources.

As a country we are therefore greatly interested in promoting this process. It also relates to the correct view that I believe is now prevalent, that Africa should become fully integrated within the globalising global economy. This raises the important question of how this process of integration should be effected.

I believe that a global consensus exists that the process of globalisation has produced and is producing both positive and negative consequences. On the negative side is the growing disparity in wealth, income and growth and development potential between the rich and the poor both between and within countries.

There is therefore a widely shared view that al humanity should seek to make an impact on the globalisation process so that it does not result in the marginalisation and impoverishment of large numbers of people globally.

With regard to our own Continent, it is our firm view that this cannot be done on the basis of the perpetuation of the old relationship according to which we as colonies produced and export raw materials and imported high value added manufactured goods from the colonising countries. This also led to the building of an infrastructure directed at servicing this particular relationship."

Even though he was talking specifically about the diamond industry it would be very true for the mining industry as a whole.

This is why in 2002 the South African Parliament enacted the Minerals and Petroleum Act. The Act has sought to bring South Africa in line with other mineral producing through a universally recognised approach, which grants the State custodianship of all minerals resources within the country. It also seeks to promote equitable access and employment equity for all the country's citizens to the mineral resources and mining activities of the country.

While it provides a safe haven for owners of existing mineral rights through the recognition of their "old order" rights for a period not exceeding five years from the date of enactment, it also requires that the holders convert them within the same period. The Act also provides for the security of tenure in respect of prospecting and mining operations.

The Act also allows for assistance to historically disadvantaged South Africans to conduct prospecting or mining activities with the provision that such assistance is within the bounds of equitable access.

The Broad-Based Socio-Economic Empowerment Charter of 2001 is also intended as another means of transforming the South African mining and minerals landscape through, among others, developmental strategies, encouraging urban renewal, value-adding beneficiation and job creation.

As regards Employment equity, industry is striving for a baseline of 40 percent historically disadvantaged South African (HDSA) to participate in junior and senior management within five years. We agreed that women should have 10 percent representation in the mining industry within the same time frame.

The mining industry has also committed itself to transferring 26 percent of its assets to historically disadvantaged South Africans within 10 years. Employer share schemes will be counted as ownership and beneficiation of primary commodities can be used to offset ownership.

Other quality assurance measures have also played their part in regulating the industry. One such example is the Kimberley Process Certification Scheme for Rough Diamonds (KPCS), in which there are 43 participating countries. The KPCS was motivated by a deep belief that the continent's minerals resources should serve as an engine for sustainable development and growth and they are enabling these countries to regain control over their diamond resources. As a result of this, there has been a massive decrease in the volume of illicit transfers and a substantial increase in much-needed government revenue. This is an important indicator that post-conflict governments are progressively gaining control over these precious natural resources.

Beyond the confines of one country or one sector, the challenge for Africa is one of regional integration - this remains as a possible instrument for African economic recovery, but the lack of organised and operational regional arrangements has led to the continent continuing to rely on exporting its commodities to the North in exchange for higher-value manufactured imports. Thus the need or consolidating continental and regional trading arrangements has to be met so that African producers and exporters can improve their competitiveness in global markets. I hope that this Conference will take this matter into their deliberations for further discussion.

The question is also whether we as Africans - does Africa - have the necessary resources, infrastructure, expertise - both human skills and capacity - in order to use mining as a way and means of expediting our development.

And furthermore what are we doing to ensure that we do begin to rely upon ourselves in building this sector, that we have expertise from our own people in the energy and minerals sector, that we have resources such has refineries and that our universities are equipped to educate and train individuals for this sector?

While there is collaborative research within the global minerals industry and in particular within the minerals-research environment and South Africa in particular has a comparatively large research base, there is a need for more local subsidiaries, to serve as catalysts in promoting and building capacity in South Africa, the region and the entire continent

There needs to be synergy between private sector structures, the state's mining research technology bodies, in our case, Mintek, and African university research centres and regional centres of excellence. This kind of collaboration ought to also set continental standards, which ought to enhance our investment potential.

President Thabo Mbeki in January this year on receiving an Honorary Doctorate from the University of Khartoum, made the following point:

"These are among the African countries well endowed with rich natural resources - Sudan with oil and gas deposits and great agricultural potential, and the DRC with oil, gas, diamonds, a host of other minerals and abundant water resources. Yet, despite their rich natural resources, the two countries are among the poorest on the continent. Both countries have suffered under autocracy as well as debilitating civil wars…"

I believe that co-operation between industry, research organisations and universities should apply especially to the mining industry in Africa. Africa offers the highest return of investment anywhere in the world according to a recent World Bank Annual report. The entrepreneurs and captains of industry present in this gathering have a central role to play through the mining industry in unlocking Africa's potential and in contributing to human resource development and economic growth.

I wish you well in your deliberations at this Conference and hope that out of this meeting will come more investment in the mining industry in Africa leading to greater rates of growth and development.

Together, let us do what we have to do, what must be done, to guarantee Africa's future.
I thank you.

Issued by : Ronnie Mamoepa
Contact No: 082-990-4853

Department of Foreign Affairs
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08 FEBRUARY 2005