CAPE TOWN - A marked improvement in fixed capital investment had taken place in the mining sector, Minerals and Energy Minister Buyelwa Sonjica said in her maiden budget vote speech in Parliament yesterday.
The Chamber of Mines raised concerns towards the end of last year about what appeared to be an investment strike in the sector. Some suggested that the cause lay in the new legislative framework introduced by the Mineral and Petroleum Resources Development Act.
The slowdown in investment was all the more inexplicable in the light of a commodities boom which saw mineral sales grow by a preliminary figure of 36.7% to R195.2 billion (US$27.4 billion) last year. At the same time, processed minerals grew at a moderate 14.5%.
Sonjica said a clear sign of interest in the mining sector was that the department had received 11447 applications for various types of rights since the promulgation of the Mineral and Petroleum Resources Development Act in April 2004.
"The number of applications received is unprecedented in the history of mining in SA," she said.
Sonjica said the department had conducted international roadshows to determine investor interest in SA.
No lack of investor interest was detected though there was uncertainty about the new legislation. The lengthy processing of licensing applications could have contributed to the perception of an investment decline.
The roadshows indicated that several factors influenced investment decisions: the inland location of the mining industry; the exchange rate; the government's enthusiasm to promote beneficiation when its competitors were eager to continue supplying raw material; the globalisation and investment abroad of South African companies; the regulatory framework; and the lack of infrastructure development.
"Despite all of this, prospects for job creation in the South African mining industry look very promising, based on the sound regulatory foundation that we have laid," the minister said.
A mining indaba was planned for June 11 to discuss problems and devise concrete strategies.
Turning to electricity supply shortages, Sonjica said her department would release by next month an energy master plan which incorporated a detailed energy infrastructure plan covering the next five years.
After this an integrated energy modelling system would be developed to inform integrated energy planning and come into operation in 2009.
By the end of October a draft law making it mandatory to include the provision of energy data on appliances, and the use of healthy, safe, energy efficient and energy friendly appliances, would be tabled in Parliament.
"A key aspect of this piece of legislation will be the creation of entities that will promote energy efficiency, renewable energies, energy planning and environmental protection," Sonjica said.
She noted that the lack of bulk infrastructure had placed a brake on the electrification programme.
Last year R282 million (US$39.6 million) had to be channelled from electricity connections to bulk infrastructure, resulting in a reduced number of connections.
This year, out of a total of R1.4 billion (US$196.8 million) allocated for household electrification, R380 million (US$53.3 million) had had to be set aside for the building of 10 substations. In total, 150,000 households and 700 schools would be electrified this year, Sonjica said.
