Ladies and gentlemen let me start off by making this bold statement that the future of

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1 Members of the Executive Council present here; Executive Mayors and Mayors; Heads of Departments; Municipal managers; Fossil Fuel Foundation; Government and municipal officials; Captains of industry present; Non-governmental organisation representatives; Media representatives; Distinguished guests, friends and comrades; Ladies and gentlemen let me start off by making this bold statement that the future of South Africa s coal supply lies in Limpopo Province. Most of the best coal reserves in South Africa are been depleted which means that whatever coal reserves remaining may be difficult to exploit. Evridiki Towers, 20 Hans van Rensburg Street, POLOKWANE, 0700, Private Bag X9484, POLOKWANE, 0700 Tel: , Fax: , website: http\\ The heartland of southern Africa development is about people!

2 Coal must be handled in such a manner that maximum utilization can be achieved because unless we use our resources in a sustainable manner the balloon is bound to burst at one stage or the other. The Waterberg and the Soutpansberg Coalfields are seen as alternative sources of coal in light of the dwindling reserves at Witbank, Ermelo and Highveld coalfields. This province is therefore going to remain very central in the mining sector for quite some time for the growth of our country, South Africa. May I remind everyone that Limpopo is also home to major reserves of the Platinum Group Metals (PGM s), diamonds, copper and iron. It is, however, very important to develop and manage these resources so that even the future generations can benefit out of our initiatives. Engagements of this nature are therefore going to be very crucial for the growth of our province and the country as a whole. According to the Department of Minerals and Energy figures from late 2007, Limpopo contributes 4% of coal mining in South Africa. The most optimistic forecast though is that in 30 years time Limpopo could contribute as much as 70% of South Africa s coal. In addition the coal mines have the potential to produce several trillion cubic feet of coal bed methane. Except for the Tshikondeni Mine in Pafuri, the Waterberg s neighbouring coalfields of the Springbok Flats, Limpopo s coalfields remain largely undeveloped hence this presents an opportunity to take our economy to greater heights through exploitation and value addition of our resources. 2

3 Statistics also indicate that 80% of Limpopo s revenue is derived from the bigger mines such as: Grootgeluk, Tshikondeni with coal Venetia with diamonds Phalaborwa copper and phosphate Amandebult, Northam, Mokopane, Musina, Lebowa, Marula, Modikwa Platinum Recent economic analysis indicates a very encouraging trend that the provincial economy is growing. From a recent study, the Limpopo s Mining and Mineral Beneficiation Initiative Strategy, it was noted that Mining s contribution to the provincial economy has increased from 6% in 1995 to 29.4% in This increase is accounted for by major mining operations which contribute 80% of the province s mineral revenue, and further implies that mining is the primary driver of economic activity followed by government services, finance, real estate and business services. This province s contribution to the national GDP increased from 5.6% in 1996 to 6.8% in 2006 and further increased to 7.1% in This marks our Province as the fifth biggest contributor to the national GDP whilst our provincial economic growth rate was 2.2% in

4 In an effort to maximise our potential, based on our resource endowments, the Limpopo Provincial Government adopted the Limpopo Employment Growth and Development Plan (LEGDP), which seeks to elevate this province to a higher growth and sustainable development trajectory. Underpinning this economic plan is the commitment to improve the lives of our people especially the communities around the mining areas through the creation of decent jobs and sustainable livelihoods. The development and implementation of the LEGDP pillars and other priority sectors, especially their competitiveness in increasingly global markets, will depend much on how well the development and implementation are able to beneficiate our key minerals in order to create a sustainable competitive advantage for their own benefit. As part of the LEGDP, mining will be implemented through its main pillars of mining beneficiation, contribution to industrial development, building support infrastructure and developing industrial technology at the firm level in order to raise the technical capabilities and global competitiveness of domestic industrial firms. In an effort to address the infrastructure challenges faced by the country which impedes growth and development, the President has appointed the Presidential Infrastructure Coordinating Commission (PICC) which has been mandated by Cabinet to plan and coordinate the National Infrastructure Plan. The Infrastructure Plan has just been recently adopted and is intended to transform the economic landscape of South Africa. The national government identified 18 Strategic Integrated Projects (SIP s) to deal with different kinds of infrastructure that is needed to address the challenge with infrastructure in South Africa. 4

5 Of particular interest to the Limpopo Province is the SIP 1: Unlocking the mineral belt within Waterberg as the catalyst. SIP 1 seeks to drive investment in rail, water pipelines, and energy generation and transmission infrastructure to catalyse unlocking of rich mineral resources in Limpopo resulting in thousands of direct jobs created across the areas covered. Urban development in Waterberg will be the first major post-apartheid new urban centre that will be a green development project. Mining includes coal, platinum and other minerals for local use and export, hence the rail capacity is being extended to Mpumalanga power stations and for exporting principally via Richards Bay and in future Maputo (via Swaziland link). The additional rail capacity will shift coal from road to rail in Mpumalanga with positive environmental and social benefits. Supportive logistics corridors will help to strengthen Mpumalanga s economic development. Eskom has been appointed as the lead programme manager for SIP 1 which is aimed at unlocking RSA s coal- and platinum-rich northern mineral belt centred on Limpopo and Mpumalanga through transport, water and energy interventions. The main aim of SIP 1 is to provide the coal that is needed by ESKOM in It is estimated that the coal production in the Lephalale area will increase by 23,5 million tons per annum by The remaining SIP 1 activities deal with the supporting infrastructure that is needed to mine and transport the increase in coal production. This includes the upgrading of the rail capacity and water supply to the Lephalale area. The portfolio of projects currently being under taken through SIP 1 are at different stages from concept to pre-planning to feasibility include amongst others; Waterberg rail line upgrade, a new line from Lephalale to Ermello, Mokopane ring road, Mokopane partial construction, transmission lines for Coal 3, Mokolo phase 1 and 2, as well as 5

6 emerging coal miners project to support the demand for coal in Mpumalanga. These infrastructure projects will indeed go a long way in transforming the economic performance of the province and the district as well as unlocking potential within the coal industry. The province has, in 2012 obtained approval from the dti for detailed feasibility studies of two Special Economic Zones, one in Tubatse (focusing on platinum valley/fuel cells as the anchor project) and the second in Musina (focusing on logistics and green economy projects such as the eco-industrial park and solar energy initiative in the area). It is envisaged that the coal in Vhembe will support and be positioned to enhance the diversification projects within the Musina SEZ. The province also plans to obtain approval for Lephalale SEZ in the future. On the Empowerment of Mining Communities, our province has adopted the Integrated Mining Development Framework which seeks to achieve a transparent, equitable and sustainable exploitation of the province s mineral resources. We therefore encourage all mining companies in this province to adopt this framework as a way of achieving the following key developmental imperatives: First, An Integrated Development which will ensure that mining companies in a particular locality contribute to community development in an integrated manner so that broader, sustainable and more visible achievements are made in developing our country 6

7 Secondly the Skills Development that will assist our society to continue with active and globally competitive economic activities beyond the life spans of mines that operate around them. We encourage mining houses to contribute to skills development with an eye on future growth and development beyond mining operations. Thirdly, Community development and participation. We encourage mining entities to actively engage with communities in which they plan to operate and very broadly involve these communities in their operations in all manners possible. Generally speaking, communities will not disrupt operations in which they themselves have substantial stake. Through Local Business Development communities are not only given opportunities to participate in the economic miracle around them, but this participation may substantially reduce input costs and enhance speedy and reliable product or service delivery to mining operations through the Competitive Supplier Development Programme (CSDP). Lastly the Integrated Mining Development Framework promotes Beneficiation of our mineral commodities so that broader economic growth can be attained with higher employment rates and an improved standing in global competitiveness. This financial year the framework is piloted in Sekhukhune District, and we hope to implement it broadly as from the coming year. It is important for all of us that the social licence to mine is maintained for the credibility of mining entities and their operations. Therefore we need joint commitments to maintaining harmonious relationships which are paramount for sustainable mining into the future. 7

8 In terms of the Competitive Supplier Development Programme (CSDP), LEDET as directed by the LEGDP, BBBEE, and other legislative framework and policies, is initiating the Competitive Supplier Development Programme. Engagements with mines and other relevant stakeholders have started and LEDET is in the process of conducting a study which will establish the demand and the supply side of the mines. A Questionnaire to that effect has been developed and mines are expected to provide information that will then add value to this initiative. The department will highly appreciate the mining positive response towards building the Limpopo local industrial base. CSDP is primarily aimed at meeting the prospective demand of mines, government and other private sector institutions. It involves the creation and / or building of black industrialists to be experts in different sectors. This programme is meant to encourage black South Africans to participate in the productive side of the economy. It is a collaborative programme wherein mines as buyers of goods will be expected to share the demand side (procurement spend) of the economy whilst government will be expected to create an enabling environment for the establishment of enterprise (supply side). Amongst others, it is expected that through this programme: Incubation centres will be established for skill development and capacity building 8

9 Trade unions can also play a role in Broad Based Industrialists, by establishing industries through a partnership arrangement wherein workers will see the value in what they are doing. Commencement of Enterprise Development Initiatives that will encourage big companies with bigger contracts to take on small companies (supplier development) and provide mentorship particularly linked to skills transfer. Certain goods and / or services will be designated (set aside) through the buyers procurement system and will be procured from black local enterprises Youth and Women empowerment initiatives will be introduced aimed at building local industrial capacity. Ladies and gentlemen despite the pressing energy security concerns which we are facing as a country, we cannot downplay the urgency of a sustainable environment which is so crucial to our continued existence on this planet. A research conducted on behalf of this department by Kai Batla Consultants in 2011 highlighted the following measures which need to be taken care of as we allow coal to fulfil its vital role in our energy future: Policy support for clean and efficient use of coal in power generation which should encourage the take-up of existing advanced technologies for low emissions coal-fired electricity production. New incentives and mechanisms may be necessary to fully achieve this objective; 9

10 Policy support for technology transfer, through mechanisms such as the Clean Development Mechanism, bilateral and multilateral funds such as the Global Environment Facility and the Prototype Carbon Fund. Investment into research, development and demonstration of new technologies such as clean coal techs and carbon capture and storage. These could provide a very significant opportunity for the major reductions in emissions. The current high oil prices is a good case for further CTL (coal-to-liquids) and coal based chemical plants, and the further refinement of these technologies. Consideration should also be given to beneficiating coal into coal bed methane (CBM), particularly for stranded coalfields. CBM could itself facilitate the beneficiation of other minerals as a reductant for oxides, preheating and as a chemical feedstock. In the longer term an export duty on selected coal exports should be carefully considered as a possible instrument to increase local beneficiation. There is also a need to look at both downward, upstream and side stream beneficiation in the coal sector Despite the impressive work that had been indicated above, a number of very serious challenges still remain to be addressed as a matter of urgency Youth unemployment, skills shortage, poverty and unequal distribution of income still persist and requires an integrated holistic approach to development where the public and private sector admit, acknowledge and work together to create sustainable livelihoods for our communities. 10

11 I am pleased with the roadmap, plans and programmes underway in an attempt to address the above-mentioned challenges, to improve the competitiveness of our coal industry and for the future of this province. I trust that the pool of expertise in this room will put the province one step ahead and earnestly wish you fruitful discussions and do hope that the spirit of cooperation, passion and hard work will continue to burn inside us all. Together we can indeed do more. Thank You. 11