Download VOTE 32 MINERAL RESOURCES BUDGET AND PROVINCIAL

VOTE 32
MINERAL RESOURCES BUDGET
AND
PROVINCIAL BUDGET
2011/12
Lwazi Mahlangu
Parliament Research Unit
22 March 2011
Overview
1.
2.
3.
4.
Contextual Background
Vote 32: National Budget
Provincial Budgets
Key Issues for Consideration by
Parliament
1. Contextual Background
•
•
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South Africa (a world leader) boasts an abundance of mineral
resources, producing and owning a significant proportion of the
world's minerals
The state is custodian over the country's mineral resources and
ownership, access and opportunity to the country's mineral resources
are regulated by the Minerals and Petroleum Resources Development
Act of 2002
90% of the platinum metals on Earth, 80% of the manganese, 73% of
the chrome, 45% of the vanadium and 41% of the gold.
Precious metals contributes 65% to the country's mineral export
earnings
The country supplies about 80% of the world's platinum
Mining industry is also South Africa's biggest employer, with around
460 000 employees and another 400 000 employed by the suppliers
of goods and services to the industry
• NGP sets a target of 5 million by 2020. Mining
sector projects 140 000 jobs by 2020 and 200 000
by 2030 (averaging 15 556 per annum till 2020)
• 40 000 jobs were lost during the crisis
SA's share of world reserves & production
Cont.
Transformation
•
70% of the mining industry's labour force is black, while less than 5% of
managerial positions are held by black people.
•
Future targets in the mining industry the transfer of 26% of mining assets to
black-owned companies, and ensuring that 51% of future mining projects are
controlled by black-owned firms.
Role Players and other developments
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•
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BHP Billiton
Anglo American Plc (subsidieries include Anglo Platinum, Anglo Coal, Impala
Platinum and Kumba Iron Ore)
De Beers
Rio Tinto
Tata Steel (carbon ferrochrome)
2. Vote 32: National Budget
Nominal
Rand
change
Budget
Real
Rand
change
Nominal %
change
Real %
change
Programme
R million
2010/11
2011/12
2012/13
2013/14
2010/11-2011/12
2010/11-2011/12
Administration
223.7
247.9
0.0
274.6
24.2
12.8
10.82 %
5.74 %
Promotion of Mine Safety
and Health
142.1
147.5
157.5
170.1
5.4
- 1.4
3.80 %
-0.95 %
Mineral Regulation
212.4
160.4
171.0
175.4
- 52.0
- 59.3
-24.48 %
-27.94 %
Mineral Policy and
Promotion
417.7
480.4
520.3
558.7
62.7
40.7
15.01 %
9.74 %
TOTAL
995.9
1 036.2
848.8
1 178.8
40.3
- 7.2
4.05 %
-0.72 %
Summary
Overall Budget
•
Department received R1.0 billion, which is 0.21 per cent of the total
appropriation by vote in the 2011/12 financial year
•
56.7% allocated for current payments
•
R438.4 million or 42.3% allocated to Transfers and subsidies
•
1% allocated to Capex
Programmes of the Department
•
•
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Administration
Promotion of Mine Safety and Health
Mineral Regulation
Mineral Policy and Promotion
TOTAL
R (Million) Percentage
247.9
23.5%
147.5
14.2%
160.4
15.5%
480.4
46.4%
1 036.2 100.0%
3. Provincial Budgets
Eastern Cape
Province
Some Facts and Figures
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The provincial economy is dominated by the export-led automotive-sector
manufacturing and by the tertiary sector. This makes our economy especially
vulnerable to international market fluctuations.
During the year 2010/11, Coega appointed 82 interns, supported 53 intern
placements with consultants, and trained a total of 6 826 people.
R34,9 million allocated to LED projects was directed towards the
establishment of sustainable industries and settlements in the underdeveloped rural parts of the province. Unfortunately, due to non-compliance
on the part of local municipalities, much of this money has not been
disbursed.
Loan funding extended by the ECDC secured a further 1 700 jobs, primarily in
the OR Tambo Region. The bulk were in the Services and Manufacturing
sectors, with 704 and 385 jobs respectively.
High Impact Priority Projects at the ECDC being proposed, with R113 million
worth of projects being piloted, R362 million worth of projects undergoing
scoping, and R2.03 billion worth of projects under implementation.
Mining exploration accounts for a further R1.5 billion of pipeline projects. The
job potential of these projects is estimated to be around 4 500.
Mining Issues/Facts
• IDC (has a 10% stake) in Kalagadi Manganese - committed a R3.5 billion
towards the implementation of the Kalagadi mining project (BEE company)
• Kalagadi Manganese is in the process of establishing an integrated
operation encompassing mining, ore processing (sinter plant), as well as a
smelter. The total capital outlay to implement the project is estimated at
R11 billion.
• The mining and ore processing operations are located in the Northern
Cape Province, while the smelter operation will be located in the Coega
IDZ in the Eastern Cape. (production of the first sintered product in July
2012)
• Shareholders have committed to fund R4.5 billion. A further R6.5 billion will
be raised from the various Developmental Finance Institutions and
commercial banks.
• In addition, a 320,000 tons per annum ferromanganese alloy production
facility is to be constructed at Coega in the Eastern Cape.
Ferromanganese is an essential ingredient in the production of steel, a
commodity expected to show good growth in the next decade.
Budget Allocation
Eastern Cape
Individual
allocations to
programmes
and entities
2011/12
(‘000)
Programme 1
Administration
160.63
Programme 2
Economic Development
53.60
EC Development Corporation
255.17
EC Gambling & Betting Board
31.19
EC Liquor Board
32.33
East London Industrial Development Zone
141.61
513.90
Programme 3
Environmental Affairs
EC Parks and Tourism Agency
Transfers to Municipalities
Total
66.11
141.56
2.04
209.71
884.24
Free State
Province
Some Facts and Figures
• Free State Provincial economy is performing below national
average.
• Growth in 2010 in the provincial economy was 1.9% and it is
projected at 2.4% in 2011.
• The province’s major contributions to the provincial economy
come from finance, real estate and other business services.
• Boasts of the largest gold-mining complex - the Free State
Consolidated Goldfields, with a mining area of 32 918 hectares.
• About 82% of the province’s mineral production is derived from
gold mining, with gold mines also supplying silver and
considerable concentrations of uranium
• Twelve gold mines operate from the towns of Welkom, Virginia
and Odendaalsrus in the province and roughly 30% of South
Africa’s gold is obtained from this region, ranked fifth in the world
in gold production.
Cont.
•
Unemployment increased from 21.9 % in Q4 2008 to 24% Q4
2010
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Need to work more closely and decisively with the private
sector to expand and develop production and the value
chain in the agriculture, mining, manufacturing, tourism,
trade and services.
In mining in the province (Welkom) must take advantage of
the current favourable increase in commodity prices.
Large deposits of coal and the country’s largest deposits of
bentonite are also found in the Fezile Dabi district. This
bituminous coal is converted into petrochemicals at
Sasolburg.
Budget Allocation
Budget Allocations (R Million)
2011/12
Equitable share amounting
17.50
Conditional Grants amounting to
5.00
Own Revenue amounting
0.72
Total
23.22
Departmental Allocations
Departmental Allocations
2011/12
Office of the Premier
0.221
Provincial Legislature
0.203
Department of Local Government and Traditional Affairs
0.378
Department of Agriculture and Rural Development
0.519
Department of Public Works
Department of Sports and Culture and recreation
Department of basic Education
Provincial Treasury
Department of Health
Department of Economic Development, Environment and Tourism
1.2
0.479
9.5
0.201
6.8
0.39
Department of Human Settlements
0.988
Social Development,
0.802
Department of Police, Roads and Transport
Total
1.5
23.2
KwaZulu Natal
Province
KZN Facts and Figures
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In 2009, the provincial economy shrunk by 2.24% with devastating effects on
employment.
The number of discouraged work-seekers increased from 183 000 in the
Q12008 to 495 000 in Q32009. (170% increase)
MTEF estimates of provincial economic growth 3%- 3.5% falling short of
required RSA 7% p.a for a prolonged period.
The mining and quarrying sector accounts for less than 2% of provincial gross
domestic product (PGDP) but the province’s mineral sands and beneficiation
plants are important to the nation’s minerals sector
KwaZulu-Natal is home to two aluminium smelters (in Richards Bay), three
steel plants, a manganese smelter and four concrete factories.
Richards Bay Minerals supplies the world with about 25% of its demand. It
has extensive ore holdings along the coast and is the largest titanium slag
producer in the world.
KZN Sands (an Exxaro subsidiary) is the other major mineral company
operating in the uThungulu district. It focuses on smelting ilemnite to produce
titanium slag
Cont.
• Northern KwaZulu-Natal’s coalfields are being revived
• Miranda Minerals has several projects at different stages of
development focusing on the Klip River coalfields around Dundee and
Glencoe.
• Awaiting the results of the EIA on Burnside area and resources of 35.5
million tons have been indicated and inferred. If Burnside is approved,
mining is expected to begin in the last quarter of 2011.
• Small scale gold mining in the Umzinto goldfield’s several sites
• Carbonates from three large quarries around the Marble Delta
Formation inland from Port Shepstone.
– High grade material is used as filler in paint, paper, toothpaste, bread and
plastic;
– lower-grade material is used in rubber, glass and fiberglass and
– the third quarry provides limestone for the major NPC-Cimpor cement plant
nearby.
Job creation initiatives
Human resource training and development
– Bursaries - approximately R72 million on external bursaries and R19
million on internal bursaries for the 2011/12 FY
• Learnerships and Internships
– Interns and learners should constitute 5% of the total staff
establishment of a department.
• FET Colleges
– Continue to offer both the National Certificate (Vocational) and
National Education (NATED) programmes in the FET colleges sector
• Public Service Academy
– The academy will receive R50 million from the National Skills Fund
over the next three years for learnerships, apprenticeships and skills
programmes in construction, manufacturing and engineering,
benefitting public servants and the unemployed.
Budget Allocations
North West
Province
NW - Some Facts
• Main economic sector is agriculture (Province has a
comparative advantage in Agriculture) contributing 13% of
provincial Gross Domestic Product (GDP)
• Mining is the second largest sector in terms of contribution to
GDP providing jobs for 18% of the labour force in the
province.
• North West is the fourth largest provincial contributor to GDP at
5.7% after Gauteng, KwaZulu-Natal and Western Cape.
• The province produces 84% of platinum, 46% of granite and
25% of gold in the country.
North West Budget
Budget Allocations (R Million)
2011/12
Equitable share amounting
19.27
Conditional Grants amounting to
4.51
Own Revenue amounting
0.66
Total
24.44
Departments Allocations.
Departmental Allocations
2011/12
Office of the Premier
0.234
Provincial Legislature
0.151
Department of Local Government and Traditional Affairs
0.317
Department of Agriculture and Rural Development
0.758
Department of Public Works and Transport
2.83
Department of Sports and Culture
0.433
Department of Education
10.26
Provincial Treasury
0.331
Department of Health
6.3
Department of Economic Development, Environment and Tourism
0.455
Human Settlements, Public Safety and Liaison
1.489
Social Development, Women, Children and People with Disabilities
0.882
Total
24.44
Limpopo Province
About Limpopo.
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Limpopo depends largely on mineral resources. It is the
primary driver of economic activity after government services
Mining constitutes 27% of the Limpopo GDP.
The performance of the mining sector is largely influenced by
the demand in the international markets, particularly China
and India.
The province exports iron ore, which constitutes 16% of
Limpopo’s provincial exports
Other substantial mineral reserves include platinum group
(chrome, vanadium, nickel and titanium )metals, diamonds,
coal, chrome and copper.
Electricity generation, such as the Matimba power station in
Lephalale, is another major economic activity.
Mittal Steel mines coking coal for its blast furnaces and sells
the lower grade coal
Analysis
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Main economic sector is agriculture (Province has a
comparative advantage in Agriculture) contributing 13% of
provincial Gross Domestic Product (GDP)
The economic crisis led to - 1.8 % economic growth in Limpopo
The economic crisis led to - 1.8 % economic growth in Limpopo
Jobs were lost a number in the mining sector, partly because of
the decline in the demand for mineral resources in the world
market
Unemployment rate declined from 25% to 16% in
2010.(employment in the province is expected to increase in
2011)
Provision of basic services for the province is at 83.6% for
water, 58.9% for sanitation and 81% for electricity.
Limpopo Province
•
Expected to create more than 400 000 jobs in
the next 9 years as part of contributing to the
national target of creating 5 million
employment opportunities by the year 2020'.
•
2011/2012 budget allocation with the aim to
ward off the negative effects of the crisis on
the poor
Mining Companies
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Bushveld Igneous Complex
Samancor runs Eastern Chrome Mines at Steelport (dimension stone, quartz, sand and clay)
Dilokong Chrome Mine located between Burgersfort and Polokwane.
ASA Metals - a joint venture between the Limpopo Economic Development Enterprise and China’s
Eastern Asia Metals Investment Company. They Produces 39% of the world’s chromite.
The Phalaborwa Complex
- contains large amounts of copper, magnetite (iron ore) and phosphates. The complex also contains
the world’s largest deposit of a mica used in horticulture and construction, known as vermiculite.
Penge Formation
In the south-west of the province, at Thabazimbi, a large iron ore deposit
Waterberg and Soutpansberg
Coal - the Waterberg area is seen as the future of South African coal mining.
Pietersburg Greenstone Belt
South of Polokwane, was the site of South Africa’s first gold rush in 1871. Silica is mined south of
Polokwane.
Giyani Greenstone Belt and Murchison Greenstone Belt
The Consolidated Murchison Mine (ConMurch) at Gravelotte, just west of Phalaborwa, is the single
biggest producer of antimony in the world outside China, producing about 20% of the world’s supply.
Pretoria Group
Andalusite, a vital component in spark-plug ceramics, is mined near Thabazimbi and at
Maroelasfontein in the west of the province. In the area south-east of Chuniespoort in the east are
the Havercroft, Annesley and Hoogenoeg deposits. Active companies in the area include Rhino
Minerals and Andalusite Resources
Limpopo Budget
Budget Allocations (R Million)
2011/12
Equitable share amounting
36.35
Conditional Grants amounting to
6.91
Own Revenue amounting
0.58
Total
43.84
Job creation 2011/12
Departmental activities will directly create more than 160 000 jobs in the 2011/2012
financial year, and 40% of these jobs will be targeted for the youth.
Jobs to be created
Department of Local Government and Housing
2011/12
36503
Department of Agriculture
7670
The Department of Public Works
3740
Department of Sports and Culture
1502
Department of Education
Department of Safety and Security and Liaison
Provincial Treasury
22242
697
30
Department of Transport
31876
Department of Health
10701
Department of Health and Social Development .
25063
Department of Economic Development, Environment and Tourism
36846
Total
140367
Gauteng Province
Gauteng Facts and Figures
• Province has the smallest land area, but contributes over
30% to the economic growth of South Africa.
• GDP- per Region declined by R11.3 billion in 2009 and the
growth rate by -1.8% as the economy entered recession.
• Main contributor to GDP-R are finance and business
services sub-sectors (over 25%)
• Government, personal and social services sub-sector
makes the second highest contributions
• Manufacturing is the third largest contributor to GDP-R
• Most headquarters are based in GP (e.g. financial
institutions and manufacturing)
Job Creation activities
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Aligned to NGP – Gauteng Employment Growth and Development Strategy
has 5 key pillars
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Public infrastructure investment
–
Industrial Policy
–
Green Economy
–
Inclusive Economy Initiatives, and
–
Social Impact
R66 million set aside to support labour absorptive sectors with backward and
forward linkages. (tooling initiative, foundries, promoting and supporting
tourism)
Address socio-economic infrastructure investments priorities – such as rail,
roads, freight, transport, Information and Communication Technology,
including the rollout of broadband
Through the EPWP, GP targets to create 175,000 work opportunities of 100
days each as well as over 88,000 full time equivalents, targeting one
individual per household.
Community Works Programme will generate at least 6 000 jobs in
Metsweding, Ekurhuleni and Tshwane (R98 million to fund these job creating
opportunities)
Budget Allocations (R Million)
2011/12
Equitable share amounting
50.40
Conditional Grants amounting to
14.60
Own Revenue amounting
3.00
Total
68.00
Western Cape
Province
Job Creation initiatives
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R400 million set aside over the next three years for innerCity regeneration projects that will attract major
investment.
R300 million has been set aside for new roads
R204 million set aside in the two outer years of the MTEF
for new economic development and job creation projects
Budget Allocations
Departmental Allocations
Office of the Premier
2011/12
0.607
Provincial Legislature
Department of Local Government and Traditional Affairs
0.136
Department of Agriculture and Rural Development
0.502
Department of Public Works
Department of Community Safety
Department of Education
3.2
0.311
13.3
Provincial Treasury
Department of Health
Department of Economic Development, Environment and Tourism
Department of Human Settlements
13.4
0.254
1.8
Social Development,
Department of Social Development
1.3
Department of Transport/Transport Infrastructure
4.0
Total
38.8
Mpumalanga
Province
•
The tabling of Mpumalanga Budget for 2011/12 and
hosting of the Post Budget Stakeholder briefing have
been postponed to 24 and 25 March 2011 respectively
due to unforeseen circumstances.
•
For more information, contact:
Letshela Jonas on 013 766 4243 / 079 500 0154
Budget Allocations
Budget Allocations (R Million)
2011/12
Equitable share amounting
23.40
Conditional Grants amounting to
5.20
Own Revenue amounting
0.63
Total
29.23
Northern Cape
Province
•
To be discussed in the next meeting
4. Key Considerations
• Monitor progress with regard to the development of
the Beneficiation Strategy (due to be tabled)
• Filling of all vacant posts (National Level) and
ensure that Provinces create jobs in the sector
identified (aligned to NGP)
• Clarity on the State Owned Mining Company
whether it falls under DMR or SOEs
• NGP indicators at provincial level (GDP/Absorption
rate/ Education/poverty)