More recently, India and Botswana have overtaken us in diamond beneficiation despite our considerable diamond resources.

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1 SPEECH BY THE DEPUTY MINISTER OF MINERAL RESOURCES, MR GODFREY OLIPHANT, MP AT THE OCCASION OF THE LAUNCH OF THE DE BEERS GROUP OF COMPANIES DIAMOND BENEFICIATION PROJECT JOHANNESBURG, 13 JULY 2016 Programme Director Innocent Mabusela Executive Chairman of De Beers Consolidated Mines, Mr Barend Petersen, De Beers Group CEO, Mr Bruce Cleaver, De Beers Consolidated Mines Board Members Anglo American Executive Director, Mr Andile Sangqu, Anglo American Board Members, President of the World Federation of Diamond Bourses, Mr Ernie Blom, Board members of the South African Diamond Manufacturers Association, 1

2 Business Leaders, Trade Union Leaders, Members of religious leaders, Senior Government Officials, Members of the media, Distinguished Guests, Ladies and Gentlemen I would first of all like to thank the Executive Chairman of De Beers Consolidated Mines, Mr Barend Petersen for the invitation to address your launch of Downstream Enterprise Development, a project of the De Beers Group. Let me also hasten to congratulate the five chosen candidates for the launch of this important project. We sincerely hope that this will be the start of a new phase in our national quest for effective and sustainable mineral beneficiation with a focus on black economic empowerment. We look forward to many more such occasions towards the expansion of such innovative and beneficial initiatives to expand this and other similar projects. It is common knowledge that the global mining industry is experiencing a down cycle. However, it is important to recognize that the commodity down cycle does not affect all commodities equally. Furthermore, down cycles, much like the up cycle, do not last forever. For a country such as ours, blessed with considerable reserves of diversified resources, it is vital that we plan to get the basics in place for the long term success. One of the critical and foundational factors for our long term competitiveness of our mining industry is a well-developed and competitive skilled human resource base. This is vital for our long term beneficiation success. 2

3 More broadly, the promotion of a prosperous mining industry demands urgent attention to the fault-lines of recent ways of doing business. It is safe to say that our success will not be secured by our aspirations alone! Whilst vision and ambitions are vital for embarking on the journey, skills, appropriate funding, market access and experience are the vital requirements for a successful arrival at the destination. Politicking and lobbying may secure a prospecting license or a supply contract, but without the necessary ingredients of experience, skills and funding, such opportunities may not lead to much gain, be it personal wealth or socio-economic development. It is instructive to note that South Africa was the dominant source of gold and diamonds for well over a century, dating back to the late 19 th century. Yet we have failed to produce a robust and competitive industry around the beneficiation of our considerable precious metal endowment. One would have expected a large scale cutting and polishing industry built around our natural resource base. Far from it, historically we lost the industry to centres such as Antwerp, Tel Aviv, and Dubai. More recently, India and Botswana have overtaken us in diamond beneficiation despite our considerable diamond resources. If we, in South Africa, are to succeed in extracting maximum benefit from our mineral endowment, we must do things differently. The operative word is doing differently. This means doing governance differently and it also means the industry must rethink its organizational and operational processes. We cannot afford to go through another decade of declining mining sector output, loss of global ranking and more importantly a free fall in our global share of exploration investment as well as loss of value addition to our mineral resources. 3

4 Rather, a decade from now, we should boast a burgeoning of emerging mining companies, driven by a meaningful number of new players underpinned by sizeable firms in the industry, recognized for their drive and expertise. It is therefore our collective obligation to ensure that the considerable wealth of natural endowment is utilized to generate socio-economic benefits and integrated development for our nation. To this end, not only do we need to expand the industry, but also avoid the undesirable consequences, and to ensure a mining industry that is socially progressive, environmentally sustainable, and economically competitive. As we reflect on a paradigm shift in the mining sector, it is stating the obvious that we cannot continue to mine and export ore and other raw materials for processing elsewhere, as this severely limits the benefits we can derive from the exploitation of our resources. There is therefore a need to increase value addition to our minerals before they are exported, in line with government s mineral beneficiation and industrialization priorities. In the recent past there has been a great deal of debates and controversies about mineral beneficiation. In the process much emphasis has been placed on narrow down-stream opportunities. As part of our mind-set change we need to re-examine notions of beneficiation, and broaden our definition in line with the realities of socio-economic and financial benefits that both up-stream and down-stream opportunities offer in each and every commodity. Today South Africa enjoys a considerable range of opportunities for integrating our mineral beneficiation and industrialization programmes in order to enhance the pace of social development and economic growth. 4

5 As we approach mining and mineral beneficiation differently, in a number of areas we have to consciously, proactively and systemically do things differently. Amongst them, is the design and operations of our post-apartheid communities. Learning from our own history, we should avoid the emergence of divided, inefficient and operationally expensive Apartheid-like settlements of the past. Instead, we ought to focus on energy-efficient, socially integrated, and operationally efficient and competitive human settlements. Integrated Urban Development Framework (IUDF) is a policy initiative of Government, coordinated by the Department Of Cooperative Governance and Traditional Affairs (COGTA). The IUDF seeks to foster a shared understanding across government and society about how best to manage urbanisation and achieve the goals of economic development, job creation and improved living conditions for our people. As we enter the new century of mining and mining related industrialization, we need to now reflect on the legacy that we would like to leave behind. The urban and environmental landscape that we bequeath to our children has to be dramatically different from what history has bequeathed to us. This is our collective responsibility and it will arise from our collective choices today. At the same time, the competitiveness of our national mining industry will, to a large extent, depend on the degree to which it adopts green technologies and sound environmental practices. It is a fact that all over the world, the mining industry is synonymous with the destruction of the environment and the land potentially useable for agriculture and food production. This dichotomy has to be managed carefully and 5

6 responsibly via sound and concurrent environmental rehabilitation management practices. We in South Africa are blessed with a considerable natural endowment of highly valued and much sought-after mineral resources. As importantly, we have highly competitive and widely acknowledged mining sector expertise and technology arising from our long history of experience in this sector. Our government, at the same time, is committed to unlocking the potential that the mining sector has in order to foster rapid social development, economic progress, and large-scale job creation. Clearly we stand at a critical juncture in our country s history. We need to collectively define the path for our next phase of social development going forward. As we join forces and mobilize all the stakeholders to this end, we need to explore every opportunity that our mining industry offers to create growth, job creation, and most importantly the empowerment of our historically disadvantaged communities. In this process, our primary focus needs to be on the development of skills and the promotion of sustainable business operations. In this context, the launch of De Beers Group Downstream Enterprise Development Project is a welcome start. We wish the participants all the very best of success in their business ventures. Moreover, we look forward to having their experience helping many others in this industry and in other beneficiation projects. THANK YOU. 6

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