US embassy cable - 04PRETORIA4768

C O N F I D E N T I A L SECTION 01 OF 02 PRETORIA 004768 
 
SIPDIS 
 
STATE FOR NP/NE, AF/S 
DOE FOR NE-2.4 AND NNSA/NA-241, NA-243 
USDOC FOR 4510/ITA/MAC/AME/OA/JDIEMOND 
 
E.O. 12958: DECL: 10/21/2014 
TAGS: EMIN, EPET, ENRG, KNNP, TRGY, PINR, SF 
SUBJECT: SOUTH AFRICA: AMBASSADOR MEETS MINISTER OF 
MINERALS AND ENERGY 
 
Classified By: Ambassador Jendayi E. Frazer, Reasons: 1.4 (b) and (d) 
 
1. (C) SUMMARY.  Ambassador Jendayi Frazer called on Minister 
Phumzile Mlambo-Ngcuka of the Department of Minerals and 
Energy (DME) on October 19, 2004.  Ambassador Frazer stressed 
the need to move ahead on scheduling our first Joint Standing 
Committee on Nuclear Energy Cooperation and to bring closure 
to our research and development agreements on nuclear energy 
and on nuclear materials safeguards technologies. 
Mlambo-Ngcuka mentioned DME's objective to encourage oil and 
gas exploration on South Africa's continental shelf.  She was 
disappointed that Forest Oil (Denver) and PetroSA were unable 
to locate more natural gas in their offshore Ibhubesi field, 
but was appreciative of the support that the U.S. Trade 
Development Agency had provided the project and PetroSA.  She 
mentioned DME's intention to develop the jewelry industry in 
South Africa, but that this first required loosening controls 
on the possession of precious metals and diamonds in South 
Africa.  Mlambo-Ngcuka said that she wanted to bring the 
interagency dialogue on DME's Vehicle Emissions Strategy to a 
close by the end of this year.  She said that if MMT, the 
fuel additive sold in South Africa by Afton Chemical 
(Richmond, Virginia), were disallowed, the government would 
have to devise an "elegant exit" for Afton.  End Summary. 
 
Introduction 
------------ 
 
2. (SBU) Ambassador Frazer made her introductory call on 
Minister Mlambo-Ngcuka on October 19.  Also attending the 
meeting was Acting Head of Ministerial Services Sandile Tya 
Tya and Econoff.  Mlambo-Ngcuka, who has a reputation as one 
of the more effective ministers, began her second term as DME 
minister in April.  During her first term, she supervised the 
creation of the country's first black economic empowerment 
charters in the liquid fuels and minerals sectors. 
Mlambo-Ngcuka also was temporarily the acting Minister of 
Science and Technology when the post fell vacant in the run 
up to national elections in 2004. 
 
3. (SBU) Comment: In 2002-04, Mlambo-Ngcuka's husband and 
former Director of Public Prosecutions, Bulenani Ngcuka, 
headed a corruption investigation involving Deputy President 
Jacob Zuma.  In the course of the investigation, Zuma 
supporters accused Ngcuka of being a former spy for the 
apartheid regime, and of abusing his authority.  In 2004, 
President Mbeki commissioned a hearing that exonerated 
Ngcuka.  The spotlight took its toll, however, and Ngcuka 
resigned his position in August 2004.  He is now involved in 
a black economic empowerment enterprise Amabubezi along with 
some well known black business leaders.  Mlambo-Ngcuka 
appears to have emerged unscathed from all the publicity 
surrounding her husband. End Comment. 
 
Nuclear Energy Cooperation 
-------------------------- 
 
4. (SBU) Ambassador Frazer began the meeting by stressing the 
need to establish a United States-South Africa Joint Standing 
Committee on Nuclear Energy Cooperation (JSCNEC) and to 
decide on an inaugural date as soon as possible.  The United 
States was prepared to come to South Africa December 1-3 to 
facilitate the inaugural meeting, but needed confirmation as 
soon as possible.  Ambassador Frazer also emphasized the need 
to bring closure to two research and development agreements 
in the area of nuclear energy and materials safeguards 
technologies.  These agreements established the framework 
within which cooperative technical projects could be pursued. 
 Mlambo-Ngcuka said that she would look into the JSCNEC and 
the agreements and get back to the Ambassador by October 21. 
(Note: On October 28, Sandile Tya Tya told Econoff that 
Minister Mlambo-Ngcuka still needed to be briefed by Deputy 
Director Nelisiwe Magubane and Chief Director Tseliso 
Maqubela on these subjects, but that Maqubela had told Tya 
Tya that holding the JSCNEC inaugural meeting in December 
"was most likely."  Maqubela also told him that the 
agreements were in advanced stages, i.e., "ready to be 
signed."  Earlier, the Department of Foreign Affairs (DFA) 
informed the Embassy that an interagency meeting scheduled on 
October 22 to discuss the JSCNEC and R&D agreements had been 
postponed to October 29, to ensure the participation of all 
relevant officials.  The Embassy continues to actively press 
for an inaugural JSCNEC and the conclusion of the R&D 
agreements.) 
 
Ibhubesi Gas Field 
------------------ 
 
5. (C) Mlambo-Ngcuka was a bit disappointed that Forest Oil 
and PetroSA were not able to locate more natural gas reserves 
in the Ibhubesi field off the Western Cape during their 
recent drilling campaign.  She said that the Petroleum Agency 
of South Africa (PASA) was doing everything it could to 
promote oil and gas exploration on South Africa's continental 
shelf.  The problem had been that, until now, not much 
resource had been found.  She was appreciative of the U.S. 
Trade and Development Agency's support for Ibhubesi project 
and technical assistance to PetroSA.  Econoff mentioned that 
Forest Oil felt it had enough reserves at this time to 
justify a small power plant in the Western Cape, and that 
such a plant would provide valuable peaking power to the 
region.  Mlambo-Ngcuka agreed, adding that one of DME's 
objectives was to diversify away from coal for environmental 
reasons.  She also mentioned that on October 22 South Africa 
would sign an agreement with Namibia, Angola, Botswana, and 
the Democratic Republic of the Congo on the development of a 
$4 billion hydroelectric dam at the Inga Rapids on the Congo 
River. 
 
Adding Value: Jewelry 
--------------------- 
 
6. (SBU) Mlambo-Ngcuka explained DME's objective to create a 
domestic jewelry industry.  South Africa was an important 
source of gold, platinum, diamonds, and semi-precious stones. 
 She saw no reason why South Africa should export these 
commodities to Italy when they could be fashioned into 
jewelry in South Africa and used to advance black economic 
empowerment.  First, the government had to modify the law to 
allow the development of an indigenous industry by loosening 
the controls so that small businesses could acquire precious 
metals and stones for the purpose of manufacturing jewelry. 
She hoped that South Africa would be exporting jewelry to the 
United States under the African Growth and Opportunity Act 
within five years.  (Note: South Africa may export most 
jewelry items to the U.S. duty free under the Generalized 
System of Preferences.) 
 
Vehicle Emissions Strategy: MMT 
------------------------------- 
 
7. (SBU) At the close of the meeting, Econoff mentioned Afton 
Chemical's effort to receive a fair hearing on the use of 
MMT, a fuel additive and replacement for lead, in South 
Africa.  South Africa had been considering banning MMT as 
part of its Vehicle Emissions Strategy.  Mlambo-Ngcuka agreed 
that whatever South Africa decided to do with MMT, it should 
be fair and based on sound science, but added that there 
seemed to be a balance of scientific research for and against 
the fuel additive.  She said that one idea had been for the 
government to give the consumer a say (e.g., through labeling 
at the pump), but the Department of Environment and Tourism 
seemed to be "dead against it."  Whatever the government 
decided, she said that it would need to take into account all 
of the costs and benefits.  If it turned out that MMT were 
disallowed, then the government would have to devise "an 
elegant exit" for Afton Chemical and the refiners that used 
MMT -- meaning some sort of phase out over a number of years. 
 One way or the other, she wanted to bring deliberations on 
the Vehicle Emissions Strategy to a close by the end of the 
year. 
FRAZER