Recent incident involving illegal mining: public hearings

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Mineral Resources and Energy

06 July 2009
Chairperson: Mr M Gona (ANC)
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Meeting Summary

The Director-General of the Department of Minerals and Energy, representatives from the Chamber of Mines and Harmony Gold Mining Company Ltd and the National Programme Manager of the Special Investigations Unit of the National Prosecuting Authority briefed the Committee on illegal mining activity in South Africa.

In June 2009, the bodies of 87 illegal miners were discovered in the Eland shaft owned by the Harmony Gold Mining Company Ltd at Welkom in the Free State province of South Africa.  Although illegal mining activity was first reported in the area in 1999, the incident attracted wide-spread media attention and calls were made for urgent Government intervention in the matter.  Incidents of illegal mining were reported in other mining regions as well and were not limited to gold mining only.

Illegal mining was controlled by highly organised crime syndicates and the efforts made to date by the mining industry and law enforcement agencies to stop illegal mining operations have been ineffective.  Since 1999, illegal mining activity continued to escalate.  The current economic meltdown and the decline in demand for resources put the mining industry under severe pressure and resulted in the large-scale retrenchment of mine workers.  Ex-mine employees were recruited by the syndicates to work as illegal miners and current employees were subjected to bribery and intimidation to provide support for illegal miners and to allow illegal miners access to mine shafts.

Illegal mining activity occurred in disused mine shafts that had been closed because the shaft was unsafe or uneconomical.  Some of the closed shafts contained mineable ore.  The gold-bearing ore was processed by illegal refineries.  One illegal refinery was housed in a hostel in the Welkom mining community.  The illegal gold was sold by the syndicates on the local and international markets.  The Institute of Security Studies and the Chamber of Mines estimated the proceeds from illegal gold mining activities during 2008 to be in the region of R5 billion (20 tons or 10% of South Africa’s annual production).  South Africa was the only country in the world where trade in precious metals were controlled by legislation and the syndicates were therefore able to trade illegal gold and other metals on the international markets.  The syndicates were suspected of large-scale money laundering activities.

Illegal mining severely impacted on the health and safety of mine personnel.  Illegal miners stole explosives and equipment, damaged mine infrastructure, threatened and physically attacked mine workers and security personnel and compromised mine safety by uncontrolled blasting and damage to support pillars.  Illegal miners remained underground for long periods and required food, water and medical supplies for survival.  Employees and businesses in the surrounding areas were known to provide food to illegal miners at exorbitant cost.  Mining communities were adversely affected by illegal mining activity, the loss of life of miners and the sexual abuse of children and women forced into prostitution by the syndicates.

Legislation required mine owners to be responsible for the health and safety of all persons in the specified mining area.  The mines suffered financial loss through the theft of mine property and equipment, the unauthorised use of water, electricity and pumping infrastructure, the cost of additional security measures and personnel and the loss of production.  The theft of explosives had serious repercussions for the mine and mining explosives stolen by illegal miners were used in blowing up bank automatic teller machines.  The State suffered a financial loss in tax and royalty revenue and illegal mining had a major adverse effect on South Africa’s reputation as a safe environment for foreign investment in the mining industry.

Action taken to curtail illegal mining activity included increased access control, additional security measures, patrols and raids by mine security and SAPS, searching of employees for food and cash and charging arrested illegal miners with more serious offences.  The NPA worked with agencies at the United Nations and in other countries to address the issue of organised crime syndicates and money laundering at international level.  Measures to introduce the fingerprinting of legal gold at international level were being explored.  Additional measures proposed by the industry included making recommendations for legislative changes, continued participation in local, national and international stakeholder forums, close working relationships with law enforcement agencies and obtaining the support of labour unions.

The presenters agreed that the magnitude, diversity and serious consequences of illegal mining required a concentrated and coordinated approach by all the stakeholders to put a stop to illegal mining in South Africa.

Members asked questions about illegal mining activity prior to 1999, the buyer market for illegal gold, the security measures and access control procedures of mines, the measures taken by mines to ensure the health and safety of employees, the gaps in export procedures and controls, the legal charges brought against persons involved in illegal mining, the possibility of continued legal mining operations in unprofitable mines, the reasons for persons becoming involved in illegal mining, the instances of child abuse, the control of mine equipment and explosives, the role of the Chamber of Mines, the extent of illegal mining activity and the involvement of mine management personnel and registered mining companies in illegal mining.

The hearings were scheduled to continue on 8 July 2009.

Meeting report

The Chairperson said that the purpose of the meeting was for the Committee to be briefed on the consequences and extent of illegal mining activity and the possible preventative measures that can be taken to prevent illegal mining activity from taking place in South Africa.  He referred to the incident in June 2009, when the bodies of 87 illegal miners were retrieved at a gold mine owned by the Harmony Gold Mining Company Ltd (Harmony) at Welkom in the Free State province.  He said that illegal mining activity had a devastating effect as lives were being lost.  In addition, the State suffered a significant loss of revenue.  The issue of mine ownership and the nationalisation of mines would not be discussed during the meeting.

Presentation by the Department of Minerals and Energy (DME)

Adv Sandile Nogxina (Director-General; DME) briefed the Committee on the provisions of the Mineral and Petroleum Resources Development Act (MPRDA) and the Mine Health and Safety Act (MHSA) that regulated legal mining in South Africa (see attached document).  He said that the illegal mining was a criminal offence and was the responsibility of the law enforcement agencies and mining right holder, rather than the DME.  The MHSA defined the responsibility of the State and the right holder to ensure the health and safety of all persons (including illegal miners) in specified mining areas.

Illegal mining activity was first discovered in the Free State in 1999 and subsequent reports were received from mines in Mpumalanga and the West Rand.  The death of 35 illegal miners in Barberton was reported in 2008.  Illegal mining took place where ore-bearing rock remained in the support pillars and the hanging and foot walls of mines that had been closed.  Illegal mining activity had escalated since 1999.

Following the death of 23 illegal miners at a Harmony mine in 2007, a meeting was held on 7 October 2007 between the mine inspectorate of the DME, the mine owner and security personnel to discuss the implementation of preventative measures to curtail illegal mining activity.  The measures included the improvement of control over access to mine shafts, increased searches of miners, increased involvement by the South African Police Service (SAPS) and an increase in underground patrols and raids by mine security personnel.  Apprehended illegal miners were charged with trespassing and fined an amount of R50.  The relatively minor charge of trespassing was however not an effective deterrent as illegal miners immediately returned to the mine to continue their activities.  Illegal mining activity continued unabated, with mine owners reporting ever increasing numbers of incidents and arrests.

Illegal miners remained underground for lengthy periods of time and were provided with food and other essentials, albeit at exorbitant prices.  One person arrested was found with R178000 in cash in his possession.  A further meeting was held on 27 May 2008 between the DME, mine owners, SAPS and the Department of Justice to discuss the application of stricter sanctions for illegal access to mines.  The situation continued to deteriorate and another meeting was called in January 2009 to discuss an intensified security operation involving SAPS and mine security personnel.  Harmony presented an action plan to curtail illegal mining at the meeting.  Although increasing numbers of illegal miners were being arrested, the problem continued to persist, mainly as a result of the bribery and intimidation of mine employees.

The DME and SAPS conducted audits of explosives in possession of mines.  The losses in explosive stocks resulted in the recent withdrawal of the explosive delivery licenses of two mines by SAPS.  Illegal miners were known to be involved in the theft of explosives from mines.  Stolen mine explosives was also used to blow up automatic teller machines (ATM’s).

The challenges faced by the industry included the interconnection of mine shafts that allowed access to various mines by illegal miners, the ability of illegal miners to bypass access control systems and the bribery of mine employees to provide access, food and support to illegal miners.  Many illegal miners were ex-employees of the mines and had the necessary skills, knowledge and experience to carry out illegal mining activities.  The illegal miners were controlled by highly organised crime syndicates.  Where persons involved in illegal mining were arrested, the syndicates intimidated witnesses and their lawyers ensured that the legal process was delayed.  Illegal mining activities compromised the health and safety of mine personnel and had a severe detrimental effect on the social fibre of surrounding mining communities.  The syndicates were known to supply children and young women for purposes of prostitution to the illegal miners.  Illegal mining was encouraged by the high gold price, the high rate of unemployment in the country and the influx of illegal immigrants from neighbouring countries such as Mozambique and Lesotho.

Illegal miners showed a high degree of willingness to risk their lives in order to earn a living from illegal mining.  The death of illegal miners was no deterrent and the syndicates continued to recruit miners to continue operations.

The death of 87 illegal miners in June 2009 was caused by an underground fire started by the miners in a disused mine owned by African Rainbow Minerals (ARM).  (ARM was a major shareholder in Harmony).  The mine concerned was situated 10 km from the Eland shaft owned by Harmony and the bodies of the deceased miners were brought by their colleagues to the Eland shaft, where they were discovered and retrieved by Harmony personnel.  Immediately after the incident was reported, the Minister of Minerals and Energy visited the mine and met with the mine management and union representatives.  The Minister held subsequent meetings with other stakeholders and representatives of the mining community.

A local forum was established under the leadership of the DME to address the issue of illegal mining and had developed an action plan.  The Minister had engaged the Ministers of Police, Justice and Constitutional Development on the matter and would raise the matter in a Cabinet meeting on Thursday, 9 July 2009.

The Department regarded illegal mining as an issue of the utmost importance.  A solution to the problem could only be found in coordinated action by Government, business and the law enforcement, organised labour and civic organisations.

Mr N Diale (ANC) said that illegal mining was a very serious matter for Government.  He expressed concern over the loss of control over illegal mining activity and suggested that the State took over responsibility and nationalised the mines where illegal mining was taking place.

Mr E Lucas (IFP) and Mr P Dexter (COPE) suggested that Members reserved discussion until the other presentations had been made to save time and avoid repetition.

The Chairperson suggested that Members asked questions to obtain clarity on the points made by the Department in the presentation.

Prof L Ndabandaba (ANC) noted that illegal mining was first reported in 1999.  The conclusion drawn was that illegal mining did not occur during the previous political dispensation.  He asked for clarity on when illegal mining commenced.

The Chairperson wanted to know how many deaths had occurred during illegal mining operations to date.  He asked where the illegal gold was destined, who was responsible for the creation of the market for illegal gold and who was funding illegal mining operations.

Adv Nogxina said that Mr Diale’s comments were noted by the DME. The suggestion made could be debated further. The matter was of a very serious nature and the Department was prepared to consider any possible solution to the problem of illegal mining.  In response to Prof Ndabandaba’s question, he said that the Department had no record of illegal mining activity during the previous Government but the mining industry may have further details.

Replying to the Chairperson’s questions, Adv Nogxina said that the law enforcement agencies had conducted extensive investigations into the phenomenon of illegal mining and would be in a better position to provide answers.  He agreed that the illegal mining activities would not take place if there was no market for the product.  He said that the mining industry had initiated a number of measures in an attempt to curtail illegal mining but it was obvious that only the pawns in the organisation were being arrested while the kingpins remained untouched.  Illegal mining was clearly the work of organised crime syndicates but the issue was attracting major international attention.  A recent internet search resulted in more than 74000 references to illegal mining and South Africa was perceived to be at the forefront.  Illegal mining was costing the country dearly and media reports were given international attention.  Reported incidents of illegal mining caused untold damage to South Africa’s reputation as a safe haven for investment in the mining industry.  The country was perceived to be held to ransom by criminals and the escalating problem of illegal mining had serious consequences for South African society in general.

Presentation by the Chamber of Mines (COM)

Mr Mzolisi Diliza (Chief Executive; COM) thanked the Committee for the opportunity to submit a presentation on illegal mining.  He briefed the Committee on the role of the Chamber in the mining industry, the criminal activity affecting mining, the initiatives taken by the Chamber to address criminal activities and the impact of criminality on the mining sector, the economy and the health and safety of mine workers (see attached document).

Mr Sietse van der Woude (Safety Adviser; COM) presented the Chamber’s policy on Zero Harm implemented in 2003 and the progress made by the industry in reducing the number of mining fatalities by 50% to date.  He gave an outline of the role played by the Chamber on improving the health and safety of mine workers.

Mr Roger Baxter (Chief Economist; COM) presented an overview of the impact of mining on the South African economy.  Although mining contributed only 7% directly to South Africa’s gross domestic product (GDP), the indirect contribution amounted to 17.2%.  The mining industry contributed 50% of the country’s foreign exchange earnings.  Mining employees numbered 518585 (supporting an estimated 5 million dependants) and a further 500000 persons were employed in indirect and induced industries.

The industry represented 9% of the total fixed investment in the country, 35% of the market value of the Johannesburg Stock Exchange (JSE) (valued at R2 trillion), one third of all black economic empowerment deals done in the last 11 years and 18.5% of direct corporate tax receipts (amounting to R33 billion in 2008).  Mining provided 50% of the volume handled by Transnet rails and ports, 93% of electricity generated by coal power plants and 15% of electricity demand and 37% of liquid fuel produced from coal.  Total mining income during 2008 amounted to R405 billion and total expenditure amounted to R409 billion.  Most of the benefits derived from mining activity went directly to the local economy.  The mining sector was however severely affected by the economic downturn and mining production rates reflected a decline since 2004.  In particular, the electricity crisis at the end of 2006 resulted in major loss of production.  Mining inflation was rising at double the producer price index (PPI) rate.

Mr Baxter summarised the economic impact of South Africa’s failure to take advantage of the commodity boom of the previous years and the effects of the current global economic crisis.  The sector was however positioning itself for survival, recovery and prosperity.

Mr Diliza listed the current challenges facing the mining industry and concluded the presentation by stressing the need for all stakeholders to work together in overcoming the challenges.  The Chamber suggested that the existing structures were strengthened in order to deal with the threat to the industry from criminal mining activities.

The Chairperson remarked that the presentation from the Chamber was informative on the mining industry in general but included little information on the subject of illegal mining.

Mr Diliza explained that the presentation focused on the structure of the industry and described the context wherein all mining activity took place.  Details of the practical issues concerning illegal mining would be provided by the submissions from Harmony and the National Prosecuting Authority (NPA).

Mr Dexter raised an objection over the presentation made by COM.  The points raised were important but he felt that the focus of the meeting was the issue of illegal mining and extraneous detail should have been reserved for another meeting with the Chamber.

The Chairperson accepted the explanation provided by Mr Diliza that a more in-depth presentation on illegal mining would follow in the submission from Harmony and the NPA.

Presentation by Harmony Gold Mining Company Ltd (Harmony)

Ms Marian van der Walt (Executive: Corporate and Investor Relations; Harmony) introduced the delegates from Harmony and gave an outline of the submission to the Committee (see attached document).

Mr Ambrose Khuzwayo (Head of Department: Security; Harmony) gave a definition of an illegal miner (also known as “Zamas”) and explained the background to the problem of illegal mining.  Harmony became aware of illegal mining activity in 1999, when the company acquired a number of mines in the Welkom area.

The company’s main concern was for the health and safety of its own employees.  Illegal mining activity was not limited to Harmony mines, the Free State or gold mines but occurred in other parts of the country as well.  Illegal miners gained access from several mines (both working and non-working) in the Welkom area, not all owned by Harmony.  Many illegal miners were illegal immigrants but former and current employees were involved as well.  The company was particularly concerned over the bribery and corruption of its own employees.

The risks to the safety of mine employees, security personnel and members of SAPS from illegal mining activities included attacks on employees and security personnel, physical threats to employees for food, tools and access to equipment and damage to mine equipment and infrastructure.  The unsafe practices of illegal miners result in injuries and deaths and the Zamas left injured miners and the bodies of deceased miners for the company to rescue and retrieve.  The criminal activity engaged in included human trafficking, smuggling, money laundering and bribery and corruption.  The presentation included examples of the threats made by illegal miners to Harmony personnel, management and security personnel contracted from Protea (a private security company).

External threats identified included the informal settlements surrounding mine shafts, the influx of immigrants from neighbouring countries, unemployment and poverty, the lack of legislation allowing for serious charges to be brought against illegal miners and the existence of gold syndicates.  An illegal refinery operated from a notorious hostel (known as “G Hostel”), which was situated in one of the townships in the Welkom area.

Mr Peter Bishop (National Programme Manager; Special Investigations Unit, National Prosecuting Authority) explained the five levels identified in the hierarchy of organised crime syndicates involved in the extraction, refining and marketing of illegal precious metal mining products.  Each of the five layers had a complex management structure and included highly skilled operatives.  Individual illegal miners comprised level 1.  More organised gangs or groups of miners were found at level 2.  The raw material (e.g. gold-bearing ore) was processed to conform to the requirements of the Precious Metals Act at level 3 by local syndicates (i.e. reduced to second-hand gold status).  The product can then be sold legally to other license holders in South Africa.  If not sold in South Africa, the product was exported to Canada, Dubai, China and other countries in Western Europe by a front company at level 4.  The product was misrepresented on export declarations as “computer scrap”, “copper scrap” and “jewelry scrap” of very low value but re-classified and sold abroad at a much higher value.  The cost of exporting the product was repatriated to South Africa and the profit was deposited in off-shore bank accounts and used for money-laundering and other organised crime syndicate activities.  Level 5 included international buyers and intermediaries created for the specific purpose of marketing the illegal gold to legitimate buyers.

Mr Khuzwayo advised that Harmony had a staff complement of 25000 people, of which 18000 per day worked underground.  Illegal mining substantially increased the safety risks to workers by rendering work places unsafe through the illegal and dangerous use of explosives, fire, flooding and damage to ventilation systems.

In addition to the loss of gold-bearing material, mines suffered the loss of equipment, copper cable and mining explosives.  Business risks included the closure of mines rendered unsafe by illegal mining activity and financial losses to the company.

Page 15 of the presentation demonstrated the extent of the problem at the mines in a 50 km radius of Welkom.  Illegal mining activity had been uncovered in the mines illustrated in red.  The illustration showed how the mines were connected by underground tunnels.  Although illegal mining was not done in the mines marked in blue, illegal miners will use those shafts to gain access to other areas.  Illegal miners were known to walk for three days through the tunnels before reaching the area being illegally mined.  Groups of illegal miners were guided through the network of tunnels by experienced former or current employees.  Illegal miners lived underground for lengthy periods and required access to food, water, mining equipment, explosives and medical equipment.  Support was either provided by the syndicate or by collusion with mine employees.

The presentation included statistics on the number of illegal miners who were arrested, injured and deceased from 2007 to date.  The number of arrests increased from 475 in 2007 to 757 in 2008.  In the first seven months of 2009, 844 people had been arrested.  Since the involvement of the NPA, more serious charges were brought against illegal miners than mere trespassing.  The number of injured and deceased miners increased from 13 and 36 respectively in 2007 to 80 injured and 109 deceased in 2009.  The statistics on injured illegal miners included miners claiming to be dehydrated and using the opportunity provided by the mine’s obligation to provide medical care to escape from the mine.  Statistics on disciplinary action (i.e. dismissals) taken against personnel and contractors reflected a similar trend for the same period.  The company had the support of the labour unions for the disciplinary action taken against employees found to be involved in illegal mining activity.

The presentation was illustrated with photographs of illegal mining operations and a table of the exploitative prices charged for food supplied to illegal miners.  A loaf of bread costing R8 was sold for as much as R200.  Miners believed that Amarula (a locally produced liqueur) was a cure for tuberculosis and illegal miners were willing to pay an exorbitant price for the drink.  The mine was aware that local businesses were involved with the syndicates providing food to illegal miners but was unable to act against the persons concerned because the businesses operated outside mine premises.

Details of action taken by Harmony to improve access control measures were provided (see pages 28 and 29).  Increased security measures were listed on page 30.  The involvement of other stakeholders was listed on pages 32 and 33 of the presentation document.  The presentation was concluded with the measures to be taken by Harmony on an ongoing basis.

The Chairperson requested additional information from the NPA on the international impact of illegal mining in South Africa.

Mr Bishop advised that the global initiative taken by the NPA focused on the buyer market for precious metals (i.e. levels 3, 4 and 5).  If the market for illegal gold can be eliminated, the problem of illegal miners operating in mines (levels 1 and 2) would disappear.  The partnership between law enforcement agencies and the public and private industry participated in the South African National Precious Metals Forum and interacted with an international working group on the matter, the Department of Foreign Affairs of Russia, the United Nations Inter-criminal Research Institute and the United Nations Office for Drugs and Crime.  The public/private partnership created platforms for engaging international refiners and buyers, where the support of these organisations was elicited to report incidents where suspicious product was offered for sale.  A number of entities were involved in the development of forensic processes and technology to determine the origin of precious metals (similar to the Kimberly Process applied to identify legally-mined diamonds).  South Africa participated in UN crime conventions and actively promoted the adoption of an international agreement on the trade of certified precious metal.  Although not a short-term solution, he believed that the measures mentioned would ultimately be successful in eliminating the market for illegal minerals.

Ms F Mathibela (ANC) thanked the presenters for the detailed and informative presentations.  She asked if the mining companies changed security personnel on a regular basis to prevent opportunities for collusion from developing.  She remarked that illegal mining activity made it very difficult for the Company to guarantee the health and safety of mine workers.

Mr Lucas was convinced that illegal mining had occurred prior to 1999.  He suggested that doctors providing treatment to injured illegal miners reported such cases to SAPS.  He asked why steps were not taken to close down the illegal processing of raw materials in “G Hostel”.  He asked why the existing export procedures at ports and airports can not be tightened to increase control over exported product.  He said that the existence of buyers for the illegal product was the major problem and that it was clear that loopholes existed that allowed money-laundering practices.  He asked if more cannot be done to provide employment for mine workers to encourage less reliance on illegal mining to provide a livelihood.

Adv H Schmidt (DA) asked how Harmony became aware of illegal mining activity in 1999.  He found the reports of attacks on SAPS and security personnel alarming and found it unacceptable that such incidents occurred in areas controlled by the mining company.  He wanted to know what charges (other than trespassing) were brought against illegal miners.  He said that illegal mining was obviously profitable and asked if consideration could not be given to allow mining by smaller enterprises to continue on a controlled basis after it was no longer financially viable for the bigger mining companies to do so.  He asked if the loss of production as a result of illegal mining was the reason why South Africa was no longer the world’s top gold producer.

Prof Ndabadaba asked what qualified a “Zama” to join an illegal mining syndicate.

Mr Dexter asked for details of the legislative amendments required to address the issue of illegal mining.  He asked why mines were being closed when they contained enough gold-bearing ore to be profitably exploited by illegal miners.  He said that illegal mining was not a new issue and had been taking place for many years.  He recently became aware of illegal coal mining in the Eastern Cape and the phenomenon was clearly not confined to the gold mining industry.  He applauded the action taken by the law enforcement and public/private partnership and recommended that more resources were made available to the team involved in addressing illegal mining at the international level.  He suggested that other mining houses were invited to make submissions to the Committee on actions taken and possible solutions to stop illegal mining activity.

Ms M Phaliso (ANC) requested further information on the involvement of children in illegal mining and the extent of abuse of children by illegal mining syndicates.  She wanted to know why illegal mining was not brought to the attention of Government earlier.

Mr Bishop gave the assurance that the NPA would continue to focus on illegal mining.  The unit was a member of the National Precious Metals Forum and as long as there was mining, there will be an investigative body concerned with the international buyer market.  He said that illegal mining was a high priority for SAPS.  The unit had commenced investigations in 2000.

Ms Van der Walt said that Harmony was doing everything reasonably practical to ensure the health and safety of employees.  The areas used by illegal miners were very difficult to access and were extremely unsafe.  She agreed with the suggestion made that all the mining houses were involved in finding solutions.  She confirmed that Harmony first became aware of the problem in 1999 but could not comment on what had occurred prior to that date.

Mr Khuzwayo explained that injured illegal miners were brought to the nearest operational underground station by their colleagues, where the company was obliged to bring them to the surface and take them to hospital.  As mentioned before, illegal miners faked injuries and used this method to be smuggled out of the mine.  Ambulance drivers were bribed to set them off en route to the hospital.  He could not comment on action taken against “G Hostel” as it was not on mine property but the company was aware that the illegal processing works had been in place for some time.

Ms Van der Walt said that representatives from the local businesses and communities had attended the meetings of the local stakeholder forum and had pledged their support and cooperation.

Mr David Msiza (Deputy Chief Inspector; DME) advised that the local stakeholder forum had drafted an action plan, which included addressing the issue of “G Hostel”.  The Welkom municipality owned the hostel and was responsible for it.  The action plan included a register of residents of the hostel to be compiled.  The hostel had been earmarked for upgrading, most likely into family units.  Some of the illegal processing was done in the surrounding townships as well but the community was represented on the forum and had made good suggestions for addressing the problem of illegal mining.

Mr Bishop advised that the initiatives to address the issue of the international buyer market included interaction with the World Customs Organisation and the Financial Action Task Force on money laundering by banks.

Responding to Adv Schmidt’s question, Mr Khuzwayo said that criminal charges laid against illegal miners since the end of 2008 included charges in terms of the MHSA.  Depending on what was found on the miner, charges of attempted theft of mine property were laid.  Illegal miners no had to face the charges in court, where before they only had to pay a R50 fine for trespassing.

Mr Bishop added that charges in terms of the Organised Crimes Act and asset forfeiture legislation would be laid.  Illegal mining was organised crime and the applicable legislation made provision for serious charges and substantial penalties to be brought against the perpetrators.

Ms Van der Walt said that the company was seeking the kind of penalty that would be a deterrent to people from getting involved in illegal mining activities.  Currently, illegal miners were prepared to risk their lives for the possibility of earning a large income.  She said that children were involved in illegal mining activities and were subjected to sexual abuse.  The company was aware that illegal mining included the laundering of large amounts of money from abroad.  She said that the mines were making substantial capital investments in upgrading access control systems (e.g. hand scanning) and in structures designed to prevent easy access to mine shafts.  She advised that the areas mined by illegal miners had been closed by the company because the area was no longer safe for mining or was no longer profitable.  An example was the recent closure of the Elandsrand shaft because the area had become unsafe even though some gold-bearing rock remained.

In response to the questions raised by Messrs Schmidt and Dexter, Mr Baxter explained that illegal miners were able to extract ore profitably because they had no overheads.  Explosives, equipment and electricity were stolen from the mines, which raised the costs of operation for the mine.  Mines had to meet legislative requirements to ensure safety and illegal mining had a negative effect on the health and safety of mine workers.  Illegal mining activity threatened the viability of mines, which impacted negatively on the economy.  He agreed that illegal mining affected the entire mining sector, including platinum, diamonds and coal.  He said that the Institute for Security estimated that illegal mining accounted for 10% of South Africa’s total gold production of 200 tons per annum, i.e. 20 tons.  Irrespective of the loss of production to illegal mining, South Africa’s annual gold production fell far below that of the United States and China.  However, there was no doubt that the elimination of illegal mining would improve the viability of mines, reduce the overhead costs incurred by mining companies and reduce the number of retrenchments of wine workers.

Mr Van der Woude explained that the mine owner as the employer was responsible for the health and safety of all persons on the mine, including the areas which were no longer economically viable.  The industry was prepared to consider any suggestions to combat illegal mining activity but allowing legal mining to be carried out by small enterprises in areas that were not profitable for the mining company had to be carefully considered.  The mine owner remained responsible and would need to ensure proper control measures and health and safety infrastructure were in place and adequate.  Although the mine management sympathised with the plight of illegal miners, their activities compromised the health and safety of all mine workers.

Mr Van der Woude said that all mines had to submit samples in terms of the Precious Metals Act.  The samples were analysed and the data entered into a database, allowing the “fingerprinting” of gold.  He advised that applicable legislation was under constant review and the industry will approach Parliament with requests for any necessary amendments.  He said that the problem was not the legislation but rather the enforcement thereof.  The mining industry was unique and prosecutors and law enforcement officers needed specialised knowledge about mining.  The industry had developed good working relationships with the law enforcement agencies in the mining areas.

Mr Khuzwayo said that anyone could become a “Zama”.  No qualifications were required by the illegal mining syndicates.  The common factors were exploitation, poverty and the influx of immigrants from neighbouring countries prepared to do anything to earn a living.

Ms Mathibela asked why magistrates did not impose stiffer penalties for illegal mining activities.  The syndicates recruited illegal miners from neighbouring countries, who had no idea what they would be involved in and that they would be risking their lives.

Mr Lucas said that the ongoing theft of mining explosives and equipment indicated that there were gaps in the control systems that should be closed.  He wanted to know who was providing funding for the buyer market.

Mr Khuzwayo replied that a task team had been appointed and the local and national forums were investigating the buyer market.  The mine reported all cases of theft of mining equipment and materials to the SAPS.  He explained that explosives were stolen from unmanned material cars en route to the working area and the mine was doing everything possible to prevent illegal miners from gaining access to the material cars.

Mr Bishop explained that magistrates can only act on a case brought before them in terms of the crime that was committed.  To date, the focus had been on arresting illegal miners but attention was turning to prosecuting the businesses that supported illegal mining by supplying food to illegal miners.  Effective legal action needed to be taken against all parties involved in illegal mining, not just against the miners.

The Chairperson said that illegal mining was a serious matter.  The presentations included details of action taken but he felt that not enough was being done to stop illegal mining.  He asked for further details on the ownership of the mines in the Welkom area (as depicted on page 15 of the Harmony presentation) and the reason for the inter-connectivity of the tunnels.  He wanted to know how illegal miners gained access to the mine shafts and why the mine was unable to prevent illegal miners from entering shafts with the 18000 mine employees going underground every day.  He noted that some formally registered companies were involved in illegal mining and asked what action was taken by COM against members who may be involved in illegal mining.  He wanted to know to what extent COM took responsibility for control over registered mining companies. He asked if senior management personnel of the mine were also involved in illegal mining.  He asked how illegal miners gained access to mining equipment and explosives.  There was legislation in place to control explosives and he wanted to know what action had been taken by the DME against mining companies that failed to adequately control explosives.  He said that mine owners as the right holders remained responsible for the management of derelict mines and asked what role was played by COM in this regard.  He requested details of the legislative changes required and clarity on where the Committee could assist in the prevention of illegal mining.

Mr Khuzwayo explained that the mines depicted in the illustration on page 15 of the presentation were owned by different mining companies.  Illegal mining activity had been detected in mines illustrated in red.  He agreed that illegal miners had access to inside information to enable them to reach the area targeted for illegal mining but was unable to determine the extent and type of information provided by either current or former employees.

Ms Van der Walt added that illegal miners gained access to shafts and explosives by bribing mine employees.  Ropes were used to gain access to some of the shallower shafts.

Ms Estelle Cilliers (Technical Manager; Harmony) said that the company can only take action against employees when provided with information and factual evidence.  She confirmed that disciplinary action had been taken against senior personnel and the company was able to provide full details of each case to the Committee.

Ms Van der Walt advised that Harmony’s safety and awareness programmes were applicable from the managerial level.  The company had a zero tolerance policy on illegal mining and will take action against all employees found to be involved, including managerial personnel.  She confirmed that persons at managerial level were known to be involved in illegal mining and that the company will make the information available to the Committee if required.

Mr Van der Woude explained that the COM was actively involved in establishing the various national, regional and local forums and provided resources to ensure that the forums would be effective.  The COM was a lobbying organisation and had no investigative responsibility.  Regional forums had teams to conduct investigations and the national forum included an independent investigative arm, reporting to SAPS.  Legal action taken against COM members was done by law enforcement agencies and not by COM.  COM had no function to ensure compliance with legislation by members.

Mr Van der Woude said that there was a distinction between commercial and mining explosives.  Not all ATM bombings involved mining explosives.

Mr Baxter explained that the logistics of supplying material and equipment to working areas in mines were very complex and required sophisticated engineering and infrastructure.  The average working area was at a depth of 2.7 km and material stores supplied material and equipment to an area with a radius of 5 km.  Mines covered vast areas and material and equipment were not controlled from one central store.  The complexity of the logistics involved in supplying materials to the workface unfortunately allowed for opportunity for the materials to be accessed by illegal miners.  The mining companies were doing what they can but complicated challenges remained.

Mr Van der Woude said that COM reviewed legislation on an ongoing basis and approached Parliament when amendments were necessary.  He was not aware of any pending changes to legislation.  He stressed that the problem was the enforcement of existing legislation.

Mr Bishop said that more control was needed over the issuing of permits and recovery works licenses.  More control was required over the export of unwrought gold.  More precise details of the product should be provided on the Customs declarations and should include an analysis report.  The contents of containers should be described in a more detailed manner and checked to ensure that the estimate of value was correct.  Customs officials required more training in the export of precious metals.

Mr Thabo Gazi (Deputy Director-General; DME) reported that the Department had conducted audits on explosive control systems with SAPS in various regions where there were problems.  A recent audit resulted in an administrative fine of R100000 being levied against Harmony and operations were halted at mines in the Rustenburg area because controls over explosives were found to be lax.  The DME was concerned over the closure of mines but did not hesitate to order mine closures when the safety of workers were compromised when the mine became unsafe.

Adv Schmidt wanted to know to what extent illegal mining occurred in mines owned by other mines.

The Chairperson asked for details of the other areas in the country where illegal mining was taking place.

Mr Van der Woude confirmed that mines in other areas (e.g. Mpumalanga) were affected as well.  Illegal mining was more prevalent in the Welkom area because of the number of mines in the area allowing access via inter-connecting tunnels.

Ms Van der Walt agreed that illegal mining was not confined to Harmony, the Free State province and gold mining.  She said that Harmony had chosen to be open and transparent about the problem and was involving all stakeholders in an attempt to find solutions.

The Chairperson thanked the presenters for the submissions.  Parliament took the matter in a very serious light.  The Committee planned oversight visits to investigate the matter further and planned to call another meeting with stakeholders in due course.  He expressed appreciation for the efforts taken so far by the mining industry.  The presenters were invited to attend the hearings scheduled for 8 July 2009, when the Committee will be briefed by labour unions and community representatives.  He gave the assurance that Government was committed to the elimination of illegal mining activities and the Committee will do all it can to assist in the process.

The meeting was adjourned.


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