Auditor-General's Report on derelict mines: Response by Department of Mineral Resources

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Mineral Resources and Energy

02 March 2010
Chairperson: Mr Gona (ANC)
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Meeting Summary

The Department of Mineral Resources briefed the Committee on its progress with the rehabilitation of derelict mines in South Africa. This was in direct response to the report of the Auditor-General, which listed a number of serious concerns with the operations of the Department in this area. The Department outlined the concerns, and responded to what it had done to address them. DMR noted that it had, since 2002, been looking at the strengthening of environmental management, and attending to closure and rehabilitation of mines which had been left abandoned and ownerless. Mines that were closed, however, were often broken into so that anything left in the mine could be stolen. The processes were complex and involved a great deal of research before final actions could be taken. The DMR prioritised its actions, based on considerations of pollution reduction, environmental regulations and implementation tools, rather than on popular demand. Asbestos mines, because of the serious health risks, had been a priority since 2005, but the Department also targeted those mines causing water pollution, in view of the scarcity of water. However, DMR cautioned that part of the rehabilitation process involved buying in of water.

Generalised responses were given to the eight criticisms expressed in the A-G’s report. The DMR had apparently approved a national strategy, which would be developed further. A database was in existence, but needed to be upgraded. A Rehabilitation Oversight Committee was established. The procedure for allocation of funds would be tied in to other processes. Communication was described as work in progress, as was capacity and lack of proper budget preparation and monitoring. The DMR noted that there were huge challenges, that this was a legacy stretching back more than one hundred years, and suggested that it should perhaps not be the responsibility of the DMR alone.

Members were quite critical of the presentation in a number of respects. Several commented that the responses and the report had been far too generalised, and that another presentation with further details should be prepared, which gave more details on what strategies were proposed and what was currently being done. Members were particularly concerned that despite the huge budgetary allocations there were few tangible results, and only a few of the 5 906 mines had been rehabilitated, despite the high risk they posed. They commented that the DMR did not appear to have complied with a 2006 Court Order, and asked for details as to what was being done. Members said that it should surely be possible for the DMR to trace the owners of derelict mines, since some may be operating other mines, since records should have been kept and since it had been possible for some miners, with very limited resources, to do this. Members asked about the prioritisation for rehabilitation, and also queried why mining companies were still being permitted to pollute water, and enquired about the process for sealing mines. Whilst Members had some sympathy for the comments about the legacy, they nonetheless pointed out that the DMR had been given a substantial budget to deal with the matters. Further questions were related to capacity, the reported lack of skills among tender applicants, the lack of action plans, the allocations per year of the budget of R30 billion, and the fact that this did not cover the costs of acid mine drainage. Members suggested that perhaps the Chamber of Mines should be asked for input, and the role of the Department of Environmental Affairs must be clarified.

Meeting report

Department of Mineral Resources (DMR) response to Auditor-General’s report on derelict and ownerless mines
Ms Ntokozo Nzimande, Chief Director, Department of Mineral Resources, noted that she had been asked to brief the Committee on the Department of Mineral Resources’ (DMR) response to the report of the Auditor-General (AG) report, dated October 2009, on the status of derelict and ownerless mines in South Africa. The matter had received wide media coverage in December 2009.

The Chairperson said that this was an opportunity for the DMR to present a comprehensive report and allay the fears raised by the AG. The AG was not able to be at today’s presentation. The Chairperson said that the challenge that the State faced was whether corrective measures had been put in place.

Ms Nzimande said that the DMR’s operations were guided by its relevant legislation. She said that the conferences of 1972, 1982 and 2002 emphasised a greater environmental awareness in general, and more specifically relating to the environmental management of mines. The SDM project was initiated immediately after the World Summit on Sustainable Development (WSSD) of 2002, and the cost of that project was more than R25 billion to date. The initiative looked at ways and means to strengthen environmental management, and the closure and rehabilitation of mines which had been left abandoned and ownerless.

Ms Nzimande gave an example of a mine in this programme, which was situated on the East Rand. The seal closing off the mine had been broken through, so that thieves could take the steel inside the mineshaft. The DMR’s rehabilitation programme had been in place since 2002, so the report covered its activities from then up to 2009. She said that the process was complex and any rehabilitation must be preceded by extensive research into possible rehabilitation and closure. Other aspects included research into acid mine drainage, rising water levels and treatment plans. There were also specific targets for the mining industry globally. These were the reduction of pollution, regulations on the environment and implementation tools.

The importance of prioritisation, raised by the AG, was based on the above considerations, rather than on popular demand. A major priority was the asbestos sites, because of the danger and risk these posed to human health. In line with the research conducted, rehabilitation on these mines had commenced in 2005. Currently the rehabilitation was taking place along the Florida Lake Canal, which cost R16 million to construct. This was not an easy project and took a lot of work and much research. Approximately three-quarters of the canal had been completed.

Ms Nzimande said there were eight main criticisms contained in the A-G’s report. The DMR had responded to each of these.

The first related to the lack of an approved national strategy. She noted that this had subsequently been approved, in December 2009, and would be developed further. Secondly, the A-G had noted the absence of an integrated information system. She said that a database was in existence, but would need to be upgraded. The A-G had reported on a shortage of organisational capacity. She responded that the main development in this regard had been the establishment of the Rehabilitation Oversight Committee in December 2009. A criticism had been expressed on the shortcomings in the procedure for allocation of funds. Ms Nzimande responded that this would be linked to the database and ranking system.

The A-G had commented that communication channels were not clearly defined. Ms Nzimande noted that this was work in progress, and a thorough communication and consultation procedure was being developed.In response to the A-G’s concerns about the lack of capacity and lack of proper budget preparation and monitoring, she noted that this was now addressed in the overall response that she was now giving to the Committee. The A-G had commented on the use of Mintek in these matters. Ms Nzimande said that proper procedures were in place to notify the A-G and National Treasury, in respect of Regulation 16A6.4.

Ms Nzimande concluded that the DMR had huge challenges around trying to ensure that there were no ownerless and unrehabilitated mines. Furthermore, there would be ongoing management of sites, particularly because of the danger of rising water. As a result there is also a need for ongoing research.

Mr Thabo Gazi, Acting Director General, DMR, said that he was confident that all the criticisms raised by the A-G had been addressed.

Adv H Schmidt (DA) commented that the report of the A-G had been “quite scathing”. He noted that although there had been a R30 billion allocation, there were very few tangible results. Of the 5 906 mines reported upon, only a very small number had been rehabilitated, despite the fact that these mines posed an extremely high risk. He said that talk of “ongoing management” and “research” was too vague, and he wanted to know exactly what the strategy was to achieve those goals, and also what DMR’s intention was, for the future, rather than what was currently being done.

Adv Schmidt also wanted to know why the assertion was made that the rehabilitation was the responsibility of the entire mining industry. He said his view was different, and that this was in fact the sole responsibility of the DMR. He felt that the DMR had not been acting sufficiently in terms of this responsibility. He asked the delegation to specifically address and clarify points 6.1, 6.2, 6.3 and 6.6 in the presentation. He also pointed out that the DMR was ordered by the Court, in 2006, to address its “fixed” mandate, programme and budget. He wanted to know how this Order of Court was being complied with.

Ms B Tinto (ANC), referred to page 8 of the report of the A-G, which indicated that one official seemed to be responsible for a myriad of tasks, as listed under paragraph 6.3 (organisational capacity and structure). She   said that it was almost incredulous that one person could be responsible for so many tasks. This made the DMR vulnerable to corruption. She wanted to know what was being done about this.

Ms Tinto enquired whether the owners of mines elsewhere could also be the owners of some of the derelict mines. She enquired why the former owners could not be traced and made to share the responsibility with DMR for the rehabilitation.

Ms N Mathibela (ANC) said that it seemed a large amount of R23 million had been spent on mines that were predominantly on the East Rand, yet there was hardly any activity in other provinces, especially in regard to asbestos mines.

A Member asked what the scope of the work was in other provinces, and what kinds of mines were involved.

Ms Mathibela thought, in relation to the poor response to the tenders put out, that it might have been feasible for DMR to engage those who had responded, even if they were not fully skilled, because in this way at least some work rather than no work would have been accomplished.

Ms J Ngele (ANC) was not satisfied with DMR’s responses to the A-G’s report. She said that so many responses were mentioned as work “in process” or were earmarked “priority”. She said DMR needed to be more decisive and clear on what was being done about the situation as raised by the A-G.

Mr E Lucas (IFP) said he wished to take a more proactive approach and ask what was to be done in the future. He said that the presentation today, as well as the A-G’s report, painted a grim picture of what had happened in the past. He was sympathetic to the fact that the laws in the past did not specify rehabilitation as a compulsory part of mining, but it seemed the A-G had more information than the DMR was presenting here today. He asked what number of derelict mines would be rehabilitated. This required a target towards which the DMR must work. The example of the mine cited, where the stones were removed to gain entry, was of concern, as he believed that something far more sophisticated that stone should have been used to close the mine. The risks and dangers around asbestos mines had been known for many years and needed far more urgent attention.

Ms Nzimande said that a very thorough process was followed with the sealing of a mine. As far as the legislative aspect for sealing was concerned, this was difficult to determine, because of the legacy over the past hundred years.

Mr V Magagula (ANC) shared the concerns of other members about the timeframes. He said he could not understand how it was possible that the DMR, having given permission to mine, and presumably having every detail about the owners at some point, could simply allow these mine owners to abandon the mines. He said that the DMR must be held responsible and must regulate this.

A member asked whether asbestos mines were prioritised, and whether there were timeframes for the completion of the work.

Mr Gazi responded in general to a number of the points raised. He said that many of the issues raised by the A-G were “structural” in nature, and the presentation given today captured the key drivers. He reiterated that the problems were a legacy of mining, which stretched back more than 100 years. It was the current administration that was left with so many derelict mines. He did not dispute that the DMR was the entity that had been assigned responsibility to deal with the rehabilitation.

Mr Gazi reiterated that progress had been made since the A-G’s report. Firstly, a strategy had been approved. A Rehabilitation Oversight Committee had been established. He said the DMR was actively drawing on different sectors of the Department in order to bring diversity of thought to the problems.

Mr Gazi noted that the allocation of resources was prioritised towards those mines that were causing water pollution, since water scarcity was a major general concern. The asbestos mines were a priority and work had been carried out there.

Ms Nzimande said that much of the work of rehabilitation involved the pumping of water and that brought its own problems of buying of water and water quality. She said the establishment of the Oversight Committee represented a major improvement and this entity would report directly to the Director General on its operations.

The Chairperson said he was concerned about the lapse of time between the time that the A-G’s report was made available to the DMR, in June 2009, and the time when the response was given.

The Chairperson felt that the percentage of the budget allocated by National Treasury to DMR was “huge” and the action plan and achievements were not commensurate with the money being granted.

The Chairperson agreed that water scarcity was a known issue yet the pollution and potential pollution caused by mines was still being allowed. As far as the Florida Canal was concerned it was not clear from Slide 13 which part of it is was complete and which part was incomplete.

The Chairperson asked what was being done about increasing capacity.

The Chairperson said that there were many mines, as indicated on page 6 of the report,  that were still untouched by rehabilitation in the Northern Cape. However, these continued to receive less attention than others, despite the known and serious damage they were causing.

Ms Nzimande said that in the Northern Cape those mines were being rehabilitated on three separate sites, and work in that province had never stopped.

The Chairperson was also concerned that some of the former owners who abandoned these mines may still be operating other mines. He repeated the question why these owners could not be traced, and at what point a closure certificate was issued. He noted that in the Northern Cape, a Court case had been won with the assistance of the miners, who themselves managed to trace the owners. If they had managed to do so, with their limited resources, he questioned why the DMR could not do the same. He wanted a more specific report on progress of tracing.

Ms Nzimande said that there was a process in place for tracing of owners.

Adv Schmidt referred to the remarks about lack of skills among tender applicants, and wanted to know whether the poor response to tenders was due to the same problem.

Adv Schmidt said that although there were 5 906 mines, there were less than that number of operators. He felt that the mines needed to be regularly inspected and wanted to know whether there is a policy covering that.

Adv Schmidt asked what capacity was available for the implementation of current and future environmental management plans (EMP), and how many staff were responsible to action this.

Ms Nzimande noted that every region had a unit to manage this aspect.

Mr E Mtshali (ANC) stressed that the reports and presentation were not viewed lightly, and that every detail was carefully absorbed by the Committee. He was especially concerned about the tender process, which he found, in general, to be problematic and fraught with individuals intent on enriching themselves in a corrupt way. He felt a glaring omission was the lack of an action plan.

Adv Schmidt asked whether the budget of R30 billion was the current, or next year’s allocation.

Mr Edson Ragimana, Chief Financial Officer, DMR, said that the budget for the current year was R47.5 million and for next year it was R52 million. It was a challenge to finance the database. He said that the process of rehabilitation aimed to be a social benefit as well, in that it intended to bring about job creation. He said that the tender process was fully compliant with the Public Finance Management Act (PFMA). He said he could not say why capable companies did not bid for the tenders, but he said he could speculate that this was in part at least due to the fact that many of the mines were located in very remote areas and it may therefore not be as lucrative to bid for this work as opposed to other work.

The Chairperson commented that, from the input by Mr Ragimana, the current allocation presented more challenges than solutions. Page 6 of the report showed that only five mines, from a total of 5 906, had been rehabilitated over three years, at a cost of R42 million, and he therefore questioned whether this was making optimum use of scarce funds. He said the R30 billion, reported as contingent funds on page 5, did not include costs of acid mine drainage, and therefore the real cost was even higher.

The Chairperson suggested that one possible solution for the future might be to include the Chamber of Mines as a roleplayer. Its contribution needed to be spelt out and perhaps may even constitute as much as half the responsibility, together with the State, to deal with this legacy. He said unnecessary costs were being incurred by a delay in the tendering process (pages 9 and 10). Similarly, on page 11, the graph showed unnecessary waste of funds, because insufficient allocations were made in particular financial years. DMR also needed to be mindful of possible legal action due to the effect on human health of the people living near these mines.

Mr Magagula said a clear answer on the budget allocation was required. He cautioned that expert knowledge was needed to clarify the number of mines and the status of these mines to be rehabilitated. He said that DMR must remember that in some countries, wars were fought because of insecurity about resources such as mines.

Ms D Mathebe (ANC) wanted to know exactly what was achieved with the R47.5 million budget.

Ms Mathibela felt the DMR’s response on the question of the asbestos mines was not satisfactory.

Ms Ngele said that the presentation should be given to the Committee again, in an amended form, and that the DMR needed to be much better prepared when it returned to the Committee.

Adv Schmidt felt that the responses were too broad and needed to be factual and specific, and linked directly to the issues raised by the A-G.

Mr Magagula said the budget was not clearly presented.

Mr Lucas said the role of the Department of Environmental Affairs must be clarified and the presentation must include details of how the two departments would work together.

Mr Gazi repeated that over a century of mining had left a legacy of a century of dereliction. It was an enormous challenge but the DMR had taken on the full responsibility and that was evident in its strategy plan.

Ms Nzimande commented on the suggestions about the role of the Chamber of Mines, and the apportionment of liability. She said it was clear that the Minister’s call on the mining industry to come on board was justified. The DMR also had responsibilities beyond its rehabilitation operations. One of those responsibilities was the nurturing of appropriate skills in the mining sector by way of providing bursaries. The acid mine drainage remained a priority.

The Chairperson asked whether, considering funding and long term arrangements, some funding would remain with DMR, or whether it was likely to migrate to the Department of Environmental Affairs.

Ms Nzimande said this was under discussion, as the funding basically related to the two pieces of legislation. At present it was proposed that there should be an 18-month transitional period until the responsibility, together with funding, fully resorted under NEMA (National Environmental Management Act).

The Chairperson said although this matter was complex, a clearer action plan was needed. In view of the huge allocation of R30 billion from Treasury, it was imperative that matters such as timeframes, among others be clarified. He said he welcomed the availability of the Strategic Plan and looked forward to being briefed in this Committee soon. He said the Chamber of Mines would be invited on that occasion, and that affected communities must be included in all these deliberations and operations.

The Chairperson noted that it did not augur well for the DMR to defy the 2006 Court Order, and urged it to comply without delay.

The meeting was adjourned.


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