Department of Mineral Resources Budget 2010/11: briefing

Meeting report

Department of Mineral Resources (DMR): Presentation
Mr Thabo Gazi, Acting Director-General, Department of Mineral Resources (DMR), presented the 2010/11 budget of the Department. The budget was split into four programmes namely Administration, Promotion of Mine Safety and Health, Mineral Regulation, and Mineral Policy and Promotion. The budget total was R1, 03 billion.

Administration would receive R239 042 000. Promotion of Mine Safety and Health would receive R145 865 000. Key activities of the latter programme would include an Audit of Health and Safety management

systems of mines; conducting investigations and enquiries; implementing amendments of the Mine Health

and Safety Act; community issues; developing a comprehensive strategy on vibrations, blasting, and dust control; research and development; implementing a national seismic network system; and a focused annual research programme.

Mineral Regulation would receive R215 925 000. Key activities of this programme would include monitoring and enforcing compliance; inspections of social and labour plans, mining and prospecting work programmes, and environmental management plans; Mining Charter inspections; reducing the  State’s environmental liability; identifying and prioritising unsafe and un-rehabilitated ownerless and derelict mines; implementation of identified ownerless and derelict mine rehabilitation projects; and ensuring adequacy of current provisions for rehabilitation.

Mineral Policy and Promotion would receive R429 184 000, the bulk of which would be transfers to state owned entities amounting to R361 625 000. Research and development conducted by the Council for Geoscience (CGS) and the Council for Mineral Technology would account for R302 million of these transfers. Key activities of this programme would include contributing to the United Nations Commission on Sustainable Development (UNCSD) proceedings to enhance the image of the mining industry – “Greening the mining industry”. Measures to promote investment in the minerals sector would include facilitate access for Black Economic Empowerment (BEE) coal miners to the Richards Bay Coal Terminal (RBCT) for export quality grade. Measures to transform the mining industry would include finalising the review of the mining charter; amending the Geoscience Act; reviewing the Diamond Amendment Act; reviewing the Mineral and Petroleum Resources Development Act (MPRDA) 2002 (Act 28 of 2002) (MPRDA); and conducting frequent regulatory Impact assessments.

Under Departmental Spending Priorities Areas, the Department budgeted R52 million toward the rehabilitation of ownerless and derelict mines, R145 million on health and safety programmes and R174 million on the implementation of the Mineral and Petroleum Resources Development Act. (See presentation and Vote 31: Mineral Resources – Introduction: Policy Priorities for 2010/11 document for a detailed breakdown of the programmes and the budget). The Mines Health and Safety Amendment Bill would be tabled in the course of the financial year.

The Department noted that the presentation should be read together with the DMR Medium Term Strategic Plan and the Estimates of National Expenditure, chapter 31. The challenge for DMR would be to continue with the former Department of Minerals and Energy (DME) legacy on administrative support matters

Discussion
Mr C Gololo (ANC) asked if seismic activity could be detected before a seismic event occurred.

Mr Xolile Mbonambi, Mine Health Services DMR, replied that the purpose of the seismic activity project was to assist them when they engaged with mine owners on the measures mine owners were taking to minimise the impact of seismic events when they occurred. Should a seismic event happen, the Department would have early access to data rather than wait for mine owners to release the information after the event.

Mr V Magagula (ANC) asked how the Department recruited inspectors, as there was a need for them.

Mr Edson Ragimana, Chief Financial Officer DMR, said there was provision of R4.2 million made for training of inspectors.

Mr Mthokozisi Zondi, Chief Inspector of Mines DMR, said that the Department had a bursary programme to recruit at university and technikon level and appointees were then exposed to a work experience programme. The Department had established a training programme, in conjunction with the University of the Witwatersrand and the Mining Qualifications Authority, for inspectors. In addition the Department had a management-training programme.

Mr P Dexter (COPE) wanted the Department or a researcher to create a list of the key performance indicators alongside the budget items so that the Committee could keep track of them during the course of the year.

Mr R Sonto (ANC) asked what was meant by “Use of goods and services” in Programme 3 and what “risk management” in Programme 1 implied. What effect had mine operations, blasting, etc., had on community safety for communities nearby?

Mr Ragimana said there were funds for the rehabilitation of derelict and ownerless mines and also funds for payments to people leaving the Department. Disaster management related to information management, and the Department’s preparedness should a disaster occur at their offices. Such plans included off-site backup of information backup and a plan to become operational again in a short space of time.

Mr Zondi said that many informal settlement communities encroached on mine land and the Department sought to find a standard that the mines complied with when they did their blasting operations to minimise the impact on communities. Mining operations generated vibrations, which could cause dwellings to crack, noise from blasting, and dust.

Mr Joseph Katenga, Corporate Services DMR, said that fraud management was by means of the code of conduct, a whistleblower programme, and training and awareness programmes at the regional offices throughout the organisation. Measurement was by means of maintaining a database of reported incidents

Mr E Marais (DA) wanted the head of corporate services, Mr George Mguni, to provide the Committee with an organogram of the Department including names, phone numbers, emails and indicating posts that were vacant. He asked that Mr Gazi confirm that the budget was sufficient and that the Department would not come back to ask for more money and that the budget would be tabled in the House, with no increase to the figures as presented to the committee.

Mr Gazi replied that the structure would be made available and that the Department was comfortable with the budget.

Mr Ragimana confirmed Mr Gazi’s view adding that only unforeseen circumstances would cause them to seek additional funding.

The Chairperson said that mining’s impact on water pollution was a topical item given the water shortage faced by South Africa and that the figure budgeted for rehabilitation of mines was a fraction of the R30 billion required (estimate from a study conducted by CGS). How was the Department going to deal with it? He said that the inspection and compliance of mines was a mammoth task and asked how many inspectors they had. How many were in training? How many did the Department need? And what retention strategies did the Department have in place?

Mr Gazi said that the Department was working within national priorities set by government, which determined the current budget allocation, and at the current rate it would take half a century to complete the rehabilitation of mines.

Mr Musa Mabuza, Mineral Policy and Promotion DMR, said the Department had prioritised those mines that should be given immediate attention. The Department was gaining a better understanding of the extent of the problem and the Department were investigating alternative modes of funding where for example old mines were being reworked profitably with newer technologies with the proviso that the mines were at the same time being rehabilitated.

Mr Zondi said that the Department planned to increase the inspectors in occupational health and safety, mainly in the bigger regions, as well as addressing the shortage in mechanical and electrical engineers. The figures regarding the amount of inspectors and the number required would be provided.

Mr Mnguni said that the inspectors had an occupation specific dispensation and were remunerated at level 9 and the Department had introduced training programmes to develop their expertise. Special awards of a monetary nature were introduced as recognition of above average performance. In addition management were undergoing development programmes.

The Chairperson wanted to know how many mines were operational across the country.

Mr Michael Oberholzer, Mineral Regulation DMR, said that the Department would supply that figure.

Ms D Mathebe (ANC) asked that a list of minerals currently being beneficiated be provided to the Committee.

Mr Mabuza said that the Department would provide a list by the end of the month.

The Chairperson asked if the Department was reviewing and monitoring State Owned Enterprises (SOE). Why was it the State’s responsibility to assist marginal mines and rehabilitate derelict mines? He noted that provision had been made only for the State Regulator but not for the State Diamond Trader (SDT). He asked why that was the case.

Mr Mabuza replied that the SDT financing model had not worked towards attaining the objectives for which it was established. The Department had worked on establishing a new developmental business model but had recognised that this was not enough; the Department needed to look at the industry as a whole to enhance the security of supply and so the SDT was one of the interventions to enhance the security of supply for beneficiation in South Africa. It would be available within the next few months.

Mr Gazi said that the SDT was financially stable.

The Chairperson asked that in the event the business model for the SDT was finalised and with reference to Mr Marais’ question, would the Department approach government for additional funding for the SDT?  Big and small operators in the diamond industry were frustrated with the SDT. He asked for an update by 05 May 2010as the Committee was scheduled to meet with the SDT. It seemed pointless to have a functioning State Regulator but no entity to regulate.

Mr Mabuza said that that the cost to the State would be trillions of rands with loss of life and health if the Department did not spend millions to pump water out of derelict mines. The Department chaired a Government Task Team (GTT) searching for permanent solutions.

Mr Joseph Katenga said the Department monitored SOEs’ adherence to the strategic plan and budget.

The Committee thanked the Department.

The meeting was adjourned.