Committee Report on Department of Mineral Resources budget; Aurora Mine on Grootvlei Gold issue

Meeting report

Committee Report on Department of Mineral Resources budget
Mr P Dexter (COPE) referred to the draft report, and pointed out that on paragraph 3.1 on page 5, the wording was incorrect. There was no evidence that white women were being employed at the expense of black persons. The wording needed to be changed. He stated that the message the Committee was trying to convey was that the number of black men and women was not what it should be in the industry.

Mr M Schmidt (DA) was concerned about what the Auditor-General’s Audit Report said on abandoned and onerous mines.

The Chairperson said that the AG’s concerns had been discussed by the Committee. The Department was supposed to come back to the Committee to present on its Action Plan. The Committee was waiting on the Department.

Mr Thabo Gazi, Chief Inspector of Mines, said the Chairperson’s comments were correct. The AG’s finding was a concern. A total of R52 million had been allocated to address the issue.

Mr E Marais (DA) said there should be closer co-operation between the Departments of Water, Agriculture and Mining to reduce the impact of mining on the environment. Reference was made to the bottom of page 1 of the report, point 3.

The Chairperson said that the point made could be included under key issues of the report.
There was a general view that transformation in the industry was slow. The Committee was yet to be briefed on the BEE Charter Review. Government, labour and business had already commented on the issue. The Minister had even expressed her unhappiness. Mr Dexter was asked to come up with a formulation that would be more suitable.

Mr Dexter noted that the reasons for a lack of transformation were far more complex. It should be seen as a priority. 

Ms N Mathibela (ANC) said that the Committee had not discussed the employment of men and women in mines. The issue was only about black women.

Mr E Lukas (IFP) asked why the Committee was not discussing the issue of illegal mining. Was another department dealing with the issue?

The Chairperson agreed to include it in the report as a concern raised. It was an ongoing problem which the Committee would flag. 

Mr Gazi agreed that illegal mining was a critical issue. The issue was being dealt with by law enforcement as the Department did not have the budget to deal with it.

Mr C Gololo (ANC) asked whether the Department budgeted for the conversion of hostels to accommodate families of miners.

Mr Mthokozisi Zondi, Acting Inspector of Mines, said the Department did not have a budget for the conversion of hostels to accommodate families of miners. Mining companies did it themselves.

Mr Marais asked that illegal mining be flagged and that the Committee consider an oversight visit on the issue. The issue was being dealt with by other committees as well.

The Chairperson said that an oversight visit on illegal mining had been done by the Committee. A report had been accepted in the House and the Speaker had referred the issue to the Minister.

Mr Dexter provided alternative wording to the paragraph 3.1 that he queried earlier in the meeting regarding the lack of transformation within the sector.

Mr Gazi said that he was not clear on what paragraph 3.1 was trying to say.

The Chairperson said paragraph 3.1 stated that the Committee was concerned that large mining companies were holding the monopoly of mining rights. The Charter required only 26% of ownership to be transferred by 2014. The bulk 74% would still remain with mining companies.
The longer the Department delayed the BEE Charter Review Report the longer the issues would remain concerns. Much had been said that transformation, especially regarding ownership patterns in the industry, was disproportionate. In the media it was alleged that only 9% ownership had been given to the previously disadvantaged.

Mr Gololo made a wording change recommendation on the top of page 5 on point 2 regarding the transformation of women in the industry.

Mr Marias asked Mr Edson Ragimana, Chief Financial Officer, whether he was satisfied with the Department’s budget.

Mr Gazi said that the question had been raised before and that the Department had responded. The answer was that the budget was sufficient.

The Chairperson noted that the issue of single sex hostels should also be noted in the report as an issue.

Ms Mathibela said that new mines were still using single sex hostels.

Mr Gazi said that the issue of single sex hostels was noted. It was a monitoring and evaluation issue.

Mr Lukas said there were reports in the media and elsewhere that international companies were not investing in the mining industry in South Africa. Apparently a climate for investment was lacking.

The Chairperson said that the Committee needed to remain vigilant over issues around stakeholders in the industry. There would be many perceptions out there. It was an issue that needed to be flagged by the Committee. Investor confidence levels in the industry had to be looked at. A further concern was whether the reports were factual or made up.

Mr Lucas said that investors had manipulated BEE long enough. Now that regulations were being tightened up in the industry the pinch was being felt.

Mr W Magagula (ANC) said that a mindset change was needed. Mining companies were out there just to enrich themselves.

Mr R Sonto (ANC) agreed that investors had exploited Africa for far too long. The fact that SA was tightening up its laws had cut them down.

Mr M Mtshali (ANC) was concerned that the Department had not addressed issues that had been raised by the Auditor-General.

Mr Gazi said the Department had agreed to present on the issue of onerous mines to the Committee. The presentation was in the pipeline. The issue of onerous mines fell under mineral policy within the Department.

The Chair conceded that there were issues that the Department had to get back to the Committee on. Beneficiation strategy, onerous mines strategy and the promotion of small-scale mining were some of the issues that the Department had to present on. Some of the work was work in progress.

Mr Mtshali felt that there was no work in progress on the concerns of the AG.

The Chairperson said that outstanding issues would be addressed by including them in the Committee’s Programme. It was thus work in progress. The AG’s concerns were being addressed.

The Chairperson placed the report as amended before the Committee for adoption.

The report was adopted as amended.

Aurora Mine on Grootvlei Gold

The Committee also discussed the Aurora mine issue as it related to Grootvlei Gold. Grootvlei was under liquidation and the liquidator had placed it under the management of Aurora Empowerment Systems. Concerns had been raised that all was not well at the mine. The Chairperson noted that the issue was placed on the Committee’s agenda for discussion as various role-players and stakeholders had raised concerns over it. Correspondence had even been sent to the President in this regard. The Committee had consequently asked the Department to brief members on the issue. Raising water levels which were a hazard; deteriorating conditions in hostels; the workforce at Grootvlei mine remaining unpaid were some of the issues that the Department was asked to elaborate on.

Mr Gazi said the Grootvlei Goldmine PTY was the licence holder. Pamodzi Gold was the holding company. Engagement by the Department was with the licence holder. Grootvlei ran into financial trouble. In terms of the Insolvency Act and the Companies Act it went into liquidation. Aurora Empowerment Systems was appointed to manage the operations for the liquidators. The mine was already at present placed under judicial management. Hence the involvement at this stage by the Department was limited. The Department however was engaging on health and safety issues.

Inspections were being carried out and the water level issue was being addressed. The Department did not have Aurora on its books. Aurora was a contractor.

Mr Zondi said that the mine was currently at a stop. No mining was taking place underground. It would not be allowed to operate unless it was safe to do so. He pointed out that water and electricity had been restored at the mine on the 14 April 2010. The Department was working hand in hand with the Departments of Labour and Health.

Mr Gazi said that there were options available but that it was difficult. Every option had repercussions that would follow. The process needed to be carefully managed.

 
Ms Ntokozo Nzimande, Chief Director Mining and Mineral Policy, said that a great deal of work had already been done over the issue of water levels at the mine. Inspections had been done on the 24 March 2010. The Department was working with the Department of Water Affairs. Action was being taken and the Department of Water Affairs had issued a directive. The mine was only allowed to have certain levels of trace elements pumped into water streams.

A deadline of 20 April 2010 was set for the mine to make representations to the Department of Water Affairs. The Department was yet to find out what the outcome of the process was. The Council for Geosciences was also involved in the process.  Part of the licence conditions of the mine was to pump only certain amounts of water per day. Pumping in itself could be problematic. Monitoring was taking place. From a legal point of view the Department could only liaise with the licence holder. The Department did however contact Aurora to discuss the issue. Attempts were being made to manage the environmental damage. The process was being monitored.

Mr Schmidt said he had two issues that needed clarification. The first was that there was an allegation that an R14m government subsidy which should have been paid to the mine, had not been paid. The second was that Aurora wished to purchase the mine it was managing for R390m.

Mr Gazi was not aware of an impending sale to Aurora. Aurora was only tasked with managing the mine.

Ms Nzimande said a sale was not possible as a final order of liquidation had not been issued yet. She said that the pumping subsidy needed to be contextualised. It was not the duty of the state to grant the subsidy to a specific mine. Money had been allocated to the Department for the pumping of extraneous water. The money was to be used for broader environmental issues in the area.  The state was not obliged to give the mine any money.

Mr Dexter said that it would seem that both the liquidator and the management company could not solve the problems of the mine. If problems were left as they were it could have a great deal of repercussions. There could be losses of jobs and environmental concerns.

Mr Gazi said that Mr Dexter’s concerns were valid. The Department of Labour was trying to address employee concerns.

The Chairperson understood the legal constraints that the Department was experiencing but said that there were powers in terms of legislation that the Department could invoke. Section 52 and 56 of the Mineral and Petroleum Resources Development (MPRD) Act could be invoked. The livelihood of the mine workers was of the utmost concern. The approach by the Department seemed relaxed. Further concerns were that illegal mining and looting was taking place. There were persons who were exploiting the situation. What happens when the workers get fed up and start destroying mine property? He felt the response by the Department not to be good enough. The Department needed to apply its minds.

Mr Lukas suggested that a way forward could be an independent investigation into the issue. 

Mr Dexter suggested an oversight visit to the mine and to ask the liquidator and the management company to address the Committee on the issue.

Members were in agreement that an oversight visit to the mine as soon as possible was a good idea.

The Chairperson also suggested that Section 47 of the MPRD Act be invoked.

Ms Nzimande explained that Section 47 of the MPRD Act dealt with suspension and cancellation of rights. If a cancellation of rights was done by the Minister it would mean that the state would have to step in. It was difficult since the Department lacked a budget to step in. The Department was considering recommending a suspension of rights. It required monitoring and it too had financial implications. Many of the options had financial implications. Allegations of illegal mining would be looked at.

Mr Schmidt pointed out that cancelling a mine right cancels all value. It would affect the claims of mine workers against the mine as well.

Mr Sonto said that it would be helpful if the Department could provide the Committee with the various options that were being considered before the Committee left on its oversight visit.

Mr Dexter agreed that members should be allowed to engage with the Department on the various options.

Mr Gazi said the Department was sensitive to the plight of the mine workers but was doing its best. Section 47 could be invoked by the Minister where there was non-compliance. It was an abnormal and complex situation.

The Chairperson asked whether the liquidator had considered other applicants for the management of the mine besides Aurora. If Aurora was failing its task why could the liquidator not terminate the management contract? Another company could have taken over the management of the mine. The Committee needed to know what the terms of the management contract was with Aurora. It would shed light on what options were available if Aurora could not fulfil its task. The Committee had to be prepared when it arrived at the mine. Information had to be at hand.

Mr Dexter felt that meeting with the liquidator and the management company was even more important than visiting the mine itself. The visit was secondary.

The Chairperson suggested scheduling a meeting with Aurora, Grootvlei Gold, unions, the liquidator and the Department on 28 April 2010. Based on the outcome of the meeting members could undertake their visit to the mine on the 29 April 2010.

Members alluded to the fact that the scheduled meeting date and the oversight visit was to take place during members’ constituency week. Travel arrangements had to thus be made and members had to decide on where to hold the meeting. At the present point in time some of the members had already left the meeting and it was difficult to make decisions.

The Chairperson suggested 5 May 2010 as a possible meeting date.

Member agreed to this suggestion.

The meeting was adjourned.