Mining Regulatory Framework; Mining Industry Growth, Development and Employment Task Team (MIGDETT) Achievements and Challenges

Meeting report

Mining Industry Regulatory Framework
Mr Sandile Nogxina, Director-General: Department of Mineral Resources (DMR), outlined the role of the Mineral Regulation Branch in the petroleum sector in respect of the Petroleum Agency of South Africa (PASA). PASA was a body established in terms of Chapter 6 of the Mineral and Petroleum Resource Development Act (MPRDA). Section 71 empowered PASA to, among other things, receive, adjudicate and make recommendations to the Minister for the granting or refusal of applications for onshore and offshore exploration and production of petroleum licences. Other responsibilities included monitoring and enforcing compliance with the regulations. What often happened in practice was that the Mineral Regulation Branch would receive applications, consider and adjudicate on them before advising the Minister about approval. Part of what PASA was tasked with in considering and adjudicating on applications was to ensure the implementation of the transformation agenda of government through implementation of the Mining Charter.

Discussion
Mr H Schmidt (DA) asked for clarity about the activities of exploration of minerals and the refinement of those minerals. Did the Department have any responsibility when it came to the regulation of mineral refining activities?

Mr Nogxina replied that, historically, the refining of minerals was an activity not regulated by the DMR. The reason for that was that refining was regarded as a secondary activity. That position had changed since the coming into effect of the MPRDA. Presently, as things stood, the Minister of Mineral Resources did have overall responsibility of regulating all refining activities, something which previously fell under the responsibility of the Department of Trade and Industry.

Mr E Lucas (IFP) asked for clarity as to where the activities of Petro SA, particularly its gas production, fell under. It seemed as if the Department of Energy had oversight over Petro SA, but on the other hand, they used a product which was regulated by the Department of Mineral Resources.

Mr Nogxina explained that when Petro SA imported crude oil from other countries, the overseeing department was the Trade and Industry Department. The product produced from the refining process was regulated by the Department of Energy and the Department of Mineral Resources only had a role in as far as Petro SA was concerned over its gas, which was a product falling under the oversight role of the Mineral Resources Department. Petro SA therefore needed permission from the DMR to handle gas at its plants.

Mr M Sonto (ANC) asked for clarity as to which entity performed the scrutiny of licence applications before those applications were sent to the Minister for final approval.

Mr Nogxina explained that the scrutiny of applications was done at two levels. With respect to solid minerals, the first phase of scrutiny was done by regional officers responsible for mining activities. With regard to all gaseous, liquid and crude oil minerals, the scrutiny of applications was done by PASA. Both the regional officers and PASA would then forward their recommendations to the Director-General. Mr Nogxina would then re-evaluate the applications and apply all the protocols used for quality control and when satisfied, forward the applications with recommendations to the Minister, who then would apply his or her mind before approving or rejecting the recommendations.

Mr Schmidt said that he understood that certain companies, such as Petro SA, were exempt from complying with certain procedures for mining related activities. What was the basis for the granting of such exemptions with the exception of a guarantee for the rehabilitation of environment?

Mr Nogxina replied that the guidelines for the granting or refusal of exemptions were provided for in law. There were many reasons why an entity could be granted exemption and those reasons were there in law. Petro SA had never been granted any exemption so far and no other entity in the country have been. However, it was common that factors such as national interest played a major role in the granting of exemptions.

Mr W Magagula (ANC) pointed out that it was still not clear to him how the two departments - the Department of Energy and the Department of Mineral Resources exercised their oversight responsibilities over entities such as Petro SA and Mintek.

Mr Nogxina explained that it was important to remember that Petro SA was an entity that did not belong to the control or direct oversight responsibility of the DMR. Mintek on the other hand was. The difference then was that the oversight responsibility over Petro SA by the DMR was only limited to a functional level, whereas with regard to Mintek, the Committee did have oversight responsibility over both its functional and governance level.

The Chairperson added that the Committee had no powers, for example, to question Petro SA on how they handled their financial matters. They could assess only how they conducted their activities where petroleum was concerned. The Committee could only exercise oversight over Petro SA for the purposes of checking if they were compliant with the terms of their mining licence.  

Mr Schmidt asked Mr Nogxina to clarify the status of PASA. Was it a separate agency which was independent or could one consider it as a sub-entity of DMR?

Mr Nogxina replied that PASA was a creature of the MPRDA and its existence was mainly to support the regulatory and promotional functions of the Department, especially with regard to the offshore aspects of mining. Nevertheless, PASA had its own board and CEO and the Committee was free to call them to account on any matter which fell within the Committee’s mandate.
 
The Chairperson pointed out that the Committee would find space in their busy schedule to invite PASA for an information sharing session with them.

Mining Industry Growth, Development and Employment Task Team (MIGDETT)
Mr Musa Mabuza, Acting Deputy Director General: Mineral Policy and Promotions: DMR, said that faced with the global financial crisis, the DMR, in partnership with business, labour and various government departments, had decided to establish MIGDETT at a December 2008 mining summit. The aim was to mitigate the anticipated reduced productivity caused by the financial crisis which it was estimated would cause massive job losses in the sector. A task team had been formed to spearhead the objectives of MIGDETT. One of the task team’s mandates was to recommend short-term interventions particularly on how to minimise the impact of job losses. The other objective was to develop interventions that would position South Africa’s mining industry for sustainable growth even after global recession had passed. The task team came up with a number of recommendations. Central to those recommendations was to pursue sustainable growth of the mining industry hand-in-hand with an aggressive and meaningful transformation agenda.

A decision was also taken to work on the competitiveness of the mining industry through addressing impediments such as management inefficiencies, low investment in exploration, lack of requisite skills, shortage of infrastructure and environmental degradation. The transformation agenda was to be pursued through human resource development initiatives, addressing the question of ownership, mine community development programmes, housing and living conditions improvement. At present, the work was continuing and the Department was pleased to announce that through its early interventions, it was able to save about 65 000 jobs after it was predicted that the mining sector would shed about 100 000 jobs due to the financial crisis. The 30 June 2010 was set as the final deadline when the plan of action on how to move forward would be unveiled as agreed upon by all the stakeholders, that is, government, business and unions.

Discussion
Ms J Ngele (ANC) replied that it was encouraging to hear what the task team and everybody else involved had done. The worrying thing was that it was one thing to identify the problem, draw up a plan to address the problem but implementation was what mattered the most.

Ms N Mathibela (ANC) agreed with Ms Ngele, saying she would have been happier if she had been told how far the implementation phase was. More clarity was requested on whether all the machinery needed under procurement would be finalised on 30 June 2010.

Mr Lucas welcomed the presentation and expressed hope that the issue of housing conditions would receive attention at last. The issue of international companies that came to South Africa to exploit our resources with false promises of helping the economy needed to be evaluated. Many of those foreign companies were only concerned about making huge profits and taking them back to their mother countries. It was now time to be strict with foreign companies and to scrutinise their beneficiation policy to see if it complied with the policies of the Department.

Mr Nogxina replied that an impression had been created that mining could not be done hand-in-hand with sustainable development and conservation of the environment. The interventions which would be embarked on sought to dispel that misperception directly.

Mr Sonto noted that while it was appreciated that the intervention of the Department saved over 65 000 jobs, his concern was that such stories went unreported by the media. He wondered why that was the case. The targeted deadline, 30 June, seemed a little too ambitious. One could only wait and see if it would be complied with.

Mr Nogxina replied that it would be unrealistic to expect that all the challenges identified would be wiped out by the end of June. What the Department was communicating was that on 30 June, it would be consolidating its plans into one single programme of action which would then be rolled out on the ground to address the challenges identified. In other words, the Department would be putting in place the instruments which would bring about the change that was needed in the mining industry.

Mr Nogxina said that many of the results being realised now were borne of initiatives which were taken as far back as December 2008. The Department was doing all it could to publicise its successes and would have loved it if the media at large had jumped onto the bandwagon to do the same.

Ms D Mathebe pointed out that, while 65 000 jobs had been saved, the loss of 35 000 jobs on the other hand seemed a bitter pill to swallow in a country that had massive levels of poverty and inequality. On the matter of foreign companies that exploited South African resources, was there anything which the country could do to bring back the resources that were shipped out of the country? She concluded by saying it would be appreciated if the Department could provide the Committee with a copy of the resolutions which were taken at the summit held in December 2008 so that the Committee could do its oversight.

Mr Nogxina agreed with Ms Mathebe that 35 000 lost jobs was a scary figure but that needed to be evaluated against the 100 000 jobs which could have been lost if the Department had done nothing to intervene. The Department considered the loss of a single job a tragedy! The question of bringing back resources was difficult for the Department to answer, and perhaps the politicians could address the matter better that anyone else could.

Mr C Gololo (ANC) said that his worry was that nothing from the task team report or presentation mentioned addressing the scourge of HIV/AIDS and how the Department planned to address it.    

Mr Nogxina replied that the presentation and the MIGDETT initiatives were focused on addressing particular kinds of challenges in the mining sector. The Department was not presenting its entire strategic plan and hence had left out other issues such as HIV/AIDS. The Department did have a detailed programme concerning the matter raised and would welcome the opportunity on another day to come and present its interventions and plans about the matter.

Mr Lucas praised the Department and wished everyone involved the best of luck in turning around the mining industry. The job which the officials were facing was difficult and very few people would have wanted to be in the position which the Director General was in, to lead the Department in such a difficult journey, which if well implemented, would change the lives of many poor South Africans.

The Chairperson echoed the words of Mr Lucas and thanked the Department for the job well done in unpacking some of the complex issues of the anatomy of the Department. The expectations were high from everyone and people were promised by the new administration that government was committed to working better and faster in solving their problems. A time had come to be bold and take decisive action in addressing certain issues and if it meant revoking licences of those who did not pull their weight such actions would be supported. There were certain companies that still kept single sex hostels and were not moved to taking measures to correct what clearly was a violation of dignity and other constitutionally protected rights of the people on the receiving end. People were fast losing patience in service delivery capability of the government and the time was now to restore confidence before it was too late.

The meeting was adjourned.