Alexkor on its operations; Establishment of a State-Owned Mining Company: public hearings

Meeting report

The Chairperson said that after Members’ recent oversight visit to Namaqualand, it was clear that the mineral wealth of the country was not equitably shared. The Committee’s resolve to embark on a process of decisive intervention into mining by the state on behalf of the poor and marginalized communities in the country had been strengthened.

Alexkor presentation
Ms Khetiwe Mc Clain: Chief Executive Officer (CEO), Alexkor Ltd, gave a detailed presentation on the only operational state-owned diamond mining company in South Africa, Alexkor.

Alexkor marine mining operations were conducted by 27 contractors and 17 subcontractors which involved employment of approximately 489 persons. The revenue percent split in the Northern offshore sea units was Alexkor 52% and Contractor 48%. Southern sea unit split was Alexkor 30% and Contractor 70%. The far south split was Alexkor 25% and Contractor 75%. The split varied according to the kind of stones mined, with the north being the most advantageous mining area.

Alexkor and the Richtersveld mining community had entered into the Pooling and Sharing Joint Venture (PSJV) for mining in the Alexander Bay by virtue of order of the court in 2007. Rights were pooled and mined jointly with Alexkor holding 51% and the community 49% of marine mining rights. Land and marine mining rights had been converted and a mining plan was still to be finalized. The PSJV conditions also included establishment of a township in Alexander Bay and upgrades of the township to municipal standards.

The bulk of carat production was from marine mining (over 70%) and the gravel was delivered to Alexkor for processing and recovery of diamonds. The diamonds were sold on tender at the Johannesburg Diamond Exchange. As per legislation, 10% of Alexkor’s production was offered to the State Diamond Trader.

Marine mining production had dropped significantly since 2002 but had picked up slightly over the past few years. Diamond sales in 2010 equalled R163.9 million compared to R127.5 million in 2009. Government funds to the value of R129 million for the year were received for PSJV purposes. Of this amount R29 million was allocated to the township establishment. Post-retirement medical aid (PRMA) decreased from R135 million to R90 million due to changes within the Bonitas medical aid fund when Alexkor dropped their pensioners to a lower subsidy level. This resulted in an actuarial gain of R45 million.

Operational constraints included: variation of the diamond price and dollar exchange rates - the strength of the rand; environmental conditions – declining sea days due to global warming; depleting resource; rehabilitation liability of mines; and PRMA liability needed to be reduced more extensively. Diving days had declined from 79 days in 2003 to 13 days in 2010.

Mr Wiaan Basson, Acting Mine Manager, Alexkor Ltd, explained that the definition of a diving day was when on any particular day 50% or more mining vessels went out to sea to retrieve gravel from the sea bed.

Ms Mc Clain said that bearing in mind the life of mine being ten years as well as rehabilitation liabilities incurred and contributions to economies of the surrounding region, it was critical for Alexkor to increase diamond mining opportunities and assets in the following two to three years, ideally in South Africa or in neighbouring countries. Alexkor was not being subsidized and was funding itself in terms of operations. She further suggested that pooling of state-owned diamond assets under Alexkor would increase longevity and sustainability of Alexkor and contribute to the development of the region.

Alexkor strengths were technical know-how, sound alluvial expertise, extracting and processing expertise, knowledge of the market, a good database and vessel tracking system and 99% gem quality stones.

Mr Basson concluded that Alexkor had been in existence since 1927 and in the past ten to 20 years had been more actively involved in shallow water marine mining and to a small extent deep marine mining. It had built a sound database and expertise in the mining processes and understanding of the geology of the West Coast and Southern Africa. Alexkor’s good quality stones were sought after world-wide.
 
Mr Mike Mpanza: Engineering Manager, Alexkor Ltd, said that safety at Alexkor had improved but had not yet met its target. There had been two underwater fatalities in the past five years.

The township upgrade was in phase I - civil engineering services - and was 0.4% behind schedule. Phase I involved the sewerage and water network, construction of the half mega litre reservoir, road repairs and upgrade of the storm-water control system. Phase II - the electrical reticulation phase - would begin in October 2010 and would include rewiring of houses in December 2010. Alexkor aimed to complete the project in June 2011, at which time it would be handed over to the municipality as it would then be up to municipal standard as required by the PSJV.

Discussion
Ms J Ngele (ANC) asked if the PSJV split where Alexkor held 51% and the community 49% of marine mining rights existed presently or was the plan for the future.

Ms Mc Clain said that the PSJV was not yet fully established due to delays in finalization of certain precedent conditions. Land and marine mining rights had been converted and executed and the process was expected to be finalized within the following few weeks. Another condition, the mining plan, had not yet been finalized. Phase I of the township establishment was in process.

Ms Ngele asked if PSJV phase I included the building of schools and clinics.

Mr Mpanza said that phase I included the sewerage and water network, road repairs, construction of the reservoir and rewiring of houses.

Ms Mc Clain said that there were existing schools built by Alexkor in the past which were now under the Department of Education. The hospital was under the Department of Health. Alexkor contributed to the presence of a medical practitioner on the mine premises.

The Chairperson said that during their oversight visit, the community had expressed discontent about the delays in the establishment of the PSJV while Alexkor continued to mine in the areas where the concessions were suppose to go to the community.

Ms Mc Clain said that there were no intentions from Alexkor to delay the PSJV. The processes of conversion, amendments and the mining plan by the Interim Joint Board (IJB) of Alexkor took time. Alexkor was not mining on any areas to be mined by PSJV except for Witverkop which had very low grade diamonds. This concession was being mined by the Alexkor Development Foundation and The Women’s Group. Other mining on land had been reduced to sweeping, enlarging and cleaning up of old mine blocks. In the interim, Alexkor had extended a benefit for the community beyond the PSJV requirements by offering a 5% revenue split from proceeds from the marine area mining where sweeping was taking place. 

Mr H Schmidt (DA) asked when the procedure for PSJV would be finalized.

Ms Mc Clain said that Alexkor was not responsible for putting together the mining plan. This was done by an IJB. The mining plan had not yet been approved.

Mr Schmidt asked what the average percent offering to the State Diamond Trader was since the onset of trade.

Mr Basson said that ten percent was sold to the State Diamond Trader on a regular basis.

Mr Schmidt asked if diamond production had declined so dramatically due to the decline in resources which declined from 4.6 million carats in 2008 to 641 000 in 2009 or if it was affected by the PSJV allocation to the Rugtersveldt community.

Mr Basson said that there was a dramatic drop in production in 1996 due to a decline in Alexkor resources and very little exploration continued after that. In the middle of 2000 due to the PSJV and when lands claims started to kick in, there was uncertainty as to ownership of those resources. At that time Alexkor stopped mining altogether onshore. After 2002 marine production declined due to sea days available. Alexkor was trying to introduce new technology, move contractors to more sound portions of the mines and explore deeper areas.

Mr Schmidt asked for clarity on whether the grant from Government of R100 million rand resulted in Alexkor making a profit.

Mr Berno Lategan, Acting Chief Financial Officer (CFO), Alexkor Ltd said that the R100 million Government grant had zero effect on the profit and that this amount did not go through the income statement.

Ms N Mathibela (ANC) asked if persons were employed from the rural areas and if there were any communities in the rural areas who would benefit from phase I.

Ms Mc Clain said that detail on other projects had been made available to the Committee at the previous visit. The social and labour plan (SLP) report would outline social and labour commitments.
Ms Mathibela asked how many people were employed by Alexkor.

Ms Mc Clain said that there were 114 permanent employees and 489 persons were employed by contractors and subcontractors.

Ms Mathibela asked if it was possible that the employee who had contracted silicosis ‘outside of Alexkor’ could have been affected by dust from the mine.

Mr Mpanza said that silica dust had not been picked up in the mine.

Mr E Marais (DA) asked if ALexkor’s CEO was located in the Alexander Bay area.

Ms Mc Clain said that most CEOs were not based at the mines. The Alexkor CEO was based in Johannesburg and traveled to the area frequently. Many meetings on the transformation processes had to be attended and it made sense for Alexkor to have a small office in Johannesburg.

Mr Marais noted that the northern concessions appeared to be the most rich area for diamond mining yet the land production had stopped. He asked if the life span of the existing concessions were down and out, or if it was no longer profitable to mine there, why Alexkor concessions would be renewed in those areas.

Mr Marais also asked for the total fatalities in the past three years and clarity as to whether the fatalities listed included contractors and subcontractors.

Mr Mpanza said that the statistics did indeed include both contractors and subcontractors. There had been two underwater fatalities in the past six years. These persons were subcontractors.

Mr Marais asked who had been appointed to monitor whether the phase I standards were sufficient.

Mr Mpanza said that KV3 Engineers (KV3) was appointed in 2005 for technical investigation into the township upgrade. The Implementation Committee included the findings of the investigation in a report before finalization for tender purposes. KV3 was project managing and a permanent resident engineer appointed by KV3 was on sight to ensure that phase I went according to plan. Alexkor had followed the tender process and performed sight visits to the three companies that were short listed. In February 2010, Brink & Heath was awarded the tender to manage the first phase of the PSJV upgrade after successfully meeting the tender criteria.

Mr Marais commented that he supposed that Brink & Heath were instructed to employ as many skilled labourers from the community as possibly but it seemed that only the lower positions of labourers were contracted to work.

Ms McClain clarified that the condition was that all local community labourers who could perform the work would be employed. Only where the skills could not be found locally would labourers be sought elsewhere.

Mr Marais asked for clarity on the change in the medical aid fund and reduction in the pensioner’s subsidy.

Mr Lategan said that up to 2008, employees were part of the Renaissance Fund. When this fund liquidated, all employees who qualified for medical aid were fast-tracked onto the Bonitas comprehensive medical aid scheme. However Alexkor soon realized that it could not take on the financial risk of having all employees on the comprehensive plan and dropped all employees to the standard plan, which also covered 100% of the subsidy level. This drop in level was on a voluntary basis by the employees. This change in plan caused liability to drop from R135 million to R90 million which was reflected as the R45 million movement on the income statement.

Mr R Sonto (ANC) said that the intention of a public hearing was to understand whether a state-owned mining company was uplifting communities from poverty and whether it should still exist. Communities were not thriving from the existence of Alexkor. PSJV was effected in 2007 and yet nothing had happened since then. She asked what the output to the communities by the Alexkor Development Fund (ADF) was since its establishment in 1992.

Ms McClain said that some of the questions would be covered in the SLP documentation. Alexkor had requested annual reports and financial statements from the ADF for the past few years. Presently the ADF had requested a week of time in order to compile the information. ADF had been started in the early 90’s to assist with bursaries and education and would receive 30% of profits after tax. Since Alexkor was not making profits, a discussion was initiated around ADF taking 10% of equity of Alexkor. This was put on hold due to negotiations with the community. An agreement was reached between the former Alexkor management and ADF Trust Fund that in exchange for equity it would give the ADF one of the concessions at Witverkop, to generate income as a subcontractor to Alexkor. When the reports were received by ADF, they would be made available to the Committee.

The Chairperson asked if Alexkor had requested audited financial statements from the ADF. The Committee wished to probe deeper in order to understand the exact agreement between Alexkor and the ADF Fund.

Ms McClain replied that indeed audited financial statements had been requested and that the report from ADF would give clarity on how ADF was currently operating.

Mr Basson added that the ADF was established to provide funding for bursaries, education and projects to the disadvantaged communities in the Namaqualand region.

Mr Sonto asked given the strengths and age of Alexkor as a state-owned enterprise, if Alexkor had explored synergies between itself and other diamond traders which were either state-established or operating on their own, as well as Alexkor’s relationship with research, science and mining technology bodies.

Ms McClain said that her understanding was that Alexkor had not undertaken partnerships in this regard in the past. In the past year, interested parties had been invited to enter into contracting arrangements with Alexkor with the objective of increasing productivity. In terms of direct relationships with other mining companies, Alexkor had engaged in information sharing and other exercises. Alexkor had received input and been managed by Mintek for a period of time in previous years and had received informal data assistance from Geoscience.

Mr Sonto asked if Alexkor was a ‘success story’.

Mr Basson said that this was a difficult question to answer. In 1992, Alexkor Limited began operating and during the 90’s began expanding. Marine mining expanded more seriously into shallow, middle and deep water mining and land operation also expanded. At one stage the company was producing more than 200 000 carats per annum. Towards the late 90’s the profits became marginal or non existent and in the 2000 the company found it difficult to expand due to the declining status of the resource base. Further, in 2005 the uncertainty with regards lands claims provided additional problems to the company. Alexkor had quality assets and could provide to the community infrastructural and economic well being of the sector. Company revenue of the past year was approximately R160 million of which 60% was paid to the contractors. Alexkor’s salary bill was approximately R30 million per annum. From that point of view, approximately R120 million was paid to employees and communities around them.

The Chairperson asked where the profits were invested during Alexkor’s good years.

Mr Basson said that offhand he could not recall all the information. Certainly, during the good years in the 90’s, 30% of the profits had been paid to the ADF and some of the profits had been retained for expansion and for sustaining company operations. 

The Chairperson asked if Alexkor could recall when last a dividend was paid back to the state.

Mr Basson said that Alexkor would have to check on that information.

Mr E Mtshali (ANC) asked if the Committee could be supplied with Alexkor’s financial statements.

Mr Basson said that the financial statement had been signed off by the auditors and would be published in the annual report as per usual. The Committee would certainly be supplied with the financial statements.

The Chairperson asked what the contribution to the State fiscal year was.

Mr Lategan said that regarding taxes, Alexkor was sitting with R56 million assessed tax loss. This meant that in future, the first R56 million in profit before tax would be absorbed against the present loss. Thus Alexkor had not paid tax over the past few years due to fact that Alexkor was in a loss-making position.

Mr Basson added that Alexkor had been paying 5% royalties for all diamonds mined from the marine sector.

Mr Schmidt asked what the Government had paid to Alexkor annually from 2005 to 2010.

Mr Lategan said that in the financial statements the Government funded obligations to the township establishment, costs relating to the deed of settlement fund and the PSJV recapitalization funds were disclosed. Government funds were ring-fenced and utilized for their specific projects only. On 1 April 2009, the opening balance of the accumulated funds was R171 million. During the year, R29 million was received for the township development and R100 million for PSJV recapitalization. Of all these funds, only 5.8 million was used for projects to date, and R14.1 million interest was gained. At the end of March 2010, R209 million of Government funds were received in total and were waiting to be applied to their specific projects.

Mr Sonto suggested that if labourers were trained correctly and adequately in the past, by now the coastal belt would have adequate miners from Alexander Bay.

Mr Basson said that Alexkor performed organized health and safety training and operational leads, where required, for contractors and also health and safety training for Alexkor’s own employees. Alexkor also provided training towards operators such as earth moving vehicle and plant operators. In the past, Alexkor had a diving school to ensure that Alexkor had a base of divers which could feed into the operations of Alexkor. This school had subsequently closed. A concern from the community may be that Alexkor did not train mining specific.

Mr C Gololo (ANC) asked what Alexkor’s take was on the feasibility of establishing a state-owned company and if Alexkor had a long term plan for marine mining since it appeared that the diamond resources were depleting.

Ms F Bikani (ANC) asked for an organogram of Alexkor’s management structure.
Ms Mc Clain said that Alexkor had a very small management team. It consisted of the CEO, CFO, Mine Manager, Engineer and recently a human resources (HR) officer was appointed. A security consultant was currently outsourced.

Ms Bikani asked for clarity on the beneficiation strategy to which Alexkor had aligned itself.
Ms McClain said that Alexkor supported the idea of beneficiation and had been compliant with the State Diamond Trader. Although the strategy had not been signed off, Alexkor wanted to ensure that it added value to the mineral sector within the country.

Ms Bikani asked for an indication of shareholder percentages at Alexkor.
Some questions posed in the meeting were not answered due to time constraints.

The Chairperson said that further engagement with Alexkor was necessary. Alexkor was 100% state owned by the Department of Public Enterprises. The only shareholder was Government. He envisaged that Alexkor would use its expertise in land and marine mining in a way which led to upliftment of the Namaqualand community. However, no business survived without dividends to the shareholder and Alexkor could not continue to play the role of a state owned enterprise in Namaqualand, taking resources from the state, without returns. in the manner in which it was operating. He asked how Alexkor saw its role going forward.

Ms McClain said that challenges of poverty on the ground were a conscious part of Alexkor’s business. If Alexkor could start with a clean slate, without rehabilitation and PRMA liabilities, it would be a very profitable company. However, the responsibility was to cover those liabilities. Although the PSJV model had taken longer than Alexkor had hoped, it was a good model for community involvement in a partnership of sharing of expertise. This model could be applied around the country at other diamond bases. Alexkor did not want to exist to merely cover its liabilities and it was well understood that any business investment expected dividends.

The Chairperson said that the Committee’s view was that the manner in which Alexkor operated was unsustainable. Alexkor was expected to plough back either to the state or to the community to alleviate poverty. Mandates may have shifted from time to time, but the Fourth Parliament’s concern around Alexkor was that international bodies, such as Citigroup, had declared South Africa was the world’s wealthiest mineral country. In short, Alexkor owned mineral rights and concessions but was taking no risk. The challenge was that communities were being plunged into poverty at the same time that minerals could be mined. The Committee envisaged Alexkor playing a role in the future, but the outstanding question was how Alexkor wished to play its role.

The meeting was adjourned for tea.

Equitable Access Campaign. The Muisvlak Manifesto
Mr George Nikolaai, Small-Scale Mining, Equitable Access Campaign (EAC) member, then outlined the Muisvlak Manifesto and briefed the Committee on the challenges experienced by Shallow Water Miners in the Northern Cape.

The small-scale marine diamond industry had been the bedrock of the Northern Cape coastal region’s economy for decades but in the past ten years, the lack of equitable access, effects of climate change, resource depletion and operational costs had brought about decimation of the once vibrant sea-faring community.

Marine diamond concessions in the Northern Cape were either dormant or moribund. The small-scale marine miners alone possessed the means of extraction whilst the mining rights holders themselves, Transhex, De Beers and Alexkor, had no extractive capacity of their own. The rights holders chose rather to outsource the risk and effort to contractors and collect rent or when necessary, suspend operations, as shallow water mining was not their core business and they had access to other robust revenue streams.

The EAC was established by members of the small-scale mining community on 28 April 2010 at the Muisvlak Convention Centre, situated between Port Nolloth and Alexander Bay, in order to pursue the right of equitable access to the diamond resource of the adjacent Atlantic Ocean. The community’s right to equitable access was enshrined in the Bill of Rights.

The EAC strove to hold the Government accountable in terms of the BEE Mining Charter and MPRDA for the sake of saving the small-scale marine mining businesses and their dependent communities in this region.

The EAC was committed to uniting the NC small-scale marine businesses and encourage the return of skilled miners to the industry;  establishing the Small-Scale Marine Diamond Miners Co-operative;
identifying and targeting marine concessions not fully utilized; engaging with mining rights holders;
using lawful and ethical leverage where necessary to force transformation in the spirit of nation building;
ensuring that equitable access extended down the value chain; and ensuring that the diamond diving heritage of the community was shared by partnering with tourism and cutting industries.

There were a total of 52 marine concessions stretching from the Orange River mouth to Doornbaai of which 43 were held between Alexkor and De Beers; six were held privately and three were vacant. Only 13 were active and 39 (75%) were dormant. Unemployment in 2001 before the collapse of the diamond industry was 47% and was expected to be far higher today. Climate change had reduced sea days from 150 in 1999 to 13 in 2009.
The establishment of a state mining company would make the BEE charter a reality at least for the Namaqualand area.

The EAC believed that there was no longer place for the middle men, Alexkor, De Beers and Transhex, which were license holders of the marine concessions, especially in the shallow waters.

Mr Nikolaai added that personally he felt that the previous presentation by Alexkor had not sufficiently explained to the Committee the challenges in the Richtersveld community where the PSJV had not partnered the broader community as intended in the tender requirements. Also, the Social and Labour Plan (SLP) had not been furnished by Alexkor to the EAC members despite requests.

Mr Gavin Craythorne: Small-Scale Mining; EAC member, said that, in the West Coast, all current concession holders were given concession rights on the understanding that they would conduct optimal mining with their expertise and equipment. Around the 1980s, concession holders realized that mining of diamonds in the inshore surf zone of the West Coast was a risky and expensive business and therefore changed their business model from a centric controlled model to outsourcing. Today all concession holders on the West Coast outsource the mining of the gravel for diamonds. Contractors believed that this was not with the spirit of the original undertaking. Dormant mines did not affect the large miners. Further, a rental model rather than a developmental model existed, whereby the concession holders extracted rent from the very people who did the work. While not much that could be done about climate change and operating costs, much could be done about equitable access. Many colleagues had left to pursue off-shore oil and gas and many had become bankrupt. It was estimated that 70% of productivity had been lost. The EAC wished to avoid the total collapse of the industry.

Discussion
Mr Schmidt said that it would be worth investigating if the MPRDA was part and parcel of the problem. The problem had not only occurred in the coastal region but in the North West Province where diggers did not have access to diamonds. The basis of the regulation of mining had changed. Equitable access was included in the Mineral and Petroleum Resources Development Act (MPRDA) but the implementation of the Act appeared to be manipulated for the benefit of certain groupings and companies.

Mr Nikolaai said that the handing of concessions to various individuals during the old regime also contributed to the present decline of the industry. These individuals had made weak attempts to mine the shallow water areas with divers. Once the resource started to deplete, these companies began to outsource which gave birth to small marine operators and diving contractors. These operators had the expertise and took the risk but were without equitable access which was causing the communities who were directly reliant on diamond mining to suffer.

Mr Craythorne said that, with respect to the MPRDA, implementation was indeed a problem. The Government had been proactive with inspecting compliance with the Health and Safety Act but the concession holders themselves had not been subjected to compliance inspection. He added that Alexkor was the only concession holder which came anywhere close to compliance with the MPRDA and the BEE Mining Charter and was actively involved with operation of their concessions. The concessions which were of concern to the EAC were those which lay dormant. Concessions offered viable opportunity for small-scale marine businesses if there was no rent collector in the equation. The concession holding system was essentially a gatekeeper system which decided who would have access and on what commercial terms.

Ms Bikani said that in order to offer greater support to the EAC, it would be necessary to know who EAC was representing.

Mr Craythorne said that the EAC constituted all small-marine mining contractors in the Port Nolloth and Alexander Bay area. The Manifesto had been signed by around 90 of the contractors and thus the manifesto had the support of the small marine-mining community, as this was their only potential source of income and no other type of industries were in the area.

Ms Bikani asked if EAC had a viable business plan for the outcome of the exercise and if there had been a feasibility study to determine if the communities would in fact benefit.

Mr Schmidt agreed that an economic model was required. It appeared that the meeting point of economic finance and accessibility was at the heart of the problem. A proposal for the Northern Cape small diamond miners had to include a workable model in order to individually, or collectively, as a viable entity with security of tenure, approach a bank for surety for equipment.

Mr Craythorne said that small business development companies would no longer fund small-scale marine businesses as they had in the past lost money due to sales and execution of the regional boats which they funded. Banks were also not likely to fund small-scale miners unless they had serious capital. He highlighted that the 30% which concession holders claimed from concessions was the difference between having a bankable business plan and not having one. It was a matter of mathematics. Within the diamond mining industry there were artisanal miners who mined diamonds in rock pools and these miners could easily survive with the basic diamond mining equipment. There were also high-end small-scale diamond miners who operated with sophisticated global positioning system (GPS)-guided mining. It was well within the capability, particularly of the sea-faring community in Hondeklip Bay and other areas, for small-scale marine miners to survive economically, if given access to concessions.

Mr Nikolaai added that small contractors who applied for contracts had to incorporate and train unskilled labour without assistance from the large companies. This had led to failure of a number of businesses.

Mr Marais asked if he understood correctly that the three large mines of the Rugtersveldt were not equipped to handle the marine operations – they were more equipped to handle land operations - and that concessions should not be given to the large mining companies but the contractors who carried all the risk. He asked how the broader community would benefit and if the contractors were equipped to handle the business and logistics side of the industry.

Ms N Mathibela (ANC) asked what the EAC’s view was on having a state owned mine.

Mr Craythorne said that the state was the owner of the minerals and mineral rights and the middle man was the concession holder. Operating as a state-owned enterprise would give the small-scale marine miners the opportunity to transact directly with the state. Although 75% of concessions were silent partner middle-men, Alexkor was considered an active partner, not a silent partner. The West Coast small-scale marine miners would have a viable business case if the middle man was removed.

The Chairperson summarized that three companies had almost all mineral rights and this was part of the challenge to the MPRDA. The question for the Committee was why these companies were not sharing access to mineral rights with the formerly disadvantaged people. It appeared that the big companies were renting out their mineral rights to contractors who had to bear risks of employment, equipment costs and running of operations. The MPRDA and Constitution did not envisage this when it came to optimal utilization of mineral rights for the benefit of the people of the country. The Committee was aware that the EAC aimed to unify the small-scale mining companies and establish a state-owned mining company.

Ms Ngele asked if the small-scale marine diamond miners were part of PSJV and what was actually meant by ‘a very small area of the community involved in PSJV’.

Mr Craythorne said that small-scale marine miners were not part of the PSJV. When the PSJV referred to the community, they were referring to a specific sub-set of the community who were the Rugtersveldt community who were involved in the lands claim. It did not include the broader community.

Mr Sonto asked if small-scale mining companies mined in shallow or deep sea water and if small-scale mining replaced the large mining companies, they would have the expertise, equipment and manpower to do so.

Mr Craythorne said that sea concessions lay in depths beyond the reach of small-scale marine miners. Decompression constraints became severe as the depth increased. Small-scale marine mined in depths from 0 – 27 metres, which were ‘a’ and ‘b’ concessions. There was no mining tool that had been developed which had the dexterity of a diver who manually controlled a nozzle underwater. In the past ten years R60 million had been invested to develop remote mining technology for shallow waters, with no success. Thus, with the current technology, the diver in shallow water was unassailable.

The aim was not to replace the large mining companies but to gain equitable access. The EAC believed that where concession holders were not developing their concessions and where concessions lay dormant, those concessions should be withdrawn from those concession holders. From an operational point of view, not one concession holder was a shallow water miner. They employed contractors to do the mining from beneath the sea and were involved to varying degrees from the point from where the mineral was mined, the sorting process or by issuing contracts.

Mr Craig Cooke, EAC member, said that it was important to understand that mining rights were allocated only after an Environmental Impact Analysis and SLP were in place. Alexkor was required to have an accessibly SLP at all times and it was unacceptable for a rights owner not to have their SLP in place. Until unethical manipulation for mining rights was removed and direct access was granted to small-scale marine miners, the spin-off to the community would not be felt and concessions would remain dormant. It was up to the Committee to understand that the companies themselves did not have expertise for marine mining.

Ms Bikani said that the issue of mining rights, the marine mining industry and their community was on the Committee table. The enlightening information received that day would be correlated with the information received from Alexkor and this would be a focus for the Committee.

The Chairperson said that the Committee was aware of the challenges presented and would engage with the Department on MPRDA amendments. The fact that 75% of concessions lay dormant was indication that something was seriously wrong and would explain the decreased levels of employment and increased poverty in the community. He invited the EAC to further engage with the Committee on working on a final product which would alleviate the problems.

The meeting was adjourned.