Establishment of State-Owned Mining Company: public hearings

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Mineral Resources and Energy

18 August 2010
Chairperson: Mr F Gona (ANC)
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Meeting Summary

The Director-General of the Department of Mineral Resources briefed the Committee on the negative reports in the media on the state of the mining industry. These reports could undermine the confidence of overseas investors. The Department admitted that there were flaws in the Mineral and Petroleum Resources Development Act. There was uncertainty over the application of the Act and loopholes were already being exploited. While there were problems with double granting of licences, these and other administrative errors made up a small percentage of the total number of applications for mining rights that had been processed since the Act came into effect. The Department had realised the problems and was taking measures to correct the situation.

Members welcomed the Department's commitment to addressing problem areas and to transparency in the process of granting licenses and rights. Members were advised that old order rights that were not converted to new-order rights would revert to the State. Measures were being taken to deal with allegations of corruption. Certain companies used stalling tactics to delay the implementation of Government requirements for the granting of rights.

The National Union of Metalworkers of South Africa presented a case for the nationalisation of mines. The Union was of the opinion that nationalisation was the best way to create employment and ensure that all citizens benefited from the mineral wealth of the country. The Arcelor-Mittal / Kumba dispute was cited as an example of a State asset which had been sold off to private interests, which resulted in the charging of exorbitant prices for the product and driving small companies out of business.

Members questioned the differences between nationalisation and a state-owned mining company. Members agreed that beneficiation was an important issue. The hearings were not the correct forum for a discussion on nationalisation and the Members felt that the submission from the Union provided little input on the establishment of a state-owned mining company.

The South African Women in Mining Association was formed to promote the interests of women in the mining industry. The Association had established the South African Women in Mining Investment Holdings as its investment arm. The company was owned by shareholders, some of which were members of the Association. There was support for a state-owned mining company based on other international precedents. The Association felt that there would be great benefits for women as the State would pay more attention to developmental issues.

Members praised the work of the South African Women in Mining Association. There was concern over incidents of in-fighting between members and certain members exploiting their position. Another meeting was needed to discuss these issues.

Meeting report

The Chairperson advised the Members that the Committee's programme had been changed by the Chairpersons' Committee. The Geosciences Bill would be moved forward. The Secretary would circulate the new programme. The Department of Mineral Resources (DMR) had to appraise recent developments. The Department had been attracting negative publicity over a number of issues. This was since the implementation of the Mineral and Petroleum Resources Development Act (MPRDA). One of the major issues had been the problems between Kumba and Arcelor-Mittal. The Committee needed to hear from the DMR about the truth of the reports. The image of mining had to be restored. Overseas investors based their decisions on media reports and did not take the trouble to establish the facts.

Presentation by the Department of Mineral Resources (DMR)
Mr Sandile Nogxima, Director-General, Department of Mineral Resources, said that the Department had noted with growing concern the increasing negative sentiment towards the mining sector. Companies and investors were facing uncertainty. Fact and fiction had been blended in an unseemly fashion. The current legal framework allowed for more than one interpretation. Two Court cases currently attracting attention were the dispute between Kumba and the Department (which was sub judice) and the Lonmin matter.

The Department believed that the South African mining industry remained the bedrock of Africa's economic powerhouse. Citibank estimated that South Africa's mineral reserves were worth R2.5 trillion. The mining sector was clearly driving the war against poverty and under-development.

South Africa had made good on its promise to improve its standing on the Fraser Institute rankings. The ranking had improved from April 2010, when the country was ranked 44th out of 51 jurisdictions, to 31st in August 2010. The improvement was ascribed to the hard work that was done to get the leadership of the industry to work together.

A declaration with the leadership of the mining industry had been signed. The agreement underpinned the strategy for sustainable growth and meaningful transformation in the mining sector. The agreement would ensure that Government, business and organised labour worked together to improve the country's global competitiveness, promote investment and drive transformation.

The country's mining reputation had been adversely affected but the sector was still worthy of future investment. There were a number of ambiguities in the Mineral Resources and Petroleum Development Act (MPRDA) of 2002. The legislation was immature and there was a lack of well-developed jurisprudence. In the absence of precedents, the letter of the law was being applied rather than the spirit or intentions of the law. There was a lack of transparency in the licensing data, which led to suspicion. There were administrative capacity problems and increasing perceptions of incompetence and corruption.

The DMR had been instructed to implement a plan of action. A joint stakeholder team had identified the amendments to the MPRDA that were required. From 1 September 2010, the status of exploration and mining licences would be made available on the Department's website. The DMR was developing a new integrated system to track the license process. With effect from 1 September there would be a moratorium on the submission of prospecting applications. The moratorium would be in place for six months to allow for a comprehensive audit. Other licensing activities would continue as normal. With immediate effect, prospecting rights would only be issued by the Head Office of the DMR. A number of administrative inefficiencies had been identified. While 25,600 licences applications had been processed since 2004, more than 100 cases of apparent administrative irregularities had been identified. All cases of the duplicate granting of licences would be resolved within three months. Regional offices would be upgraded within the following six months. Allegations of corruption would be dealt with speedily. The media and public were encouraged to report cases of corruption.

There were different interpretations of the tender process. There was a perception that the law was being applied in a manner that promoted corruption. People should approach the courts rather than question the intentions behind the awarding of tenders.

Amendments to Chapter 4 of the Act were necessary. This section of the legislation dealt with the order in which applications were processed. Section 11, which dealt with the regulation of the transferability of rights, was open to different interpretations. In certain cases rights were granted and sold on the following day.

Another grey area concerned the regulations applicable to associated minerals. The current law allowed for the granting of different mineral rights to different parties on the same land. The old Mineral Act provided for undivided shareholding. The MRPDA did not anticipate the fragmentation of rights and controversial issues were bound to arise.

The process of converting old order rights to new order rights had been completed between 2004 and 2009. The Department was now seeing the impact of the MPRDA. Some entities would lose their rights, which was not necessarily a bad thing. As jurisprudence was developed, disagreements could be expected. This was not a sign of the collapse of the regulatory system. The judiciary would be the best mediator in settling the disputes between parties.

Mr V Magagula (ANC) felt that Mr Nogxima was shifting the blame for the current situation to Parliament. The DMR wanted to normalise the process of granting licence rights and he wondered where things had gone wrong. There were several cases where licences were granted to more than one entity. There was no transparency in the process. The Committee was hearing rumours from the media. He asked why the DMR was not telling the Committee what was going on. The implementation was faulty and resulted in perceptions of incompetence and corruption.

Mr E Lucas (IFP) said that the problems could only be solved if they were admitted. He asked if any holders of old order rights had applied for new rights. He asked what had been done where the holder of an old order right had not applied for a new order right. He asked if the old order rights had been retracted or if the rights were still available.

Mr M Sonto (ANC) asked for further clarity on the conversion of old order to new order rights. The MPRDA had been enacted in 2002 and the loopholes in the legislation were already being exploited. Parliament had to take some of the blame for enacting ineffectual legislation. He asked if the weaknesses in the legislation were a negative reflection on the DMR.

The Chairperson pointed out that the MPRDA had been enacted in 2002 but was only promulgated in 2004.

Mr Nogxima said that it was unfair to accuse the Department of shifting the blame. It was a case of putting responsibility where it belonged. All parties needed to work together. Parliament and the DMR both had responsibilities. Guarding the reputation of South Africa was the responsibility of all stakeholders. He acknowledged that there were allegations of incompetence and corruption against the Department but action was being taken. A Deputy Director-General would be deployed to each of the regional offices to investigate allegations that were made. Certain Chief Executive Officers of mining entities were afraid to report cases of corruption. This made it difficult for the Department to deal with the allegations. In other cases, the DMR had received no evidence of fraud or corruption. People were inclined to blame their failure to win contracts on corruption. Allegations of corruption should be reported to the South African Police Services if there was a fear of repercussions from the Department.

Mr Nogxima said that the DMR could not avoid the perceptions that were created. All that could be done was to make the process more transparent. While there might be corrupt officials in the Department there were also corrupt people in the private sector. The issue had to be addressed holistically.

Mr Nogxima did not think that there were a lot of cases where double licensing had occurred. Of the total of 25,600 applications that were dealt with by the DMR since the MPRDA had been enacted, only approximately 100 irregularities had been reported. These irregularities included instances of the double granting of licences. In migrating from the old to the new system, certain date from the old system was not captured. As a result, the claims involved had been indicated as being available. Ideally the DMR should have called in all the holders of rights instead of depending on the systems. The double granting of licences was an administrative error. Approximately thirty cases were in the process of being cleared. In certain cases, the double grants related to the entire farm rather than specific portions of the farm. Mining rights became applicable when the rights were registered. None of the duplicated rights had been registered. The legislation could not be blamed and everything had been done in accordance with the letter of the law. Government officials had to apply the law. The DMR was now discovering where the gaps in the legislation were. He had yet to hear of any piece of legislation which had not needed to be amended at some stage.

Mr Nogxima said that the deadline for the conversion of old order rights had been in 2009. The holders of old order rights had forfeited their rights if new order rights were not applied for. The Department was currently experiencing the effects of the implementation of the MPRDA. On many cases, the DMR was dealing with vested interests. The Arcelor-Mittal saga was a case in point. When the mining rights lapsed, the rights reverted to the State as the custodian of minerals. The lapsed rights became available to applicants. In general, rights lapsed after twenty to thirty years. Those rights with a five year period had lapsed in 2009. The DMR would have to investigate where there were rights on existing mines. The DMR would have the answers once it had completed its audit. The Department would report back to Parliament on how it planned to deal with lapsed rights.

Mr Nogxima said that the consultation process during the formulation of the MPRDA had been extensive. The Department had followed a process to achieve consensus before the Bill was submitted to the Cabinet. The test of legislation was in the application. Only certain provisions had to be amended. Currently, the Act required a large degree of administrative discretion and there were differences in how officials interpreted the law. The Department would submit a proposal to amend the Act to Parliament.

Mr E Marais (DA) thanked Mr Nogxima for his intention to act on reports of corruption. He welcomed the commitment to transparency. He noted that the authority to grant rights was now being centralised even though the regional offices were being upgraded. He asked if the authority would revert to the regional offices in time. He asked what the backlog was and if the DMR had the staff capacity to clear it. He asked if the new system would be able to protect sensitive areas. The rehabilitation of mines was a serious issue and needed attention. Only R52 million was budgeted for this purpose, which would have to be revisited.

Ms B Tinto (ANC) understood that the former Department of Minerals and Energy had evolved into the DMR. There were old and new issues that had to be resolved. The Minister had said that the issuing of licences had been suspended. She asked which licences were involved. The DMR had a substantial budget but people were still being killed in mining operations and no mention had been made of improving safety.

Mr Nogxima replied that the removal of authority to grant licenses from the regional offices was a temporary arrangement. Authority should be restored within six months, depending on the results of the audit. Many rights had been granted since 2004 with a five year life span. Many of the prospecting rights had not developed into mining rights and some were sold on. Section 11 of the MPRDA had to be strengthened to deal with the issue of transferability of rights. He was confident that current controversies would pale into insignificance after the audit. Companies were complaining now but after the audit the rights of some of the new entrants would be lapsing. He agreed that the Department had challenges with regard to capacity. Currently, the DMR was still structured in accordance with the former Minerals and Energy role. The DMR was designing a new structure, which was informed by the new mandate. In terms of rehabilitation, the Chairperson of the Committee had written to the DMR to request a meeting on 28 August 2010 and the issue would be addressed then.

Mr Marais asked if there was any conflict between the DMR and the Department of Environmental Affairs (DEA).

Mr Nogxima replied that systems were being put in place to enable all responsible Departments to interact before licences were granted. The DEA had to identify sensitive areas and could recommend that an application was declined. He was unable to provide details on the backlog in processing applications and would submit a written reply. The issue was distorted as a result of the conversion process. Companies must comply with the new regulations, including social and labour matters. The Minister could not refuse an application but could enter into negotiations with the applicant. Black Economic Empowerment (BEE) measures and a social and labour plan had to be in place. Companies knew that as long as their application was pending their operations were protected and the application could not be summarily rejected. It was more a question of companies marking time than the existence of a backlog.

Mr Nogxima said that the Department had not had much interaction with the Committee. The DMR was invited to appear before Parliament and the Department did not determine the Committee's agenda. The issue of miners being killed was a tricky situation. The incident referred to by Ms Tinto had happened on a mine that was in a care and maintenance phase. The victims were illegal miners. The issue had been dealt with and referred to the law enforcement authorities. However, such incidents hurt the country's reputation as foreign companies did not understand how illegal miners had managed to gain access to a mine which had been closed.

Mr Marais said that he had been present during an oversight visit to the Northern Cape and was advised that social and labour plans would come into effect in November. Well qualified staff would be needed to inspect these operations.

The Chairperson said that the Committee needed to interact with the Department. The Lonmin issue had raised concerns. The mining of associated minerals should be stopped and the rights properly reallocated.

Mr Nogxima said that an application in terms of Section 102 of the Act had been received. The application was for the inclusion of associated minerals. An inspection had been done. Lonmin had disposed of minerals that were not covered by the licence and the company had been prevented from selling the minerals concerned. An application for the additional minerals was approved the following week and the prohibition had fallen away.

The Chairperson was concerned about rising poverty. The mineral wealth of the country was not distributed equitably. He was disturbed by the examples of abject poverty observed during the oversight visit to the Northern Cape. Mining operations were ravaging the environment. Rights were not being developed. There were calls for the interests of the owners of mining rights to be publicly declared. He asked if the DMR was not responsible for the state of the mining sector. If rights were not exercised, the rights should revert back to the State in accordance with the principle of using it or losing it. The scenario of mineral wealth was not compatible with the poverty of mining communities. The moratorium on new licences would give the DMR some breathing space. There were many rights that had been granted but very few new mines were being established. Members of the Committee would have been found wanting on the oversight visit had they not been accompanied by a Chief Director of the DMR.

Submission from the National Union of Metalworkers of South Africa (NUMSA)
Mr Cedric Gina, President, NUMSA, said that there was concern every time the nationalisation of mines was mentioned. The unemployment rate of 32% was unacceptably high. Calls to nationalise the mines were not new and was one of the elements of the Freedom Charter. At Polokwane, the ruling party had held a watershed conference.

A developing state such as South Africa must ensure that natural resources were exploited for the good of the people rather than for profit. The role of state-owned enterprises (SOE’s) had to be strengthened. SOE’s had to be financially viable and have a public mandate. There was a need to promote new enterprises. Monopolies had to be broken. The small size of the South African economy had resulted in the formation of monopolies.

The disputes concerning Arcelor-Mittal and Kumba indicated the need to nationalise mines. Iron ore was an important resource. The State should reclaim ownership of Arcelor-Mittal. The Iron and Steel Corporation (ISCOR) had been a state-owned company in the past and it had been a big mistake to sell ISCOR. He quoted a number of journalists who were making calls for State intervention in the mining sector. Import parity pricing (IPP) was a way of ensuring maximum profit. Prices were benchmarked to overseas markets.

Beneficiation was a major issue. South Africa was blessed with rich mineral resources. NUMSA had a bad experience of the IPP system. A number of companies in Vanderbijlpark had been forced to close because of the high steel price. The MPRDA did not have beneficiation as an objective. Mineral policies must be an integral part of industrial policy.

Mr Gina cited the example of Venezuela. The “Bolivarian Alternative Agenda” had been applied to transform the economy. The Venezuelan Constitution made provision for central State responsibilities in the defence of key industries, such as the oil industry and farming.

It was difficult to pin the debate on a single issue. The Arcelor-Mittal dispute had been a chance for the State to intervene. The State had to move from being a shareholder to developing the economy. NUMSA believed that there was an urgent need for nationalisation. This could be in the form of private-public partnerships.  The concept of collective ownership could apply where the State played a leading role. The economy would need a complete overhaul.

Mr Gina admitted that this approach would be a radical departure from GEAR. The State should move from case-by-case privatisation to case-by-case nationalisation. He realised that there would be a cost in terms of the loss of investor confidence. The developmental agenda should not be held to ransom by business.

Mr Sonto said that the economy had a long way to go to liberate people. The submission should have dealt with NUMSA's comment on the establishment of a state-owned mining company. The submission focused on advocating nationalisation. He asked what NUMSA was putting on the table. He asked how a contemplated SOE company would differ from the other SOEs and what the structure of the company should be.

Ms J Ngele (ANC) recalled that NUMSA made a call for the State to form a state-owned mining company at a summit held on 28 May 2010. The presentation differed substantially from the position taken by NUMSA at the summit and she wondered what was happening in NUMSA.

The Chairperson asked Ms Ngele if she was not confusing NUMSA with the National Union of Mineworkers (NUM).

Ms Ngele apologised for her error and withdrew her remarks.

Mr Lucas agreed that South Africa was rich in resources yet South Africans had to pay so much for products. Other countries were able to manufacture goods for much less. He supported the beneficiation issue. Not much was being done at present. Minerals were too expensive for some unknown reason. China was able to keep production prices much lower despite not having any iron deposits. The nationalisation issue had to be dealt with in a mature manner. South Africa was unable to consume all the goods produced locally.

Mr Gina replied that it would appear that the media had succeeded in rubbishing the SOE’s. The media isolated certain efficient SOEs and made it sound as if they did not belong to the Government. An example was South African Express Airways. However, when an SOE made a mistake, the media called for no more SOE’s. Claims were made that the State had no capacity. He said that Members of Parliament should not be fooled by such lies. South Africa had the necessary capacity. ISCOR had been an SOE. During the apartheid era, the SOEs were only used to benefit the minority. SOE’s were now being used to benefit the majority. SOE’s must strive for excellence. On the subject of beneficiation he said that there had been conditions attached when ISACOR was acquired by Arcelor-Mittal. These conditions had not been adhered to and had resulted in the closure of companies.

Mr Sonto noted that NUMSA was advocating nationalisation. His question had been on what the structure of a state-owned mining company should be. He asked if a state-owned mining company would be an SOE or a different vehicle. Nationalisation would lead to a change in the economic structure of the country. He asked if the current scenario allowed for such economic re-arrangements.

Mr E Mtshale (ANC) said that the problem was not nationalisation. Government had to be in a position to support the concept. Since the ANC Youth League had started calling for nationalisation, the labour unions had joined the chorus. Mines could be nationalised but not the land. NUMSA had not explained how nationalisation could be achieved. The calls for nationalisation had started after the economic recession of 2009. Mines had lost billions of Rand. He asked if an honest call for nationalisation was being made or if this was simply an attempt by land owners to salvage their properties. A British economist had said that there was always a secret hand in operation. In terms of economic transformation, he asked if the economy could be transformed without a transformation of the social system. He asked if NUMSA was talking about real change or merely using a different jockey on the same horse. He asked if there was a way to check if people were not just riding on the bandwagon. He asked who would benefit from nationalisation and how as the majority did not benefit at present.

The Chairperson reminded the meeting that the subject under discussion was the establishment of a state-owned mining company and not the nationalisation of mines. Organisations like NUMSA were free to raise the issue but he would not allow a debate on nationalisation during the proceedings. The issue would be dealt with on another occasion.

Mr Woody Aroun, Parliamentary Officer, NUMSA, said that it was difficult to talk about a singular entity in terms of a state-owned mining company. There were a number of sectors and entities involved. The matter was raised in the Polokwane document and the issue could be debated externally. The issues might appear to be the same but there were different views. NUMSA had put across its position. NUMSA's members had been affected by the Arcelor-Mittal dispute. Arcelor-Mittal was a holding interest and had a monopoly in the steel industry. Downstream industries should also benefit. The raw material was either exported or sold internally at high cost. The media had raised critical issues. There must be added value at every process. The form and content might vary. It would be useful if Members could visit other countries. Venezuela Oil had been an SOE. The benefits had not been spread to the citizens and the company had been nationalised. Many problem issues had been raised in the submission.

Mr Gina said that nationalisation was the shortest route to establishing an SOE. Nationalisation was needed not only in the mining sector. Another example was SASOL. This issue had been raised on many occasions in the past. SASOL benefited from international oil price increases. BEE interests were not represented. The previous Minister of Trade and Industries had raised the issue of a new state-owned steel company. This had been brought to the attention of NEDLAC. He asked if the problem was that there was no control over the prices charged by Arcelor-Mittal. Government was too cautious of the opinions of foreign investors. The MPRDA had been opposed by industry at the time but had since been accepted. There were SOE’s such as Alexkor in place, which provided a format for a similar entity. Members could debate whether the wrong format was being followed. The people had to be represented on the Board of the entity established.

Mr Magagula returned to the issue of nationalisation. He said that Members of Parliament had to implement Government policy. Certain Members supported nationalisation.

The Chairperson noted Mr Magagula's declaration of interest. He took note of NUMSA's call, especially on the grounds of beneficiation. Job creation was important and potential must be tapped. He wanted to see more engagement on the operation of a possible state-owned mining company. Arcelor-Mittal had threatened to close certain operations if the deal with Kumba was not concluded to their benefit. The company had been told that they had inherited a State asset that had been funded by the taxpayer. The Committee would deliberate on the submission and would invite participants to take part in study tours. It was necessary to determine if a stand-alone Act would be better than an amendment to existing legislation. The issue was attracting wide interest in the country.

Submission from the South African Women in Mining Association (SAWIMA)
Ms Alice Phatudi, National Chairperson SAWIMA, said that women had traditionally played no more than a peripheral role in mining. SAWIMA was conducting a vigorous drive to boost the role of women in the sector. She explained the core purpose of SAWIMA. The Association had pioneered change in the industry. An inspiration was the way in which India had become the leader in the polished diamond industry.

Ms Phatudi explained that SAWIMA was a Section 21 company with the primary focus of the development of women in the mining sector. There was a special emphasis on beneficiation to create jobs. SAWIMA wished to identify and address the challenges faced by women. It also aimed to create a forum where women could share their experiences, challenges and successes. The goals of SAWIMA were to launch and develop a mentorship and coaching programme. A research programme would provide SAWIMA with on the progress of transformation in the sector, participation in the industry, barriers to entry for women and the level of participation of women. Another goal was to develop an HIV/AIDS policy. SAWIMA wished to create partnerships with mining houses to combat discrimination.

Ms Phatudi listed some of the achievements of SAWIMA. The organisation had engaged with every mining house operating in the country. Partnerships had been created in terms of procurement and training and strategic alliances had been formed. Very few women were empowered. SAWIMA had partnered with the Mining Qualification Authority (MQA) to train over 1,000 women in different sectors. Grants had been secured. SAWIMA would continue to identify projects especially in the rural areas. A credible database had been created, which listed all SAWIMA members, their qualifications and experience. A list of corporate partners was included. SAWIMA was not just about aspiring women miners.

Submission from the South African Women in Mining Investment Holdings (SAWIMIH)
Ms Noluthando Langeni, Chief Executive Officer, SAWIMIH, informed the Committee that SAWIMIH was the investment wing of SAWIMA. SAWIMIH was registered as a company in 2003. The company belonged to its shareholders. The number of shares allocated was proportional to the investment made. SAWIMIH took advantage of related investments and joint ventures. Shareholders were required to provide a personal profile and the names of beneficiaries. An annual general meeting was held.

15% of the shareholding was reserved for SAWIMA members. The investment arm was able to support community service initiatives. Certain SAWIMA members in the rural areas could not afford to pay for shares. Of the remainder, 60% of shares were available to ordinary shareholders. The list of Board members was provided.

SAWIMIH provided outsourcing services as a corporate financial advisor and worked with the Afropulse Group. The organisation was assisted by Government to the extent of 0.0023% of total investment. SAWIMIH helped the whole consortium with diverse investments. SAWMIH held the prospecting licences for three platinum mines in Limpopo province and was looking for an investor to develop the mines. The organisation had prospecting licences for seven iron and manganese mines and was involved in coal mining projects in KwaZulu Natal and Limpopo.

SAWIMIH wanted to level the playing field. In terms of the formation of a state-owned mining company, SAWIMIH realised that Government was a very important aspect of the mining industry. The main objective of such a company should be to retain ownership of strategic resources. The State should have passive equity holdings in business. Government was the custodian of mineral resources and had a role to ensure that transformation was driven. Enforcement of the present regulations was being left to the consciences of the mining houses, such as BEE. If the Government owned mines it could use these mines to drive transformation for the benefit of all citizens. This would be a different approach to State funding. It was a joke when companies were asked to provide guarantees.

SAWIMA represented women in all nine provinces, in particular women from the previously disadvantaged communities. Certain owners of mining and prospecting licences were banking the rights and did nothing to develop enterprises. Government should not be viewed as a BEE partner but as a strategic partner. Government was well provided with human and financial resources. Certain funding institutions were also available. Government was in a position to operate both inside and outside South Africa.

Ms Langeni referred to the model followed by China. Certain mines were run by the Government. This was an attractive model. Government ownership would promote value-enhancing activities. Little progress was being made in this respect. An SOE would do research and development and achieve beneficiation. An SOE would improve the infrastructure and would invest across a broad spectrum, thereby assisting BEE.

The current system meant that bodies like SAWIMA could only get involved at an expensive stage of the process. An SOE would ensure that all the mineral wealth of the country was developed. The line of authority should run through the DMR and the Department of Public Enterprises (DPE). The level of accountability was important. Government would apply the legislation in a transparent manner, including listed and unlisted interests. Market domination, favouritism and poor performance would be reduced.

There were international precedents for a state-owned mining company. Pilot studies had been conducted in India. India LTD was the world's largest coal producer. Hindustan Copper held a similar position. There were more parallels in China and Botswana.

Ms Langeni said that if the State could take over some mines, it would facilitate job creation. The country's mineral resources were a gift from God and were the heritage of all South Africans. Aside from job creation where would be alleviation of poverty and disease.

Mr Lucas congratulated SAWIMA on their work. They were doing and not just talking. Access to finance was the major issue. It was relatively easy to obtain a prospecting licence. There was a big difference in moving from prospecting to mining. This was a very expensive process. Once mining started, everyone got on the bandwagon. It was a question of how to cross the first hurdle.

Mr Magagula was unsure if questions should be directed to SAWIMA or SAWIMIH. He noted that the organisations were represented in all the provinces. Recently, a delegation of women from the Western Cape, who were members of SAWIMA, had addressed Parliament. The delegates included the Chairperson, Secretary and members of the provincial structure. All were suffering. He thought that women were supposed to solve problems and not create them. He asked if SAWIMA was calling for nationalisation or a state-owned mining company.

Mr Sonto said that the last of the three submissions had advanced the view of a state-owned mining company. He asked which mines should be state-owned. He asked how the State could play a passive role in ownership. SAWIMA was saying that a state-owned mining company would be a vehicle for wealth creation. He asked SAWIMA to explain how the State could build a united nation. He asked if the model was only confined to job creation. He asked SAWIMA how the organisation expected women to benefit. As a national organisation, SAWIMA had greater understanding of how the various regions could benefit.

Ms Ngele asked what the membership of SAWIMA was. She complimented the organisation on the quality of the submission and asked if the members were aware of its contents. She asked what was being done by the thousand women who were being trained. She asked if the members of the Board had been trained to carry out their duties. She asked for an explanation of the abbreviation PPC used in the presentation. She was not a member of SAWIMA but foresaw some problems. Women were complaining but nothing was said about the challenges facing them. She could see that there were major initiatives in hand at a high level. However, these issues did not penetrate to the level of ordinary members. She asked if information was reaching ordinary members and if the delegation spoke on their behalf.

Ms Langeni replied that it was prudent to know which body was being addressed by the questions from the Members. SAWIMA was a Section 21 company under the Chairpersonship of Ms Phatudi. It was comprised of members who paid an annual subscription fee of R300. SAWIMIH was its investment arm and was owned by shareholders.

Mr Magagula said that the agenda for the meeting was clear. The Committee had invited SAWIMA to make a submission. He understood that all the persons present were representing SAWIMA. The Committee recognised SAWIMA at this meeting and no-one else.

The Chairperson said that it was good to obtain the information from SAWIMIH, which was the investment arm. SAWIMA had established SAWIMIH to create business opportunities for its members. He saw the two entities as different divisions within one body. SAWIMA had been established by the former DME. He would like to know how much money had been invested by Government, but this was the subject of a future discussion.

Mr Mtshale asked about reports of faked shareholder certificates.

Ms Phatudi said that the delegation had come wearing one hat. The nine provincial chairpersons of SAWIMA were the directors of the investment company. The organisation had made some progress and could acquire prospecting licences. It was a thorny issue. SAWIMA had acquired 50% of a deal with Anglo Rand in 2002 but it was a nightmare to raise the necessary funds. The organisation was eventually financed by an institution based in Toronto. She proposed a tripartite alliance between Government, SAWIMA and financial entities.

Ms Phatudi acknowledged that there had been an incident at the recent mining indaba. A group of women from the Western Cape had said they could open a can of worms regarding past practices. The women from the Western Cape alleged that they had been promised mines and prospecting rights in 1999 but had not been in possession of all the facts. There had been in-fighting amongst members in the past. The new Board was elected at the end of 2007. A turnaround strategy had been put in place. Women were serious about business. She was unaware of reports that members had been forced to sell their houses and move into shacks. The R300 subscription fee covered SAWIMA's administrative costs and training. Many women had not achieved any training. SAWIMA had conducted a road show around the country. There were problems in all parts of the country. Any woman who had succeeded in mining had done so because of SAWIMA. The Department of Trade and Industry and the DME had held competitions for innovation. Women who excelled were recruited to join SAWIMA. The Association encouraged women to take part, especially those situated in the deep rural areas.

Ms Phatudi explained that PPC stood for Pretoria Portland Cement. This project had been outsourced to Mintec. Current production had been up-skilled to meet international standards. Thirty women had been identified to open a factory in Limpopo. Mintec would train the women and assist with marketing. There was a similar project in the Eastern Cape.

Ms Langeni explained that the philosophy behind the establishment of SAWIMA was getting lost. SAWIMA was divided on a regional basis. The aim was to introduce women into the mining sector. The regional chairpersons were responsible for organising the regional structures. The regional operations were comparable to a stokvel. Members received benefits that exceeded the R300 subscription fee. SAWIMA had toured all the provinces after the sale of the platinum mine. There were few members in the Western Cape. Her experience was that women did not talk at the meetings but preferred to fight with each other. She was surprised at the complaints about the Western Cape chairperson. She would like to see evidence of the fake share certificates.

Mr Sonto said that the Members were talking about the SAWIMA members who had visited Parliament. These members were in possession of the fake certificates. He said that the investments made by the State must benefit women. He asked what risk management strategies were in place. He asked if the regional chairpersons were awarding projects to themselves. He asked if such projects would benefit women in general. If there was any evidence of wrongdoing, the Committee would like to hear it.

Ms Tandiswa Stokwe, SAWIMA Chairperson, Western Cape, explained that there had been a meeting on 5 September 2010, which was attended by SAWIMA members with faked certificates. The certificates were given to them by a person known as Letwaba. The certificates were applicable to the proposed Ulomfundo sand mine. Letwaba and the then regional chairperson had been tasked to meet with the consultants on the project. A geosciences test had been conducted. The result was that the sand was clay-based and not suitable for building purposes. The mine was still there but SAWIMA had yet to apply for rights to mine the clay. She had a copy of the share certificate, which reflected that the holder had zero shares. Letwaba must explain what had happened there. There were uranium deposits in the Beaufort West area. This issue had been raised at the meeting in September. While she was still investigating the matter, a group of women had wanted to apply for prospecting rights. One of the members had made an application together with her husband. They had then sold their shares to an Australian company for R8 million each.

Ms D Mathebe (ANC) said that this issue warranted another meeting with the Committee.

The Chairperson said that a number of concerns had been raised. A rosy picture had been painted but the reality of the picture on transformation was bleak. Women were on the receiving end. The Committee had visited the provinces. Wherever poverty, unemployment and social ills existed, women were the first to be affected. He had seen some terrible sights. Government was trying to dispense with the image of elite organisations. SAWIMA had met with their Western Cape branch to resolve the problems.  More engagement with the Committee would follow at a later date. Women working on the mines had access to the labour unions in addition to SAWIMA. The Ministry was sending a message to SAWIMA that they need to decide on whether to close down or to continue.

The meeting was adjourned.



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