Auditor-General Performance Audit Report on Rehabilitation of Abandoned Mines

Public Accounts (SCOPA)

31 August 2010
Chairperson: Mr T Godi (APC)
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Meeting Summary

The Department of Mineral Resources tabled and gave his responses to the report of the Auditor General on the rehabilitation of derelict mines by this Department. The Auditor-General (AG) had found that there was no approved strategy by the Department to guide and inform its rehabilitation programme. Besides slow rehabilitation progress, there had also been an overt lack of rehabilitation procedures and policies. The Department’s organisational structure and capacity did not support its objective for rehabilitation. There were delays with implementation of projects, with several bids needing to be re-advertised. There were insufficient criteria by the Department in relation to budgeting and allocation of funds, with insufficient funding being made available for rehabilitation. Lack of communication with both internal and external stakeholders was apparent, in particular a failure to notify the AG and National Treasury about the appointment of Mintek as a project manager. Action plans on projects were lacking, and there was lack of oversight over external contractors. The Department said that historically there were no legislative measures to manage the impact of mining on the environment and the strategy could not be formulated by the Department until the magnitude of the problem was determined by research. The Department explained the appointment of Mintek. The Department said that now an implementation plan had been developed and there was now a framework for communication, as well as procedures to ensure that all parties were kept informed. High priority sites were identified. The current liability of the Department for rehabilitation would cost around R30 billion, but since its annual budget was only about R50 million it would need to approach National Treasury.

Members felt that the presentation was insufficiently detailed, did not indicate the extent of the problem, nor whether the situation was now at crisis point. Members were concerned as to what was being done about rapidly rising acid water levels below Johannesburg, and, whilst noting that a task team had been formed, commented that this had been done very late. Members asked why no implementation dates were given, and asked about current initiatives. Questions were asked as to the number of abandoned mines, whether it included mine dumps and dormant mines and illegal mines, what mines were classified as high risk, and whether this information could be updated easily. Members wondered why so few officials were tasked with certain mines, particularly the asbestos mines, where there was a backlog, and asked about the skills shortages, whether systems were in place to execute the work, and whether the systems did not include assessment of the personnel required. Members also noted that the income of the Department was clearly not adequate for it to address the rehabilitation, and enquired about the responsibilities of those who had owned or abandoned the mines. The Portfolio Committee on Mining commented that the Department should interact with the Chamber of Mines and report back to the Committees. 

Meeting report

Auditor-General's report on the rehabilitation of derelict mines: Department of Mineral Resources (DMR) briefing
Advocate Sandile Nogxina, Director-General, Department of Mineral Resources, tabled the report of the Auditor-General (AG). His presentation outlined the AG's findings, root causes,corrective action undertaken by the Department of Mineral Resources (DMR or the Department) thus far, the national strategy for the management and the rehabilitation of derelict and ownerless mines, and the budgeting and allocation of funds.

Adv Nogxina said that the Auditor-General found that there was no approved strategy by the Department to guide and inform its rehabilitation programme. Besides slow rehabilitation progress, there had also been an overt lack of rehabilitation procedures and policies. The AG’s report further noted that the DMR's organisational structure and capacity did not support the Department's objective for the rehabilitation programme. There were delays with the implementation of projects. With regard to the evaluation and adjudication of bids, several bids had to be re-advertised, which had led to delays with project implementation. With regard to budgeting and the allocation of funds, the AG had noted the lack of criteria for the allocation of funds to projects, insufficient funding for rehabilitation and a decrease in funding levels and spending. The AG further noted a lack of of formal communication between external and internal stakeholders. When consortiums were used as project managers, there had been no consistent  project sign off, and the necessary action plans on dealing with project issues were lacking. There had also been a lack of oversight by DMR over external contractors. When using Mintek as project manager, the DMR had failed to inform the National Treasury (NT) and the AG about this, in line with Treasury Regulation 16A6.4. There was also a lack of specialised skills within Mintek.

Adv Nogxina then gave the DMR’s comments on these findings. In respect of the rehabilitation programmes, he said that historically there had been no legislative measures to manage the impact of mining on the environment. The magnitude of this problem was unknown, and a strategy had to be informed by detailed research, which would still need to be conducted to establish the full implications. He tabled the DMR’s response on the slow rehabilitation, lack of integrated systems and capacity (see attached presentation).

Adv Nogxina then focused on the matters around Mintek. He said that Mintek had been appointed by the DMR to programme-manage the rehabilitation programme, and that mandate had been inclusive of the procurement process.

In regard to the comment about lack of communication and coordination, he noted that the implementation plan had developed and outline of a clear framework regarding both external and internal communication. Procedures were also now in place to ensure that the AG and NT were notified regarding the relevant Treasury regulation.

Adv Nogxina highlighted the DMR’s scheduling plans and priorities as well as the clusters of mines that posed as high environmental risks, and were thus listed as high priority sites. He noted that the current liability had been estimated at more than R30 billion, but the DMR currently had a budget of R50 million per annum. It would thus be necessary for the DMR to approach National Treasury to request additional funding.

Mr R Ainslie (ANC) said that the presentation had been lacking in detail. He displayed concern in particular about the strategy and information. He did not think that the presentation indicated the full extent of the problem. He wanted to know, as far as the management of the abandoned mines were concerned , if a crisis point had indeed been reached. This crisis related to the country’s water resources, and to the environment.

Adv Nogxina noted that it was very difficult to identify whether or not a crisis point had been reached, but that it was indeed a matter of urgency to deal with these matters.
Mr Ainslie said that in July 2010, he had sat in on a briefing being given to the Portfolio Committee on Water and Environmental Affairs, when a senior Departmental official had indicated that millions of litres of acid mine water were rising at a rapid rate. At that stage, the acid mine water had been about 600 metres below Johannesburg, and was rising at a rate of between 0.6 and 0.9 metres per day. If this was not halted, it could have catastrophic consequences. However, in order that the Department did something about the issue, it must first acknowledge that there was a problem.

Adv Nogxina said that on that same morning he had attended an inter-ministerial meeting regarding the matter, and that a task team had been formed that day.

The Chairperson enquired why a task team was only formed on 1 September 2010, and enquired whether there had been any previous teams in place prior to that.

Adv Nogxina said that previously, there had also been a task team, but that at that stage it only comprised of the DMR and the Department of Water and Environmental Affairs. Government was now seeing that the matter did not just relate to those two departments, and that a more collaborative effort would be required. He indicated that the Department of Science and Technology, as well as other relevant science and technology institutions, also needed to be brought on board.

Mr Ainslie said that it was a very late reaction, but was indeed a step in the right direction.

Mr Ainslie sought clarity as to why the Department had not indicated any implementation dates in its strategy. He enquired if the DMR did have a business plan or an implementation plan, as the strategy, although framed in broad terms, was lacking finer details.

Adv Nogxina said that copies of the implementation plan would be distributed to Members by the officials during the course of the meeting.
Mr Ainslie sought an example of a current implementation plan from the DMR.

Mr Nogxina cited the example of the Florida canal.

Mr Ainslie noted that a report had stipulated that, in May 2008, there had been 5 906 officially listed abandoned mines in South Africa. He asked the Department to confirm the figure, and wanted to know if the numbers had risen since then. He also enquired whether this list included mine dumps and dormant mines, as well as illegal mines.

Adv Nogxina said that the mines had been categorised according to whether or not they were derelict and ownerless, and not according to the criterion that Mr Ainslie had mentioned.

Mr Ainslie wanted to know what type of mine was classified as high risk.

Adv Nogxina said that a high risk classification was given when those mines had an impact on health, safety and the environment.

Mr Ainslie wanted to know if the DMR was able to maintain the information system as the status of mines changed.

Adv Nogxina confirmed that this could be done.

Mr P Pretorius (DA) was concerned about the DMR's organisational capacity and structure, as well as the small number of officials that had been assigned to the task.

Mr M Steele (DA) wanted to know when the DMR had been given the responsibility of derelict mines.

Adv Nogxina noted that derelict mines had been under the Directorate of Environmental Affairs in 2003/2004, when the Council for Geoscience (CGS) had done its initial investigations and discoveries. The new DMR Act had come into effect in 2004.

Mr Pretorius was concerned that one official had been selected to be responsible for asbestos mines. He wanted to know how many other officials had been tasked with the responsibility of the other mines.

Adv Nogxina confirmed that one other official was responsible for that.

Mr Pretorius was concerned that only two officials were responsible for such a huge backlog.

Adv Nogxina noted that the numbers and ability of the officials depended on their specific roles.
He said that the problem was not so much with capacity, but with sourcing and putting in palce particular skills, especially those around project management.

Mr Edson Ragimana, Chief Financial Officer, DMR, said that there was a skills shortage in the industry on the whole.

Adv Nogxina added that the DMR was competing for skilled appointees with the private sector, and the latter were able to pay more.

A Member enquired if systems had been put into place to execute the work.

Adv Nogxina said that the DMR had the systems, but sometimes simply lacked the skills.
A Member enquired whether the DMR’s systems did not include personnel. A specific enquiry was made as to which official was responsible for the R129 000 loss that was indicated on page 15 of the presentation.

Mr N Singh (IFP) noted that these mines, if left in their current state, would have serious ecological and environmental impacts. If the DMR were relying on its annual income of R50 million per annum to address these issues, then it would take about 600 years to address the problem, if it was calculated as carrying a liability of R30 billion. He was not happy with the lack of detail. He was also not happy with the time frame that the DMR had indicated in its presentation. He wanted to know what the responsibility was of the owners of those abandoned mines, or the people who had abandoned the mines.

Adv Nogxina noted that, morally, the mine owners carried the obligation. However, in terms of the legal dispensation, it was deemed that the abandonment of the mines had taken place at a time when they were not being held legally accountable. There was an ongoing legal dispute between mine owners and government on the point of liability at the moment.

Mr Ragimana said that clearly the current budget of the DMR did not address the issues. The DMR would be approaching National Treasury in the next budget cycle to stress the need for more funding to address the issue of the derelict mines.

Mr Ainslie said that the implementation plan did not include an actual action plan.

Mr F Gona (ANC, Chairperson of the Portfolio Committee on Mining) said that this was a serious issue. The effects of the problem were extremely adverse. However, government could not be held solely responsible. He would allow the DMR to interact with the Chamber of Mines, in order to determine the role that the Chamber would play. It must report back to the Committees at a follow-up meeting.

The meeting was adjourned.


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