Oversight visit reports: Northern Cape, Council for Geoscience, Mintek, Minutes: adoption

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Mineral Resources and Energy

16 November 2010
Chairperson: Mr F Gona (ANC)
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Meeting Summary

The Committee noted that it would, in the following week, undertake the second leg of the oversight visit to the Northern Cape, this time visiting the Kimberley area, where it would visit the Kumba Mine, Kolomela, De Beers, New African Mining and the opencast mine in Lime Acres. It would also meet with the Namaqualand Development Trust Fund, the Kumba Super Trust Fund, the Smitsdrift community and Women and Mining.

The Chairperson discussed the arrangements for the international study tour, in January 2011, to Chile and Bolivia, Members serving on other committees could attend more than one study tour, if they did not clash. Positive responses had been received from both countries, and the Committee would try to ensure that all Members had the opportunity to go on the tour. Members suggested that they should meet with the foreign ambassadors of those countries prior to travelling.

The Committee approved the minutes of meetings between 19 February and 9 September 2010. Following the meeting on 21 May, the Committee noted that it would next meet with the South African Diamond and Precious Metals Regulator on 23 February 2011, when the Department of Mineral Resources (DMR) would also be present. Members noted that on 12 May the DMR had briefly raised issues around PetroSA, and suggested that the Committee should call that entity in for discussion. Although PetroSA reported to the Department of Energy, the current Committee would have jurisdiction over any drilling activities that it undertook, and PetroSA was mentioned in the Mineral and Petroleum Resources Development Act (MPRDA). Members suggested that joint meetings with the Portfolio Committee on Energy would be appropriate. The final decision was still awaited in respect of the potential sales mentioned in the meeting of 18 May.

The Committee tabled and approved, as amended, its draft Report on the Oversight visit to the Northern Cape in May. Additional wording was suggested to clarify the Alexkor issues, and references were added to the Namaqualand Diamond Fund Trust (NDFT), as well as clarifying the position of the TransHex trust fund. It was noted that there were still outstanding issues with Alexkor granting the mining rights. Members stressed that many people in Namaqualand lived in abject poverty and the situation on the ground differed from the mining houses’ descriptions. It would be stressed that neither the mining companies nor the communities were able to account for the trust funds, and the boards must be called in to account, while the Department of Public Enterprises would be asked to investigate the matters. Three mining companies had a monopoly in that area, but were not properly implementing the required social and labour plans. Members questioned the extent to which the DMR was exercising oversight and ensuring implementation of legislation, and noted that the Committee must undertake an oversight visit to the Department. It would recommend that the MPRDA must be amended to deal with mineral rights being held although no operations were maintained, plunging regions into financial straits.

The Committee considered and adopted, with amendments, its draft report on the oversight visit to the Council for Geoscience. Specific reference must be made to the seismicity study funded by the Mine Health and Safety Council. Some changes were suggested to the Findings and Recommendations sections, which were to be combined. A new recommendation was added that the percentage of money allocated to research and development be increased. The Committee finally considered and adopted, as amended, its draft Report on the Oversight Visit to Mintek. The references to the specialist machinery used to do work for the State Diamond Regulator were corrected. The headings for Findings and Recommendations were to be joined, and further comments were made on Mintek and the need to promote its expertise.  

Meeting report

Oversight visit to Kimberley: arrangements
The Chairperson stated that the Committee would leave the following week for the oversight visit to Kimberley, which was the last leg of the Northern Cape oversight tours. Since there was little mining activity going on in De Aar, the Committee would concentrate on Kimberley and its surroundings for the whole of the following week. Three issues arose in the planning of the trip. The first was that although the Committee hoped to have a translator from the Language Section of Parliament who was conversant in both Afrikaans and Setswana, no one person could be provided with skills in both. Secondly, the Committee was waiting to hear from the Portfolio Committee on Trade and Industry about the invitations to a joint sitting to consider the Kumba matters. Thirdly, because of the sensitive nature of its work, the Committee would need protection services from the South African Police Service (SAPS) and Intelligence, similar to what it had received in Free State.

The Chairperson noted that the Committee would, during the course of 21 November to Saturday 27 November, be meeting with the mine management, shop stewards and mine health and safety representative of each company, and later would interact with the recipient or mining communities in close proximity to the mines. He outlined the mines to be visited. The Committee would also be interacting with the Namaqualand Development Fund Trust (NDFT) and would meet with a newly discovered trust fund, the Kumba Super Trust Fund, to find out what it entails and how its governance was structured. The Committee would also be interacting with the Smitsdrift community and with Women in Mining. The community meetings would inform the Committee how the mining legislation was implemented and its impact on the people on the ground.

Ms J Ngele (ANC) requested the departure and arrival times from the airport to the oversight trip in Kimberley.

The Chairperson replied that members would leave from their respective areas and that all Members would be advised of their departure times and place.

Study tour discussions
The Chairperson stated that a meeting was hopefully to take place later in the day to appoint a new Chair of Chairpersons. He noted that a meeting had been arranged with the Chief Whip in regard to oversight, and he noted that apparently each of the portfolio committees were allocated to months for study tours. The tour for the Mining Portfolio Committee coincided with that of the Portfolio Committees on Police, Public Enterprises, Higher Education and Training, and Agriculture, Forestry and Fisheries, and was to take place in January or February. Any Member serving on more than one of these committee would have to choose which tour to attend. This Committee would be visiting Bolivia and Chile.

Mr C Gololo (ANC) clarified that the Portfolio Committee on Public Enterprises was scheduled to travel in February. He would attend the tour of this meeting in January, and of the other committee in February.

The Chairperson stated that if there was no overlap between the two trips, there were no qualms about Members attending both study tours. However, the Committee felt that completely new Members of the Committee could not be expected to attend to oversight immediately, as they would be unfamiliar with the issues, and therefore not know what questions to ask, and not add much value, so it would be preferable to try to achieve better continuity.

He noted that Chile had responded hat there would be parliamentarians to receive the Committee, and in Bolivia the Minister and the equivalent portfolio committee would receive this Committee, and would also accompany Members on tours to mining companies. This still needed to be cleared finally with the Committee Section.

Mr Gololo said that he would be able to assist with translation as he was fluent in Spanish.

The Chairperson regarded this as very positive, and said that confirmation would be given to Members of what weather they should prepare for.

Mr Gololo, who had previously lived in South America, confirmed that the weather would be similar to South Africa.

Mr E Marais (DA) asked for the dates of the study tour.

The Chairperson replied that the trip would be from 17 to 28 January 2010, excluding travel dates. The Committee would leave the country on15 January, and would spend a week in Chile and a week in Bolivia.

Ms B Tinto (ANC) stated that it would be advisable if the Committee Secretaries began to work with the ambassadors from the respective countries to be visited during study tours.

The Chairperson stated that the procedures were part of the Committee Secretaries’ training, and it was important for the Committee also to meet with its own ambassador to brief him or her.

Mr Marais asked how many members were allowed to go on the study tour.

The Chairperson replied that the principle was that because Committees would do one study tour in their five year term, the entire Committee would be given the opportunity to go, provided that budget allowed for this. Previously, the tour was planned for Chile and Sweden but because this had exceeded R2 million, Bolivia was chosen instead of Sweden. Application had been made for the whole Committee to attend.

Mr Marais reminded Members to hand in their passports before they left on recess.

The Chairperson asked the Committee Section to ensure that it communicated with all Members as to what they would need to do, and who would make the arrangements.

Adoption of Minutes
he Chairperson tabled Minutes of 19 February, 24 February, 3 March, 10 March and 16 April.

Each of those Minutes was considered separately, and approved by Members.

The Chairperson tabled the minutes of the meeting on 21 April. He asked that the attendance be shown in these minutes. Subject to that amendment, the minutes were confirmed.

The minutes of the meeting held on 23 April were approved.

In respect of the minutes held on 5 May, the Chairperson pointed out that during this meeting the State Diamond Trader briefed the Committee on its Annual Report, but the Committee did not accept that report and instead requested a written response to questions. That was reflected in the Minute. The Minute was approved by the committee.

Adv H Schmidt (DA) enquired when the Committee would next interact with the South African Diamond and Precious Metals Regulator.

The Chairperson replied that the Committee would interact with it early in 2011, but on different issues. This entity would brief the Committee on 23 February 2011, on its Annual Report and outstanding matters, and the Department would also be present.

The Committee then approved the minutes of the meeting held on 7 May.

The Chairperson noted that on 12 May the Department had briefed the committee on the PetroSA. The Committee must call in PetroSA as it knew little of the functions of this State Owned Entity, early in 2011.

Mr Schmidt stated that PetroSA reported to the Department of Energy, not the Department of Mineral Resources. There had been a short briefing only by the Director General of the DMR, who stated that the resource was energy related. Although the Committee could call in PetroSA, it did not fall within the Committee’s brief.

Mr P Dexter (COPE) stated that PetroSA was involved with petroleum, and agreed that this was energy related, unless there was drilling involved.

Ms L Moss (ANC) believed that this Committee could call it in, and suggested that it might be useful to have a joint meeting with the Portfolio Committee on Energy.

The Chairperson was under the impression that the Committee had no business in the petroleum sector, but had discovered that it may have some role to play. The Mineral and Petroleum Resources Development Act (MPRDA) made direct reference to PetroSA as playing a pivotal role in granting exploration permits for any mineral resources. The Committee could call it in, on that basis, to hear what it was doing in terms of this Act.

Ms Moss reiterated that she would prefer to have a joint meeting, specifically addressing challenges in the petroleum sector.

Mr Dexter stated that it was not a matter of principle, and if another entity related to, or had activities that crossed over to mining, the Committee should interact with it.

Ms F Mathibela (ANC) stated that the DMR had mentioned that petroleum fell under mineral resources as well as energy.

The Chairperson stated that there would be no harm in holding a joint meeting, when dealing with the Annual Report and strategic plans, and said that this Committee could ask the entity to report to it as well as to the Portfolio Committee on Energy.

Members then approved the minutes of the meeting.

Members also approved the minutes of the meeting on 14 May.

The minutes of the meeting held on 18 May were approved, subject to grammatical corrections.

Adv Schmidt asked about an outstanding matter, in which the Committee had expressed concern about 60% sale on the international market, and noted that the final report had not been received on what decisions had been made.

The Chairperson stated that the Committee understood that it was bound by the Cabinet memorandum imposing a moratorium on the disposal of State assets in the mining sector. The Department had also indicated that it did not receive any Section 11 application, which would seek Ministerial approval, and the report was unofficial. It seemed that the entity, aware that it would not receive approval, had taken note of the Committee’s concerns. However, the Committee would follow up on the final decision.

Members approved the minutes of the meeting of 18 May.

Members also approved the minutes of the meetings on 20 July, 18 August (with grammatical corrections), 25 August and 8 and 9 September.

Committee’s draft
Report on the Oversight Visit to the Northern Cape
The Chairperson stated that the work during the oversight visit was intense. He asked for comments to be made, but noted that findings and recommendations should stand over for the moment. He also noted that errors of grammar and spelling should be mentioned as Members went through the report.

The Chairperson commented on paragraph 4.3, saying that the agreement between Alexkor and the Richtersveld community was still a challenge. He noted that since Alexkor had not yet ceded certain rights, the phrase “This led to Alexkor ceding…” should be changed to “This led to Alexkor’s intention to cede…”

In Paragraph 6.3, in the part dealing with the impact of employment, he suggested that a new sentence should be added after the part reading “from
2009-2010 retrenchment had been effected instead of being made”, reading: “This exacerbated the situation of unemployment and poverty levels in the Namaqua region in the Northern Cape.”

In paragraph 6.12, in the part dealing with benefits, reference was made to a trust for about four to five communities. Richtersveld, Nama Khoi, Namaqua and Kamiesberg were beneficiaries of the targeted trust. He thought that perhaps there was also a need to mention the Namaqualand Diamond Fund Trust (NDFT), but said that this must first be checked to ensure that the report was accurate before it was tabled in the House.

Mr Sonto asked, in respect of paragraph 4.2, which trust fund was involved in the rehabilitation.

The Chairperson replied that it referred to the TransHex Trust Fund, which it was an in-house trust fund, established by TransHex for rehabilitation purposes and managed by itself. It was, in terms of the MPRDA, supposed to ringfence a certain amount of funding only for rehabilitation purposes. TransHex had not made any commitment as required by the law, but instead opted for its own trust fund. He suggested that perhaps the sentence should make specific reference to “established its trust fund” to make it clear that it was TransHex’s own trust fund.

Adv Schmidt asked if the Committee, during the oversight visit to the Kimberley area, would visit any of these affected communities, and checked if there would be any repetition.

The Committee said that this would not happen. The Committee had purposely divided its oversight into two parts because of the vast areas to be covered. The visits to the Namaqua region included De Beers, Alexkor, TransHex, and Black Mountain, whilst the visits to the Kimberley region would include different mining operations of De Beers, Kumba, Lime Acres, an open cast mine, and Smitsdrift.

Mr Gololo noted paragraph 4.3, and said he was under the impression that the Richtersveld community was involved, together with Alexkor, in a joint venture in relation to the community’s Development Foundation.

The Chairperson said that there were still some outstanding issues. Alexkor had not yet implemented the agreement that was signed. Firstly, Alexkor had entered into an agreement that a percentage of Alexkor’s profit would be paid over to the Alexkor Development Foundation (ADF) but later this was changed, and eventually it was agreed that mining rights would be given instead. The implementation of this issue remained elusive. Alexkor had not yet transferred the mining rights to the Richtersveld community in line with the agreement, but focused on other outstanding matters. One of the excuses was that there were differences in the community, but the Committee pointed out that the whole issue stemmed as far back as 1998, so the situation was still uncertain, as reflected in the draft Committee Report.

Ms Mathibela asked, in relation to paragraph 6.14, how relevant the electricity generator project progress was.

The Chairperson replied that De Beers, during its presentation to the Committee, had stated that this project was established and financed and simply needed government buy in. The whole project had already been set up.

The Chairperson pointed out issues under the “Findings” section of the draft Report. One issue was the lack of communication between municipalities and communities. In many areas of Namaqua, people were living in abject poverty, as witnessed during the May oversight. The information presented by the mining companies contradicted the information given by the communities. Mining companies could not account exactly for the trust funds and were not aware of its obligation. Both trust funds provided for representation by trustees.  However, the communities were not aware of the MPRDA.

The Chairperson said that he wished to add points under “Findings” about the lack of social infrastructure and community, and the fact that the Committee discovered high levels of unemployment within the region.

Adv Schmidt stated that neither the mining companies nor the communities were able to account for the trust funds, so the main concern was who was accountable. He thought that the Committee must call the boards of those trusts in to explain the position.

The Chairperson replied that this had been done for the Namaqualand Development Fund Trust and the Alexkor Development Foundation. However, the Committee could not deal with the community side, as this was
administered by the Portfolio Committee on Public Enterprise. If that community scheme received mining rights, it would be necessary for this Committee to call it in. The Committee had called only those trust funds that received royalties.

Adv Schmidt believed that it should be said that the Committee did not consult with the Alexkor Development Foundation, but that the mines and communities could not account for the trust funds, and recommend that the Department of Public Enterprises should conduct an investigation.

The Chairperson said that the trust funds referred to in the draft report should be set out clearly and by name. He agreed that the fact that neither the mines nor communities had accounted should be included.

Mr Gololo stated that because mining companies contributed royalties to the trusts, it should be stated clearly that they received royalties and not donations.

The Chairperson reminded Members that the royalties were paid until the MPRDA came into operation, but had been suspended since March 2010, as the companies were now required to pay over to the State.

The Chairperson then noted that the “Findings” section of the draft Report stated that there were three mining companies that held the monopoly of mineral rights in the Namaqua region. This “cartel” divided Namaqua into portions and monopolised the entire landscape of the regional and mining rights. The Committee further discovered that mining companies had a variety of degree of development projects. The Committee also discovered that mining companies were not properly implementing the required social and labour plans.

Adv Schmidt stated that the Committee had become increasingly aware that mining companies, across the board, were not complying with legislation. He suggested that the DMR should be inspecting them and determining why the social and labour plans were not implemented. The Committee must hold DMR accountable, as it was its responsibility to ensure that the mining companies were complying.

The Chairperson stated that the role of the DMR was raised previously, and the Committee must conclude that the DMR failed in its regulatory functions in the area of Namaqualand.

Mr Gololo agreed that the DMR was not complying. Currently there were 6 000 mines and the State was paying substantial sums to ensure that mines were rehabilitated, which again went back to DMR not fulfilling its regulatory functions.

The Chairperson stated that the Committee still needed to plan an oversight trip to DMR itself, to determine what the Department was doing to implement MPDRA and the Mine Health and Safety Act, and how and to what extent it was enforcing and ensuring compliance with the law.

The Chairperson said that the findings and recommendations section of the draft Report should reflect that a visit should be planned to check the DMR implementation plans.

The Chairperson then suggested that the recommendation stating that those retrenched should take their matters through the National Union of Mineworkers should be removed from the draft Report.

The Chairperson then added further recommendations. In respect of the conversion of old hospitals by De Beers into correctional services facilities, he asked that it be noted that the Department of Correctional Services was asked to support the correctional centres in the old hospitals, since De Beers had not capacity to manage the correctional service centres, which should be attended to by the correct State Department.

In respect of the MPRDA, he added a recommendation that this Act must be amended to deal with mineral rights that were held by companies for long periods of time, while the region and the provinces descended into poverty. He pointed out that in Northern Cape, certain companies held on to their rights, scaling down their operations, thus plunging the region into dire financial straits. MPRDA had some provisions to address this, but they were not adequate.

Members agreed to adopt the draft Report, as amended.

Committee’s draft Report on the Oversight Visit to the Council for Geoscience (CGS)
Mr Gololo suggested that Members be referred to as “Hon” rather than “Mr” or “Ms”.

The Chairperson answered that, firstly, this would not show the gender, and secondly would not allow for the correct titles such as “Dr” or “Adv” to be given.

The Chairperson said that the reference to the Council for Geoscience (CGS) as a “mandatory advisory authority” should be amended to “a national advisory authority”.

The Chairperson noted that the grammatical errors would be corrected during the proofreading.

The Chairperson said that on page 3, the sentence in bold, which reported that the Mine Health and Safety Council funded the CGS on a pilot study for twelve months, should specify that it was the seismicity study that was funded.

The Chairperson stated that the headings for “Findings” and “Recommendations” should be combined.
He suggested a redraft of the first sentence to read: “…look at the matter of rising water tables as a result of acid mine drainage in the Rand area.”

He asked that the sentence starting: “   CGS was underdeveloped …” should be changed, to read: “CGS was underfunded to handle all of its problems; therefore the Ministry of Mineral Resources must pick up its approval of the new funding model for CGS.”

The Chairperson also added a new issue. He reminded Members that currently South Africa only contributed 0.5% of its Gross Domestic Product (GDP) to research, compared to the contribution of other countries of between 2% and 5% of GDP. He would like to urge that South Africa move forward on this and therefore asked that a sentence be added to the effect that: “The country must invest more of its GDP percentage (±3%) on research capabilities, in order for us to be in line with other countries.”

Mr Sonto asked why there was a recommendation for a meeting to be arranged between municipalities, provincial and local government, and what it would deal with.

The Chairperson replied that it was in relation to the matter of acid mine drainage and the potential damage, and that the intentions of the parties must be clarified.

Members agreed to the adoption of the draft report on the Oversight Visit to the CGS, as amended.

Committee’s draft Report on the Oversight Visit to Mintek
The Chairperson asked for comments and questions on the draft Report.

Adv Schmidt questioned the way in which paragraph 4.8, under the section dealing with mineralogy, was worded. He was uncertain if this reflected exactly what was reported. He pointed out t that although the mineralogy division was running a dedicated diamond laboratory, with laser equipment, the references to “diamond shape, colour and surface feature” was surely incorrect, since this could not be determined with the equipment that was specifically named in that section. Mintek was able to attend to this separately, but not using that machine.

The Chairperson stated that the sentence could be reformulated.

Mr Schmidt asked that the phrase: “diamond shape, colour and surface feature” be deleted.

The Chairperson thought that this phrase was important. Whilst it was true that perhaps there had been some confusion as to where exactly this was done, he pointed out that Mintek had in fact been able to demonstrate the high level technology that it had, which enabled it to determine the shape, colour and surface feature. He added that since Mintek also played an advisory role to the State Diamond Regulator, it was necessary for Mintek to be able to provide this information, for the regulator to do its work effectively.

Adv Schmidt suggested that the relevant part of the sentence should then read as follows: “…funded by the South African Diamond and Precious Metal Regulator, in order to determine the diamond shape, colour, surface feature and trace elements, by the use of, inter alia, the art laser ablation inductively coupled, at no
cost to Mintek.”

The Chairperson asked that in this Report the headings for “Findings” and “Recommendations” should be joined.

The Chairperson said that more findings needed to be added. Firstly, he asked for inclusion of the sentences: “Mintek has high levels of technical and professional expertise in the field of mineralogy…“Mintek has huge potential to assist the country in the local beneficiation of all our minerals….The country must increase its investment in research capabilities…Mintek’s expertise must continue to be used and promoted worldwide…
“Mintek must continue developing scientists within the country, concentrating on young and historically disadvantaged South Africans.”

The Chairperson asked that the sentence to do with the Committee extending an invitation to Mintek to discuss the possibilities of mineral beneficiation should be expunged.

Members agreed to adopt the Report, as amended.

The meeting was adjourned.


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