Mintek & Council for Geoscience on their 2009/10 annual reports

Meeting report

Mintek Annual Report 2009/10 briefing
Mr Mohau Mphomela, Chairperson: Mintek, appreciated the Committee's visit to Mintek; he was also pleased that the Committee had visited the Council for Geological Sciences (CGS), although he regretted that he had been unable to attend that visit in person.

Introduction, highlights
In the mining value chain (slide 3) Mr Abiel Mngomezulu, Mintek: CEO, indicated by way of a flow chart the process leading from exploration, mining, concentration, hydrometallurgy and biotechnology or pyrometallurgy, refining, to value addition. He also indicated by means of this slide the interrelation of Mintek with the Council for Scientific Research and with the Council for Geological Sciences.

Mr Mngomezulu indicated Mintek’s worldwide presence (map - slide 4), the state of disrepair of some of Mintek’s buildings (slide 5), sources of information – the Annual Report, with audited financial statements, shareholder performance agreement, and key performance indicator report (slide 7, the management structure (slide 8), and highlights of the year ended March 2010.

Such highlights were: science vote and earmarked funding increased 22%; total income declined 11% year-on-year; staff turnover decreased to 7%; Mintek weathered the recession without shedding a single job; new business development function created – focus on marketing Mintek’s technologies and services; client dissatisfaction frequency rate achieved target; and a recognition agreement signed with the National Union of Mineworkers (NUM).

Effects of economic crisis
Mr Mngomezulu explained the effects of the economic crisis on the global mining sector: for the world’s top 40 mining companies, revenues declined 15% year-on-year; net profit declined 26%; and cash flow from operations decreased 27% (information from PriceWaterhouseCoopers). World exploration budgets 1989-2009, according to information from the Metals Economics Group, were illustrated by means of a graph (slide 10).

Financial position
Mr Mngomezulu indicated Mintek’s annual income 1968-2010, comparing state grant, total income, and other revenue (slide 11). He provided a financial summary indicating income, expenditure, and surplus (slide 12).

Mr Mngomezulu gave an analysis of financial position as at March 2010, according to which there was a revenue decrease by R42,6 (11%); cash generated from operations was significantly lower that previous year; there was a volatility of foreign currency resulting in exchange loss; the gross margin on commercial projects was maintained at 25%; there was reclassified investment property due to termination of lease (R12m); and an expanded asset base by R25.1m (2009: R38,6m) (slide 13).

Audit report
Mr Mngomezulu highlighted improved asset management and controls. In 2007/08 the Auditor-General (AGSA) had noted inadequate internal controls over project management system and emphasis of matter – fraudulent payments of R3.6m over the past 2 years, and had given Mintek a qualified audit report. In 2008/09 and 2009/10 Mintek had received an unqualified audit report (slide 14).

Technological developments
Mr Mngomezulu illustrated by means of a graph the focus of the several technology divisions and research and development divisions on products and services (slide 15).

Mr Mngomezulu showed Members a photograph of the ConRoast – Bay 2 (slide 16), a diagram of the water atomisation process (slide 17), a photograph of the MetRIX plant (slide 18), and a photograph of the bioleaching plant (slide 19).

Mintek had signed a contract with the National Iranian Copper Industries Company (NICICo) for full-scale implementation of copper heap bioleaching. Two large-scale projects were under way for major clients in South America (slide 19).

In regard to titanium metal, laboratory-scale facilities were commissioned for chlorinating titania feedstocks and titanium sponge production (slide 20).

Under the heading of alluvial diamond provenance, the Mintek/SADPMR Diamond Provenance Laboratory was officially opened (slide 21)

Mr Mngomezulu showed Members a photograph of Mintek’s advanced gold leach facility for studying environmental parameters in relation to process conditions, so as to arrive at the overall optimum process route (slide 22).

The measurement and control division developed, demonstrated, implemented, and serviced specialised instruments and process control systems to stabilise and optimise flotation and milling processes, to control the dosing and limit discharge levels of cyanide used in gold leaching processes, and to stabilise and optimise the use of energy in submerged-arc furnaces (slide 23).

Project AuTEK had a biomedical programme (HIV, cancer, and malaria), in which an HIV-1 integrase assay kit had been developed; a catalysis programme, in which AUROLite™ catalysts were supplied to researchers in conjunction with the World Gold Council and STREM Chemicals (USA); and a nanoscience and nanotechnology programme, in which was AuTEK (gold nanotechnology development) and the
DST/Mintek Nanotechnology Innovation Centre (applications in health and water) (slide 24).

The SAVMIN project at Grootvlei was illustrated by photographs (slides 40-41). Also illustrated were high pressure grinding rolls (slide 42), the RADOS sorter (slide 43), and the CommoDas sorter (slide 44).

Beneficiation
In promoting small-scale mining and beneficiation, Mintek had conducted technical trials of the iGoli mercury-free gold recovery process in Chile in collaboration with CIMM and the Mining Association of Andacollo. 197 people were trained in occupational health and safety, environment and quality, surface mining and quarrying under the Mining Qualifications Authority (MQA) programme. There was an agreement with the Department of Science and Technology (DST (to implement a 60 ton/month Biomin™ mineral-based soil ameliorant production plant in Mpumalanga (slide 25).

Mintek sought the development, support and incubation of small and medium enterprises (SMMEs) in the minerals sector, by means of the creation of start-ups and employment; training and skills development; development, adaptation and transfer of small scale technologies; accreditation of Mintek as a training service provider with MQA; and ceramic and jewellery Incubators (slide 26).

Mr Mngomezulu pointed out to Members the pottery projects of Mintek in the North West, of which phase 2 (R2M funding) were at four sites: Kanana, Orkney (11 learners with disabilities); Braklaagte, Zeerust (15 learners with disabilities); Boitekong, Rustenburg (10 learners with disabilities); and Morokweng, Vryburg (10 learners with disabilities) (slide 27).

Glass bead manufacturing embraced traditional African beads historically made from shells, gold, glass, and ceramics. The Amaso Beads Technology was used to convert “bottles to beads” using recycled glass bottles.
Training and incubation was provided and technology was transferred to SMMEs (slide 45).

Sustainable development was a major concern of Mintek. Asbestos dump rehabilitation – managed by Mintek under the Department of Mineral Resources (DMR) Derelict and Ownerless Mines programme. Sites before and after rehabilitation were compared (slides 28-31).

Human resources
Human capital development and management embraced science, technology, engineering and mathematics promotion – MinQuiz™ nationwide science contest school registrations were up from 281 (2007) to 333 (2008) to 398 (2009); the Technology and Human Resources for Industry Programme – Girl Learner Job Shadowing programme; the Work-Integrated Learning programme (previously In-Service Training Programme); internship programmes – DST Research Professional Development Programme (DST RPDP)
– MQA Graduate Development Programme (MQA GDP); and undergraduate and post-graduate bursaries (slide 32).

Graphs illustrated beneficiaries of bursaries and trainees, comparing full-time undergraduates, full-time master’s degree students, and full-time doctoral students (slide 33), and comparing part-time master’s degree students and part-time doctoral students (slide 34). Work-integrated learning students were indicated (slide 35).

Highlights of human capital development and management were: retrenchments – no retrenchments due to recession; employment equity – designated group component at 82%; unionisation – recognition agreement signed with NUM; and HIV/Aids; – employees encouraged to use VCT service; a survey indicated improvement in knowledge and behaviour.

Mintek’s lost time injury frequency rate (LTIFR) was compared with the target rate from April 2008 to March 2010 (slide 37).

Mintek’s client dissatisfaction frequency rate (CDFR) was compared – actual CDFR versus target CDFR (slide 38).

Future prospects
Future work for Mintek included energy and water efficiency; Government priorities and the beneficiation drive - job creation potential (slide 39).

Mr Mngomezulu concluded that volatility and uncertainty in the global economy would continue for some time. It was essential to contain costs, maximise commercial revenue, and balance applied basic research with commercial contract and service activities. Africa was increasingly attractive as a destination for mineral project investment. Mintek sought to attract, develop and retain skilled technical personnel (slide 46).

The innovation chasm, otherwise known as the “Valley of Death”, was illustrated by means of a cartoon and defined as the gap between a research and development (R&D) discovery and the tangible benefits arising from commercialisation of a new product (slide 47).

Discussion
[The Chairperson invited Members to ask questions. At this point the proceedings were inaudible and the first Member's name and her question could not be heard.]

Mr H Schmidt (DA) asked for clarity on the ConRoast (slide 16) technology. He understood that one company had had exclusive use of this technology. He asked for more details. Secondly, he asked how private sector involvement, or lack thereof, had impacted on Mintek's responsibility to develop mining technologies further for the benefit of the mining community. 

Ms F Bikani (ANC) asked if Mintek envisaged profit-making from the commercial side of the technology divisions' activities. If it did, what did it hope to achieve from these processes? If not, what was happening? And how did the technical side differ from the commercial side? [Inaudibility followed by acoustic feedback made it hard to understand Ms Bikani's introduction to her question].

Ms Bikani asked secondly about the benefits that Mintek hoped to derive from its water atomisation process (slide 17). She noted that the previous year there had been a problem in completing the machinery.

Ms Bikani asked thirdly about the AuTEK Project (slide 24). She noted that Mintek had said that there was a gradual withdrawal of the gold companies from the project. She asked for more detail as to the possible reasons. It was of particular concern because the project appeared to have some special benefits to some of the health conditions that Mintek had mentioned. Why the disinterest?

Ms Bikani asked fourthly about Mintek's internship programme. She asked if outsiders could assist Mintek to identify potential interns. Also she asked what percentage of interns became part of Mintek's permanent staff. She asked this question in the light of some learners from the Free State who remained without work after completing their internships and could only dream of entering the world of mining but lacked the opportunity.

Ms Bikani asked fifthly about Mintek's water efficiency programmes in terms of its future work. She noted that Mintek was also working on matters of acid mine drainage and that the product of that water turned out to be expensive. She asked if there were any ideas or issues on the table on how best to utilise that water. Would the project be too expensive eventually? Were people aware of the advantages, if any?

Ms Bikani asked sixthly about the RADOS sorter (slide 43). Was there no risk of radioactivity in working with that machinery? If so, what protective measures existed for people working on that project?

Mr C Gololo (ANC) thanked Mr Mngomezulu for the presentation and Mintek for “weathering the storm” of the period of recession and thereby not shedding any jobs. This was a great achievement.

Mr Gololo commended the pottery projects of Mintek in the North West (slide 27). Mintek was doing a very good job and was enhancing the creation of employment. He hoped that Mintek would involve many other people.

On the sponsoring of the students at the University of Cape Town (UCT), Mr Gololo would like to see Mintek assist more students in this valuable undertaking, so that they could gain more experience and obtain jobs eventually.

Mr Gololo asked about the conversion of sea water to make it fit for drinking. Was Mintek able to make any break though?

Mr Gololo also asked about the AuTEK Project (slide 24) with reference to the biomedical programme. Was Mintek assisting in the manufacturing of tablets? What exactly was Mintek's role in this programme?

Ms N Mdaka (ANC) said that this was her first day in the Committee, having moved from Correctional Services. 

Ms Mdaka asked for clarity about the fraudulent payment of R3.6 million over the past two years (slide 14).

The Chairperson asked Mintek to respond.

Mr Mngomezulu replied that the fraudulent payment was history. “It is not for this financial year.”

Mr Sakhi Simelane, General Manager (GM): Finance, Mintek, explained “it happened before my time.” here had been many problems that had happened, arising from some breaches of internal control in 2006/07. It was identified when there was a strengthening of internal control around 2007/08. “About two people were actually arrested.” The matter was handed over fully to the police. Mintek had tried to recover some of the money but had failed, “but all those people had been arrested”. It had not occurred since then.

Mr Alan McKenzie, Acting GM: Technology, replied on the RADOS sorter (slide 43). This equipment was checked and regulated by the Department of Health. This Department had checked it to ensure that there were no emissions. All the people who worked with it were registered as radiation workers, and they had to wear badges and undergo biological monitoring monthly to ensure that they had not been exposed to radiation.

Mr Roger Paul, GM: Business, Mintek, replied on the ConRoast (slide 16) technology and the nature of the contract with the companies concerned. Approximately R90 million had been invested in the development of the technology. R45 million of that went into the construction of the pilot plant that Members had seen in the presentation. The other R45 million went into improving the research and development and optimising of the processes. What that investment allowed was an exclusive licence for a certain number of years in which it had to attain certain milestones. The first was 30 June 2011 by when the first furnace had to be built. Already in fact that furnace had been built. The company concerned would have to make the first licence payment of R10 million towards Mintek. Thereafter the company concerned had to build one furnace every two years in order to keep the exclusive licence. If the company concerned did not, the exclusive licence would lapse, and Mintek would be allowed to license the technology to any other party.

Concerning the SAVMIN, Mr Paul said that the SAVMIN was a technology for treating acid mine drainage and was designed to produce potable water. The problem that both technologies faced, was that in treating acid mine drainage water was that municipal water typically cost R3 per cubic meter. However whether one was considering Mintek's technology or reverse osmosis or ion exchange technology, as Members might have seen in the Carte Blanche television programme on Sunday night, the technologies all cost somewhere between R9 and R15 per cubic meter. This was a substantial difference. If a plant was built to treat acid mine drainage and to treat potable water, it had to be asked who would pay the difference - the subsidy between the price at which that water was sold to domestic consumers and the price that it cost to treat it. Mintek believed that SAVMIN had certain inherent chemical advantages, but the cost of the equipment was a problem. This is why Mintek negotiated a technical agreement with one of the world's biggest commercial purifiers of water, which was bringing in its expertise, equipment, and capital, and was helping Mintek to optimise the process and thereby make it cheaper. This was slow and expensive work, for which Mintek had a programme going forward for the next three years.

The Chairperson asked Mr Paul about acid mine drainage. In the next two to three years we would be faced with a very serious problem. He asked if Mintek was involved with the Department of Water Affairs. This Department was talking of a budget to establish a plant near some of the derelict mines and linked to some of the mines that were currently active.

Mr Paul replied that Mintek did have a representative who sat on the Inter-ministerial Committee on Acid Mine Drainage. Starting from April 2012, for three years, Mintek had been allocated funding to continue the development of the SAVMIN technology. Currently Mintek was at the level of a pilot plant. It was not yet confident that it was able to build a commercial plant. Mintek still needed to bring down the cost, and improve the operating efficiencies.

The Chairperson wanted reassurances that it would be possible to arrest the situation. The media were talking on a daily basis of the threat of the decanting of acid mine drainage water, particularly in the Rand Basin. In a matter of a few months we would be hit with this disaster. “Are we working towards winning the battle?” People wanted to be sure that their water would not be contaminated.

Mr Paul said that he would then respond on AuTEK, but felt that it would now be appropriate to address the question of converting sea water into potable water. This was linked to acid mine drainage. There were two existing worldwide technologies for converting sea water into potable water. One was simply by applying heat and distilling the water, which was condensed. This was practised by many of the Arab countries which used their own natural gas which they burnt to provide the heat to distil the water. It was done no where else in the world as it required extremely cheap energy costs. The second was reverse osmosis. One plant had been built and commissioned in South Africa at Sedgefield close to Knysna. There was also one being built close to Mossel Bay. It was extremely expensive to convert sea water into potable water. The reason was the salt load. The typical level of dissolved salt in sea water was two to 2.5%, whereas the salt load in acid mine drainage was typically 0.6%. So in fact it was easier to convert acid mine drainage water. So this was an area in which Mintek felt that there was no particular motivation for it as a mining company to become involved in the conversion of sea water into potable water.

Mr Paul responded to the question on why Mintek was involved in a biomedical programme in connection with AuTEK (slide 24). There was mention of HIV/AIDS, cancer and malaria. When Mintek was trying to convince the gold mining companies to invest in adding value to gold and gold products, rather than just selling bullion, Mintek approached Gold Fields who invested in nanotechnology, and AngloGold who invested in catalysts, and Harmony Gold who agreed to fund the medical side. There were a number of drugs based on gold compounds which showed a strong response to the HIV virus, particularly in suppressing the generation of what were called integrates. Mintek had had these compounds tested in the United States of America (USA) at the National Institutes of Health (NIH) and Mintek had brought out a small kit which Mintek was starting to sell commercially for researchers who were involved in the integrates cycle around the HIV virus. Mintek had set up a little laboratory where it was able to do these tests itself, and was trying to advance the development of these gold drugs to the stage where Mintek could take them to a major pharmaceutical company.

Mr Paul said that Mintek was outsourcing work on cancer to local universities and using postgraduate students to do much of the work on its behalf. Once again Mintek was looking at gold based compounds and their medicinal properties in respect to anti-cancer drugs.

Mr Paul said that it was much the same with malaria. There was virtually no malarial work at Mintek itself, but the company was funding university students.

Mr Paul said that Gold Fields had withdrawn from the funding about six to nine months previously, on account of financial pressures.

Harmony Gold's funding would stop on 30 June 2011.

However, Mintek had a commitment from AngloGold Ashanti to continue funding for the next three years.

Mr Paul believed that this answered all the technical questions.

The Chairperson reminded him of an unanswered question.

Mr Paul responded that Mintek earmarked its entire Parliamentary science vote to conducting dedicated research and development (R&D) in identified areas where it believed there was a need, and it was aligned with the 12 national priorities which the CEO had identified. Mintek also relied to a fairly significant extent on the private sector to fund some of Mintek's R&D. AuTEK would be a classic case, where the three gold-mining companies referred to were paying 50% of the research costs. Mintek tried to leverage as much as it could on the private sector. Even the high pressure grinding rolls were supplied by a company from Germany. So Mintek tried to leverage the knowledge that it generated through the Science budget vote into practical and commercial R&D which it then tried to get the private industry to support. In this past year (2010/11), there had been a cutback in the R&D which Mintek would have done if it had had better financial support from the commercial sector. It hurt Mintek when the industry could not afford to conduct R&D test work at Mintek.

The Chairperson reminded him of a further unanswered question.

Mr Paul said, regarding the benefits of the atomiser, that when one tapped a furnace there was a flow of tow or three tons of metal that came our very quickly. The normal way was to cast that into ladles and then the metal solidified into ingots that weighted between half a ton and a ton each. This made it very difficult to handle that material, and find out how much of the platinum group metals (PGMs) were in that sample, because how did one know that the platinum would not be homogeneously dispersed throughout the metal alloy. What the clients would like Mintek to do was have that atomiser which as one poured that molten metal into high pressure jets of water that produced something of the consistency of beach sand and even a little bit finer. Once one had done that one could move it or scoop it up and take a sample for analysis and because one had quenched the molten metal the analysis of platinum was very homogeneous throughout those very small grains. The diagrammatic slide showed an atomiser that cost R45 million. Mintek hoped to get Anglo Platinum to fund R23 million of that R45 million but those negotiations were slow and not yet finalised.

Mr Paul responded to the question on profit-making from commercial work. Mintek tried to achieve a 20% profit on every commercial project undertaken, and it tried to add this on to its costs. However, of course, Mintek could generate that project only if it could complete the project on time, on budget, and exactly according to what the client specified without any problems that might cause us to repeat the work and eat into the profits. Mintek did not attain exactly 20% profit on every single project, but Mintek did use the profit that it made, to reinvest in buying additional capital equipment which it could not afford to purchase from the science vote. Mr Paul referred Members to the slide on annual capital expenditure, most of which was funded from the profits of Mintek's commercial work, and only a very small proportion was funded from the Parliamentary science vote. 

Mr McKenzie talked about the absorption of interns and the work-integrated learning programme at Mintek. This programme was previously known as the in-service trainee programme. It was a very successful partnership between Mintek and those students at those institutions that had been known as technikons. These students were in the third and fourth year and needed practical work experience in order to graduate. On the other hand Mintek benefited from this partnership through the extra creativity and knowledge that the interns brought to the organisation. The challenge was that Mintek could absorb only so many of them. It normally set itself targets of between five and 10% for absorption. The technical divisions had limited budgets and capacity. However, Mintek tried its very best to give these young people skills to the highest limits. Additionally “soft” people skills, and project management skills were inculcated. Also Mintek tried to help them get jobs while they were studying.

The Chairperson asked about the high rate of failure and asked Mintek if it had investigated the causes. Secondly he asked to what extent Mintek was tapping the resources of the Sector Education and Training Authorities (SETAs). These were all Government resources that must be shared.

Mintek assured the Chairperson that it did use the resources of the SETAs and was aware of the added benefits. There was, however, a predetermined pipeline in Mintek, and Mintek could absorb only so many.

The failure rate in the first year was a national problem that Mintek could not take upon its shoulders. There could be shortcomings in the selection and recruitment process. However, Mintek was busy investigating this. Most companies would want to employ students from the third year level, because by that time, students would have proved themselves.

Ms Bikani asked how the process currently going at the Department of Public Works to put engineers and artisans on a data base complemented what Mintek was doing.

Mr Mngomezulu replied that this was a totally different process. On the one side those who were retired could come and help Government going forward. On the other hand there was the job creation process for the young ones who lacked work.

Mr Mngomezulu concluded with comments on the State of the Nation Address (SONA), staff turnover decrease, and the recognition agreement with the National Union of Mineworkers (NUM). He reminded Members that the report under consideration was on Mintek's work from April 2009 to March 2010. The SONA that Members were discussing was that of February 2011. In 2008 Mintek had removed 300 persons from casual labour to permanent employment in order to give them decent jobs that were sustainable. Most of those people remained at Mintek. The 7% staff turnover was composed of those employees who left of their own accord or for reasons caused by themselves. Mintek had signed an agreement with the NUM guiding Mintek as an employer. The most important point of this was the bargaining rights.

The Chairperson asked if Mintek was analysing uranium in terms of its use or concentrating on the energy properties of uranium and the safety of the work that it was doing, to the extent that uranium could be used to produce weaponry.

The Chairperson asked about bioleaching and titanium metals.

The Chairperson noted that the Committee, on its study visit to Chile, had seen that new uses for copper were being found in that country.

The Chairperson noted Mintek's remarks about alluvial diamonds. Was Mintek dealing with diamond parcels from Zimbabwe and were they within the framework of the Kimberley process?

The Chairperson noted the challenge of more than 6 000 ownerless and derelict mines that must be rehabilitated. He also noted the challenge of silicosis. People affected might want compensation.

The Chairperson was concerned about the safety of machinery in abandoned mines.

The Chairperson noted an area of concern – non-adherence to legislation - in the audit statements (Annual Report, page 60). He asked about Mindev (Pty) Ltd.

Mintek replied that it was a subsidiary. Because of legal issues it had a similar mandate but was currently dormant. There had been an oversight on Mintek's part whereby a tax return had not been submitted.

Mr Petrus van Staden, Biotechnology, Mintek, replied that bio-leaching had a number of different aspects. Mintek had long term projects specifically for two companies from Chile. In this regard Mintek was being recognised as a world leader in terms of novel technologies and novel equipment. It was becoming more expensive to treat copper ores.

Mr Paul responded that South Africa was rated fourth in uranium resources worldwide, but was only seventh as a producer of uranium. South Africa had large reserves but they were very low grade and therefore costly to exploit.

Mintek was not involved in uranium enrichment at all. It was involved only in extraction, and most certainly not in weaponry.

South Africa produced 40% of the world's titanium annually but in the form of titanium slag which had to be processed further. Japan, Russia and the USA dominated the world's production of titanium. These countries saw it as strategic for their weapons industry.

Mr Paul replied that the SAVMIN equipment had been brought back to Mintek and there was no danger from it. 

Priority was given to rehabilitating asbestos mining dumps. It involved the contouring and movement of those old dumps. Mintek's role was to coordinate activities. Temporary jobs were created for the people in the localities. Bamboo would subsequently be planted to enable members of the local community to harvest the bamboo and make furniture.

Mr Mphomela said that the new board had been appointed the previous year. The board believed that Mintek could do more as it had a great deal of capability. Commercialisation thus far was enough to support Mintek's running costs. This country needed a great deal of investment. The scientific institutions should be given sufficient resources to carry out their mandates.

Ms Bikani called for more women's faces in Mintek's delegation.

Mr Mngomezulu replied that some ladies had resigned, but the vacant positions were fully open to qualified lady applicants.

The Committee adopted Mintek's report. [Ms Bikani proposed; Mr Schmidt seconded].

The Chairperson thanked Mintek for its generosity in giving Members 2011 diaries.

Council for Geoscience (CGS) Annual Report 2009/10 presentation
Prof Phuti Ngoepe, GCS Board Chairperson, introduced the presentation.

Dr Thibedi Ramontja, CEO: CGS, spoke on the Council's structure, corporate performance - historic performance and balanced scorecard; national geoscientific programmes and selected projects; selected international collaborations; critical challenges; and key actions to address the challenges.

Corporate performance
The technical programme performance. CGS statutory and commercial performance from 2001 to 2010 was illustrated by a graph comparing programme completed and commercial income (slide 4).

Corporate performance (year to date) was indicated, comparing target against performance with respect to balanced score card (BSC) perspective for market (stakeholder/customer) focus, economic (financial) growth, effective systems (organisational), and world class people (learning and growth) (slides 5-11).

Financial information
Financials as at September (December scenario) were shown (slide 12).

Reasons for the deficit were explained. Existing projects had been lost. The Eskom project was suspended, as was the small-scale mining project. The global economic downturn meant that there were no new geological related projects from the World Bank and other funders. The strengthening of currency was always a challenge when working abroad (slide 13).

Measures or focal points for managing the situation were indicated by a flow chart – (slide 14).

Geoscientific programmes
National geoscience programmes were geological mapping, metallogenic mapping, geophysical mapping, geochemical mapping, and seismology (slide 15).

Maps were shown, indicating the progress of the mapping and publication of the 1:250 000 scale geological maps in South Africa, the 1:50 000 scale geological maps in South Africa, the 1:250 000 scale metallogenic mapping programme for South Africa, the airborne geophysics priority areas, the progress of the regional geochemical survey of South Africa, and the national seismic network (slides 16-21).

Seismic projects
The CGS continued to monitor earthquakes in South Africa and its collaborative project with Mine Health and Safety Council (MHSC) should commence during this financial year to identify the required equipment and procurement process in progress and continue to represent South Africa at the Comprehensive Nuclear Test Ban Treaty Organisation (CTBTO) and undertake relevant scientific activities on behalf of South Africa (slide 22).

A table of earthquakes monitoring: global seismology was provided (slide 23). It was noted that there were earthquakes in New Zealand in February 2011, China, Indonesia and Mexico in April 2010, Chile and Japan in February 2010, Haiti in January 2010, and Malawi in December 2009. There was moderate seismic activity in South Africa, but there had been large earthquakes in the country:

1809 in Cape Town, approximate magnitude between 6.0 and 6.5,
1912 in southern Free State, approximate magnitude of 6.5,
1932 off Cape St Lucia, approximate magnitude between 6.0 and 6.5, and
1969 in Ceres-Tulbagh, magnitude 6.3. (slide 23).

Selected geoscience projects
These included industrial minerals – the updating industrial mineral maps and data (limestone, granites, clay, etc). These would be a critical contribution to the creation of jobs. Focus areas were the Eastern Cape; Mpumalanga; Western Cape; Northern Cape; and KwaZulu-Natal. There was also the rare earth metals
collaborative research project with the Japanese on rare earth metals, the identification of their location and processing techniques (slide 25).

Rural Development
In exploring the groundwater potential of the Mzimvubu to Keiskamma catchment area for rural development, the Council was working on a three year Water Research Commission project. This was an integrated water catchment study of groundwater resource potential (targets identification) and groundwater vulnerability (slide 26).

Acid mine drainage
Acid mine drainage (AMD) in Gauteng priority areas were indicated (slide 28).

AMD was reported in several mining areas – the Witwatersrand Gold Fields, in Mpumalanga and KwaZulu-Natal coal fields, and the Northern Cape copper mines.

In the Western basin in the Witwatersrand, AMD was decanting to surface thus impacting on the Cradle of Humankind. Urgent intervention was required. In the central basin, pumping stopped in October 2008. The water level was now rising – currently about 480 metres (m) below surface. Immediate intervention was required to ensure pumps were installed by March 2012. In the Eastern basin, pumping stopped 31 January 2011. The water level was now rising from around 700 m below surface.

There was a lack of adequate measures to manage and control the problems. It was urgent to intervene before problems become more critical. The Council noted the proximity to densely populated areas (slide 28).

When and where would the central basin decant? The answer was given (slide 29).

The impacts of mine water - pollution and seismic activity were indicated (slide 30).

The Council's key recommendations were:
Prevent decanting by pumping;
Implement ingress control measures to reduce the rate of flooding and the eventual decant/pumping volume and costs;
Water quality management;
Neutralisation and metal removal in the short-term;
Removal of salt loads from river systems to be considered in the medium- to long-term (direct use or desalination to potable quality);
Improve monitoring and undertake research to inform better decision-making;
Manage and monitor other AMD sources within the Witwatersrand, e.g. diffuse sources such as slimes dams; and
Investigate the implementation of An Environmental Levy (slide 31).

International collaboration
The Council participated in the Organisation of African Geological Survey (OAGS), in which the Council continued to participate and building the organisation. CGS was representing South Africa as the Secretariat of the Organisation. The 2016 International Geological Congress would be hosted by South Africa and preparations continued as planned. The Council participated in the Southern African Development Community (SADC) and European Union (EU) funded project to compile the SADC hydrological map, which was vital in determining the water potential of the SADC region. The Council also participated in the
African- European Geoscience Observation System (AEGOS). This was a collaborative forum between European and African geoscience institutions to promote collaboration in geoscience information and developing interoperability of geoscientific data. CGS participated in the One Geology collaborated with other researchers from India, Japan, and Belgium on an expedition to Antarctica (slide 32). A senior scientist from the Council for Geoscience was invited to participate in the 51st Japanese Antarctic Expedition to the Sør Rondane Mountains of Central Dronning Maud Land, Antarctica. (slide 33).

Energy security
In nuclear energy, CGS was responsible for the geological investigation of the New Build Programme. In geothermal energy CGS worked on the identification of potential geothermal energy sites in South Africa (WRC and Department of Science and Technology (DST) supported project). It also participated in the South Africa coal resources Eskom sponsored project to quantify the coal resources of South Africa, and in carbon sequestration research to identify potential areas to store carbon dioxide (CO2), in which the CGS had identified the potential sites (slides 34-35).

Human resources
As to human capital, the Council had a focus on developing young scientists. In collaboration with MQA, the CGS provided internships to young scientists. These internship programs helps young scientists to gain valuable working experience and thus increased opportunities for employment (slide 36).

The following information was given:
Overall demographic profile by race current status as at 31 March 2010 - black 60%, white 40% (slide 37);

Comparative figures - professional job category by race…2004 to 2010 (slide 38);

Overall demographic profile by gender - current status on 31 March 2010 (slide 39);

Comparative figures - staff profile by gender… 2004 to 2010 (slide 40);

Bursary intake - analysis of numbers of beneficiaries 2003 to 2010 (slide 41); and

Demographic composition of bursary recipients by gender (slide 42).

Critical challenges
To enable the long-term financial sustainability of the CGS made it necessary to increase revenue (both state grant and commercial); implement the amended Geoscience Act; continue training of previously disadvantaged scientists; retain skilled senior scientists; address the ageing scientific infrastructure; and pay a significant role in attracting investment in the minerals exploration/prospecting sector. (slide 44).

Key actions to address the challenges were to continue to implement short-term measures which had turned around the financial situation of the organisation – these include costs cutting measures.

The board and management would investigate various options in respect of positioning and restructuring the organisation.

The organisation would engage the National Treasury and the Department of Mineral Resources (DMR) on future funding of the organisation, especially with regards to projects that will contribute towards job creation – through the Medium Term Expenditure Framework (MTEF) process (slide 44).

Discussion
The Chairperson invited Members questions.

Mr Schmidt asked if the pumps would be ready in time to prevent decanting of the acid mine drainage water. [Audibility was poor.]

Mr Schmidt asked about the situation in the Eastern Basin (slide 28). [Audibility was poor.]

Mr Gololo thanked the CGS. He asked if it was possible to detect the major earthquakes and tsunamis.

Mr Gololo asked what CGS’s total staff complement was, including the scientists.

Mr Gololo asked about CGS's cost cutting. Would cost cutting not prejudice CGS's work of exploration, which was its core function?

Mr Gololo asked about the rock formations that were visible as one flew towards Cape Town. What was in those rocks?

Ms Bikani asked if the CGS's programmes involving commercial activities could not generate profits. If one examined the CGS's work and the activities that it had been obliged to suspend because of insufficient funds, in spite of its important purpose, she argued that it should be possible to reach a consensus on legislative changes that might benefit Government ultimately by a measure of commercialisation. “We bring it up every time”, yet for one reason or another it was a no-go area in terms of the development of CGS and Mintek. 

Ms Bikani asked for more information with reference to the CGS's graphs on corporate performance (slides 3-11).  [Audibility was poor.]

Ms Bikani asked, with reference to the CGS's slides on acid mine drainage water (slides 27-31), whose responsibility it was ultimately.

Ms Bikani asked further about the financial implications of preventing decanting by pumping and if such costs were accommodated in CGS's budget (slide 32).

Ms Bikani asked about the Congress of which CGS had spoken (slide 32). She did not see why funding should be a problem. If the FIFA World Cup could happen in South Africa, why could the Congress not take place successfully in South Africa?

Ms Bikani noted that the CGS was supporting some of the countries which it had mentioned. It looked as if there was more value in other countries in terms of the geological mapping. Could the CGS not negotiate internationally so as not to be totally dependent on Government? If it could get funding from outside the country to help other countries, could it not get funding from outside sources, beyond the World Bank, to assist it in its work in South Africa?

The Chairperson noted that the time was now 13h00.

Mr R Sonto (ANC) said that the kind of work that the CGS was doing would increase when the State-Owned Mining Company (SOMCO) came into existence. Was CGS adequately modelled to be the kind of vehicle that the state would need to make the SOMCO a success?

The Chairperson asked about the seismic project in collaboration with the Mine Health and Safety Council (MHSC) (slide 22). This was very important to save lives, as the MHSC had itself indicated to the Committee in its briefings in previous meetings. In CGS's arrangements with MHSC, had adequate funding been provided? 

The Chairperson asked about acid mine drainage. It was a real cause of fear for the people in the area. CGS's report was now beginning to give the Committee a picture that the CGS was on top of the situation to the extent that its predictions were almost 100% accurate. Therefore it had to be asked if the Department of Water Affairs had indicated if it was going to install a water treatment pump in the Central Basin or in between. Would it be before the time frame that CGS had mentioned? The Committee was becoming engaged with this matter, from time to time, on a number of platforms. People needed reassurance that the matter was receiving attention and would finally be resolved. (Slides 27-31)

The Chairperson asked why CGS had chosen Cape Town as the venue for the 2016 International Geological Congress. It was not a mining area. Perhaps Cape Town was the best value for money in terms of accommodation and travel arrangements.

The Chairperson said that it was important to examine CGS's funding requirements and whether the CGS was working towards a situation in which it could be seen as self-sufficient. CGS had a developmental mandate. It was a matter that the Committee would want to argue with the National Treasury when the time was right. This was why the question was posed to CGS in terms of its model. If the CGS could be self-sufficient, this would address a number of the Committee's questions. It would also enable, in the CGS's next annual report, for the Committee to examine whether the CGS was gravitating towards self-sufficiency; if not, it meant that one had to look back internally to engaging National Treasury and establish a clear basis for the continuous funding that the CGS must receive for it to fulfil its role. 

The Chairperson asked lastly about the matter of emphasis noted by the Auditor-General (Annual Report, page 13) with regard to wasteful expenditure to the extent of R2.9 million. This was quite a substantial amount. The Committee was happy that the CGS had been given an unqualified audit opinion, but wanted assurance that the CGS was working towards a resolution of this problem.

Mr Schmidt asked if CGS had any comments about Shell's fracking methods, which it proposed to use in prospecting in the Karoo. [Poor audibility].

Ms Bikani asked about a forensic investigation (Annual Report, page 60), and an item on World Cup expenditure (Annual Report, pages 63-64).

Dr Ramontja responded on acid mine drainage. The recommendations were that there was a need to pump in all three basins. In the Western basin it was necessary to pump immediately, because it was already decanting. The pumps must be installed and the water level lowered to protect the environment in that area. The Department of Water Affairs was guiding that process. It had been allocated funding of about R200 million to start the process. With regard to the central basin, Dr Ramontja had spoken to members of the team concerned and had been told that the team had even bought pumps by itself. However, the three parties must sit together and come to an agreement: the Department of Water Affairs was driving this process. Water would be treated at the same time as it was pumped. The water would be treated with lime to neutralise the acidity. Also the harmful metals would be removed from that water, so that the water could be released into the stream. The next phase would to be to examine whether it was possible to make this water drinkable. In the Eastern basin, pumping had stopped on 31 January 2011. The CGS wanted to deal with the water in the Dolomites, since that water was important for agriculture. The recommendation was that the water should never be allowed to pollute the Dolomites. It would be a challenge in terms of the time frames but CGS was confident that it could be done.

Mr Schmidt asked for clarity.

Dr Ramontja said that even if the mining companies concerned resumed pumping, the CGS would monitor the situation. The mines concerned were very old and risky. From Government's point of view, it was necessary to protect the environment. This was the bottom line and CGS's approach.

Dr Gerhard Graham, Executive Manager: Scientific Services, CGS, replied that one needed to consider the number of seismic monitoring stations in South Africa, which was only 23, compared to the United Kingdom's 400 or so. This was the major factor in the level of seismic activity which CGS could record. CGS expected that anything above magnitude 2 would be capable of recording in South Africa. CGS could certainly record the largest earthquakes occurring throughout the world. [Severe acoustic feedback made Dr Graham virtually inaudible at this point.] 

Dr Graham said that CGS had five coastal monitoring stations for the detection of tsunamis in the Indian Ocean. CGS would record the earthquake, since this happened first. On the basis of these observations, CGS would make its predictions on the likelihood of a tsunami. However, sea-based equipment to measure the pattern of a tsunami was very expensive. Fortunately, since the tsunami waves travelled much more slowly than the shock waves of an earthquake, there was enough time to issue a warning.

Dr Graham said that the mine health and safety project was no more than five months old. For the time being, the CGS had funding for a year and it was seeking to persuade the managers of mines to buy into the project. It was still a pilot project.

Dr Graham said that CGS had a research project to compare different scenarios and to develop a data base and risk index to indicate particular areas where there was a higher risk of a mining accident. 

Dr Graham replied that it was safe to say that the rocks around Cape Town were very old. The rocks of the Karoo Basin varied in age and formation and varied from as young as 60 million years old to as old as 300 million years. The Karoo was known for its fossils. Nearer to Cape Town, the rock formations were as old as 350 million years. There had been much turmoil in the geological history in this area and this resulted in the rocks being folded, with large fractures in the earth's crust. It was known that the Cape Fault Mountains was a region probably very rich in ground water.

Mr Leonard Matsepe, Chief Financial Officer (CFO) Council for Geoscience, replied that for the work that had to be done the CGS was under funded. The money required, as determined by a study, was quite substantial.

Mr Matsepe replied that before 2002 the premiums that the CGS was paying for the staff to have life cover had not been taxable. There had been a change in the legislation, but CGS did not discover its mistake until several years later. At length the matter was resolved in October 2010. Now the CGS was careful to implement any changes in tax laws and regulations.

Mr Matsepe replied that R4.7 million of the R5.7 million was money set aside as guarantees for tenders in order to gain access to commercial work. There was nothing sinister in this audit finding. The remaining R1 million was for litigation in the case of one employee who took the CGS to the labour court. There was no sense of financial mismanagement.

The Chairperson asked if the above-mentioned guarantees were refundable.

Mr Matsepe replied that they were.

Mr Matsepe replied that the forensic investigation had found that people were not following the internal controls that were in place. CGS was trying to recover the monies concerned, and had implemented most of the recommendations of the investigation.

Dr Ramontja gave further details. An individual involved was repaying a sum of R42 000 paid to him as a “thank you” for a service that would have cost much more had an expert from Europe been hired to solve the problem. This was a lot of money. However, the chairperson of the hearing had been unable to find any fault with the person.

Mr Matsepe replied that National Treasury wanted to see a page detailing World Cup expenses in the annual report (pages 63-64), although CGS had a preference not to include items for which figures were zero. The reason for this was that each additional line represented a higher cost in producing the report. The Auditor-General also insisted on this line, even if nothing had been spent.

CGS replied that the staff complement was 326, including interns. CGS would take on 18 interns in June 2011. The complement had decreased from 350 because of cost-cutting.

CGS replied that there were a number of acting positions.

Dr Ramontja added that posts had been advertised.

Prof Ngoepe replied that the CGS had a model of what ideally it wanted to do which it had submitted after discussion with the Department and with the Minister. However, in December 2010 the CGS had been informed that there were no funds, so the CGS had to revert to its earlier model.

Prof Ngoepe emphasised that this had been a challenge to the board for quite some time. It had compared models for such councils in various other countries, including Australia, the UK and Canada. It had seen some models in which the geoscience council was totally embedded in government and others where they were only partially embedded.

Other countries had a different perception of South Africa from how they viewed other developing countries. They think that because South Africa could hold the World Cup, it might be considered self-sufficient.

Prof Ngoepe, himself a scientist, noted that there were insufficient funds to subscribe to journals. Publishers were willing to give developing countries access to their journals freely, but not to South Africa.

Prof Ngoepe drew Members’ attention to international bench marks on the funding of scientific councils and universities. European countries had agreed to devote 3% of their Gross Domestic Product (GDP) to research and innovation; the United States of America (USA) devoted about 2.7%; the Scandinavian countries about 3.5%. South Africa by contrast devoted only 0.98%. The difference was amplified by the weakness of the rand versus the Euro and the Dollar. It was surprising therefore that there were still South African scientists who could compete. South Africa should aim to devote 2.5% of its GDP to research and innovation. It was vital to have geologists who were up to the mark.

Prof Ngoepe said that the board would welcome assistance to develop its funding model to ensure proper resources for the CGS. Our children should not ask in 20 years time why their parents had not raised their voice.

The Chairperson noted that science was an enjoyable subject and the Committee wished that it had more time available.

The Committee adopted CGS' report. [Ms Bikani proposed; Mr E Mtshale (ANC) seconded.]

Portfolio Committee on Mineral Resources. Report on the Northern Cape oversight visit
The Chairperson asked Members to read the document in readiness for the Committee’s next meeting.

Portfolio Committee on Mineral Resources. Report on the study tour
The Chairperson asked Members to read the document in readiness for the Committee’s next meeting.

Portfolio Committee on Mineral Resources Report on the public hearings on SOMCO
 The Chairperson asked Members to read the document in readiness for the Committee’s next meeting.

The meeting was adjourned.