Department of Mineral Resources on its 2011 Strategic Plan

Meeting report

Chairperson's Opening Remarks
The Chairperson began by saying that he had asked the legal advisors to draft a resolution which would be submitted to the Speaker in relation to the [ADF]. The [ADF] had been elusive in not appearing before the Committee and hence they had defied Parliament and this had been reduced to writing.

Mr E Marais (DA) said that he was content with the document.

The Chairperson said that the resolution was supposed to be addressed at the trustees of the [ADF] and not the chairperson of the [ADF]. The Chairperson went on to state that in the previous meeting they had interacted with parties from Aurora. The Committee could not wait for the meeting with Aurora on 03June and hence would schedule another meeting in order to quantify the correct amount that Aurora was supposed to pay to its workers. The acting Director-General of the Department of Labour had received quantified amount from Aurora for a certain amount. Aurora had access to funding and hence if a compliance order was given Aurora would be able to pay. On 03 June the Committee would discuss the future situation of the two mines since the Committee had been told that they would be new funders but further information would be provided by the liquidators after 03 May.

Department of Mineral Resources. Briefing
Advocate Sandile Nogxina, Director-General, Department of Mineral Resources (DMR), began by giving the mandate, vision and mission of the Department. The strategic outcomes were aimed at ensuring that sluggish nature of the investment in the mining industry of the past was reversed. The Department was committed to improving the regulatory environment while aligning their outcomes with the national priorities of government. The performance of the mining industry demonstrated that there was significant recovery from the recent global economic and financial crises. The anticipated employment in the mining industry shrunk by 5.1% in 2009. However the employment of women grew by 11% in the same year. In 2010, total employment grew by 1.2% with women employment growing by 15.6%. The total employment in mining reached 498 055, falling marginally short of breaking through the half million threshold. In terms of the national mining sector there was a "strategy for sustainable growth and meaningful transformation of South Africa's mining industry".  The strategy recommended the way of mitigating constraints and emphasized the need to approach competitiveness and transformation as two sides of the same coin. The strategy was going through the Cabinet process.

The Mineral Beneficiation strategy had been presented to then International Marketing Council (IMC) on economic development, employment and infrastructure. The Department was in consultations with the relevant economic departments in order to expedite the adoption of the strategy. In addition the Director-General said that the amendment of the mining charter was concluded in September 2010. The amended charter removed ambiguities that caused various interpretations and it also introduced a scorecard with clear performance targets.  The first compliance reports were expected at the end of June 2011. The Cabinet had authorised the use of African Exploration Mining and Financing (Pty) Ltd (AEMFC) as a nucleus for the establishment of the State Owned Mining Company. The work of hiving off the AEMFC from its current wholly owned status in the Central Energy Fund was already at an advanced stage.

With regards to small scale mining the Department had in place a small scale mining strategy which provided a framework for the creation of a sustainable sector which was supposed to be characterized by growth and development. Special attention would be paid to linking DMR supported initiatives and small scale mining projects with financial institutions. The management of derelict and ownerless mines was a key deliverable of the Department given the serious challenges that the country was facing. The Minister had approved a strategy for this. As part of the rehabilitation programme five sites had been rehabilitated during the 2010/11 financial year and ten sites had been targeted for the current financial year. Acid Mine Drainage was an issue that had dominated public discourse. The Department had worked with all the affected parties and departments and a report had been prepared on the matter and it had been presented and it had been approved by the Cabinet. During the 2011/12 financial year the Department planned to continue conducting research on mine water ingress as well as implementing solutions and this would include constructing canals and sealing abandoned shafts and trenches which contributed to the high volumes of water passing underground which invariably generated acid mine drainage.

The Minister was said to have unveiled a new licensing system which was aimed at streamlining administrative processes to ensure the attractiveness of South Africa as a mining destination. This was preceded by a moratorium which the Minister had lifted except in Mpumalanga. In addition the Department had developed an integrated electronic system for managing the Mine Health and Safety portfolio. The system allowed for the integrated and improved management of information in the mining industry. The Department would attempt to establish an internal compliance inspectorate. This would assist in meeting the concerns of members of the public who had raised the lack of compliance in the mining industry.

In conclusion the Director-General said that the Department would continue with their stance that if mines could not mine safely they were not supposed to mine at all until effective measures were implemented in order to safeguard the health and safety of employees. Health and safety would be elevated to the boards of mining companies to ensure that appropriate measures were also taken at board level.

Ms Patricia Gamede, Deputy Director General: Corporate Services, Department of Mineral Resources, presented on Programme 1 Administration that related to corporate services. The purpose was the provision of strategic support and management services to the Ministry and the Department of Mineral Resources. The structure of the administration included corporate services, chief financial office, audit services and chief operating officer. The focus areas of corporate services from a stakeholder perspective were to contribute to skills development, communicate DMR policies and programmes and to facilitate transformation initiatives. From an internal point of view the focus areas were polices and procedures, legal support, implementing a national vetting strategy and performance management development. In conclusion she stressed that they were committed to building a formidable team that was able to effectively discharge it responsibilities, serve the masses and make a difference.

Mr Nthupeni Ragimana, Chief Financial Officer, Department of Mineral Resources, presented on Programme 1 Administration. The total budget for DMR was R1.036 billion for the 2011/12 financial year and it represented an 11.5% growth from 2007/8. The funding was shared between the departmental programmes and entities under the control of DMR ministry accounting at 58% and 42% respectively. The budget had been adversely affected by the continued budget cut implemented by National Treasury and over medium term the DMR budget was cut by R70.5 million. There was a misalignment between the budget and the operational plans leading to high levels of shifting of funds within the programmes. In order to curb the negative trend, the department introduced a compulsory development of detailed plans, signing of declarations of the cash flow projects and the preparation of cash drawings for 2011/12 using the cash flow projections. He went on to give a DMR resource plan per economic classification. The overall expenditure was estimated to increase from R995.8 million in 2010/11 to R1.2 billion in 2013/14 at an average rate of 5.8% per annum. The increase was attributed to additional funding received over the Medium Term Expenditure Framework (MTEF) in respect of improved conditions of service and water treatment technology. Under administration and mine health and safety inspectorate expenditure was expected to increase as a result of the expansion of the programme's establishment after the split of the department and additional allocation for inflation related adjustment. Under mine regulation the expenditure was expected to decrease due to the transfer of the rehabilitation of derelict and ownerless mines function from Mineral Regulation to Mineral Policy and Promotion. A report on the progress on action plans for the 2009/10 Audit Report matters was given. The last part of the presentation involved the chief financial officer's priority areas being highlighted.

Mr David Msiza, Department of Mineral Resources, presented on Programme 2 - Mine Health and Safety. He began by giving the strategic objectives which were to promote heath and safety, ensure compliance with service level agreements and improve turnaround times. A brief background was also given on the Mine Health and Safety Inspectorate.

Mr Joel Raphela, Acting Deputy Director-General, Department of Mineral Resources, spoke to Programme 3-Mineral Regulation. He began by giving the strategic areas of focus which were to promote job creation, promote sustainable resource management, monitor and enforce compliance and reduce state environmental liability and financial risk. The promotion of job creation would come from the new mining rights, through the increased compliance inspections of small and medium enterprise (SMME) development projects and local economic development projects. The sustainable use of resources and management would be promoted through the percentage of adjudicated work programmes relative to rights issued. The liability of the state and financial risk would be reduced by identifying rights and those with inadequate financial provision by conducting inspections and issuing statutory notices. The Department would also ensure that no residual liabilities would remain for the state before any closure certificate was issued. The branch also sought achieve 100% compliance with regulatory requirements.

Ms Ntokozo Ngcwabe, Acting Director-General, Mineral Policy and Promotion, presented on Programme 4-Mineral Policy and Promotion. She outlined the priority areas which were to promote investment in the mining sector through economic research, investment promotion activities, develop an implementation plan for the beneficiation strategy. Secondly the Department sought to promote sustainable resource management through rehabilitating a number of derelict mines. They would also ensure transformation in the mineral sector through reviewing mining and mineral legislation and implementing the competitiveness and growth strategy.

Discussion
Mr H Schmidt (DA) questioned the figure that had been given for the rehabilitation of mines asked whether the budget had been affected what the actual figure was for the rehabilitation of mines. In addition he stressed that there where serious issues with the amendment Bill that was before Parliament. One issue that had destroyed the Department was the issue of ICT-Kumba issue in which an unknown party with no history of financial or technical ability was given a licence and this issue had to be rectified in the amendment Bill.  The AEMFC was an important development. He asked how the funding was going to be met.

Ms F Bikani (ANC) appreciated the presentations that had been given by the Department which she said was a reflection of where the Department came from and where they were presently. There were a lot of challenges. She said that the Committee was supposed to meet with the Department to discuss the issues on the implementation of the processes of certain issues. She asked whether the South African Mineral Resources Administration online system (SAMRAD) was related to the information technology (IT) development. In addition she asked whether the Department was putting effort in retaining staff and what challenges were they facing in attracting people. She noted that there seemed to be some progress that had been made in relation to acid mine drainage. She asked whether there was improvement, what the financial implications were and who was playing what role. In addition she asked whether there was a gap in legislation since it seemed as if there was a problem in payments being made within 30 days. Furthermore the Member asked whether there was a defined programme that showed that there had been some talks between the Department and the Council for Mineral Technology (Mintek)and that they assisted each other.

Mr C Gololo (ANC) thanked the Department for the well presented strategic plan. The establishment of a Compliance Inspectorate Unit was said to be a good idea. The Member asked to whom would the Unit account to and what punitive measures would it take. In addition he noted that no training had been scheduled for retrenched miners. He asked whether there was a budget for [SONDCO] and whether the Department was going to ask Parliament for assistance in the development of [SONDCO]. Furthermore he asked how many mines had been rehabilitated. Lastly the Member asked for the name of the mine that had been closed down in Mpumalanga.

Mr Marais asked how much money had been budgeted for shafts.

Mr E Lucas (IFP) expressed his happiness to the fact that a monitoring system had been established since it was an early warning mechanism. With regards to beneficiation he stressed that the Department needed to start from somewhere. Beneficiation was expensive because the people had started a long time ago but they needed to do something nonetheless. He suggested that instead of exporting raw material they were supposed to export the finished product. In addition he stated that the problem with small scale mining was financing. There were a number of investors who were taking small scale miners for a ride by taking advantage of them and something serious had to be done about the issue. Job creation had to be used to turnaround South Africa.

Mr R Sonto (ANC) began by thanking the Director-General for his bold overview. He asked for further clarification with regards to the enhancing of mine health and safety and how far would the Department take the issue of preventing mines from mining if they failed to adhere to regulations.  He asked what role regional offices played in assisting the Department. In addition he asked what skills would be focused on by managers when it came to the completion of corporate services courses. The Member went on to ask why the Department intended to reduce and not prevent fruitless and wasteful expenditure. Lastly he questioned whether the Department would be able to run workshops on their own or they would outsource the responsibility.

Mr Nognxina responded that the running of workshops was a matter that the Department was not going to outsource hence the Department would run its own workshops internally. In response to the question on the reduction of fruitless expenditure he said that the problem was when the strategic plan was compiled they put first their wish but when it came to the actual objectives they had to match their resources with what they wanted to achieve hence the reason the Department reduced because they had to match their objectives to the resources they had. However the next move after the reduction phase would be to try and prevent.  The skills courses were designed for DMR officials hence they focused on the capabilities they wanted to improve within the Department. Regional offices were the main service centers of the Department. All applications were lodged at the regional office and thereafter the regional offices would make recommendations for the approval or refusal of licenses. In addition regional offices were the most important part of the Department and hence the capacities of regional offices would be strengthened. Furthermore the mine in Mpumalanga had been closed down because it had failed to comply with the conditions of their licence.

The Director-General agreed with Mr Lucas that beneficiation was one of the instruments that had to be put in place for the sustainability of the South Africa's mineral resources. He stated that the issue was before the Inter-Ministerial committee where other departments had been consulted on specific issues. The beneficiation strategy would be tabled in Parliament after the local government elections. The Compliance Inspectorate Unit would be answerable to the regional office and would be accountable to the accounting office of the Department who would then account to Parliament. The Inspectorate Unit would invoke punitive measures such as revoking licenses and in some instances a fine could be imposed depending on the nature of the violation. The Inspectorate would inspect to see if what companies had included in their social and labour plans was happening on the ground. Moreover he stressed that he could not satisfactorily say where the budget for [SONDCO] would come from and that the process was still being concluded by the Executives and hence the Executives would approve modalities. He went on to respond that the name of the company that had been closed down in Mpumalanga was Imbabada colliery. He agreed with what Mr Schmidt had said with the exception of the insinuation that if an entity was small and unknown it could not be granted any mining rights. This was what the law sought to address.  The ICT-Kumba issue was in court hence the courts were going to deal with the issue. He stressed that he had no fear that ICT had met the granting criteria hence they were given the license. He stressed that established companies did not have the monopoly of being granted rights.

Mr Ragimana responded to Ms Bikani's question that there was a relationship between [SANDARA] and its IT plans. They talked about the plan to integrate all their systems in the presentation and what they had launched currently was just but one model of the systems but going forward they would develop other problems. The intention on Integrated Financial Management Systems (IFMS) was to replace the current transversal system and their involvement was that they were a user of those systems and National Treasury was the owner. The Department had not been actively participating with the exception of receiving feedback on progress. He responded to the issue of payments that had been raised by saying that where problems but the problems were not a reflection of a legislative problem. He elaborated by saying that if a supplier supplied goods to the government the supplier was supposed to have a government official order and if the supplier did not have this payment would be delayed. The budget for the rehabilitation was said to be sitting in two line items which were transfer payment to Mintek and the other was goods and services. The amount was said to be about R52 million.

Ms Gamede responded to the question on attraction and retention by saying that it was mainly in the mine health and safety programme. The reason was because of resolution 3 of 2009 which prevented the Department from hiring people at a certain level. The Department had applied to the Department of Public Service and Administration (DPSA) in order to be granted a relaxation but there had been no response as yet from DPSA. Furthermore she explained that the youth were of the opinion that the programme that the Department provided was too long since it was seven years but the Department was reviewing the programme. The failure rate was also part of the training programme and hence the area was also being reviewed.

The Chairperson asked whether there were people who were still in acting positions within the Department.

Ms Gamede responded that there were three people in the acting positions.

Ms Ngcwabe responded that the DMR were still responsible for the programme for technical reasons they entered into a contract with Mintek so that they would do the actual physical implementation of the work and they would report to the DMR on a monthly basis. The DMR also had environmental officials who went in the field together with Mintek and this enabled the DMR to monitor rehabilitation but they did not do the actual physical work. There was also an aspect of post rehabilitation monitoring for a certain period. The budget for sealing shafts for ingress control, the projected figure was about 250. The figure depended on a number of issues such as the size or depth of a site and whether they used foam. However R5 million had been set aside.

The Chairperson asked whether the Department had managed to trace previous owners of derelict mines and whether the owners were willing to co-operate and make a contribution.

Ms Ngcwabe responded that 98 owners in East Rand alone had been traced and they had been approached by the Department. The majority of them were DRD. The Department would start negotiations with them soon.

The Chairperson said it was evident that there was light at the end of the tunnel and there was progress in a number of areas. The Department was being prepared to be user friendly.  Some of the recommendations that had been made during the mining charter public hearings such as the establishment of a directorate had already been rectified by the Department. This would force companies in the mining industry to comply.

The meeting was adjourned.