Minister on Department of Mineral Resources 2011 strategic plan

Meeting report

Briefing
Adv Sandile Nogxina, Director-General, Department of Mineral Resources (DMR) said the Department had developed Vision 2014 encompassing a mining jurisprudence that was competitive globally and Vision 2025 which sought to contribute meaningfully to job creation and poverty eradication. In 2010 employment growth had been 1.2% with total employment at just under 500 000. Through Migdett (Mining Industry Growth and Development Employment Task Team) the Department had developed a mining sector strategy with projections on growth in the sector reflecting the creation of a potential 140 000 jobs.

Interventions by the Department would be through:
The National Mining Sector Strategy plan which was expected to be approved by Cabinet by June this year.
The Beneficiation Strategy to promote fourth phase beneficiation.
The amendment of the Mining Charter, which had been revised and now required an annual review rather than the five yearly review as occurred previously. The Amendment Bill should be before Parliament before the end of the year.
The exploration company African Exploration Mining and Finance Corporation (AEMFC) would act as the nucleus of a State Owned Mining Company.
The Small Scale Mining Strategy to assist rural development and job creation. Areas would be identified for small scale mining, which would get special attention to promote job creation.
The Rehabilitation Strategy on mines (Acid mine drainage). Five current sites were being worked on and 10 new sites had been identified for next year. Acid mine drainage was not the sole responsibility of the Department; it only played a supportive role to the Department of Water Affairs.
Administrative processes in which new licence procedures had been streamlined. The process was now an electronic online system.

The South African Mineral Resources Administration online system (SAMRAD), (the Department’s online electronic information management system, had been implemented. It had had teething problems but would assist greatly in the management of information in the mining industry.

The establishment of a compliance Inspectorate Unit which was needed for the ongoing inspection of licences, as over time it had been found that certain companies had ignored licensing conditions. Health and safety in mining continued to be a concern. The Department would be developing the skills and safety program and conduct inspections and audits with these specialised inspectorate units once finance became available. In Adv Nogxina’s opinion “if a company could not mine safely, then it should not mine at all”. The Department would be promoting that the boards of companies present quarterly reports on health and safety.

At this point the Hon. Susan Shabangu, Minister of Mineral Resources, who had joined the meeting, said that the work of the Department indicated its intention that the industry become more transparent and more compliant with legislation. On the issue of fatalities in the industry, she said the Department was seeking Parliament’s support to not only make the Department a global player, but also one that was caring. Therefore it was seeking to take mining safety from the mine management level up to the shareholders of the mine. The Department itself was seeking to become transparent. There had been questions of corruption and inefficiency at its offices and management was seeking to improve the Department. A key issue was that the new online electronic application for licences would obviate the need to go to an office and there would be less contact with regional offices where inefficiencies had been claimed. The Department was not a very strong department and it was seen as a small department by government and the Ministry of Finance and therefore had a small budget. It was a challenge therefore to fill the vacancies especially in the inspectorate unit but it wanted to brand the Department as being committed to improving the mining sector and to be seen as a mining country by the rest of the world even though the mining sector was competitive globally.

Budget
Mr N Ragimana, Chief Financial Officer (CFO), DMR, said the budget allocation for 2011/12 was R1.036 billion which reflected an 11.5% growth after that it would grow at 5.8% till 2014. The allocated funds would be shared by the DMR (58%) and its entities (42%). Under spend at R1.2 million had been less than 1% for the year 2010/11.

Challenges faced by the Department were the budget cuts requested by Treasury in the amount of R70.5 million. Funds had to be shifted because of the misalignment of budgets and funds. Control measures had been implemented and more detailed plans now needed to be developed by program officers who now also had to sign declarations on the budget.

The increase in the budget included improved conditions of service, which would account for R40.9 million and water treatment technology (for acid mine drainage), which accounted for R 30 million. Administration would receive R223.7 million rising to R274.6 million in 2014, Health and Safety would receive R142.1 million rising to R170 million, Mineral Regulation would receive R212.4 million dropping to R175.4 million by 2014. The decrease was because of a technical adjustment where the funds would be re-allocated to Mining Policy and Promotion, whose budget would be R417.7 million rising to R 558.7 million. This included the
allocation to Mintek.

The Department’s action plan included capacitating regional staff, developing the electronic management system, centralising invoicing, fast tracking the payment process and irregular expenditure to be reported in the disclosure notes and implementing corrective measures against transgressors.

Mr Joseph Katenga, Chief Compliance Officer, DMR, said that the Department had set a target of reducing injuries on by mines by 20 percent and to increase by ten percent the number of certificates of competency issued. It anticipated mining growth in North West, Limpopo and Mpumalanga and was looking to develop staff capacities at the Rustenburg and Klerksdorp branch offices. The adjudication of mining rights would be given a priority to support job creation. It would seek to reduce the state’s exposure to environmental liability and financial risk by not issuing closure certificates until there was no residual state liability. The Department would be analysing statistics to ensure the implementation of the transformation strategy. Internal business processes would conduct non compliance inspections in regard to the Mining Charter and legal compliance. In this regard the branch structures would be re-aligned to focus on compliance inspections

The Department said that it would measure the percentage growth in fixed capital investments as an indicator of the efficacy of the promotion of mining in South Africa. It had identified ten commodities and five areas it wanted to promote. In addition it would be promoting sustainable resource management with 12 derelict and ownerless mines being earmarked to be tackled in 2011/12. Acid mine drainage treatment and mine management was being done in collaboration with the Department of Water Affairs, the Department of Science and Technology.

It was reviewing legislation concerning the sector’s transformation. Amendments to the Mineral and Petroleum Resources Development Act and the Mine Health and Safety Act were being drafted, and it was conducting studies on the impact of the Regulatory Impact Assessments policy on investment.

Discussion
Mr B Nguni (Free State, ANC) asked how far the Department had come in achieving its targets for black ownership in mining. How did the Department see small, medium and micro enterprises (SMMEs) as successful small scale miners given the capital intensive nature of the industry? How enforceable was the Social Labour Plan? What was the vacancy rate in the Mine Health and Safety Inspectorate?

Adv Nogxina replied that the target had been 26% by 2014. At its last review in 2009 the figure was 9 to 10% and it was now targeting 15%. The new charter factored in corrective measures, as it was now an annual review instead of five yearly. The shorter review would also allow for understanding challenges and that by the end of September the final review would be complete. On small scale mining, he said that there had been high expectations that everyone could take part in mining but the long term nature of investments before getting any returns had led some investors to cash in their licenses. The Department was seeking to assist in technological capacity building but it did not do funding for small scale miners. He said the enforceability of the Social Labour Plan was possible because it was part of the conditions attached to licences. Previously it had not had the inspection capacity to enforce this but could do so now.

The Department said there were currently eight vacant posts in the Health and Safety Inspectorate.

Mr A Lees (KwaZulu-Natal, DA) said that if the Department wanted transparency and economic growth the issue of nationalisation of the mines needs to be clearly resolved otherwise no direct investment would be forthcoming. How did the Department intend increasing employment in the industry by 140 000 jobs? To whom would the State mining company report and what would its business be? When would a copy of the acid mine drainage report be seen. How would safe mining be defined in the context of the Director- General’s assertion that no mining take place unless it was safe? Often it was the people at the coalface that were breaking the rules chasing production targets. He was concerned that the emphasis in safety by the Department was in the issuing of certificates rather than the improvement of safety standards. He said strong action needed to be taken against financial irregularities rather than condone these violations. 

Adv Nogxina replied that the Department was trying to transform the mining industry not nationalise it. Transformation and economic growth were two sides of the same coin. The figure of 140 000 jobs was arrived at through long-term collaboration in the mining sector based on an analysis of the future plans of mining companies. Because of electricity blackouts and brownouts in the recent past, AEMFC was tasked to secure the supply of coal as the supply of coal had been in the hands of private companies most of whose contracts were long term supplies to off shore countries. As the state was the custodian of energy supply it was strategic to ensure securing supplies. The company had many rights in uranium and coal but would be competing against private companies and have no advantage. He said he had participated in Standing
Committee on Public Accounts (SCOPA) meetings on acid mine drainage; a report had been done by a task team and had been tabled at Cabinet. He said the definition of mining safety standards was based on the objective safety standards and he acknowledged that mining was a risky business. Accidents happened because of a lack of adherence to safety standards. The upholding of and adherence to safety standards therefore was the responsibility of the mine owners whose task it was to get the workforce to comply via its management. Those in authority had to be answerable. He said certification was needed but it wanted more people who were more competent. He agreed that irregular expenditure could not be condoned, but that transgressors had been dealt with.

The Minister responded on the issue of acid mining saying that Cabinet had agreed to make public the document. It had taken decisions and an 18 month action plan would be implemented by technical and task teams incorporating the Council for Scientific and Industrial Research (CSIR), Mintek and the Universities of the Free Sate, Johannesburg and Pretoria.

Ms B Abrahams (Gauteng, DA) asked how the Department communicated with groups on the skills development initiative and on projects for women. How many women were involved in the mining industry? Were there ownerless and derelict mines in Gauteng?

A member of the Department replied that there were ownerless and derelict mines but that the Department had discovered the people owning the mine.

The Minister replied that the mine owners were no longer active in mining and were not connected to other mining ventures and therefore it was a challenge to get compensation, as the owners did not have the financial capacity even as they had the financial liability.

The Department said that various workshops and information sessions were held with communities. 18 companies led by women had been licensed.
 
Mr K Sinclair (Northern Cape, COPE said that the debate on nationalisation, the transfer of old order mining rights and the issue of acid mine drainage had tainted the image of doing business in South Africa. He wanted to know when the State Diamond Trader was coming to the Northern Cape. Would the Department consider opening an office in Khatu because of the mining activity there? e wanted to know about the rehabilitation of the West Coast De Beers mines, some of which De Beers apparently wanted to sell. What was the latest situation with regard to the “zama zamas”? Was the Department involved in the gold chain development in Kimberley?

Adv Nogxina replied that the Minister had had road shows around the world and had explained the issue of nationalisation and Kumba. The debate for him was a positive not a negative as he saw in it the depth of the democracy prevalent in the country. Contestation was not a threat but an example of the positive democratic process at work. He said the Department was not involved in the gold chain development in Kimberley.

The Minister replied that the Department had no intentions regarding De Beers and that it could not intervene unless there was an actual case. The question on the rehabilitation of mines was worrisome, as new owners might not necessarily have the capacity to rehabilitate mines. On the “zama- zamas” she said that there had been lots of progress at Welkom with arrests having been made and better management of the mines. Harmony was managing its illegal miners better and there had been challenges in Barberton as well but that there had been progress there as well. She re-iterated that nationalisation was not ANC or government policy. Nationalisation had been raised by the ANC Youth League leader. She admitted that it did cause panic in the market and had tried to reassure the market that South Africa was still an investment destination. Similarly, “land grabs’ were not ANC or government policy. She said that in any event nationalisation or “land grabs” would have a direct impact on the Constitution so the Constitution would also have to be changed. She said that for four years it had promised that the State Diamond Trader would be coming to the Northern Cape. She had had a meeting with the Premier of the province and informed her that the Trader would not be coming. The Trader would be staying in Gauteng where there was an integrated program including the assistance of international people. She said Kimberley did not have the infrastructure capacity. She said the Department was looking at establishing a satellite office in Kimberley especially for the Health and Safety Inspectorate, to improve the quality of inspections.

Ms E van Lingen (Eastern Cape, DA) asked who was responsible in the Department to answer parliamentary questions.

Adv Nogxina replied that the matter would be looked into as the weekly meeting had a standing agenda item for parliamentary issues

The Chairperson said that in December the COP 17 Conference (The 17th Conference of the Parties of the United Nations Framework Convention on Climate Change) would be taking place. What was the Department’s role in the conference?

The Minister replied that COP 17 was led by the Department of International Relations. The DMR was part of the task team on energy. The Department would seek to find what role and input it could give to COP 17 via the Mining Industry Growth, Development and Employment Task Team (MIGDETT).

Mr Sinclair said he was happy with the clear-cut answer on the State Diamond Trader but not happy with the motivation given. He asked if the Department could look at establishing an agency to fund small-scale mining.

The Minister replied that the Northern Cape had gone beyond diamonds and had major potential in UMT mines and the Kgalagadi area. The Northern Cape in conjunction with the North-West, Limpopo and Mpumalanga were priority areas for job creation in the Department’s plans. The Department was working with the Department of Public Enterprises, Transnet, and the Department of Transport on ensuring that growth in the area was not stifled by lack of infrastructure.

Mr Nguni asked if the Department was looking at parity pricing for steel.

The Minister replied that the price of steel was a concern and that the Department of Trade and Industry was dealing with the matter. Local commodities had to benefit South Africa.

The meeting was adjourned.