The South African Capital Equipment Export Council and Manufacturing Circle submitted that job creation in South Africa and the transformation of the economy was best achieved by adapting the Mining Charter to give preference to the South African manufactured product as that would do the most in addressing unemployment, poverty and inequality. This could be achieved by setting targets for procurement of locally manufactured equipment, with a local content of, say, at least 50%, by mining companies and contractors to mining companies. Companies should be able to obtain bonus points for buying locally.
An Inkatha Freedom Party Member said 'Local is lekker': there was an unfortunate resistance to locally manufactured goods. African National Congress Members supported penalising companies for buying equipment from other countries unnecessarily, and found the submission was rather abstract.
Webber Wentzel submitted that the legal status of the revised Mining Charter and the ability of the Minister to amend it was uncertain; failure of the revised Mining Charter adequately to define terms such as 'BEE entity' rendered the revised Mining Charter vague and uncertain; the concepts of 'effective ownership' and 'meaningful economic participation' were contradictory; the requirements of mine community development were not clearly defined; the requirements of sustainable development were currently governed by other legislation; the revised Mining Charter failed to provide adequate instruction on the use of the Mining Charter Scorecard; and whether the revised Mining Charter might purport to give itself the force of law was debatable.
Members found the Webber Wentzel submission rather critical and not productive of solutions to the revised Mining Charter itself. How would the firm advise companies on avoiding fronting - one of the problems in the industry? A Democratic Alliance Member thought that Parliament's legal advisors must study the firm's document in regard to the revised Mining Charter's definitions. The Chairperson noted the firm's questioning the authority of the Minister to make amendments. However, a detailed Act would be voluminous. Therefore, one depended on the main Act and regulations from the same Act.
The National Union of Metalworkers of South Africa was especially concerned with beneficiation and its impact on the metals and engineering sector. Minerals were a non-renewable 'wasting asset'. South Africa was 'well-endowed with metals' but import parity pricing impeded 'growth and employment creation by the downstream sectors'. Also electricity pricing hampered downstream steel production as downstream producers had to pay more. There was enormous potential for expanding South Africa's capital equipment and medium and heavy commercial vehicle industries and over time South Africa should become less dependent on imports. However, if platinum continued to be exported in large volumes unbeneficiated, the chances of making South Africa a leader in the production of catalytic converters was slim. A new or revised Mining Charter must not undermine the objectives of the Industrial Policy Action Plan 2, must be aligned with the key action plans of the Policy, and strategically lever public procurement to facilitate metals beneficiation.
The Chairperson appreciated the Union's emphasis on beneficiation, and Members noted its concern with import and electricity pricing. Metalwork was an intensive energy user. Was electricity supply geared to the beneficiation which Members were considering? What was the Union's view of the requisite skills for beneficiation and were there programmes to develop the requisite skills? There was a need to make recommendations and work towards synergy.
The South African Mining Development Association submitted that the Minerals and Petroleum Resources Development Act and its definition of historically disadvantaged South Africans created a problem by including white women. This definition and target caused distortion because of the over-representation of white women in management and should be discarded as defeating their purpose. One had to empower the ‘majority’ of the people. The majority of black producers did not own mines. The Association believed that the Mining Charter set low targets for employment equity and new targets should be set.
The Chairperson appreciated that the Association had supported its statements with researched material, and noted that the Association's submission agreed with that of the Department on 24 August that there was no transformation in the mining industry. Members wanted a round-table with stakeholders, including the Department, the Department of Trade and Industry, the Department of Public Enterprises, the Association, and Webber Wentzel. Members were worried that there were still no sanctions being applied. There was need to be realistic in terms of the targets set. Members deplored the withdrawal from the hearings of certain entities as making it harder for the Committee to be factual and realistic, and organisations like the Association would continue to struggle since they had no backup. The Association's submission was gloomy but was factual. An Inkatha Freedom Party Member found it a proactive submission. The Chairperson wanted ideas to converge.
The National Union of Mineworkers gave a background to its submission, followed by introductory comments on the Mining Charter and its objectives. The Union then commented on the elements or pillars of the Mining Charter, with reference to ownership and joint ventures, procurement and enterprise development, beneficiation, employment equity, human resource development, mine community development, housing and living conditions, and sustainable development and growth of the mining industry. It then suggested actions required from Parliament after the public hearings.
Members wanted the Committee to examine the issue of fronting from the perspective of small scale miners and engage with the Department on the state-owned mining company. The Chairperson appreciated that the Union was giving specific recommendations. What the Chamber of Mines of South Africa had said on 24 August was highly doubtful and the Union had vindicated the Department and its consulting firm. The Committee would have to recall the Chamber, for its submission had been tantamount to misleading Parliament.
Mr Guy Harris, Director: Group Strategy and Public Affairs, Bell Equipment Sales SA Limited, on behalf of the South African Capital Equipment Export Council (SACEEC) and the Manufacturing Circle endorsed the need for job creation in South Africa and the transformation of the economy. This was best achieved by adapting the Mining Charter so that preference was given to the South African manufactured product as that would do the most in addressing the socio-economic challenges facing South Africa. This could be achieved by setting targets for procurement of locally manufactured equipment, with a local content of, say, at least 50%, by mining companies and contractors to mining companies.
Mr Harris gave an overview of SACEEC, which provided a facilitating role in assisting the South African capital equipment sector to grow especially through exporting and ensuring a positive local business environment. To that end, it took a proactive role (see SACEEC submission, page 1).
The SACEEC had a public private partnership (PPP) with the Department of Trade and Industry (DTI) (presentation, slide 3).
The Manufacturing Circle focused on issues of common interest across all manufacturing sectors. Its members were companies across the size and sub-sector spectrum. It had a focus on stemming de-industrialisation, aligning micro and macro economic policy and preferential procurement. (presentation, slide 3).
Mr Harris indicated South Africa's socio-economic challenges. Given the high levels of unemployment, poverty and inequality, it was important to create locally as many decent jobs as possible. It was also important to replicate manufacturing facilities in all mining regions. By local SACEEC referred to South Africa. Capital equipment manufacturing provided significant entry work opportunities, and as employees in the entry level areas acquired skills they moved forward, thus reducing inequality. SACEEC submitted that a local equipment supplier providing imported capital equipment was ensuring that economic opportunities were foregone. However, if their business was based only on a small number of 'tenders', sustainable business was not created. If the product could be manufactured locally, then there was on ongoing net impact on employment. The current penchant towards imported products had a negative impact, jobs were lost, and additional poverty created. With importing, inequality was addressed only for a small group of participants, rather than on a broad-based basis (see SACEEC submission, pages 1-2).
Most jobs in the sector were not highly skilled and were mainly labour intensive, so there was a direct relationship between job creation and poverty reduction; upskilling resulted in reducing inequality (presentation, slide 4).
The benefits of supporting local manufacturers were indicated. SACEEC and the Manufacturing Circle noted that with imported equipment the profits went offshore (presentation, slide 5).
The benefits of supporting local were illustrated by the example of Bell(presentation, slide 6).
Among suggestions for adapting the Mining Charter, SACEEC and the Manufacturing Circle recommended amending 'sourcing locally' to 'sourcing locally manufactured' and aligning the DTI BBBEE Codes and with National Treasury preferential procurement policy (slide 7).
Mr Harris indicated SACEEC's views on the proposed adaptation of the Mining Charter. The South African Industrial Policy Action Plan (IPAP2) and New Growth Path (NGP) had recognised the need to designate certain products for governmental and parastatal procurement for local preference. The Preferential Procurement Policy Framework Act (PPPFA) regulations were in the process of being amended and the DTI had made a start on designating products. Promoting the use of South African beneficiated minerals, South African labour and local manufactured products could be achieved by setting targets for capital equipment procurement. This would encourage mining companies and contractors to produce locally manufactured equipment and encourage local manufacturers to expand their product ranges and offerings. It should also result in new companies establishing local manufacturing facilities (see SACEEC submission, page 3).
Mr Harris provided full contact details, including a Skype address, and welcomed Members to visit SACEEC and Manufacturing Circle plants and people (slide 8).
Mr Harris added that SACEEC had regular interaction with the DTI, National Treasury, and other state entities. He emphasised the need to redress past imbalances, and the three evils of unemployment, inequality and poverty. He referred to a labour intensive approach. Companies should be able to obtain bonus points for buying locally. There should be synergy with the labour unions. It was worrying that the Organisation of Petroleum Exporting Countries (OPEC) with only 30% of total world oil production was able to set oil prices, yet South Africa, with a larger share of world production, did not control platinum prices.
The Chairperson noticed that Mr Harris had made orally some additions to his submission document.
Mr Harris had originally submitted in March; he would submit an amended document to the Committee via the Secretary.
The Chairperson asked Mr Harris to expand on his proposed amendment to the Mining Charter and noted Bell Equipment Sales SA Limited (Bell)'s partnership with the Department of Trade and Industry (DTI). Did the DTI sit on Bell's board of directors? What percentage holding had the DTI in Bell?
Mr E Lucas (IFP) thought of home when he heard of Bell Equipment Sales SA Limited, which was a good example. 'Local is lekker', he said. People resisted locally manufactured goods because they did not know better. He wished that they could be influenced by Bell. He asked for clarity on the ownership of Bell and where BEE and job creation was accommodated.
Mr C Gololo (ANC), alluding to Mr Lucas's comments, was very proud of Bell. He commended Bell on its efforts to buy locally. He indicated his support for penalising companies for buying equipment from other countries unnecessarily.
Ms F Bikani (ANC) asked what model or plan Mr Harris had, and how old Bell was. What social labour plans were in place, and how was implementation of alignment to the DTI Codes envisaged. The submission was rather abstract. There should have been some form of development.
Ms M Njobe (COPE) asked how South Africa competed with foreign companies in manufacturing capital equipment.
Mr Harris agreed with Mr Lucas that 'local was lekker'. it there were more companies like Bell we would have more jobs. Mr Harris was also a director of Proudly South Africa.
Bell had originated 60 years ago as a design house, becoming a Zululand forestry and sugar equipment supplier and thence growing into a global supplier of construction and mining equipment employing some 2 000 people in the area of Richard's Bay. During the 2008 period there had been some retrenchments. In the last year Bell was able to re-employ 1 000 people. Mr Harris gave figures on ownership: 7.5% was owned by Bell employees. This was where the real empowerment was taking place from the viewpoint of local distribution. 'We don't fall under the Mining Charter ourselves' but fell under the DTI Codes; however, 'our customers' fell under the Mining Charter – 'hence our interest'. Bell was a labour-intensive company. Relations with the unions were good.
As to the alignment of the Mining Charter, there should be changes to the Black Economic Empowerment (BEE) codes. He would like to see the exclusion given to imports taken out. He would be happy to discuss specific proposals either with the Department or with the Committee. He did not advocate introduction of tariff barriers, but it was essential for there to be preferential procurement aspects. Bell had contributed much to education and social development, but believed its main contribution was creating jobs.
The capital equipment industry was fiercely competitive. South African companies competed with companies such as Volvo, Caterpillar, and Komatsu. This was a credit to South Africa.
The DTI had no share-ownership in Bell though the company 'fell under' the Department. The company was 38% owned by the Bell family, 32% through a strategic alliance partner, and 30% listed on the Johannesburg Stock Exchange (JSE). Bell had a good relationship with the Economic Development Department. Recently the Industrial Development Corporation (IDC) had assisted Bell financially.
Webber Wentzel submission
Webber Wentzel gave a written submission on the legal status of the revised Mining Charter, the vagueness and ambiguity of the revised Mining Charter, the Minister's authority to amend the revised Mining Charter, definitions, undefined terms, ownership, mine community development, sustainable development and growth of the mining industry, the mining charter scorecard, the non-compliance penalty, with conclusions.
Mr Jonathan Veeren, Senior Associate, Webber Wentzel, introducing a submission on the above, said that Webber Wentzel advised the various mining companies. He pointed out that laws must be unambiguous.
He reviewed the legal status of the revised Mining Charter with reference to the Mineral and Petroleum Resources Development Act 2002 (MPRDA), Section 100(2)(a). (Slides 3-4)
Clause 4 of the revised Mining Charter, on the Minister's authority to amend the revised Mining Charter, should be amended since it might be ultra vires (slide 5).
Webber Wentzel's greatest concern was that the revised Mining Charter, in numerous instances, used vague and ambiguous language. Cases were cited. (Slide 6).
The revised Mining Charter, while defining 'BEE entity' with reference to the flow-through principle, did not define 'flow-through principle' (slide 7).
The definition of 'demographics' when considered in the context of Clauses 2.1, 2.3, 2.4, and 2.5,and the definition of historically disadvantaged South Africans (HDSAs) was vague (slide 8-9).
The definitions of 'effective ownership' and 'meaningful economic participation' (slides 10-11), and undefined terms (slide 12) were criticised.
Clause 2.1 on ownership should be rephrased in clearer language to promote regulatory clarity (slides 13-14).
A number of aspects of Clause 2.6 on mine community development were vague and required clarification (slides 15-16).
The revised Mining Charter's procurement targets resulted in regulatory overreach and should instead be governed by the Generic Codes (slide 17).
The majority of the obligations as to sustainable development and growth of the mining industry contained in Clause 2.8 of the Mining Charter were already enforced through other legislation. Webber Wentzel submitted that reference be made to each of the relevant legislative provisions with regard to each requirement under Clause 2.8 of the revised Mining Charter (slides 18-19).
The Mining Charter Scorecard annexed to the revised Mining Charter contained several elements which might lead to ambiguities in implementation and application (slides 20-22). It was suggested that the ring-fenced requirements and the percentage measured requirements be set out in two separate tables 'A' and 'B' respectively, and that a paragraph be inserted into the revised Mining Charter (slide 23).
Clause 3 of the revised Mining Charter, on the non-compliance penalty, should be amended (slide 24).
Webber Wentzel submitted that the legal status of the revised Mining Charter and the ability of the Minister to amend it was uncertain; failure of the revised Mining Charter adequately to define terms such as 'BEE entity' rendered the revised Mining Charter vague and uncertain; the concepts of 'effective ownership' and 'meaningful economic participation' were contradictory and the latter might violate the Companies Act; the requirements of mine community development were not clearly defined and were uncertain; the requirements of sustainable development were currently governed by other legislation; the revised Mining Charter failed to provide adequate instruction on the use of the Mining Charter Scorecard which had taken on a new and more complex approach; and whether the revised Mining Charter might purport to give itself the force of law remained debatable. (Slide 24, and paragraph 12, pages 27-28 of the submission document).
The Chairperson asked Mr Veeren what his trouble with the triple flow principle was.
Mr Gololo said that it was a nice presentation but rather critical and not productive of solutions to the revised Mining Charter itself. He asked Webber Wentzel, as advisors to the mining industry, how it would advise companies on avoiding fronting, since fronting was one of the problems in the industry.
Ms Bikani did not have a problem with the firm's views, but did have a problem with the way in which the firm saw the revised Mining Charter. It was clear from the Constitution what was required of us on skills development, procurement, and employment equity. In the firm's view, no changes had been made.
Mr E Marais (DA) understood the background; it was all abut clarity and defining. Much work had gone into this. Parliament's legal advisors must study this document in regard to the revised Mining Charter's definitions.
Mr Lucas asked for clarity on procurement.
The Chairperson said that the firm's submission was a legal document as expected. The firm was questioning the authority of the Minister in amending. However, a detailed Act would be volumes and confuse whoever would apply it. Therefore, one had the main Act and regulations from the same Act. He thought that Webber Wentzel might resort to legal action to challenge the Mining Charter. That would be a disaster. In that case 'how could you stop people who called for nationalisation?'. Mineral resources were our common heritage. At the moment, these resources were benefiting very few. This situation was unsustainable. The firm's submission would be forwarded to the legal advisors of Parliament.
Mr Veeren replied that we were all on the same page. Webber Wentzel wanted to avoid situations where technical points were taken against the Charter or against legislation and the long-term goals enshrined in the Constitution were circumvented.
Mr Veeren referred to Annexe A of the firm's submission. It had proposed some additional text both to the MPRDA and to the Charter.
A law firm could not advise any client to engage in fronting. Formerly disadvantaged people's participation must be real. In the application for a mining right, the Department of Mineral Resources (DMR) did from time to time assess those agreements to ensure that they did comply, that they were real and genuine and did not constitute fronting.
Webber Wentzel did not want to suggest ways for mining companies to circumvent the law. It wanted to advise the Committee as to the process of drafting so as to close gaps. If these gaps were closed, it would lead to regulatory certainty, encourage investment, help Webber Wentzel to advise mining companies better on compliance with the Charter, and help the DMR because then it would have a document that told it what needed to be done and there would be very little administrative discretion. Clarity led to a better regulatory model.
Suppliers to the industry had their own sector charters to comply with. This was made provision for in the Broad Based Black Economic Empowerment (BBBEE) Act.
As to alignment with the DTI Codes there needed to be a distinction between the Mining Charter as applied to mining companies and the respective charters or codes or generic codes for other sectors, because of their own unique histories.
This Charter was developed by the Tripartite Alliance and Webber Wentzel denied that it was saying that mining companies should not comply with it. They needed to comply, but it was necessary to enhance the legislation so that the Charter was less vulnerable to legal challenges.
National Union of Metalworkers of South Africa (NUMSA) submission
Mr Woody Aroun, Parliamentary Officer, National Union of Metalworkers of South Africa (NUMSA) said that the Union was aware of the objectives of the revised Mining Charter to promote, inter alia, equitable access to South Africa's mineral wealth, increase opportunities for historically disadvantaged South Africans to benefit from mining, expand the skills base job creation, improve living standards particularly in regard to the conversion of single sex hostels into family units, and promote beneficiation of mineral resources.
Of particular concern to NUMSA was beneficiation and its impact on the metals and engineering sector. Maree J, Lundall P, and Godfrey S (2008)'s definition of beneficiation was quoted (submission document, page 1). Minerals were a non-renewable 'wasting asset' which needed to be leveraged during their lifespan to build a more diversified, labour-intensive and value-adding economy (Department of Trade and Industry (DTI)'s Industrial Policy Action Plan (IPAP2, 2010:58), quoted in the submission document, page 1).
The DTI had released figures that argued 'employment opportunities tend to be low at the milling (i.e., refinery) stage but can become very high at the mass semi-manufacturing and final production and machine building stages.' (Cited in Maree J, Lundall P, and Godfrey S (2008): 6; referred to in the submission document, page 2)
Table 1, from the DTI, (submission document, page 2) showed the benefits of beneficiation.
Table 2, from the DTI, (submission document, pages 2-3) illustrated the 'stages of beneficiation and levels achieved' for different commodities.
Both tables were cited in Maree J, Lundall P, and Godfrey S (2008): 6-7; referred to in the submission document, pages 2-3)
Problems that hampered the development of downstream steel production: pricing
South Africa was 'well-endowed with metals' (Maree J, Lundall P, and Godfrey S (2008): 2) and produced iron ore and coal.
However, NUMSA noted that import parity pricing (IPP) impeded 'growth and employment creation by the downstream sectors' (Maree J, Lundall P, and Godfrey S (2008): 2; referred to in the submission document, page 3).
For some time now ArcelorMittal had benefitted from hefty steel prices(IPP) and as Creamer T (2010) argued the steel monopoly continued to maximise profits under a new price 'benchmarked model' that was fundamentally the same as IPP (Submission document, page 3).
Table 3, from the DTI, showed the mark-ups of basic metal prices 2003/04 for carbon steel, stainless steel, and aluminium as against the South African net export price, the European Union (EU) price, the East Asian price, and the South African buyer price. (Submission document, page 3).
Problems that hampered the development of downstream steel production: electricity pricing
According to studies by the DTI, primary and secondary producers got their supplies from Eskom at pre-negotiated rates, while downstream producers had to pay higher municipal rates. (Maree J, Lundall P, and Godfrey S (2008): 8; referred to in the submission document, page 4).
Maree J, Lundall P, and Godfrey S (2008): 8 had also identified as inhibiting the growth of the higher value-added metal sub-sector:
▪ availability of skilled labour
▪ training and development
(Submission document, page 4).
Capital equipment/medium and heavy vehicles/catalytic converters
NUMSA believed that there was an enormous potential for expanding South Africa's capital equipment and medium and heavy commercial vehicle industries and that over time South Africa should become less dependent on imports. Given that the country produced about 80% of the world's platinum, the mining of platinum group metals should provide the impetus for the development of a competitive component industry, for example, catalytic converters, but if platinum continued to be exported in large volumes unbeneficiated, the chances of making South Africa a leader in the production of catalytic converters was slim. (Submission document, page 4).
Common denominators amongst stakeholders
▪ using procurement and local content to leverage and develop a competitive capital equipment industry
▪ beneficiation of our natural resources
▪ job creation
▪ skills development
From interviews with a group strategist of a major capital equipment manufacturer in the country, the prospect of beneficiation was enormous. (Submission document, page 4).
The way forward – towards a revised Mining Charter
NUMSA welcomed the Committee's initiative to consolidate proposals that would constitute the making of a new of revised Mining Charter. The NUMSA believed that a new of revised Mining Charter must take note of the following:
- not undermine the objectives of IPAP2
-the urgent need to align the new or revised Mining Charter with the key action plans of IPAP2.
-strategic leveraging of public procurement across a range of sectors to facilitate metals beneficiation (see Submission document, Annexure 1)
Import Parity Pricing (IPP)
NUMSA repeated its call to scrap IPP. The new 'benchmarked model' of pricing served only to reinforce the monopolistic pricing of steel by ArcelorMittal and must com to and end. It was imperative for Government to act decisively - failure to do so could compromise attempts to make beneficiation of our natural resources successful and frustrate attempts to develop our manufacturing base and create decent work.
(Submission document, page 5).
Mr Aroun commented that more jobs were created as one moved downstream. This was where we were lacking. He was especially concerned about the level of beneficiation, electricity pricing, and import parity pricing, and the need to assert working class solidarity.
The Chairperson observed that NUMSA emphasis was on beneficiation. This was good. Members had noted the Union's concern with import and electricity pricing. Metalwork was an intensive energy user. Was electricity supply geared to the beneficiation which Members were considering? What was NUMSA's view of the requisite skills for beneficiation and were there programmes to develop the requisite skills? The Chairperson invited NUMSA to participate in the September public hearings on beneficiation.
Ms Bikani noted much work done between NUMSA and the Department of Mineral Resources (DMR). When the Committee made its recommendations there was a need to work towards synergy.
Mr Aroun said that almost all our energy was derived from coal. NUMSA did not want South Africa's developmental agenda to be set back, but South Africa recognised the global debate on energy and climate change. NUMSA would continue engaging in this debate. It was a critical issue and he was not trying to avoid it. It was essential to reduce carbon emissions; however there was no simple model.
IPAP2 had key action programmes and interventions for the DMR. It had identified many minerals for promotion of beneficiation. Steel was one of the most important components in manufacturing so it was important to get the steel price right. NUMSA would work with the DTI on implementation of industrial policy according to IPAP2.
NUMSA thought that skills development had to be monitored constantly. The education system had to be upgraded. Industries must stop paying lip service. NUMSA was aware of many complaints from its members. Skills and training had to be addressed to achieve beneficiation.
South African Mining Development Association (SAMDA) submission
Ms Bridgette Radebe, President, South African Mining Development Association (SAMDA), said that SAMDA was started in 1994 and represented the junior mining sector. It saw the need to advocate the interests of the junior sector, because, prior to that, 83% of the mineral resources were vested in the hands of four companies and the state was not the custodian of the mineral rights. After the MPRDA, new players became prominent. Mr Termane was the first black mining diamond producer in South Africa. SAMDA's team had much experience of conditions in the industry. It might be asked why SAMDA, which was composed of producers, many of whom were in the industry before 1994, were talking as if they were 'on the other side', but not only were SAMDA members South Africans but they were also economic activists who deplored perpetuating the monopolistic structure of the industry in the past to the exclusion of the majority of the population. Whilst SAMDA recognised that profit was king, it recognised that business created jobs, but this was not the fundamental thing to focus upon. We had to redress the imbalances of the past while making profits and creating jobs. The focus was on vulnerable rural areas.
Mr Peter Tamane, Chairperson, SAMDA, submitted SAMDA's extreme concern that transformation in the mining industry had not been achieved and the Mining Charter targets had not been met by the majority of member of the industry.
SAMDA submitted that the Minerals and Petroleum Resources Development Act and its definition of historically disadvantaged South Africans created a problem by including white women. This definition and target distorted because of the over- representation of white women in management and should be discarded as defeating their purpose. We had to empower the majority of the people. The majority of black producers did not own mines. The Association believed that the Mining Charter set low targets for employment equity and new targets should be set. The definition of HDSA 'should be thrown out of the window'.
Mr Bikani proposed a round-table with stakeholders, including the Department, DTI, Department of Public Enterprises, SAMDA, and Webber Wentzel. She was concerned that stakeholders were working in silos. There was no coordination. She commented on the need for skills development. There were still no sanctions applied for non-compliance. It was necessary to be realistic as to targets set. The withdrawal of certain entities from the hearings caused difficulty to the committee in being factual and realistic. If some groups were in hiding, then organisations like SAMDA would continue to struggle for want of back-up.
Mr Lucas found SAMDA's submission 'proactive'.
Ms Radebe said that she had made it clear that the 10% of participation by women should be at least embedded in the Charter. However, to date it was not there. Women were combined with men under the word 'demographics'. The mining industry was the only industry that had legislatively endorsed the exclusion of women in many areas of mining. The new legislation must recognise that. 'We are not happy with this amended Charter.' SAMDA had made it very clear from the beginning that it differed greatly from the Ministry on this, though nevertheless the Charter had gone ahead. So SAMDA appealed to the Committee to rectify the many aspects of the Charter that were wrong. The majority of the people in her experience were still poor. It was necessary to accommodate the disabled.
Mr Peter Tshisevhe, lawyer, SAMDA, emphasised the issue of women. South African black women had suffered a double prejudice, not only in the law but also in the culture. For white women the prejudice had been only cultural. He violently disagreed with the way the DMR considered demographics. One needed to face reality. The majority of black women in this country were struggling.
Mr Nkosinathi Ngwenya, Head of Policy, SAMDA, added that it was necessary to analyse every transaction concluded. That 16% was usually diluted subsequently to a percentage that was below 6%. He explained how. Was the Chamber still claiming 15% or counting the current status, because, as things stood, there was no single empowerment transaction that stood at beyond 14%. Moreover, as a society, we positively discriminated against women and the disabled. So why should the Charter not discriminate positively, by means of an explicit law. He pointed out that there were many different forms of disability.
Ms Radebe commented further on ownership and 'unencumbered net value'. Many BEE deals enmeshed participants in debt. Moreover, many mining companies did not pay dividends. A round-table discussion with be ideal. The research SAMDA did was over three years and very thorough, but it had been difficult to get information from many companies. If there were contrary figures to what SAMDA had presented, SAMDA would be wiling to discuss them.
The Chairperson wished that SAMDA had been present on 24 August, since its submission agreed with one of the submissions at that meeting and had been supported by research. He inferred that SAMDA agreed with the Department of Mineral Resources (DMR) that there had not been transformation in the mining industry. He wanted a convergence of ideas.
National Union of Mineworkers (NUM) submission
Mr Zwelitsha Tantsi, National Education Secretary, National Union of Mineworkers (NUM), began the submission by commenting that the Chamber of Mines submission on 24 August was 'not innocent' and was an attack on the integrity of the stakeholders.
Objectives of the Mining Charter
The NUM's view was that the Mining Charter's objectives addressed the stipulations of both the Freedom Charter and the MRPDA. (Submission document, page 2).
Ownership and joint ventures
The Union commented, in respect of ownership and joint ventures, that the 26% goal had not been achieved and then revised for 2014 in the revised Mining Charter. The failure to comply with the Charter had more to do with the preparedness of the company to transform on the ownership. Sometimes, even the interest by BEE partners on share-ownership remained a challenge because the industry remained untransformed at the level of Black people directly involved with the day to day activities of the mining industry. (Submission document, page 3).
Procurement and enterprise development
The procurement and enterprise development pillar should have been the main focus on ownership because of the role and potential of enterprise development on mining linkages and job creation.
▪ the capacity to monitor without relying on the industry reports from the DMR and preparedness by the industry to contribute meaningfully on enterprise development, capacity of small, medium, and micro enterprises (SMMEs) and their geographic location were the main challenges in this regard.
▪ some BEE companies were not necessarily contributing to job creation on the basis that they did not focus on developing capacity internally but purely relied on importing goods for supply. (Submission document, page 3).
The beneficiation pillar of the Charter should be dealt with concurrent with the amendments t the MPRDA and the Mineral Beneficiation Strategy. Mineral Beneficiation was critical, as outlined by the African National Congress (ANC) National General Council (NGC) in September 2010.
(Submission document, page 3).
The employment equity element or pillar was meant to address the 'Irish coffee syndrome', in which there was a majority of blacks below ground with predominantly whites on the surface but sprinkled with chocolate.
The Union objected that the inclusion of white women had been used as reverse racism by white males. White women should not be beneficiaries in the employment equity but could be beneficiaries only on the employment of women underground. (Submission document, page 4).
Human resource development
The Union commented on the human resource development pillar, and submitted that Parliament should call for the availability of bursaries for both mineworkers and their beneficiaries and the release for full time study purpose of employed workers without pay but with retention of their employment status. ((Submission document, page 4).
Housing and living conditions
The Chamber of Mines of South Africa (the Chamber) had told Parliament (the Committee's 24 August 2011 meeting) that the majority of its members did not have hostels when the majority of gold mines in Gauteng, Free State, and North West, and platinum mines (Rustenburg) still predominantly had hostels converted partially or not at all. (Submission document, page 5).
Sustainable development and growth of the mining industry
The industry required a comprehensive approach to sustainable development and growth of the mining sector that must outline but not be limited to growth, redistribution and employment, ownership models and funding, health, safety and environment, role of mining in the economy through the NGP, IPAP2 and industrial strategy, and competitiveness ((Submission document, page 5).
Suggested actions required from Parliament after the public hearings
Mr Madoda Sambatha, Parliamentary Unit, NUM, quoted Karl Marx (Submission document, page 6). That history was the history of class struggle was why the Chamber would differ from the DMR on ownership purely because the Chamber's figures were averaged: it had to be asked why ownership should be averaged.
Mr Sambatha quoted Amica Cabral (Submission document, page 6). Chances of 100% compliance with the Charter were 'very minimal' Reasons were given (See Submission document, page 6, paragraph 2).
Parliament should introduce a new debate on empowerment of mineworkers, host communities and labour sending communities. This could be achieved in these areas:
▪ employee share ownership schemes (ESOPS)
▪ community trusts/special purpose vehicles
(Submission document, pages 6-7, paragraph 3)
Parliament must consider mandating both DMR and the Ministry of Cooperative Governance and Traditional Affairs (CoGTA) on developing a mining community investment policy
▪ the merger of the MDA and Teba Development Trust as a special purpose vehicle for the labour sending communities
▪ Parliament must mandate the Minister of Mineral Resources in consultation with the Ministers of Rural Development and Land Reform and CoGTA to develop guidelines and approaches to govern the ethnographic community consultative and collaborative process prior to implementation of mining project.
▪ Parliament must mandate the Minister of Mineral Resources in consultation with the Ministers of Rural Development and Land Reform and CoGTA to develop guidelines and approaches to govern both the involvement of the mining industry in municipality IDP process and budget contribution; this must explore possibly recognising both private-public partnerships (PPPs) and private-private partnerships.
(Submission document, page 7, paragraph 4).
Parliament must call upon the DMR and the National Planning Commission to prioritise the Development and Adoption of the Mining Sector Strategy using the current DMR strategy in line with the ANC NGC resolution, September 2011. The Committee must facilitate in consultation with organised business and labour in mining the convening of the Procurement and Enterprise Development Summit before the end of term of Parliament.
(Submission document, pages 7-8, paragraph 5).
Parliament must mandate the Council for Geosciences (CGS), Mintek and the Mine Health and Safety Council to fast track technological development on possible advanced technology to detect seismic events.
Parliament should mandate the BEE Council and the DTI to develop a common formula when assessing ownership in the mining industry.
Parliament should investigate the possibilities of making he Mining Charter a concessionary contract by changing the licensing regime of the MRPDA when amended.
Parliament must propose the introduction of a Mineral Beneficiation Commission under DTI and including various stakeholders as listed.
(See submission document, page 8, paragraphs 6-10).
In the amendment of the MPRDA, consideration should be given to include penalties for failure to beneficiate minerals and to impose, under Section 99 of the MPRDA, an extra tax on the export of raw materials.
Parliament should request the Ministers of Mineral Resources, Economic Development, CoGTA, and Rural Development and Land Reform, to consider the development of policy perspectives in:
▪ social labour plan
▪ traditional authority or community ownership
▪ community development
(See submission document, page 9,paragraphs 12-15).
Parliament should call upon the Cabinet to finalise and call for public hearings on the State-owned Mining Company (SOMCO). SOMCO should be constituted by Act of Parliament. Design and operation would be different from the current state-owned enterprises (SOEs). SOMCO would consolidate all state ownership and investments in the mining industry. SOMCO would focus on coal, uranium, iron ore, and manganese on the basis of the role these minerals had in industrialisation and energy security. Proceeds from SOMCO would be placed in a ring-fenced account and used for:
▪ re-investment in SOMCO
▪ funding free and compulsory education
▪ funding National Health Insurance
▪ funding rural development
Parliament must develop a resolution to exclude white women as employment equity beneficiaries but allow them only on underground employment. Parliament must also oppose employing black women for menial and less rewarding jobs while white women were employed for senior administration, management, costing, and finance, or, if underground, only for skilled work.
Parliament must institute an implementation mechanism for the previous Parliament's resolution on the need to investigate both living and working conditions of mineworkers.
Parliament must discourage any attempt by employers to enter into home ownership ventures as a means of alternative income. Home ownership programmes remained a social responsibility for companies towards their employees.
(Submission document, pages 9-10, paragraphs 16-19).
The NUM said that the Chamber's attack on the findings of the DMR was an attack on the integrity of the stakeholders. It was a deliberate attempt to rubbish the work of the consultants. The NUM wanted to put on record that it did not appreciate the Chamber's attitude.
The NUM commended SAMDA. .
In response to Webber Wentzel, which represented major shareholders. The NUM cautioned against falling into a trap of selective amendments: all the stakeholders must be given a chance to propose amendments.
The NUM agreed with all the speakers that there were ambiguities in what was an aspiring Charter.
Section 47 could not be effected blindly. Employees must not be used as a human shield in disputes over job creation. If they were, Section 47 must be invoked. The nature of the financial model was very cruel. These ESOPS were not yielding the intended results. It would have been beneficial if Webber Wentzel had remained. On the social and labour plan the NUM shared the same sentiment with SAMDA. The old Charter put white women at the top. The NUM as stakeholders wanted to overcome that problem. The Chamber had attacked the NUM's integrity. Platinum was one of the hostel-dominated sectors.
The NUM said that there was no access to cash flow. There was no value out of the ESSOPS because of the way they were structured. There were some challenges as to the expectations. The NUM alleged that Palabora Mining Company (PMC) was running around trying to cheat workers. There must be a legislative requirement.
Mr Sambatha said that mining companies hired lawyers in human resource development (HRD) matters. He asked why mineral rights should be renewed for companies not present in South Africa. The establishment of the State-owned Mining Company (SOMCO) was urgent. The mineworkers were impatient, as mine companies were the sole beneficiaries, for example Alexkor. The NUM's proposals on white women did not constitute unfair discrimination.
Ms Bikani said that the Committee needed to examine, in relation to BBBEE, the issue of fronting from the perspective of small scale miners being dependent on bigger mining companies for funding, as well as engage with the DMR as a regulatory body on the issue of a state-owned mining company and having ownership of mines in terms of percentages. The issue of the majority ownership falling into the wrong hands needed to be considered. The DMR was not applying pressure on ensuring that commodities were not exported without first realising the potential for beneficiation, thereby adding value, at home. Debate was needed on this together with the DTI.
The Chairperson appreciated that the NUM was giving specific recommendations. He advised that the Committee would shortly be holding public hearings on beneficiation. The NUM was the second set of presenters who had tried to assist the Committee with the problems it had faced on 24 August. What the Chamber of Mines of South Africa had said was highly doubtful and the NUM had vindicated the DMR and its consulting firm. Notably, the NUM differed from the Chamber on the status of accommodation for miners. The Committee would have to recall the Chamber, for its submission had perhaps been tantamount to misleading Parliament, and perhaps had been a mere public relations exercise. The NUM was the second set of presenters to contradict the Chamber. The Committee was happy that the NUM was open in terms of amendments. Parliament must engage on the commodities. The Chairperson noted that the NUM accepted the invitation to a round-table to address these shortcomings.
The NUM replied that harsh penalties should be applied in cases of fronting. The NUM wanted the state to play a role addressing the issue of small miners depending on bigger companies for funding. Disparaged people would accept anything. The debate about the role of the state bank needed to be entered into and accelerated. The state bank would play a meaningful role especially in investing in exploration. Most junior miners who would struggling would love to venture into bigger-scale mining, but were impeded by the requirements for large amounts of capital. Discussion needed to start around these areas. Priority must be given to the developmental needs of the country in addressing ownership. Hence Parliament must engage on the commodities. The NUM confirmed its acceptance of the invitation to a round-table.
Mr Sambatha pointed out that Eskom's recourse to load shedding was at least partly attributable to the diversion of South Africa's best coal to export. Mining companies even budgeted for the Eskom fine. He asked why the state should not have a majority share ownership in a mine that was of intrinsic importance to Eskom, for the sake of the country's security of energy. There should be an extra tax on raw materials exported, even iron ore. He said that the merger of the Mining Development Agency (MDA) and Teba Development Trust was necessary and should be taken up by Parliament because the two were competing and duplicating their efforts. Communities concerned would benefit from a merger (Submission document, page 7, paragraph 4a). Furthermore, it might be desirable to compel companies to join forces, if needs be.
The Chairperson, after conferring with Solidarity, postponed Solidarity's submission until 31 August 2011, on account of the meeting's running late. thanked Members, delegates and observers, and adjourned the meeting until 31 August 2011.
- Webber Wentzel presentation
- Webber Wentzel submission
- South African Mining Development Association (SAMDA) presentation
- South African Mining Development Association (SAMDA) submission
- SA Capital Equipment Export Council and The Manufacturing Circle submission
- National Union of Metalworkers of South Africa (NUMSA) presentation
- National Union of Metalworkers of South Africa (NUMSA) submission
- National Union of Mineworkers (NUM) submission
- SA Capital Equipment Export Council and The Manufacturing Circle presentation
- We don't have attendance info for this committee meeting
Download as PDF
You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.
See detailed instructions for your browser here.