Mine Health and Safety Council 2010/2011 Annual Report

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Mineral Resources and Energy

27 January 2012
Chairperson: Mr F Gona (ANC – Northern Cape)
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Meeting Summary

The Mining Health and Safety Council presented its 2010/2011 Annual Report to the Portfolio Committee on Mineral Resources. The Council informed the Committee that it had received an unqualified audit from the Auditor General of South Africa. Members were informed that there was a slight improvement on the loss of life on South African mines however the Council was concerned about the high number of occupational diseases on South African mines. To address this concern a committee was set up within the Council that focused on TB and HIV.  The Council was also striving to maintain a balance between health and safety on the mines. The composition of the Council was a total of 15 members, each coming from the state, labour and from employers in equal proportions. Funding for the Council came from the levies collected by the Council and used to develop its capacity. The goals of the Council included the provision of advice and reliable information on health and safety as well as playing a decisive role in legislative development within the mining sector. In 2009 the culture transformation framework was developed in order to change the culture of health and safety on South African mines. In terms of the Council’s internal objectives, internal business processes were developed. The area of occupational health needed attention and as a result the management of thermal stress has been accelerated. R32 million has been invested to monitor platinum mines for purposes of detecting seismic activities. Critical protective gear foe women in mining have been a key focus area. The Council had a R13 million surplus from its collections this year. The Council has taken the decision that any surplus would be used for the following projects: HIV-AIDS; improving safety and health as well as curbing and combating racism and gender discrimination.

The Committee was informed that that the finding of irregular expenditure  by the Auditor General did not indicate elements of fraud; it was as a result of non compliance with the Preferential Procurement Policy Framework Act and the Public Finance Management Act. In order to address this, the Council put tight measures in place; it was now complying with the PPPFA and also ensured its procurement procedures and laws were followed.  The annual report indicated that there has been an improvement in spending; the cash flow statement on page 46 indicated that there has been a decrease in the accumulation of cash. Spending on research on page 43 was R21 million, in the previous financial year it was R18 million.

The Committee wanted to know if Section 54 of the Mine Health and Safety Act was implemented fairly across all mines. The Committee also wanted to know the cause in delays of research projects. The reasons behind the non-compliance for the Preferential Procurement Policy Framework Act were sought by the Committee. The Committee inquired as to why audit and consulting fees had increased by 45%. A Member asked for more details on the powers of the Mine Health and Safety Council and also the number of mine inspections that it held.

Meeting report

Presentation: Presentation of the Mine Health and Safety Council 2010/2011 Annual Report
Mr David Msiza, Chairperson of the Mine Health and Safety Council (MHSC), said that the Council was a public entity that advised the Minister of Mineral Resources on mine safety matters. Last year there was a slight improvement on the loss of life in South African (SA) mines. The Council was concerned about the high number of occupational diseases in SA mines. The Council was also striving to maintain a balance between health and safety on the mines. The Council had received an unqualified audit from the Auditor General (AG). There was also a change of leadership in the positions of Chief Executive Officer (CEO) and Chief Financial Officer (CFO).

Mr Thabo Gazi, Chief Executive Officer of the MHSC, said that the Council also advised the Minister on the regulations of mine safety in the country. The Council had 15 members, each coming from the state, labour and from employers in equal proportions. A committee was set up within the Council that focused on TB and HIV. The levies that were collected by the Council were used to develop its capacity. The goals of the Council included the provision of advice and reliable information on health and safety as well as playing a decisive role in legislative development within the mining sector. In 2009 the culture transformation framework was developed in order to change the culture of health and safety in SA mines. The Council complied with the requirements of the Public Finance Management Act (PFMA) and other legislation. In terms of the Council’s internal objectives, internal business processes were developed. An internal task team had been set up to investigate accidents and make recommendations in the platinum mining sector. During the 2010/2011 financial year the Council had made headway in collecting money due to it from mining entities. The area of occupational health needed attention and as a result the management of thermal stress has been accelerated. R32 million had been invested to monitor platinum mines for purposes of detecting seismic activities. Critical protective gear foe women in mining have been a key focus area. The Council had a R13 million surplus from its collections this year. The Council had taken the decision that any surplus would be used for the following projects: HIV-AIDS; improving safety and health as well as curbing and combating racism and gender discrimination.

Mr David Molapo, CFO of the MHSC said that the finding of irregular expenditure did not indicate elements of fraud; it was as a result of non-compliance with the Preferential Procurement Policy Framework Act (PPPFA) and the PFMA. The amount of R877 000 which was above the R500 000 threshold as indicated by the AG, was as a result of the Council losing the CFO and then appointing an external consultant to take over the financial management obligations. There were no oversight issues in this matter. A financial manager was paid R423 000 but he had no tax certificate; this was highlighted by the AG in their report. The Council had since put tight measures in place to address this. The Council was now complying with the PPPFA and also to ensure that all procurement procedures and laws were followed. The annual report indicated that there had been an improvement in spending; the cash flow statement on page 46 indicated that there had been a decrease in the accumulation of cash. Spending on research on page 43 was R21 million, in the previous financial year it was R18 million. The R116 million cash surplus was a total that had accumulated from the previous financial year. The Council had debts totalling R6 million. R32 million from the surplus was committed to contracts with service providers that were implemented on a continuous basis. The projects that had been mentioned by the CEO were also being funded from the surplus.

Mr Msiza concluded that the internal audit committee was satisfied with the content and quality of the Council’s reports and the AG confirmed this with an unqualified audit. The Council was working very hard to ensure the safety of mines in SA. 

Discussion
Mr E Marais (DA) asked if Section 54 of the Mine Health and Safety Act - which was the provision enforced for the closure of a mine where it was deemed unsafe - implemented fairly in SA given that mine production has dropped due to the closure of mines.

Mr M Sonto (ANC) asked who the Council’s customers were. How much did the internal investigation undertaken by the Council cost and what did was the impact on the finances? What caused delays where research projects were concerned?

Ms F Bikani (ANC) asked why the PPPFA was not complied with. What was the budget for the pillars since the council had mentioned that it was trying to bring down the surplus.

Ms Tinto (ANC) asked what power did the Council have over mines where mine safety was concerned and how often were they inspected?  How safe were miners in SA? Did the Council have bursaries to offer researchers as there seemed to be a shortage of researchers?

Mr Msiza said that Section 54 was a provision of the Mine Health and Safety Act gave an inspector the power to close a mine where the danger of loss of life was probable. The Council was worried about the platinum sector which had contributed to 30% of deaths and this was improving. The Council then split its main and only office in Rustenburg where platinum mining mainly took place. The office was also capacitated and now there was an increase in inspections. The mines in the Rustenburg areas were now complaining about the number of visits from inspectors. The Council was applying the law fairly and was not discriminating or treating platinum mines unfairly. The customers of the Council were legal mines that had been issued with a license. Employers, communities and stakeholders were also the customers of the Council. The internal investigation was at the insistence of the board after complaints had been received against the then CEO who had since left at the end of his contract. The cost of the investigation was R150 000. The board viewed the allegations seriously and an investigation was initiated. There was no evidence found against the former CEO and the Council was unable to carry on with the matter. Since then the Council had appointed audit and risk committees that were on a look out for such problems. The budget of the audit and risk committees was increased. The Council had done a lot of good research. The Council was assisting the industry to achieve zero harm.  An agreement was struck at the mining summit on a number of initiatives geared towards health and safety on SA mines. The Council conceded that health issue had not been given the attention they should have and together with the Minister there was more cooperation with the Department of Health and the ministry in that department.

The Council had informed inspectors that the status quo could no longer continue on mines. The Council had come to the realisation that it had to work with all stakeholders in ensuring safety on mines, this included organised labour and business. The Council did not issue bursaries but the Mining Qualification Sector Education and Training Authority (MQSETA) has allocated 800 bursaries.

Mr Gazi said that the Council implemented a research process that commenced at the beginning of the year as opposed to later in the year during previous financial periods. There were still problems regarding payment for research, this had always been a challenge in terms of health and safety. The Council had been closely monitoring research and had improved the management of research initiatives. The focus was now on the closer management and monitoring of research. The research pillar selection was based on the principle of selecting the least number of projects that would not only yield the best results but more results as well. The areas that were left out were: integrated mining activities; technology, tripartisim; regulatory framework, inspectorate and data. These areas were also a centre of focus for stakeholders and this was one of the reasons why the Council did not undertake them. 

Mr Molapo added that there was a capacity challenge as there was no procurement specialist hence the citing by the AG on non-compliance with the PPPFA.

The Chairperson commented that the Committee would have to determine where the law would require to be strengthened.

Mr Marais referred to page 58, paragraph 5.5 and asked the CFO why consulting and audit fees had a 45% increase.

Mr Molapo replied that the increase in audit and consulting fees was included in the R800 000 that fell under the fruitless and irregular expenditure that was identified by the AG. There was a further R423 000 that was explained earlier which was for the financial consultant that was appointed after the passing of the previous CFO. The passing of the CFO had an impact on the financial performance of the Council. There were new consultants after the passing of the CFO who assumed their duties with no proper handover. The audit work took longer than it should have and this resulted in the rise of audit costs.

Ms Bikani said that most of the CFO’s responses were about his predecessor that had passed away, surely there were laws in place for succession under such circumstances, were there not any competent officials that could have acted in the interim? This sounded like an excuse and pointed to that there was something wrong in the Council’s succession planning.

Mr Msiza said that the succession issue had to be put into context during this financial year there were only 26 staff members, this was a small entity. The CFO was both a financial manager and accountant for the Council. The CFO passed away 30 days before the submission of the annual report to the AG, the incoming consultants had a lot to learn in a short space of time and they hit the ground running. There was now a CFO with a management and financial accountant.

Mr Sonto said that there was an improvement on revenue collection yet in the Council’s report it was stated that there was still a challenge caused by the Department of Mineral Resources (DMR), how was the council planning on overcoming this?

Mr Msiza replied that there were regular meetings between the two entities and statistics were collected from the Department. These were then analysed and mines were levied accordingly. Sometimes the mines would come to the Counsel and say that the information collected from the DMR was not correct and the process would start over again.

Mr Gazi said that levy was collected based on a three year cycle according to the number of accidents that have occurred. The number of days lost was also considered where a mine was temporarily shut down after an accident had occurred. Mines were required to report accidents, since there were financial implications for the mines sometimes it was hard for them to report.

The Chairperson referred to page 57 and the amount of R1.3 million, the AG had stated that this amount was not condoned. What could be the delay in the process of ensuring that it was cleared for approval? On page 13 there were a number of board members that the Committee has never seen, why? What was the future outlook of work under Objective 1? The best practices referred to under Objective 2, were these international in nature or local? To whom did the Council give feedback on the promotion of safety on the mines?

Mr Msiza said that the other members of the board have appeared before the Committee at various times. The legislation governing the Council was outcome based in nature ant the challenge was to ensure that minimum standards were maintained. The CFO and CEO were looking at improving g the performance of the Council not only in terms of legislation but also research and administration. The Council has come up with a strategy with an aim of finding the necessary tools to make it work in order to improve on performance. There was a need for an implementation unit that was going to focus purely on research, best practice and monitoring implementation on mines.

Mr Sonto asked what the current situation with the audit committee was as a lot of members have left, was this worrying?

Mr Msiza said that a new chairperson as well as new members had already been appointed.

The Chairperson asked how many?

Mr Msiza said that it was three members from each stakeholder groups after which there had to be three independent members including the chairperson. The audit committee this year was very consistent.

The Chairperson thanked the Council and said that if there was a quorum then the Committee would have either adopted or rejected the report, this would be done at the next meeting.

The meeting was adjourned.

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