Mintek and Council for Geoscience on their 2010/11 Annual Reports

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Mineral Resources and Energy

22 February 2012
Chairperson: Mr F Gona (ANC)
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Meeting Summary

The Council for Mineral Technology and Research (Mintek) said the financial year 2010/11 had been one of the most challenging years in Mintek’s existence due to the effects of the global economic recession. However, despite the negative economic climate, Mintek remained a solid company and had been able to score some major achievements during the year. The fundamentals are consequently starting to normalise and the organisation is geared towards recovery and profitability. The encountered challenges could not have been overcome without sacrifice and tough decisions, especially with regard to finances and staff. At the end of the financial year, revenue was R337 million, reflecting a R10 million decrease compared to the previous year. A concerted effort in reducing costs resulted in achieving a 2.4% saving compared to the previous year. Owing to the renewed interest in exploring the African mining sector, Mintek was optimistic about future prospects. At the end of the period under review, total staff complement was 688, 81 fewer than the previous year. The staff turnover rate increased to 8.1% from 4.6% in 2010. The increase in the staff turnover rate was attributed to resignations of skilled personnel taking advantage of the upturn in the economy.

The main strategic objectives of Mintek were to research and develop efficient mineral processing technologies and value added products and services; to research and develop green technologies and processes to mitigate the impact of mineral development on the environment; to promote the mineral economies of rural and marginalised communities through technical assistance and skills development and to build world class R&D excellence.

Mintek’s technologies and products included DC arc smelting, gold and base metal bioleaching, the Metrix resin-in-pulp (RIP) process, the Cynoprobe, Xanthoprobe and others. 

A number of bioconjugate systems were synthesized by Mintek’s Nanotechnology team. A new software application predicted the response to PGM samples using results from an automated SEM. Mintek’s Pyrometallurgy Division continued to provide technical advice on the ConRoast process.

Mintek developed and fully-supported SMMEs and training included funding for people with disabilities and marketing of products. Under the Department of Mineral Resources’ derelict and ownerless mines programme, Mintek had rehabilitated an asbestos dump in Kuruman.

Members of the Committee asked about the problem of not being able to keep employees for longer than four years; about the reasons for resigning and about the rehabilitation of derelict mines; and whether there was a market for the manufactured pottery and jewellery.

The Council for Geoscience reported R211 million total revenue in 2010/11. The government grant was R136.5 million, the contract revenue comprised of R61.8 million.

CGS compiled the SADC geohydrological map and, together with the Geological Society of South Africa, won the bid to host the 35th International Geological Congress in 2016 in Cape Town.

CGS aimed at creating regional and continent-wide promotional maps and documents to inform decision-makers on matters relating to the applied geosciences. CGS also completed a project on the geological carbon dioxide storage potential of South Africa.

Members asked about mapping and making the information available to the public.

Meeting report

Mr Mohau Mphomela, Mintek Board Chairperson, said that, as a result of the worldwide economic recession, the financial year 2010/11 had been one of the most challenging in the last five years. However, the deficit of the organisation could have been even worse, had it not have been for the diligence of Mintek’s team. The last couple of months had even shown a glimmer of improvement.

Mr Abiel Mngomezulu, CEO of Mintek, continued with the presentation. A total of 56 employees had resigned in the year 2011 which comprised of 6.4% of the female and 9.1% of the male employees (slide 7). The number of resignations had seemed to be stabilizing after being 103 in 2008 and 84 in 2009 (versus 35 in 2010 and 56 in 2011). This was due to the fact that the effect of the global financial crisis on the industry had come with a delay. The average length of service at Mintek amounted to four years, after that, employees usually resigned. This meant that there was a shortage of experienced people willing to stay for a longer period of time of between seven and ten years and beyond this time limit were generally people who would most probably retire soon. The staff turnover rate increased to 8.1% in 2011 from 4.6% in 2010 (and 18.9% in 2008 and 10.8% in 2009). The increase in the staff turnover could be attributed to resignations of skilled personnel taking advantage of the upturn in the economy.

Initially, six projects of derelict and ownerless mines were selected for rehabilitation by the Department of Mineral Resources (DMR) (slide 8). However, only four of the projects – Strelley, Jebolo, Owendale and Prieska, had been completed. Funding had been exhausted before the completion of all six projects. Pictures of the Strelley Dump were presented as an example (slide 9). A major programme of rehabilitation work was under way on tailings dumps from historical asbestos mining operations in the Kuruman-Prieska area of the Northern Cape Province. The DMR had granted a total of R90 million for a period of three years.

Financial Summary
At the end of the financial year, Mintek’s revenue was at R337.1 million, reflecting a R10 million decrease to the previous year (slide 12). The own income of the organisation had been drastically decreased from R275 million in 2009 to merely R154 million in 2011. Over the three year period the core funding had not changed (slide 13). On the contrary, contract research had doubled from R40 million in 2009 to R92 million in 2011. The biggest cost related to staff. The expenditure for year 2011 had been R339.8 million, hence there was a deficit of R2,7 million. Some financial aspects were highlighted such as gross margins on commercial projects were maintained around 25%; Mintek re-evaluated its land and buildings which revealed an increase in their value by 24.5 million; and Mintek expanded its asset base by R63.8 million of which R59.8 million had been funded externally (slide 14).

The total income from research had always been between 40 and 55% (slide 16).

Under the heading “State Grant Application”, Mintek explained how it allocated the money received from the Department (slide 17). There was a slight increase in the allocation of the state grants for second economy interventions, energy efficient technologies and low grade and complex ore bodies. However, most of the funding for research came from contract research and not from state granting. The Technology Divisions, as opposed to the Research and Development Divisions focus more on products and services and commercial activities (slide 18).

Research and Development
Dr Makhapa Makhafola, General Manager: Research and Development, noted:
▪ Mintek designed a Cynaprobe analyzer for online monitoring. It had been sold in more than 20 countries, with most of the produced instruments were sold in Australia.

▪ The commercialization of the high temperature bio-leaching project had been cancelled due to withdrawal of the Iranian client (slide 21).

▪ Since the gold price had been increasing, Mintek initiated development work with regard to sustainable processing of refractory ores. For this purpose, a fresh look at sustainability issues and energy consumption was required. Hence, through diversification to mine waters and wastes, Mintek aimed at reinforcing South Africa as a leader in gold metallurgy. Projects taking into account sound water and waste management and optimised energy efficiency should be developed (slide 22). 

▪ The Mineralogy Division explored the potential application of X-ray micro-computed tomography for 3D mineral characterization (slide 23). In this context, collaborations with the Nuclear Energy Corporation of South Africa (NECSA) had been established. In addition, international relations with the University of Utah, which was a leader in this technology, had been established. Using the technology, a variety of ores such as platinum group metals, gold, uranium and base metal ores, with respect to geological and processing applications, had been characterised.

▪ Mintek also developed a software application which predicted the response of Platinum Group Metals (PGM) samples to froth flotation. The systems used scanning electron microscope (SEM) energy dispersive x-ray spectroscopy (EDS) to identify minerals present in a sample (slide 24). The application produced an output highlighting the metallurgical properties of the PGM-bearing particles in tabular and graphical format, including particle size distribution and grouping of valuable species.

▪ Mintek supported the Small, Medium & Micro Enterprises (SMME) sector through research and development of appropriate technologies, and by providing training and support so that development could be as sustainable as possible even though based on limited resources (slide 25). Training at a pottery site in the North West Province had taken place. A total of 86 learners, 40 of which with disabilities, graduated and received certificates. Training in pottery manufacturing was also successfully completed at another site in Port St Johns in the Eastern Cape. 33 learners had been trained in jewellery manufacturing and glass beads production workshops. Mintek’s Small Scale Mining and Beneficiation Division (SSMB) aimed at assisting small scale miners in operating more efficiently and effectively in order to enable them to be economically viable and self sustaining. SSMB contributed towards poverty alleviation, job creation and upliftment of historically marginalised South Africans, through the exploitation of the country’s mineral wealth and beneficiated mineral resources into commercial products to ensure long term sustainability. Training and skills development were provided, so that 99 learners were trained. As a result, second economy indigenous crafters and emerging jewellers were brought into the mainstream of the metal jewellery industry. Small Scale Mining and Beneficiation Division’s contribution to the country’s second economy was manifested in the creation of 77 jobs in 2010/11.

▪ With regard to nanoscience and nanotechnology, Mintek produced novel nano therapeutic and targeted delivery systems (pre-clinical stage) (slide 26). Tuberculosis and malaria diagnostic prototype devices had been successfully developed and could detect the diseases at an early stage. Mintek became a leading sponsor for gold nanoparticles studied within the Organisation for Economic Co-Operation and Development (OECD).

▪ In 2010/11 Mintek was selected by the Department of Science and Technology (DST) as an implementing agency for its Technology Assistance Programme (TAP) (slide 27). Mintek, through AMD, was the co-ordinator of the Ferrous and Base Metals Development Programme of the DST’s Advanced Metals Initiative (AMI). Two sub-programmes included the metal dusting corrosion and lightweight steels for cost-effective transportation.

Mr Alan McKenzie, General Manager: Technology, showed Members a photograph of the Bay 2 furnace (slide 29), and a photograph of the MetRIX plant (slide 30). With regard to Bay 2, he explained that the facility had been closed down in March 2010 and would not start operating before April 2012 due to lack of work. The large drop in Mintek’s commercial income was caused by this shut down. 20 staff members had been accommodated in other areas. However, Mintek managed in November 2010 to negotiate a two-year contract which would cover half of the costs for the facility. The Metrix development programme culminated with the running of the Metrix pilot plant at the Harmony Gold Mine’s No. 1 plant near Welkom in the Free State Province. 

Mintek worked together with the international water company Veolia Water Solutions & Technologies on the improvement of the SAVMIN technology with the aim of reducing capital and operating costs.

In regard to ConRoast commercialization, Mr McKenzie showed a photograph of the acquired site for the proposed 5 MX DC smelter in Middelburg, Mpumalanga (slide 33). Gas-cleaning equipment was under construction to accommodate the furnace.

China dominated the production of rare earth elements for use in electronics. Mintek tried to promote valuable rare earth resources in South Africa, which would be refined locally. Using technology developed under state funding and in collaboration with the Department of Trade and Industry and others, Mintek had developed a concept for a South African Cooperative Refinery (SACREF) (slide 34). 

Corporate Services
Adv Mamokete Ramoshaba, General Manager: Corporate Services, said the demographic profile of Mintek comprised of 67% Africans, 4% coloureds, 5% Indians, 19% whites and 4% foreign nationals (slide 36).

20 employees graduated from the Wits Business School’s Management Advanced Programme (MAP) for managers and employees in supervisory positions. A Coaching and Mentoring Programme had been implemented in all Mintek divisions. The Academic Support Unit within the Human Resources Division was also active in science, technology, engineering and mathematics promotion programmes including Minquiz – a national science competition for Grade 12 learners. Internships were provided to young scientists within various programmes (slide 37). Partnerships with
higher education institutions (HEI) and four other organisations – SASOL, Federation of Engineering, Science and Technology Olympiads and Competitions (FESTOC), South African Agency for Science and Technology Advancement (SAASTA), Leoben –  were concluded.

Full-time bursaries were offered to a total of 86 students, 72 of whom were blacks; and part-time bursaries to 73, 68 of them were blacks (slide 38).

45 trainees participated in the Work Integrated Learning (WIL) programme, the same number as in 2009/10 (slide 39).

39 employees were retrenched.

Mintek maintained a high level of AIDS education by means of outreach programmes and awareness events. In a HIV/AIDS prevalence survey, in which 416 employees participated, 6.8% of the participants were tested HIV positive (slide 40).

The hurdles faced by Mintek were a general shortage of scientists and engineers, under-representation of designated groups at the technical, professional and managerial levels, the school system not producing enough mathematics and science graduates, “younging” workforce, lack of competitiveness of the salaries of professionals, limited budget to attract key and critical talent (for example, absence of shares, international vacation) (slide 41), and international competition for skills.

Research Information Management (SARIMS)
Mintek was making use of the GENIUS Research CV Database, SPIN, and the Research Output modules. Current plans included the maintenance of these modules and roll-out of GENIUS so that researchers could keep their CV data up to date.

In conclusion, Mr Mngomezulu said that although the financial year had been difficult due to the lack of revenue from Bay 2, project delays from the customers on larger projects and increased electricity tariffs, the forecast for 2012 was good. Plans for 2012 included developing a demonstration-scale atomiser plant, establishing an “African
rare earth elements (REE) Refinery” and leveraging the Savmin process to address acid mine drainage (AMD). Mintek had a lot of savings and had the intention to continue to save and to grow the awareness of environmental consequences.

Ms N Ngele (ANC) (former Member of this Committee) queried small scale mining and beneficiation. She asked whether there was a market for the pottery and jewellery that was manufactured, whether the community was generating anything from those projects. She also wanted to know what did ‘younging’ refer to. 

Mr Mngomezulu replied that he could ensure that community beneficiation had happened. The target for SMMEs still in existence after one year was set at 71%, in fact, a 100% was achieved.

On the question of younging he explained that people usually worked at Mintek for 4,5 years. However, recommendations on important decisions would only be taken from employees that had worked at least seven years. However, when people worked for seven to ten years, they might reach retirement age and retire. Then, Mintek would be left with the young personnel who only stayed for less than 4,5 years. This was meant by the phenomenon of younging of institutions.

Mr E Lucas (ANC) enquired if the 2011/12 budget would be the same or would increase.

Mr J Lorimer (DA) was interested in cost effectiveness.

Mr C Gololo (ANC) raised the issue of resignations and asked for the reason behind them.

According to Mr Mngomezulu, there were two worlds in South Africa. If a black person went to university, it was the whole community that took him there. After completing the degree, it was now up to that person to help their cousins to go to university as well. On the contrary, if a white person went to university, it was his own responsibility only, he did not have to assist his cousins in graduating. Hence, most of the people that resigned from Mintek were moving on to take jobs where they could get higher salaries. Another reason was that young employees used to work in one department only and did not see any opportunities to develop and get a promotion over a short period of time. Thus, Mintek changed their strategy and started rotating the young employees in various divisions to build them up. However, this was a long term strategy, the results would not be visible next year.

Mr M Sonto (ANC) was concerned about the fact that the average stay at the company was only about four years. He asked what tactic should be adopted to avoid the catastrophe of having merely elderly people at the organisation while the youth were not attracted by the salaries offered. He enquired about the amount of gold available in South Africa. He asked how Mintek dealt with the financial loss it had suffered and who was to blame.

Mr Mngomezulu replied that it was the Department for Mineral Resources which was the decision maker of the projects, not Mintek. The first contract between DMR and Mintek was concluded in 2009. Mintek managed to complete only four of the five projects due to lack or funding.

Ms Sonto asked what value had chrome compared to other ore resources and where would it put South Africa in future.

Mr McKenzie replied that South Africa had 7% of the global resources in chrome. A lot was exported not as finished products. The reason for this was not enough electricity. 

Ms F Bikani (ANC) asked about if the target for rehabilitation had been reached and how serious Mintek was about rehabilitating derelict mines, what were the obstacles and what was the financial status of the mines.

Mr McKenzie replied that the water treatment issue was very cost effective. Working together with Veolia led to halving the costs. Mintek had made huge differences in this matter.

Mr F Gona (ANC) asked what happened to the communities staying near the mining facilities. He commented that the question by Mr Lucas about funding for 2011/12 was very important. He asked if Mintek was despondent about research and development for units not fully funded by the state.

Mr Sakhi Simelane answered that the state grant remained not significantly changed. They had received funding for four further projects. The available money had been managed very well on a monthly basis. Mintek received money from contract research as well.

Council for Geoscience (CGS) Annual Report 2010/11
Dr. Gerhard Graham, Acting CEO, used a graph (slide 2) to compare the two balances the Council of Geoscience had to keep between statutory and commercial performance. The index of completed programmes was determined every year in March by auditors most often appointed from universities. The index had gradually increased since 2005. With regard to the commercial income, it could be seen on the graph that 2009 had been commercially a very good year, but afterwards the economic recession came.

CGS had undertaken many cost saving measures including stopping their field work and the attendance of conferences, reducing the time spent in libraries. Instead, scientists spent a lot of time in their offices and concentrated on available resources. Hence, the performance index was 97.8% (slide 3). The quality of the work was high as well: 89.12% of the customers were satisfied. The number of publications was 42 which had exceeded the target of 20.

The number of rural development projects was 33 and regional and African development projects in progress was 29, both had exceeded the targets of 25 and 20 respectively. Small scale mining initiatives were not included in these figures.

The percentage of ISO implementation in accordance with reference report was 85%, which was good progress compared to 45% baseline in 2009/10.

Preferential procurement was 26.82% against a 40% target (this was as the result of less money being spent in the organisation and due to specialised services).

CGS had expectations of R91 million in contract revenue, however, some of the contracts had been lost, hence the contract revenue was R61.8 million only, despite all implemented saving measures (slide 4).

The number of large tenders submitted (>R1m) was a new measure aimed at increasing the revenue of the organisation. As there was no baseline to work from at the time of introducing the measure, the target set was too ambitious.

CGS had been encouraging its staff members to gain further qualifications. The number of staff and students enrolled for PhD and MSc degrees was 37 (slide 6).

The number of published articles at 121 was quite remarkable. It meant that on average, nearly every scientist had published an article. This was as a direct result from the increased number of projects with external collaborators (77 of them), strategic science partnerships (a total of 30) and international commercial projects focusing on joint research and skills development (slide 7).

The effect of cost-cutting measures could be seen with regard to the protégées who suffered significantly from the cut in funding: the percentage of satisfied protégées was 50.4 as opposed to 60% baseline and 53.2% in 2009/10.

CGS had planned an income of R199 million for the financial year 2010/11 and achieved a total of 211 million, It had planned expenditure of R197 million and actually had R195 million expenditure (slide 8).

The different types of mapping done by CGS (slide 9) included geological and geotechnical: slide 10, geophysical and geochemical: slide 11 and metallogenic mapping (slide 12).

Key Geoscience Projects
South Africa is a mining country. This legacy was addressed by Geoscience which was monitoring surface water affected by
acid mine drainage. The organisation monitored the effects of long time mining on water, which amounted to an increase of the pH level. CGS aimed at understanding and combating this problem. For this purpose, it adopted a more passive approach by looking at naturally occurring processes resulting from the effects of mining on water resources (slide 13).

Another project included rare earth elements exploration and beneficiation. The goal of this project was to achieve optimal sustainable local manufacturing of value-added products, generating significant export income and new industries for South Africa by the 2020s, while reducing environmental impact (slide 14).

Leaking pipes would result over a long period of time in sinkholes. Thus, a structural, geotechnical and sinkhole stability study of the infrastructure and housing was undertaken in Merafong municipality (slide 15).  

A coal resources report evaluating and ascertaining the remaining coal resources of South Africa would be released by the middle of the year.

The Council for Geoscience coordinated and completed a project on the geological storage potential of carbon dioxide in South Africa. The work culminated in an Atlas and a Technical Report on the geological storage of CO2 in South Africa. The Atlas was launched in September 2010 by the Minister of Energy Ms D Peters (slide 17).

One of the focuses of the Council for Geoscience was to promote a better understanding of the tectonic activity in South Africa. The only place guaranteeing excellent recordings of ground motion caused by seismic events were the mining districts. Hence, 25 sets of equipment for 25 stations in the Klerksdorp-Orkney-Stilfontein-Hartebeesfontein mining region were purchased and tested and the data was utilised to determine the attenuation parameters that control ground motion in mining districts. In addition, a project on falls of ground aiming to identify root causes of rockfall incidents in mines to thus carve out an awareness programme, had been completed (slide 18).

The CGS developed new expertise in determining the vertical shear-wave (s-wave) velocity profile in soil, which is very important for geotechnical engineering and environmental and geotechnical site characterization (slide 19). The process is called the multichannel analysis of surface waves (MASW).  

The ESKOM project included sampling for cosmogenic dating (slide 20). The technique was mostly used in Europe and America.

A geological map of the SADC region was available on hard copy and CD.

The 35th International Geological Congress (IGC) would be held in South Africa as decided at the IGC33 held in Oslo (slide 21).

During 2011, interest was shown by several international oil companies in potential gas-bearing shale from the Soekor borehole core housed in the CGS Core Library.

Under Target Generation Programme, it was noted that there was a need for South Africa to refocus its support in greenfields exploration. Geological information was of great importance for the promotion of mineral exploration investment. Key information obtained through CGS’s Target Generation Programme would provide inputs to risk-based decision making, which would have an effect of reducing exploration costs. Such information would also make it unnecessary for individual companies to duplicate common information or spend money on non-prospective ground (slide 22).  

Demographic profile of CGS
There had been a movement from 2007/08 towards a balance between black (49%) and white (38%) employees as well as between female and male employees. 17% of the black and 19% of the white employees were women, whereas 32% of the black and 19% of the white employees were men (slide 25). Comparison of the staff profile by gender and race since 2004 was made on slide 26.

An analysis of the terminations by CGS was provided on slide 27.

The number of bursaries had been increasing until 2008, it had decreased in 2009, and started to improve again this year (slide 27). The demographic composition of bursaries by race and gender was shown on slide 28. Strong preference of female students had taken place in the last couple of years.

Ms Bikani was interested in whether CGS and Mintek were complementing each other rather than duplicating their research.

Mr Lorimer was interested in whether there was potential for external income. Mr Graham said that even if a contract was signed, it could be suspended. Thus, in 2009, they had expectations on a particular income, but very quickly these expectations disappeared. Therefore, in the long term, CGS would like to look at what was already available at the World Bank and within certain countries of the European Union. Recently, there was a revival in the geological sphere, and several very large geological projects would soon be released. CGS should make sure that it was aware of those projects. There were also some very large national projects.

The Chair was impressed by the mapping exercise of CGS which was, in his opinion, very productive. If investors knew what resources were available, it would make their decisions much easier. He asked CGS whether, with the available funding, it would be able to inform the public any time soon about the resources available in South Africa or whether these were merely first steps in mapping. The Chairperson asked if the research on uranium was public knowledge with regard to the dangerous nature of uranium.

Mr Graham answered that the useful information was open to the public. Small quantities of the research material were available in exchange for a small entrance fee for the CGS library. However, CGS was aware that some companies had drills and hence were obtaining their own information. Therefore, a discussion of how CGS could receive access to this information was necessary.

With regard to mapping, the idea was to gather information that would become publicly known and would attract investors. Once the information was available, the question of assessing the resources arose. Mr McKenzie emphasized that reporting on uranium and other commodities in South Africa took time. CGS could not achieve everything in the next three years, it had to prioritize what had potential and could be mined. 

The meeting was adjourned.


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