Minister on Department of Mineral Resources 2012 plan in relation to State of Nation Address

NCOP Economic and Business Development

13 March 2012
Chairperson: Mr F Adams (ANC – Western Cape)
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Meeting Summary

The Department of Mineral Resources briefed the Committee on its plans for 2012 with respect to the State of the Nation Address (SONA). Its presentation covered job creation, beneficiation, skills development, competitiveness/infrastructure, health, and procurement/empowerment and employment equity. The New Growth Path had identified the mining industry as a key sector for job creation. The Department used mining and exploration licensing and regulatory activities which covered social and labour plans of mines as instruments for job creation. Between the years 1980 and 2000, employment in the industry had dropped from 800,000 to 400,000 people but had since shown improvement to the current 500,000 people. There was a commitment by all parties to create 140 000 jobs by 2020.

The challenge for South Africa was to add value to the mineral resources it had. Five value chains had been identified by government of which two, iron ore/steel and coal/uranium/thorium had already been approved by Cabinet. The other three value chains were platinum group metals, titanium and jewellery fabrication.

It was important for the mining industry to transform and the Department was working with the Department of Higher Education and Training to improve skills in artisan development, developing black business managers, bursaries, skills and beneficiation strategy and improving women’s participation. TB and HIV/Aids were continuing concerns and a health summit had been held in November 2011 resulting in a program of action which would be implemented. Supply Chain Management (SCM) would be tightened to prevent fronting and corruption. The Department currently employed 0.6% disabled people while its target was 2%.

Members asked if the certification of skills was done according to international best practice. Was there any solution to the problem of TB preventative drugs not being taken for the full course duration? Members said no beneficiation would occur without skills. Were the institutions ready to provide training in these skills? Members commented that as long as the raw materials were taken out of the provinces where it had been mined without beneficiation, unemployment and poverty would not be addressed. Members noted potential investor concerns were the question of nationalisation and BBBEE and that very little of the social and labour plans of mines occurred when mining ended. Questions were asked about the latest news on the "zama zama" mines where twenty people had been killed recently; whether mining and prospecting permits were affordable; could the research and development process not be shortened? Members said there had been no mention of transforming the ownership of mineral resources in the presentation. How was the SCM going to be tightened? Did the Department have the teeth to act against illegal mining? What plans were there to reverse the trend of exporting raw materials? Regarding the
Imperial Crown Trading court case and the Aurora mining company case, members said that the Minister had to protect the integrity of the system as it appeared to have been tainted. Members asked who had the final say on mining licences. Members wanted to know about the situation regarding “fracking” in the Karoo, about gas in Virginia in the Free State and about coal mining in the Eastern Cape and whether there were plans in the pipeline for a smelter at Coega?

The Minister said that in 2010, mining stakeholders held a “bosberaad” which had led to a mining strategy document aimed at growing the mining industry. A lack of rail infrastructure and energy had been identified as critical concerns. This had been part of the Department’s input to government, the result of which was the President's pronouncements on infrastructure and energy in his State of Nation Address. Mpumalanga, Northern Cape, North West and Limpopo were provinces where major growth in mining would take place and the Department was working with the Department of Public Enterprises and Transnet to influence that the infrastructure would go where the new mining deposits were. She said the beneficiation strategy was not the Department’s responsibility, its implementation was with the Departments of Trade and Industry and Economic Development. The Department’s task was to ensure that there was access to supply for those who wanted to set up beneficiation plants in South Africa. She said that research and development through the Council for Scientific and Industrial Research (CSIR) and Mintek was minimal and not sufficient in South Africa. She said the BEE policy had been clarified in the mining industry. Current social and labour plans of mining companies were not fully implemented. Scrap metal exports were a challenge as gold was being hidden in the exports. She said job creation was underpinned by skills development. She said the Department alone could not deal with zama zamas. The success in the Welkom case had been because the Department had worked with the police and the mine owners. The Grootvlei mine on the East Rand had been a different case as the biggest challenge was that the miners were the employees of the mine which was in liquidation. The Department was interacting directly with the owners, liquidators and the Chamber of Mines. She said the level where the illegal miners had worked was very dangerous. The Department would be meeting with the liquidators as the liquidation process was taking far too long and the process had to be fast tracked. She said the skills competency tests had achieved low pass rates but that the Department would not drop the standards.

The Minister said that the Department was working well with the National Union of Mineworkers and with the Solidarity trade union. On the question of skills retention, they were competing with the private sector which offered more money. Enticing youth to take up mining related careers was a challenge. As the country was growing and repositioning itself, the education department had to drive developing appropriately skilled people and provide the country with what was needed. South Africa had an opportunity to experience another economic boom but the lack of skills was a shortcoming. She said the Northern Cape not only had diamonds and the area could become a centre of excellence for precious stones. She said that ICT and Aurora were treated like any other companies and that a matter that was being dealt with by the Department would never be allowed to compromise the Regulator. Corruption was not acceptable and the Department strived to run a clean operation, operating in fairness and without political affiliation or interference. There were no plans to make Free State a hub for the transport of manganese. Mining prospecting rights had been issued to the Eastern Cape Coal company. The Department was currently reviewing the company’s compliance issues. The new manganese mining company had pledged to build a smelter at Coega. The plans had not collapsed and were still there. The fracking report would be available as soon as Cabinet had met on the issue. She anticipated that this would be soon. Treasury had given the Council for Geoscience money to prospect for gas in Virginia in the Free State. The State had a role to play in prospecting. The Department was looking at reviewing the law on the license issuing process.

Meeting report

Department of Mineral Resources (DMR) 2012 plan in relation to State of Nation Address
Dr Thibedi Ramontja, DMR Director General, spoke on job creation, beneficiation, competitiveness / infrastructure, skills development, health, procurement/empowerment and employment equity.

He said the New Growth Path had identified the mining industry as a key sector for job creation. Industry stakeholders had developed a strategy for the meaningful transformation of the sector. The Department used mining and prospecting licensing and regulatory activities which covered social and labour plans of mines as instruments for job creation. Between the years 1980 and 2000, employment in the industry had dropped from 800,000 to 400,000 people but since then had shown improvement to the current 500,000 people.

He said the challenge for South Africa was to add value to the mineral resources it had. Five value chains had been identified by government of which two, iron ore/steel and coal/uranium/thorium had already been approved by Cabinet. The other three value chains were platinum group metals, titanium and jewellery fabrication.

It was important for the mining industry to transform and the Department was working with the Department of Higher Education and Training to improve skills in artisan development, developing black business managers, bursaries, skills and beneficiation strategy and improving women’s participation. TB, HIV and Aids were continuing concerns and a summit had been held in November 2011 resulting in a program of action which would be implemented. Supply Chain Management (SCM) would be tightened to prevent fronting and corruption. The Department currently employed 0.6% disabled people while its target was 2%.

Discussion
Ms E Van Lingen (DA, Eastern Cape) asked if the certification of skills was done according to international best practice. She asked if there was any solution to the problem of TB preventative drugs not being taken for the full course duration. She said she was just as concerned with other permits like water permits or environmental permits as with fronting. She said 2% had been an equity target for some time. What growth had there been in the figure for disabled people employed since 2009?

Mr B Nguni (ANC, Free State) said no beneficiation would occur without skills. Were the institutions ready to provide training in these skills?

Mr A Nyambi (ANC, Mpumalanga) asked if the Department had drawn up the presentation after the President’s speech or had they been working on a plan prior to his speech.

Mr K Sinclair (COPE, Northern Cape) said that as long as the raw materials were taken out of the provinces where it had been mined without beneficiation, unemployment and poverty would not be addressed.

At this point the Honourable Minister of Minerals Resources, Susan Shabangu, arrived at the meeting.

Mr Sinclair said Special Economic Zones could not be developed unless one linked the mining activity of the Northern Cape, for example, to the towns of Kathu, Postmasburg and Upington.

He said potential investors concerns were the question of nationalisation and BBBEE. He pointed out that very little of the social and labour plans of mines occurred when mining ended.

Ms B Abrahams (DA, Gauteng) asked what the latest was on the "zama zama" mines where twenty people had been killed recently.

Mr D Gamede (KZN, ANC) asked whether the department’s budget addressed the issues that had been raised at the meeting. Were mining and prospecting permits affordable? Could the research and development process not be shortened? He said there had been no mention of transforming the ownership of mineral resources. How was the SCM going to be tightened? Did the Department have the teeth to act against illegal mining? He said most minerals were exported. What plan did it have to reverse the trend?

The Minister replied that in 2010 mining stakeholders held a “bosberaad” which had led to a mining strategy document aimed at growing the mining industry. A lack of rail infrastructure and energy had been identified as critical concerns. This had been part of the Department’s input to government, the result of which was the President's pronouncements on infrastructure and energy in the Stae of Nation Address. Mpumalanga, Northern Cape, North West and Limpopo were provinces where major growth in mining would take place and the Department was working with the Department of Public Enterprises and Transnet to influence that the infrastructure would go where the new mining deposits were. The beneficiation strategy was not the Department’s, its implementation was with the Departments of Trade and Industry and Economic Development. The Department’s task was to ensure that there was access to supply for those who wanted to set up beneficiation plants in South Africa. She said that research and development through the CSIR and Mintek was minimal and not sufficient in South Africa. She said the BEE policy had been clarified in the mining industry. She said the current social and labour plans of mining companies were not fully implemented.

She said scrap metal exports were a challenge as gold was being hidden in the exports. She said job creation was underpinned by skills development. She said the Department alone could not deal with zama zamas. The success in Welkom had been because it had worked with the police and the mine owners. In Grootvlei mine’s case on the East Rand it had been a different case as the biggest challenge was that the miners were the employees of the mine which was in liquidation. The Department was interacting directly with the owners, liquidators and the Chamber of Mines. She said the level where the illegal miners had worked was very dangerous. She said the Department would be meeting with the liquidators as the liquidation process was taking far too long and the process had to be fast tracked. She said the competency tests had achieved low pass rates but that the Department would not drop the standards.

Mr David Msiza, Head of Mine Health and Safety, said that it was working with the DHET to enhance the 5% pass rate. He said that people dropped out to work in banks because it took five to ten years to get certificated. The Department had bursary programs, artisan training programs and training to enhance the skills of black management in place. He said TB, HIV, AIDS and dust exposure were great concerns and it had commitments to convert single sex hostels, dust control measures and improvement in living conditions.

Dr Ramontja said that the issue of water licenses were a challenge. An interdepartmental team was looking at the issue and it would be addressed in the future.

Ms Pat Gamede, Head of Corporate Services, said that it did not have the statistics for 2009 as the Department had only been established in 2010 and that since then there had been no growth in the figure for percentage disabled people employed by the Department. However it did have a recruitment strategy in place.

The Minister added that the nature of the mining industry was different from other departments and was a challenge because it required geologists and metallurgists. She said it was difficult even to attract able bodied people to add value to the Department.

Dr Ramontja said it was trying to recruit to the industry through promoting the industry and through attracting investment to the industry. It had targeted the creation of 10 000 jobs and it was on track to deliver. Regarding skills, he said that beneficiating skills needed to be looked at for the whole value chain not just one aspect of the chain, so exploration skills, mining skills, processing skills and fabrication skills were all needed.

Ms Setepane Mohale, of the Mineral Policy and Promotion division, said the beneficiation strategy approved in June 2011 was not there to force mines to beneficiate its product but rather for new entrants to beneficiate the products. The Department would use the Mineral and Petroleum Resources Development Act (MPRDA) to provide access to raw materials, leverage the skills accord to develop skills and use the CSIR and Mintek to promote research and development.

Dr Ramontja said the department was still continuing to work on aligning issues to address the SONA. The Department still needed to present its strategic plan to the Committee and would provide a more detailed report; this was only for issues with respect to SONA.

He said that in the past, the environmental liability of mines had not been touched upon, but that the new laws did talk to it. Mines had to be sustainable; the environmental impact cost of mining had to be carried by a portion of profits of the mine and there had to be social and labour plans in place.

Regarding the budget, he said that the Department’s programs did speak to the budget and that the Department felt confident that it could deliver the plan with the resources available in partnership with other Departments and entities.

Mr Nthupeni Ragimana, Chief Financial Officer, said all staff involved in SCM had to sign a SCM code of conduct. The Department had strengthened its procurement committees through proper training courses and policy had been aligned to the Preferential Procurement Policy Framework Act (PPPFA). It had also developed annual procurement plans so as to avoid last minute procurement.

Dr Ramontja said research and development required a very long time before mining took place and the initial capital investment was very risky. The process could not be shortened.

Mr Nguni asked if labour agreed to the mining strategy document at the “bosberaad”.

Mr Sinclair said regarding the ICT court case and the Aurora mining company case that the Minister had to protect the integrity of the system as it appeared to have been tainted. With regard to manganese mining, he said that the Northern Cape had to receive its due regarding developmental patterns.

Ms Van Lingen asked who had the final say on mining licences. She wanted to know the situation regarding “fracking” in the Karoo, about gas in Virginia in the Free State and about coal mining in the Eastern Cape. Were there plans for a smelter at Coega in the pipeline?

The Chairperson said he wanted to call a meeting on fracking only after the interdepartmental task team report on fracking had been presented.

The Minister said that the Department was working well with the National Union of Mineworkers and with the Solidarity trade union. On the question of skills retention, she said that the Department was competing with the private sector which offered more money. She said that enticing the youth to take up mining related careers was a challenge. As the country was growing and repositioning itself, the education department had to drive developing appropriately skilled people and provide the country with what was needed. South Africa had an opportunity to experience another economic boom but the lack of skills was a shortcoming. She said the Northern Cape not only had diamonds and the area could become a centre of excellence for precious stones. She said that ICT and Aurora were treated like any other companies and that a matter that was being dealt with by the Department would never be allowed to compromise the Regulator. Corruption was not acceptable and the Department strived to run a clean operation, operating in fairness and without political affiliation or interference. She said there were no plans to make the Free State a hub for the transport of manganese. She said mining prospecting rights had been issued to the Eastern Cape Coal company. The Department was currently reviewing the company’s compliance issues. She said the new manganese mining company had pledged to build a smelter at Coega. The plans had not collapsed and were still there. She said that the fracking report would be available as soon as Cabinet had met on the issue. She anticipated that this would be soon. She said that Treasury had given the Council for Geoscience money to prospect for gas in Virginia in the Free State. She said the State had a role to play in prospecting.

The Chairperson said that the ICT matter was sub judice at present.

The Minister said that the Department was looking at reviewing the law on the license issuing process.

The meeting was adjourned.

 

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