The Portfolio Committees on Mineral Resources and on Labour met in a joint sitting to hear updates on the progress made in resolving the matter concerning the Orkney and East Rand (also referred to as Grootvlei) mines.
The Joint Provisional Liquidators of the insolvent estate of the Pamodzi Group reported that the Orkney mine had been sold to China Africa Precious Metals for R150 million. The purchasers were keen to resume operations as soon as possible. Certain assets of the East Rand mine was sold to Gold One for R70 million. It was unlikely that operations would be resumed in the near future as the mine shafts were flooded. The surface permit rights were the only outstanding condition precedent for the sale of both mines but the liquidators were confident that the sales would be concluded in the near future. Efforts to dispose of the remaining assets of the East Rand mine were continuing and progress was being made in the legal action to recover losses from the directors and managers of Aurora Mines.
Miners’ claims for outstanding wages prior to the mines being taken over by Aurora and for the period when the miners were employed by the liquidators had been settled. A major creditor had waived its rights in favour of the rights of the employees. 1200 mine workers were currently receiving training in a re-skilling programme. The major challenge was illegal mining activity and additional expense was incurred by the liquidators to constantly re-seal entrances blasted open by the illegal miners to gain access to the mine.
The Master of the High Court had appointed Kaapvaal Trust (Pty) Ltd as liquidators to deal with the insolvent estate of Aurora Mines. The Department of Labour had established that there were 4335 workers on the Aurora payroll. The Department reported that the claims for unpaid wages by 1287 workers at the East Rand mine to the value of R2.03 million had been settled as a result of a Court order. Subsequently 468 new claims to the value of R1.73 million were received and the claims were referred to the liquidators. The Department had processed 936 claims for Unemployment Insurance Fund benefits. Applications for UIF benefits were received from 1933 foreign workers but the Department had been able to assist only 36. The residence and work permits of the foreign workers had expired and the workers did not have identity documents. Many workers could not be traced.
The Department of Labour understood that 300 Aurora workers had been employed by Gold One. Officials of the provincial Department of Labour were monitoring the progress made in the lay-off training scheme. Officials had visited the hostels at the East Rand mine and found that most of the occupants were women and children. The premises were in very bad condition. The inhabitants refused to engage with the Department but it was understood that no previous workers remained on the premises and that the hostels were currently occupied by illegal miners.
The Department of Mineral Resources reported that the joint Provisional Liquidators of the Pamodzi Group had given the interim trading contract and mining agreement to Aurora Mines. However, the venture had also failed and Aurora was placed under liquidation. 3000 East Rand and 1170 Orkney miners were affected. The Department worked with the Department of Labour on the issues concerning the workers bur received little cooperation from the liquidators of Aurora. The Department had not received the documents related to the sale of the East Rand mine to Gold One from the liquidators. The Department was responsible for mine health and safety issues and officials carried out regular inspections to ensure entrances were sealed to prevent illegal miners from gaining access. The major environmental challenge at the East Rand Mine was acid mine drainage. The mine was not operational and the water was not being pumped and treated as required. The Department of Water Affairs was responsible for the pumping and treatment of mine water.
The National Union of Mineworkers reported on the union’s involvement at the Orkney and East Rand mines. The union was critical of the appointment of Aurora to operate the mines as the company did not have the necessary skills, expertise or financial resources. The union suggested that the legislation pertaining to insolvent estates and to the powers and functions of liquidators was amended. The union commented on the asset stripping and theft of assets at the mines, which could jeopardise the successful sale of the mines and delay the resumption of operations. The union pointed out that Gold One intended abandon the existing flooded shafts and to prospect on new ground at the East Rand Mine. This required a new application for prospecting rights, which would take some time to be finalised.
Members were mostly concerned with the plight of the employees and most of the questions asked pertained to what had been done to assist the mine workers and to improve their living conditions. The Union’s suggestions to amend the legislation would be given serious consideration.
Members of the Portfolio Committees on Mineral Resources and on Labour, representatives of the Departments of Mineral Resources and Labour, the Joint Provisional Liquidators of the Pamodzi Group of Companies, the National Union of Mineworkers and other delegates of interested parties introduced themselves.
The Solidarity Trade Union was unable to attend the meeting. Aurora Mines had not responded to the invitation to present a briefing to the Committees and the responsible officials of the company could not be found when the Committee Secretary tried to contact them to confirm their attendance. The Committees hoped to conclude the matter concerning the Orkney and East Rand (Grootvlei) mines operated by Aurora Mines and would consider what further action had to be taken after hearing the input provided by the stakeholders.
Report by the Joint Provisional Liquidators on matters relating to the Pamodzi Group of Companies
Mr Barend Petersen and Mr Johan Engelbrecht presented the report of the Joint Provisional Liquidators of the Pamodzi Group of Companies to the Committees (see attached document).
The agreement to sell the Orkney mine to China Africa Precious Metals (CAPM) for R150 million was concluded, subject to certain conditions precedent. The consent of organised labour was obtained and the matter concerning surface permit rights was expected to be finalised in the near future.
Certain assets of the East Rand (Grootvlei) mine was sold to Gold One for R70 million, subject to certain conditions precedent. The liquidators were engaging with the Department of Mineral Resources (DMR) on finalising the issues concerning the conditions precedent relating to the surface permit rights. Efforts to sell the other mining assets were in progress. The liquidators acted with the consent of the major secured creditor, Deutsche Finanz Bank, who had a claim in excess of R1 billion. The mine was not a going concern and would require significant capital investment and a long period of time to be brought into production again.
Illegal mining activities at the East Rand mine were the main challenge. The liquidators participated in the Illegal Mining Forum established by the Minister of Mineral Resources and cooperated with the South African Police Services (SAPS), the DMR and other mines in the area.
The Commission for Conciliation, Mediation and Arbitration (CCMA) was involved in the training lay-off scheme for the miners previously employed by the mines. The Section 417 and 418 enquiries were completed and progress was being made in the legal action taken to recover losses from the directors and managers of Aurora Mines. There was ongoing consultation with organised labour and regular reports were submitted by the liquidators to the Master of the High Court.
Ms F Bikani (ANC) asked if all the issues that had been resolved included the money owed to the miners for wages, the bad living conditions of miners and transferring personnel to the new owners of the mines.
Mr J Lorimer (DA) asked if the liquidators had obtained the consent of the unions and the workers for the actions taken. He asked what assets of the East Rand mine were sold to Gold One and what other assets remained for disposal. He asked who was being litigated against, what the liquidators hoped to recover and how long the legal proceedings would take.
Mr M Sonto (ANC) wanted to know at what stage the legal process was. He asked if the liquidators’ involvement in the Illegal Mining Forum was included in its terms of reference. He asked when CAPM would take over operations at the Orkney mine and what the reasons were for the lengthy delay in finalising the liquidation process. Little progress appeared to have been made since the previous briefing to the Committee.
Mr E Nyekemba (ANC) said that the Committees needed to know what the timeframes were. He asked if the miners from both mines participated in the training programme.
Mr E Lucas (IFP) observed that the liquidation process had been lengthy. The matter concerning the mine workers was serious and he was aware of claims from the liquidators that certain workers could not be traced. He was not convinced that the matter would be resolved to the satisfaction of the employees.
Mr M Nchabeleng (ANC) asked who was responsible for dealing with the environmental issues, particularly the flooding of the shafts and who was responsible for the necessary funding. He asked what the involvement of organised labour was and who was responsible for the training programme.
Mr Petersen replied that the liquidators were working with the NUM and Solidarity at both mines and that consent of the workers had been obtained through the structures of the unions. The sale of the Orkney mine would be finalised within a month. The sale had been unconditional and the purchase price had been lodged in an escrow account. The liquidators followed the prescribed process in terms of the Companies Act in disposing of the assets. Discussions had been held with the creditors to get their agreement to waiving their claims in favour of the claims of the employees. In the case of the Orkney mine, he understood that there had been an agreement between organised labour and CAPM to re-employ the mineworkers once production was resumed.
The assets of the East Rand (Grootvlei) mine sold to Gold One included the intellectual property and the underground plant. The purchaser owned the adjacent mine and planned to expand underground. However, it would take some time before it would be possible to resume production as the mine shafts were flooded.
The litigation was directed at the directors and management of Aurora Mines and at the company itself. The Joint Provisional Liquidators believed it had a valid claim but it was difficult to predict the outcome and how long the legal process would take. Summonses had been issued and the litigation was being proceeded with.
The ownership of the mines currently vested with the liquidators of the insolvent estate. The liquidators had a legal responsibility to protect the assets of the mines. Illegal miners blasted open the sealed entrances to the mine, which had to be constantly re-sealed by the liquidators. The estate was challenged by financial constraints and the costs incurred in re-sealing the entrances were an added burden. Limited funding was available to cover the environmental liabilities.
The Joint Provisional Liquidators had paid all East Rand worker claims for the period the workers were employed by the liquidators. In addition, pre-liquidation claims to the value of R23 million had been settled out of the proceeds of the same of the mine. The outstanding worker claims were for the period when the miners were employed by Aurora.
Mr Engelbrecht added that the Joint Provisional Liquidators worked closely with the Pamodzi liquidators and the legal teams of various stakeholders. All worker claims for the period prior to the handing over of the mines to Aurora had been settled. He was not able to provide details of the claims against Aurora as litigation was pending but could give the assurance to the Committees that substantial amounts would be recovered from the defendants that would cover the worker claims against the Aurora insolvent estate.
The Chairperson asked if all worker claims at the Orkney mine would be settled.
Mr Petersen said that the major creditor (Deutsche Finanz Bank) had agreed to waive its rights in favour of the rights of employees. There would be sufficient funds to settle the worker claims once the sale to CAPM was completed.
The Chairperson asked if the unacceptable living conditions of the miners had been attended to.
Mr Engelbrecht explained that the supply of water and electricity to the worker accommodation was constantly interrupted as a result of the repeated theft of water pipes, cables and components of the electricity sub-station. The liquidators were engaging with the Ekurhuleni Municipality in an attempt to find a lasting solution. The Government’s Skills Training Fund allowed 1200 workers to undergo a re-skilling programme. Previous experience indicated that graduates gained the necessary skills that allowed them to start their own businesses. Gold One was the most significant mining entity in the Grootvlei area. The Joint Provisional Liquidators had engaged with Gold One and the company had employed a number of previous Aurora miners.
Mr S Motau (DA) asked how many destitute unemployed mine workers remained on the premises. He had received reports of deaths amongst the illegal miners who were active in the mines. He asked what the prospects were of the Orkney mine resuming operations and employing more mine workers.
Mr Sonto asked if CAPM had the necessary business credentials to ensure that the Aurora fiasco would not be repeated.
Mr Lucas asked for clarity on what was meant by references by the liquidators to ‘dividends’. He asked who the shareholders of CAPM were.
Mr Lorimer understood that there were between 200 and 500 illegal miners operating at Grootvlei. He asked if the Illegal Mining Forum had any success in dealing with the problem of illegal mining.
Mr H Schmidt (DA) asked if any consideration was given to the reason why the value of the Grootvlei mine was drastically reduced. Acid mine water drainage was probably a bigger liability than what the mine was worth. He asked what the plan was for dealing with the environmental issues.
Mr Petersen conceded that the environmental liability was the reason for the successful sale of the Grootvlei mine. The flooding of mine shafts was a major issue in the area and the problem affected all the mining companies operating at Grootvlei. The intention of CAPM was to make the Orkney mine operational again. The liquidators’ interest was limited to whether or not the purchaser of the assets of an insolvent estate had the necessary funds. He expected the financiers of the purchasing company to conduct due diligence investigations before financing was provided. The word ‘dividends’ also meant the pay-out to creditors from an insolvent estate. Although the major creditor would be suffering a significant financial loss, the entity had been willing to waive its entitlement in favour of the worker claims.
Mr Petersen was of the opinion that illegal mining operations were well-organised and robust ‘alternative businesses’. Illegal miners were not concerned with legalities and were willing to take extraordinary risks. The miners gained access to the mines by blasting open sealed entrances, which were spread over a wide area. Gold One had assumed any liability associated with the assets that were bought.
Ms Bikani asked when the process would be finalised. She wanted to know what the value was of the outstanding workers’ claims.
Mr Sonto asked which creditors had waived their claims in favour of the workers. He asked if there were sufficient funds in the insolvent estate to meet the liquidators’ terms of reference. He asked for more details of the surface permit rights that were condition precedent to the sale of the mines.
Mr Petersen explained that surface permit rights related to assets belonging to one mine being on the property of another mine. In the case of the Orkney mine, certain assets were on the neighbouring mine belonging to Anglo Gold Ashanti. CAPM and Anglo Gold Ashanti had reached consensus on the matter and the two parties were unlikely to enter into a legal dispute. The liquidators had managed to get funding from other mines to cover the cost of sealing entrances to the mine. The liquidators were keen to finalise the sale of the East Rand mine to Gold One so that the purchaser would take over the responsibility for the mine as soon as possible. The liquidators were required by law to follow a prescribed process to settle the claims of all creditors. In the case of the Orkney mine, the major creditor had agreed to waive its claim in favour of the claims of the workers.
Ms Bikani questioned the priorities of the liquidators. The matter had already dragged on for two to three years and it appeared to her that the liquidators were more concerned with dealing with the business aspects than settling the claims of the miners.
Mr Petersen replied that the liquidators were required to follow due process and did the best they could within the legislative constraints.
Mr Nyekemba asked if other entities were involved, for example the Department of Higher Education and Training. He pointed out that the Department of labour and other Government entities had contributed to the skills training fund.
Mr Lucas asked if there was any possibility that the purchasers would renege on the agreements.
The Chairperson said that the Committee would need to visit both mines in order to ascertain what progress had been made. He was pleased to hear that the workers’ claims at the Grootvlei mine had been settled and that the sale of the Orkney mine would be concluded within one month. He appreciated the waiving of creditors’ rights in favour of the miners’ claims by the major creditor.
Mr Schmidt remarked that the total sale price for the two mines (R220 million) fell far short of the Deutsche Finanz Bank claim of R1 billion. The granting of the surface permit rights was not under the control of the Joint Provisional Liquidators and he asked what the implications were if the sale conditions were not met.
Mr Petersen said that the sales were subject to a number of condition precedents and if any were not met, the sale would be void. All the condition precedents were resolved, with the exception of the surface permit rights for the Orkney mine. Organised labour had intervened to obtain the cooperation of Anglo Vaal Ashanti for securing the surface permit rights for the Orkney mine. The liquidators were confident that the matter would be resolved shortly as both parties were committed to finalise the sale as soon as possible. Gold One was the only entity interested in acquiring the Grootvlei mine but offered a low amount for some of the assets. The money owed to Grootvlei miners for the period when they were employed by Aurora was still outstanding. The Joint Provisional Liquidators dealt with the liquidation of the Pamodzi Group and were not the liquidators of Aurora.
The Chairperson asked for clarity on why more than one liquidator was involved.
Mr Engelbrecht explained that liquidators were appointed by the Master of the High Court. Different liquidators were appointed for each insolvent estate.
The Chairperson asked for information on the Aurora liquidators to be provided to the Committee.
Mr Engelbrecht assured the Committee that the liquidators were most concerned over the plight of the mine workers. The Joint Provisional Liquidators had explored what could be done to assist the miners and became aware of the National Skills Fund. An official had provided much assistance to ensure that the necessary funding was made available and had helped to establish the training programme to re-skill the miners. Currently, 1200 workers were undergoing training. SAPS, mining companies and local government authorities also participated in the Illegal Mining Forum. The Forum had established the magnitude and extent of the problem of illegal mining in the area and attempted to find solutions. Progress was being made and the Forum was a valuable tool in combating illegal mining. The liquidators wanted to ensure that the Aurora fiasco would not be repeated and was comforted by the involvement of Standard Bank and Deutsche Finanz Bank in providing financing to the purchaser. The purchase price was being held in escrow. The liquidators were confident that the sales would be concluded successfully.
Mr E Mtshale (ANC) asked if the Joint Provisional Liquidators received any remuneration.
Mr Petersen and Mr Engelbrecht confirmed that the liquidators had not received any payment whatsoever. Despite this, the liquidators were willing to put in the considerable effort required. Any fees paid to the liquidators would be fully disclosed in the liquidation account. Although the liquidators met with the DMR on a regular basis, there had been no contact with the Department of Labour.
The Chairperson remarked on the length of time the process had taken. The Committee would like to see that it was concluded as soon as possible. The Committees would decide when it would be opportune to undertake an oversight visit and to meet the new owners of the mines. The liquidators and responsible officials of Aurora would be invited to appear before the Committees. He was pleased to note that a portion of the proceeds from the Aurora liquidation would be made available to settle workers’ claims. He thanked the liquidators for the input provided.
Report by the Department of Labour (DOL)
The Chairperson noted the apology of the Minister of Labour. The briefing was presented by Mr Kenny Fick, Chief Director: Provincial Operations, DOL (see attached document).
The DOL reported that a claim for unpaid wages was successfully brought to Court. The Court order allowed the Department to pay 1287 East Rand employees a total of R2.03 million for unpaid wages. Subsequently, 468 new claims from miners excluded from the first payout were received. The value of the additional claim against the Aurora estate was R1.73 million. The Department had established that 1933 employees were foreign nationals whose work and residence permits had expired. The DOL had managed to deal with the claims of only 36 foreign workers to date. The major challenges were that the foreign miners did not have identity documents and many had returned to their countries of origin and could not be traced.
The DOL worked closely with NUM and Solidarity to assist the former employees of Aurora. It had been a challenge to establish how many employees were on the payroll and which employees qualified for Unemployment Insurance Fund (UIF) benefits. It was more difficult to obtain information as the shop stewards previously dealt with had closed their offices and left. The East Rand mine was declared non-operational in October 2011, allowing qualifying employees to claim UIF benefits without jeopardising retrenchment packages and benefits due to them. It was established that 4335 employees were on the Aurora payroll. The DOL had processed 936 UIF claims from November 2011. Apparently workers were being erroneously advised by unknown persons not to lodge UIF claims as this would jeopardise their claims against Aurora.
Kaapvaal Trust (Pty) Ltd was appointed the liquidators of Aurora Mines. The liquidators had been briefed on the wage claims of the employees. The DOL would continue to assist the Aurora employees with UIF claims and claims against the insolvent estate for unpaid wages and benefits.
Officials from the Department had visited the East Rand mine and found that most of the occupants of the hostels were women and children. The living conditions were dire and the occupants had refused to engage with the officials. SAPS were critical of the officials going into the hostels as the premises had been taken over by illegal miners and the lives of the officials were endangered. It would appear that none of the former employees remained on the premises.
The Department understood that 300 former Aurora employees had been employed by Gold One. It was unlikely that more workers would be taken on as the mine was not operational. The DOL had engaged with the Department of Mineral Resources on programmes to deal with the health and safety issues. The DOL understood that 1100 workers at the Orkney mine had outstanding wage claims against Aurora. The Department was hopeful that the miners would be employed by CAPM. The CCMA was assisting the liquidators with implementing training lay-off programmes. The Department’s provincial officials would monitor the training process and assist the graduates of the programme with finding positions.
Mr Fick undertook to provide the Committee with a more detailed written report.
The Chairperson observed that the presentation document dealt with the East Rand mine only. He asked what the DOL’s involvement had been with the Orkney mine.
Mr Fick had been involved mostly with the East Rand mine and did not have sufficient time to obtain the information on Orkney prior to the meeting with the Committees. As the Orkney mine was operational, workers had a better chance to be employed by the new owners. He understood that 800 former Aurora employees had been appointed by CAPM. It would take several years and a massive capital injection to make the East Rand mine operational again. The shafts had been stripped of equipment, much damage had been done, the mine was flooded and the illegal mining activities had made it unsafe for anyone to enter the mine.
Mr Sonto asked if the approach of the DOL was constrained by legal provisions.
Mr Motau referred to the statement in the presentation document (page 5) that “the Department would also continue to negotiate with Mine Management ….”. He wanted to know who the mine management was.
Mr Nyekembe recalled that the Joint Provisional Liquidators had stated that they were engaging with the Ekurhuleni local government authority to provide services at the hostels. The DOL reported that the hostels were occupied by illegal miners and not by bona fide employees of the East Rand mine. He noted that the shop stewards had also left the mine. He suggested that the Department reviewed the UIF legislation to see if the provisions adequately catered for instances where the employer was being liquidated. It was necessary to expedite the processes as it should not take so long to provide relief to the affected employees. The DOL could not use the excuse of a lack of capacity for its failure to deal with such a situation.
Ms Bikani asked if the DOL had the power to ensure that the workers were paid what they were due and if the Department was monitoring the liquidation process to ensure that workers’ rights were protected. She asked who was responsible for the rehabilitation and maintenance of abandoned mines and mine accommodation. She noted that more than one government Department was involved but there appeared to be little cooperation between the various entities.
Mr Fick explained that the mine workers were reluctant to apply for UIF benefits as they were under the impression that they would not be considered to be employees with valid claims against the insolvent estate. The DOL had not been able to establish who was erroneously advising the workers. The DOL had engaged with the management of Aurora Mines before the company was liquidated. Subsequently, the Department attempted to deal with the liquidators but had not received any cooperation. The liquidators had attempted to keep the mine going as a going concern. Aurora had sporadically paid the workers, which complicated matters as it was difficult to determine exactly when the workers stopped earning an income. The employer had not been forthcoming with information and the DOL only became aware of the situation once the workers were in dire straits. Once an UIF application was received, the process was fairly fast. Claimants had to have a valid identity document but it was necessary to consider special circumstances and make allowance for extraordinary processes.
The hostel on the mine property was in a very bad state. The local government authority had attempted to provide water and electricity to the hostel but the water pipes and electricity cables were constantly being stolen. The other houses on the mine property were in a state of neglect. The municipality had attempted to make the houses habitable for the occupants still living there.
Mr Fick agreed that under-capacity was no excuse for the DOL’s failure to deal with a crisis situation. However, the action taken by the Department had to be within the law. The DOL had found SAPS and the local government authorities helpful but they were also frustrated. The Department had limited powers to ensure that workers were paid. The prescribed legal process had to be followed before the matter came under the jurisdiction of the Department of Justice and Constitutional Development. If the DOL failed to follow due process, the Department ran the risk of the case being thrown out of Court. Employers refused to comply with Labour Court judgments and made every effort to thwart the law. In the interim, the workers continued to suffer. The CCMA Commissioner had certain powers, for example allowing UIF benefits to be paid to foreign workers or to South African workers living outside the country. The DOL was considering alternative ways to deal with the problems experienced.
The Chairperson noted the warning that the Committee should not attempt to enter the hostels as their lives could be at risk. If the hostels were no longer occupied by bona fide mine employees, the premises should be transferred to the local government authority.
Report by the Department of Mineral Resources (DMR)
Mr Thibedi Ramontja, Director-General, DMR presented the briefing to the Committees (see attached document).
The briefing covered the background to the Pamodzi Gold and Aurora Mines liquidations and the role played by the DMR. Pamodzi Gold was placed under provisional liquidation on 17 April 2009. A major creditor provided R50 million, which was used to settle outstanding wage claims. The Joint Provisional Liquidators wanted to sell the Orkney and East Rand mines as going concerns. Aurora Mines were given an interim trading contract and mining agreement by the Joint Provisional Liquidators. This venture had failed and Aurora was also placed under liquidation. The Orkney mine was sold to CAPM. No applications were received for the East Rand Mine. The liquidators subsequently accepted a low offer from Gold One for certain of the assets of the East Rand (Grootvlei) mine and intended to dispose of the remaining assets.
Details were provided of the DMR’s responsibility concerning licensing, permitting and transformation. The DMR had not yet received the agreements relating to the East Rand operations. The DMR was not happy with a situation where the desirable assets were sold off but the problem areas and liabilities were left with the State to deal with, as was the case at the East Rand Mine.
The DMR reported that approximately 3000 workers at the East Rand mine and 1170 workers at the Orkney mine were affected. The Department’s Mine Health and Safety Inspectorate held workshops to encourage employers to engage with the DMR and DOL on medical examinations of ex-workers.
The East Rand mine had not been converted and was still subject to the “old order” mining rights. The major environmental problems were acid mine drainage and slimes dams. The entire East Rand Basin was affected by flooding of the mines. The water had to be pumped out of the mines and treated. The Department of Water Affairs was the responsible authority and had appointed the Trans-Caledonian Tunnel Authority to address the problems in the East Central and Western basins.
The Orkney mine was not currently operational but remained subject to mine health and safety regulations. The DMR monitored the East Rand mine on a regular basis to ensure that entrances to the mine were kept sealed to prevent access by illegal miners. The Minister of Mineral Resources had established the Illegal Mining Forum. Despite the lack of funding available, some progress was being made to address the problem of illegal mining in the area.
The briefing was concluded with statistical data on the remaining gold reserves in the Grootvlei area.
Ms L Mjobo (ANC) asked for more clarity on the statement that the DMR had not received the agreements of the sale of the East Rand mine.
Mr Lucas was concerned that the situation would not be repeated by the new owners of the mines.
Ms Bikani suggested that the Committee was briefed on the Illegal Mining Forum and what action was being taken that had resulted in reducing illegal mining activity. She recalled that an illegal mining operation in the Eastern Cape was so successful that it appeared to be a bona fide operation.
Mr Lorimer asked for more clarity on the status of the sale of certain assets to Gold One. If the sale was not concluded, the State could end up with the entire liability as there were no other buyers interested in the East Rand mine.
Mr Ramontja replied that the East Rand mine was not operational and the mine water was not being pumped out or treated. He expected that illegal mining would continue to be a problem. As mines were closed, people would continue to move in and attempt to earn a living. The DMR intended to ensure that the sale of the East Rand mine to Gold One was concluded. The Department had to ensure that the environmental issues in the mining sector were dealt with. The mining sector had to take the social costs into account as well, for example the living conditions of workers, the well-being of surrounding communities and the rehabilitation of the environment.
The Chairperson advised that the Committee would invite further briefings on the process being followed and what progress had been made in addressing the environmental issues.
Report by the National Union of Mineworkers (NUM)
The briefing was presented by Mr Steven Bhengequla and Mr Maja Mphahlele, Officials of NUM (see attached document).
NUM criticised the appointment of Aurora by the Pamodzi liquidators as the company did not have adequate financial resources, lacked experience of the mining industry and lacked technical mining skills. For those reasons, NUM had supported the sale of Pamodzi’s Free State mine to Harmony Gold. Although the Orkney mine was sold to CAPM for R150 million, NUM anticipated that the purchase price would be reduced by R20 million because of asset stripping and theft. The mine would be co-managed by CAPM and its black empowerment partner MEAC. NUM was facilitating the temporary waiver of servitude and surface rights held by Anglo Gold Ashanti in favour of CAPM and the union was confident that the sale would be concluded in the near future.
The East Rand mine was sold to Gold One, with the understanding that the purchaser would abandon the current shafts as these had been flooded. Gold One intended to prospect on new ground, which meant that a new prospecting right application would be made and the current mining license would not be transferred. The granting of the new rights was expected to take some time.
NUM suggested that current legislation applicable to insolvent estate was changed. Liquidators were allowed to act without considering other parties and the Master of the High Court could only intervene once there was public outcry from the public and organised labour. Liquidators’ reports were not adequately regulated, the liquidators were allowed to operate in secrecy and little information was made available to other interested parties. Liquidators tended to favour the claims of creditors above the rights of employees. The remuneration of liquidators should be regulated. Stricter requirements for qualifications, rules and ethics had to be established. Reporting guidelines for liquidators had to be set, including the progress made in meeting monthly business plan targets.
The information provided by the Department of Labour on the number of affected workers was not correct.
Mr Lucas observed that the stripping and theft of assets had a serious impact on how soon the new owners of the mine would be able to resume operations. The purchaser expected the assets to be in place and the successful sale outcome could be jeopardised. He asked for more information on MEAC. He asked what funding arrangements Aurora had in place when the company took over the Orkney and East Rand mines. He wondered what could be done to assist the East Rand miners as it was unlikely that operations would be resumed in the near future.
A Member asked what action needed to be taken to ensure that there would be no repeat of the Aurora fiasco.
Ms Bikani asked who was responsible for ensuring that the environmental issues were dealt with. It was necessary to review the current legislation and to identify what measures needed to be in place to prevent future issues. A number of entities were involved in the liquidation process and it would appear that the employees were last in the queue for restitution. The Committee would give the suggestions for amending the current legislation serious consideration.
Mr Bhengequla explained that NUM became aware in April 2010 that Aurora was not paying the workers what was due to them. Aurora advised that the company did not have sufficient funds to pay the outstanding wages. NUM agreed to accept partial payment of workers’ claims in the hope that matters would improve and that the miners would remain employed. NUM subsequently discovered that Aurora was deducting insurance premiums and pension and provident fund contributions from the employees’ wages but had not paid the premiums over to the insurance companies. There was little that the union could do except raise the issue with the employer.
Mr Mphahlele explained that MEAC was a black empowerment entity that had entered into a joint venture agreement with CAPM. He said that the living conditions in the hostels were unacceptable as there was no electricity or water supply. The asset stripping was one of the reasons why the liquidation process had taken so long. CAPM had managed to restore the power supply to the shafts and had employed some of the miners on a temporary basis.
The Chairperson said that the Committee would discuss amending the legislation applicable to the liquidation of companies with the Committee on Trade and Industry. NEDLAC was involved as well and NUM would be invited to participate in the process. He thanked the representatives of the various stakeholders for their participation in the proceedings.
Other Committee Business
The Committee discussed the planned oversight visits to Smitsdrift, Marikana and Australia.
The meeting was adjourned.
- Department of Labour on the Aurora Grootvlei Case presentation, 28 August 2012
- PowerPoint presentation: Presentation by the Department of mineral Resources
- Report by the Joint Provisional Liquidators relating to the Pamodzi Group of Companies, 29 August 2012
- Developments & update on crisis at Pamodzi’s Orkney & Grootvlei mines, National Union of Mineworkers
- We don't have attendance info for this committee meeting
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