Department of Mineral Resources 2012 Annual Report

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Mineral Resources and Energy

17 October 2012
Chairperson: Ms D Mathebe (ANC)
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Meeting Summary

The Department of Mineral Resources (DMR) briefed the Committee on its 2011-2012 Annual Report. AT the outset, the financial indicators were given. Over the last three years, the DMR had reported under-spending but this was always under 3%. In the 2011/12 financial year the allocation was R1.038 billion, but it had achieved spending of R1.029 billion, with underspending of 0.92% of budget. The reasons were that certain invoices were paid after year end in relation to operating leases, and goods and services underspent. There had been some shifting of funds to ensure that programmes were achieved. Staff costs had increased by 14.56%, although there was still quite a high vacancy rate. The allocations for the Council for GeoScience, MINTEK, SA Diamond and Precious Metals Regulator and Mine Health and Safety Council were outlined. The DMR had received an unqualified audit report, but some of the same challenges recurred as in previous years. The Auditor-General, in particular, commented on some inadequate preparation of certain aspects of the financial statements, invoices not paid in 30 days compliance on revenue management, and variances on land and interest. Members questioned what the problems were that led to these comments, noted problems with liability around ownerless mines and accounting for this, and said that compliance registers had been put in place. The Members, in relation to this and other programmes, questioned timeframes, and said that variances had to be addressed.

Specific achievements and challenges, including remedial action taken to address them, were set out for each of the programmes. The Financial Administration programme had managed to exceed targets for submission of reports, improve service delivery and establish a query management system, as well as reduce non-compliance with internal processes, and provide ICT tools. Internal policies were drawn and implemented, the Master System Plan aligned ICT and business objectives and management and leadership development was enhanced. Wasteful and irregular expenditure was reduced by 86%. Whilst licensing costs were high, they had been contained. The DMR was trying to address the repeat-findings on audit reports. Members asked what was being done differently, from the last year, and what internal controls were introduced, commenting that this was an area needing more attention. Members asked about problems of retention within the department and why this was still an issue. Staffing issues received attention.

The briefing on the Corporate Services programme noted successes in sustainably developing vulnerable groups, which included women, youth and disabled persons. Three projects in bricklaying, salt mining and copper beneficiation, in Eastern and Northern Cape, involved about 60 women. Information sessions for the public, as well as internal reviews, were held. Challenges in this programme also included vacancies, high staff turnover, lack of funding to implement the new structure. Members asked for clarity on the overtime issues that the AG had queried, asked if projects were also focusing on young boys, and questioned the difficulties around retention and attracting the right skills particularly to the Inspectorate.

The Mine Health and Safety Programme outlined the statistics, noting a 3% improvement in the fatality rates in the last year, 19% reduction in fall of ground fatalities, and increases in occupational safety. Specific measures were outlined, which included recommendations from the Summit being implemented. More mining houses were paying greater attention to issues, although there were still some problems of non-compliance. Members questioned why so many fatalities seemed to occur mid-year, the main causes, asked how a mine disaster was defined, and called for more reports and more focus on the safety of women in the mines.

The Mine Regulation Programme noted successes in supplying the mine industry with more graduates from the Historically Disadvantaged sector, and outlined the creation of jobs.  Within Mine Regulation, successes were found in meeting the targets of new historically disadvantaged South Africans entering the mining sector, and job creation through new mining rights. The major challenge was that although an Enforcement and Compliance structure was approved, with 114 posts, there was no funding to implement it. The focus on inspections also meant that less funding and time were devoted to mining applications, which led to backlogs, whilst licensing processes in departments were still fragmented. There was ongoing engagement with Regional Offices and National Treasury. Members questioned the comments on tensions at mines, and said that host communities and mining companies did not always have good relations. They questioned the length of time to process mining rights applications, called for a full report and said that more attention was needed to address backlogs. They also enquired about the system for paying royalties.

The programme on Mineral Policy and Promotion Programme noted consultations on the Act amendments, studies on the impact of policy on investment, and completion of beneficiation strategies in the iron, steel and energy commodities. Economic and technical partnerships were outlined. The challenges of rehabilitation were outlined and the contingent liability report would be available later in the year. Members asked how investment was measured, questioned the ownerless mine strategy, and again called for clarity on time frames. They asked that the Department not lose sight of the Mining Charter when amending legislation and said that more attention was needed to clarify grey areas in the scorecard. They also questioned the bonuses, and agreed that quarterly reports would be necessary outlining progress in a number of areas isolated during the meeting.

Members adopted minutes from 13 June to 19 September.

Meeting report

Appointment of Acting Chairperson
Ms F Bikani (ANC) was nominated as Acting Chairperson for the meeting, as the Chairperson was ill. She tendered an apology on his behalf.

Mr J Lorimer (DA) suggested the Committee send get well wishes to him.

Another Member requested that Ms Bikani should continue to act until the Chairperson was well enough to return.

Department of Mineral Resources 2011/12 Annual Report briefing
Mr Thibedi Ramontja, Director General, Department of Mineral Resources, also asked that well-wishes be conveyed to the Chairperson.

He started by setting out some of the financial figures. In the 2011/12 financial year, the Department of Mineral Resources (DMR or the Department) had budgeted to spend R1.038 billion, but had achieved spending of R1.029 billion. This amounted to underspending of R9,530 million, or 0.92% of budget. For the last three years, the amount of underspending had consistently been below 3%. The primary reason in this year was related to procurement of Goods and Services. In addition, although operating leases were ordered during the 2011/12 financial year, the invoicing and payments took place only after the end of the financial year.

The Mine, Health and Safety Branch spent 99.88% of its funds and R6.1 million was given to other branches to compensate for their potential over expenditure. The Mineral Regulation Branch reflected 100% spending, but R22.2 million was re-allocated from other branches to this one for higher than anticipated expenditures. The Mineral Policy and Promotion Branch had R16.2 million re-allocated to other branches, and finally reflected 99.77% spending.

Mr Ramontja detailed the actual expenditures in the Statement of Financial Performance (see attached presentation for details). Compensation of employees included basic salary, periodic payments and pension. Goods and services included advertising, communication, audit cost and operating leases. Tangible capital assets included buildings and other fixed structures, machinery and equipment, and software and other intangible assets.  The staff costs increased by 14.56%. Within goods and services, audit cost, communication and operating leases were the highest cost drivers. The purchase of less software led to a decrease in software costs when compared to other years.

Mr Ramontja then looked at the Statement of Financial Position (see attached presentation) and detailed the amounts for current assets, prepayments and advances, receivables and funds and revenue to be surrendered.

He noted that in this financial year, an amount of R154,4 million Council for Geoscience (CGS). It was core funding for establishing the necessary legislation and research in order to prevent ingress of water into underground holdings. The Council for Mineral Technology Research (MINTEK) was given R196.96 million for establishing legislation and mine rehabilitation projects. The South African Diamond and Precious Metals Regulator (SADPMR) was given R39.37 million as core funding. The Mine Health and Safety Council (MHSC) was given R5.29 million as core funding.

Mr Ramontja noted that the DMR had received an unqualified audit report from the Auditor-General (AG).  There had been many challenges but the DMR had tried hard to get a clean audit, and would pursue this goal into 2014, by putting procedures and processes in place. The AG had raised some comments. Firstly, the financial statements submitted for auditing were not properly prepared in some material respects, but an action plan since then had put manual and electronic systems in place to ensure reconciliation. The AG had found that the Department did not always pay invoices within 30 days, but he noted that since then, a monitoring system had been implemented, with reports generated monthly.  Presently, 96% of invoices were paid within 30 days. The Department needed to train its staff so that contracts would be properly read. Revenue Management also was found to have issues with compliance but an action plan was in place to review, monitor and enhance the newly implemented revenue system. The DMR was on target in relation to the compensation of employees, but there were large variances in relation to interest and rent on land. The projected expenditure was R49 000 but the actual was R55 000.

Mr D Lorimer (DA) asked why the financial statements had not been properly prepared in all material respects, wondered if this was due to lack of training, and asked who was responsible for this.

Mr Ramontja said that the main issue was liability around ownerless mines. The Department had to consult with the Auditor-General to see how to deal with this matter and account for the liability. The Department also had issues with how royalties were captured.

Mr Lorimer asked if, next year, the Committee would see the same problems.

Mr Ramontja assured Mr Lorimer that already the DMR had worked hard to try to resolve the issues of liability, and the AG had appointed a team to verify what the Department had done. The issues should soon be resolved, after five months of work.

Mr M Sonto (ANC) noted that the DMR was still struggling with compliance with laws, and asked what the problem was.

Mr Ramontja explained that every department needed a compliance register and systems were being put in place to track compliance in all areas.

The Acting Chairperson asked if the Department had a timeframe to achieve this.

Mr Ramontja said the Compliance Register was already in place, but the DMR was now working on financial areas such as procurement. He assured the Committee that by the end of the year all systems would be in place.

The Acting Chairperson said high cost drivers were goods and services, including the audit cost, communications and operating leases. She wanted clarity and expansion on operating leases.

Mr Ramontja said operating leases involved issues of IT, data and communications. Audit costs were costs related to the Auditor-General’s report.

The Acting Chairperson asked about the variance on land, commenting that interest on land was very high.

Mr Ramontja agreed that land had to be included, but this was not one of the cost drivers under the good and services category.

Continuation of Briefing: Programme 1
Ms Cathy Leso, Acting Chief Financial Officer, DMR, reviewed the Financial Administration Programme. She highlighted achievements, noting that it had managed to provide reliable and timely information, exceeding its targets for submission of reports by 2.9%. The Branch improved its service delivery, with a score of 3 out of 5 for customer satisfaction, but more improvement was necessary. Education and empowerment of stakeholders had taken place, with a query management system developed that had cut down entirely on queries that were related to lack of information. Non- compliance with internal processes was reduced by 56%, beating the target by 6%. ICT systems were provided and one monitoring tool was obtained, as targeted. The availability of Information Systems was attained to 98.1%, also above target. The Branch provided adequate facilities for effective service delivery and there was a promotion of transformation policies.

Ms Leso also highlighted achievements and successes from the perspective of internal policies, noting that 12 policies that were approved were also implemented, along with another 11 already approved. Improvements on turnaround were seen on eight processes. Seven service level agreements were signed, and there was a 47% improvement in turnaround times. The Branch was also able to align ICT with business objectives, approving the Master System Plan (MSP.

From the learning and growth perspective, the Branch had facilitated management and leadership development, by making personnel development plans align with management requirements. Five managers had completed management courses. Skills were attracted, developed and retained with Human Resource Development (HRD) initiatives.

The budget was aligned to strategy, and this Branch had reduced wasteful and irregular expenditures by 86% whilst also keeping underspending at 0.91%. The Branch was able to maximise utilisation of resources and promote corporate governance.

Ms Leso then explained the challenges, and corrective measures that were taken. There was an issue with the reduction in licensing costs. In implementing one system, DMR had made it difficult to keep licensing costs down, but had finally achieved efficiency. There were still challenges around the vacancy rates and reduction of staff turnover, but retention strategies were being worked on. There were also difficulties in reducing the number of repeat-findings in the internal audit reports, and in executing fraud prevention and resource management policies. Quarterly reports on these were now required.

Mr Lorimer asked about internal controls, asking what exactly the DMR was doing differently since the AG had drawn the report. He said that the internal control mechanisms had not been working and wanted reasons.

Ms Irene Tshifura, Chief Financial Officer, SADPMR commented on the internal controls relating to the royalties and prospecting fees. She noted that after the audit last year, the Department had committed itself to coming up with a method that would account for all receivables and payables related to royalties. The files the Department had at the time did not contained all the information that was needed. Proper calculations were done on each and every file, once it had been established that those files did not give the necessary information that the AG required to substantiate receivables and debt.

Mr David Msiza, Chief Inspector of Mines, DMR, commented that governance structures had also been strengthened since the previous year. There was a change within the Internal Audit with a greater focus on aspects that might lead to audit qualifications, and how to prevent this. The plan had been revised several times. The DMR had been told to, and had, improved its engagements with the Audit Committee and the Minister.

Mr Sonto said the Department had said there was better achievement. He asked for specifics.

Ms Tshifura added that there were improvements in procurement, and in preventing irregular expenditure, and although it seemed that the irregular expenditure had increased, the figure was actually the result of an adjustment that the AG had requested, due to re-classifications of the operating lists. By the time these changes were identified, the DMR was already running in the next financial year.

Mr Sonto asked the reasons for the costly licensing. 

Ms Leso clarified that the licensing costs had nothing to do with the licensing system.

The Acting Chairperson asked if the alignment of ICT systems carried costs, and wanted to know if this would align the DMR with the National Treasury’s systems. She noted the Master System Plan (MSP) but asked whether training was being conducted on this, and whether it was budgeted for.

Ms Leso also clarified that the ICT alignment was intended to established the same financial basic infrastructure across the whole public sector. She agreed that this would come at a cost. The timeline for this was the following financial year, for the infrastructure. Training had begun and was included under the MSP.

The Acting Chairperson was again concerned that no time frames were specified. In relation to the challenges in decreasing the vacancy rate, she asked how many vacancies there were at present, and what was being done to attract staff. The DMR had consistently complained of staff attrition.

Mr Ramontja agreed that retention of staff had been a challenge. The DMR had realised that it would have to train people and engage more closely through meetings. Finding people with skills had been another challenge, as he noted that there were people with qualifications, but not the right skills. The particular shortages of skills lay in the finance positions, and this was something that the DMR battled with, as the salaries it could offer simply did not compete with salaries in the private sector. The biggest problem, however, was filling the positions of mine inspectors.

Mr Lorimer asked if there was a plan in place for training.

Mr Ramontja said there was a plan, and it was also recognised that some of the university programmes needed to be debated.

Ms Patricia Gamede, Deputy Director General: Corporate Services, DMR, said that the DMR was able to offer a number of training programmes, and could provide specific training.

The Acting Chairperson noted that the public sector did not pay as well as the private. She said that there were particular problems with salaries across the mining sector, and perhaps the Committee needed to consider how it could ensure standardisation of salaries.

Mr Lorimer cautioned that this would be a dangerous move.

Ms Leso said that some staff who had left still needed to repay amounts of loans or training to the DMR, but could do that when they were being far better paid in other jobs.

Ms Leso said that the Integrated Financial Management System (IMFS) programme had been running and this showed engagement on alignment. She felt that the DMR had taken the decision to train its own employees so that they would have the right skills and there was engagement with management.

Corporate Services Briefing
Ms Gamede highlighted successes in Corporate Services. She noted that there was better communication of the DMR’s programmes and policies by a new website and intranet. There were successful media briefings, public participation engagements, and positive newsletters published and broadcasted. There was a contribution to skills development, as 15 mining career guidance workshops were held at communities and four were held at universities.

There was success in sustainable development of vulnerable groups, which included women, youth and disabled persons. Ms Gamede said women were being specifically engaged with and brought on board with projects. There were three projects in progress for women, of bricklaying, salt mining and copper beneficiation. Around 60 women were involved with these projects. There were also information sessions and workshops held for vulnerable groups. There had been development and reviews of internal processes, policies and guidelines. The DMR had committed itself to implementing the National Vetting Strategy to screen all new employees and service providers. Leadership and management development were attended to, by implementation of management programmes, whilst 45 managers had completed management development courses.

Corporate Services’ challenges included a lack of funding for implementing the new approved structure, inability to reduce staff turnover rate and indeed a higher vacancy rate in the last quarter. She attributed the high turnover to competitive salaries elsewhere, and the fact that people would leave to develop their careers, but this was being addressed, although it was a difficult area. Requests were made for additional funding to implement the approved organisational structure. Recommendations would be implemented that came out of the exit reviews. DMR tried to fill all vacancies within three months.

Ms Ngele asked if the projects involving women were all at one location.

Ms Gamede clarified that the bricklaying was at Engcobo and salt and copper projects were in the Northern Cape.

Mr Sonto asked for examples of transformation policies.

Ms Gamede said the Department was trying to involve women in mining, as well as the youth, and was actively giving training, career guidance and skills development.

Mr Sonto asked if anything was being done to assist young boys.

Ms Gamede explained that everyone knew that girls had been disadvantaged for a long time, in particular in this sector, which was the reason for the current focus on girls and women.

Mr Lorimer asked about HR management, commenting that the AG had noted no improvement in this area. He asked if the 15% vacancy rate represented an increase or decrease from the last year. He also wondered what would happen if the Department did not fill a vacancy in four months.

The Acting Chairperson noted that there was an issue with employees being paid about 30% on overtime, which was said to be non-compliant. She pointed out that some of the posts had been vacant for close on a year, and wondered if anything was done in this case. She wanted a specific action plan, and the reasons why posts were not being filled.

Ms Gamede said that Mine Health and Safety vacancies were the biggest drivers of vacancies. The Department advertised but did not receive any responses; the exact reasons were not known, but that was the reality. There was not so much difficulty in filling other posts.

Mr Lorimer commented that there was a high vacancy rate of 15.5% also in the Mineral Policy and Promotion branch.

Ms Gamede said there were inadequate funds to fill vacancies in that branch. Funding was available to fill the posts in Mine Health and Safety.

Ms Ngele wondered if the problems were linked to the way in which the Department was advertising.

Ms Gamede said that the Department did advertise correctly and with all requirements. It seemed that people simply thought that they could better than to apply to Mine Health and Safety, but the exact reason why responses were just not being received was not known.

Mr Msiza added that people in the private sector were receiving offers of R1.5 million, excluding bonuses and benefits, compared to the Inspector salaries that the Department could offer, of R450 000 to R500 000. One gentleman had been offered a sign-on bonus of R.1 5 million on condition that he did not leave for three years. The general problem was that the public sector was competing for the same skills as the private sector, and those in the public sector could be poached away. He believed that in fact some of the poaching was being done deliberately to weaken the DMR, and in fact it had succeeded because the DMR struggled to inspect all the mines. DMR had taken in engineers without experience, had trained them for two years in GoldFields, then in the DMR offices, but found that they would soon leave, as they were more marketable once they had other skills. He clarified that employees leaving after signing contracts were required to repay R500 000 to the Department, and the DMR had made other proposals to National Treasury to try to retain staff. Some highly-experienced inspectors were being persuaded not to retire, and he was proud of those who stayed.

Mr Lorimer asked if the skills were just not available, and whether the Department would leave the posts unfilled if it did not get the right staff. He wondered if transformation requirements were a hindrance.

Mr Ramontja said the Department was failing to get the right people, as the private sector and mining industry would pay more for those with the right skills. The Department wanted to bring in young people, encouraged them to study in this field and provide them with an opportunity for training. He added that this was not a problem unique to South Africa as it was also seen in . The competition was not only in South Africa, as people were also moving to jobs in Australia and Canada.

Ms Gamede said that young people with skills were usually quite mobile, and were motivated by higher salaries.

Mr Lorimer said the mining industry was shrinking.

Ms Ngele said that the Committee had visited a mine, finding good skills at all ages in that mine.

The Acting Chairperson said that Ms Ngele was implying that whether or not the mix was right, everyone should try to learn from peers in the field. She did not know quite what the solution was, but that perhaps a way was needed to privatise some areas where needs were most apparent.

Ms Gamede responded, in relation to overtime that the AG had wanted the DMR to give more attention to amounts paid as overtime.

Mr Lorimer asked how this would affect performance if the Department was telling people how much overtime they could work.

Ms Gamede said that was a challenge on which the DMR, unions and management must negotiate.

Mr Ramontja said that there had been seventeen posts in which this was isolated as a problem, and the DMR would see how to address the problem.

Programme 2: Mine Health and Safety
Mr David Msiza highlighted the successes in Programme 2: Mine Health and Safety. There was a 3% improvement in all fatalities in 2011 from 2010, and a 70% improvement in fatality rates between 2003 and 2011. The DMR was aiming to have a 0% fatality rate and the gold and platinum sector had been giving particular attention to these rates. . It was noted that most fatalities, in the last five years, had happened between May and July. More mines were having fewer fatalities, and some had gone as long as five years without recording any deaths. There was a 19% reduction in fall of ground fatalities in 2011 from 2010. For the first time in five years, there no occurrence of a mine disaster accident. Fire related accidents dropped by 100% and explosive related accidents dropped by 20%. Inquiries and investigations were completed, and audits and inspections were conducted.

Mr Msiza said there was an improvement across all the commodity sectors in occupational safety. There had been a change in attitude with executives in the gold sector as well. Some sectors had managed to reduce their instances of occupational diseases. However, occupational health overall remained a challenge. There had been collaboration with social partners in monitoring the implementation of the 2011 Summit commitments on elimination of silicosis, noise-induced hearing loss, HIV, Aids and TB as well as the commitments on elimination of fatalities and injuries. The Department was conducting verification of mine sampling on dust measurements and results that mines were supposed to report. The Department implemented enforcement measures on occupational safety, in line with legislation and enforcement guidelines. Regional quarterly tripartite Forum meetings were held, to share health and safety information. Visibility of Chief Executive Officers and Company boards was encouraged at mines. The Mining Industry Growth, Development and Employment Task Team (MIGDETT)  had completed its recommendations, which were now being actioned by the Mine Health and Safety Council. A review was in process to try to eliminate interference by lawyers during accident and fatalities investigations and inquiries.

Within the development and review of internal processes, the new Enforcement and Administrative fine policy had been successful and was fully implemented. The Sunday Labour Permission Guideline was reviewed and implemented as well.

Mr Msiza said that, in relation to HRD, eight senior managers passed and attended the WITS Executive Development Programme and seventeen other officials attended other technical and administrative courses. 19 assistant inspectors were placed in regional offices in order to get experiential training. The Department would advertise for people with degrees, and, where they had not specifically trained in mining, would still offer two years practical experience. Assistant inspectors were placed with DMR to gain practical experience.

Ms Ngele said that fatalities were still too high and asked for the main causes.

Mr Msiza said that the two main causes were fall of ground and transport. The latter related to people being run over, but this had dropped 46% this year. There was an increase in general instances of fatalities, which included drowning, fall from high places and mud-rushing.

Mr Lorimer asked what constituted a mine disaster. He asked why there appeared to be a spike between May and July.

Mr Msiza said that a mine disaster was classified as an incident in which four or more people lost their life. He did not know why there was a spike in fatalities in some months, and would investigate.

Mr Lorimer asked that the Committee be provided with a copy of the Section 54 reports.

Mr Ramontja said that he would make a request for these Recommendations for the Committee.

The Acting Chairperson  pointed out that the safety of women in mining was not reported on separately, and referred to a benchmark report issued in the previous week that highlighted issues like abuse and the need for more protection for women.

Ms Ngele asked why the Department did not comment on what was happening to women and mineworkers.

Mr Lorimer supported the need for specific reports on protection of women, saying that this issue had to be monitored.

Mr Sonto asked what the Department was doing to normalise behaviour in mines.

Mr Msiza said that a study was commissioned on “mine culture”. Issues raised included behavioural problems such as racism and gender discrimination. The Department was concerned with the safety and security of women, and had engaged the sector on this matter.

Programme 3: Mine Regulation
Mr Joel Raphela, Acting Deputy Director General: Mine Regulation, DMR, outlined Programme 3 for the Committee. He noted that the successes included consultations and engagements with communities, and industry workshops that exceeded targets. The targets for new Historically Disadvantaged South Africans (HDSA) entrants supplying the mining industry, and granting rights to new HDSA entities, were also exceeded. The DMR managed to create more than expected jobs created through mining rights.  It had managed also to exceed the target of inspections to monitor and enforce compliance, and pointed out that compliance and revocation of rights issues were dealt with by drive-in inspections.

Mr Raphela then addressed challenges in this programme. Although the Enforcement and Compliance structure was approved, with 114 posts, there was no funding to implement it. Funding shortages also affected existing personnel, and goods and services. The focus on inspections led to funds being diverted from processing applications, which meant that the timeframes were not always met. There were increasing tensions between mining companies and host communities, in addition to tensions within community structures. Fragmented licensing processes were still apparent within departments. The application and licensing systems required further development.

Mr Raphela explained the corrective measures taken. DMR was continuously engaging with National Treasury to fund the personnel structure that had been approved. The Regional Offices were strengthened, and these offices were provided with additional resources for monitoring and evaluation. The DMR was strengthening its capacity to take over National Environmental Management Act (NEMA) functions from the Department of Environmental Affairs (DEA). There was a development of integrated licensing process to address environmental issues. Mr Raphela concluded that there was an increase in the rate of compliance and enforcement inspections, and an increase in the imposition of statutory notices where companies were found non-compliant.

Ms Ngele noted the comment on increasing tensions between host communities and mining companies. She pointed out that many mines did not give back to communities, by way of building schools or clinics, and she asked how that could be corrected.

Mr Lorimer suggested that this was not a question that the DMR could answer.

Mr Raphela said that the tensions he had referred to related to mines in the Northern Cape. The law was very specific around the requirements of holding a mining right, and the responsibilities of a holder of mining rights. These included having approved social and labour plans.

Mr Lorimer asked how long it would, on average, take for mining rights applications to be approved. He also enquired how many had been revoked. He was encouraged by the reference to an integrated licensing processes, but wanted further clarity on how this would work.

The Acting Chairperson had a similar question on time taken to obtain mining rights, saying that the length of time seemed quite long.

Mr Raphela explained that at one stage a moratorium was placed on mining rights, and this had led to backlogs. They were exacerbated by resource challenges that delayed the time taken to process the applications. The Department now had a recovery plan in place. The Minister had said that the integrated licensing system would not negatively affect timeframes. It would integrate the requirements of the Mineral and Petroleum Resources Development Act (MPRDA) with environmental legislation such as the National Environmental Management Act (NEMA) and the Water Act. This system was presently awaiting sign-off.

The Acting Chairperson said that the Committee had visited a mine in the Northern Cape and discovered a poor relationship between mine owners, particularly in the small mines, and the DMR Regional Offices. Small mine owners were not getting enough support from the Department. Regional managers were not visiting them frequently enough, but only if there was a major problem. She also said that although the Mine Health and Safety inspectors would visit mines, she was not sure how often regulators visited.

Mr Raphela said that he would investigate these concerns and would check if it was the “new” entrants who were experiencing problems. There had been a transition from receiving manual applications to online applications, and he thought that not all people were necessarily up to speed with the new processes.

The Acting Chairperson questioned what was happening with royalty payments, asking how long it was likely to take for communities to receive money.

Mr Ramontja explained that royalties were collected and then paid over to the National Treasury. DMR had no control over royalties, and was currently in discussion to have all such royalties handled at National Treasury level.

 and the Department did not have control over royalties. The Department was currently in discussion with the National Treasury for the National Treasury to collect all of royalties.

Mr Lorimer asked for specific figures on the backlogs, and who would run the integrated licencing process.

Mr Ramontja said that the Department wanted to achieve a streamlining of processes. People had been submitting non-compliant applications and the Department would not rush to give out mining rights.

Mr Lorimer asked if the new processes would require a legislative change or if this was merely a way of administering it.

Mr Mosa Mabuza, Deputy Director-General: Mineral Policy and Promotion, DMR, said that many people had compared the position in South Africa to Botswana. In Botswana, it took three months to get a mining right, but there, applicants took five years to prepare the environmental management programme. It was very important that the Department must fully consider the implications of integration in licensing and environmental affairs. Government needed to respond responsibly.

Mr Lorimer still wanted a ballpark figure for when the Committee was likely to see the plans.

Mr Ramontja said the Minister wanted the Department to submit the Bill to Parliament this year.

Mr Raphela admitted that the Department was 82% backlogged with applications. There were objections during applications and these needed to be processed. There were also complaints from the communities about consultations and all of this had an effect on timeframes.

Mr Lorimer asked if the shortage of personnel affected timeframes, and whether it was possible to find a way to process the applications faster. He asked if there was a budget for personnel

Mr Ramontja said that this was not always the case, but if the Department increased its employees, it would be able to get the job done more quickly. 

Mr Sonto said the process was not straightforward, and Mr Ramontja fully agreed.

Programme 4: Mineral Policy and Promotions
Mr Mabuza outlined the successes in the Mineral Policy and Promotion Programme. Consultations were held with communities on the MPRD Act amendments. A study was completed on the impact of policy on investment. Beneficiation Strategy Implementation plans on iron, steel and energy commodities were developed, and were approved by Cabinet. Economic partnerships were implemented, with involvement in Kimberley Process Certification Scheme (KPCS) and African Diamond Producers Association (ADPA). Promotional activities like publications had continued. Technical partnerships were implemented, including those with Mintek and Eskom. In relation to environmental matters, a Sustainable Development in Mining Strategy document and Mine Environmental Management Guidelines were completed.

Mr Mabuza said that there were challenges around the rehabilitation of derelict and ownerless mine sites. There had been difficulty in retention and attraction of professionals, and this branch showed 8% vacancy levels. There had been challenges in attracting investment towards the mining industry. There were gaps in legislation, and difficulty in finalising the beneficiation implementation framework.

Mr Mabuza then explained corrective measures that had been taken. Promotional activities had been streamlined, to enhance efficiency of the promotion efforts. Rehabilitation of ownerless and derelict mine sites was addressed, with twelve sites being completed this financial year. A contingent liability report had been drafted and would be concluded this year. There was a focus on proper alignment of branch programmes to Government programmes. A comprehensive plan for all prioritised commodities was being worked upon. The necessary amendments were being made to the legislation, to address gaps.

Mr Lorimer asked how the attraction of investment could be measured, and how the DMR felt it was doing on this point.

Mr Mabuza said that when measuring investment, there was also a need to look at reinvestment because this was a sign of confidence. The Department looked at both new investments and gross fixed capital investments. The gross fixed capital investments were long-term investments, another sign of confidence. He noted that investments in mining would not be regarded as anything less than ten years. He said there was stability. In the mining industry there was investment, in 2009, of R64 billion and, in 2010, of R215 billion. In 2010 there was R62.4 billion in new investments and in 2011 there was R68.8 billion. In the first quarter this year there was R18.5 billion in new investments, with R18.2 investment in the second quarter.

Mr Lorimer stated that stability was good, but growth was better.

Mr Sonto commented that the ownerless mines were a burden on the Department.

Mr Ramontja said that there were 5 930 sites identified and because the DMR did not have the resources to deal with all of them simultaneously, it had identified the most dangerous, which were the asbestos mines, and were following up to ensure that these mines were abandoned.

Mr Mabuza added  that the environmental impact of the asbestos mines was particularly significant, hence the reason for this focus at the moment.

The Acting Chairperson noted that the figures cited in the Annual Report around funding put to this, timeframes and numbers of sites did not appear to correlate. She asked whose responsibility this was now.

Mr Ramontja explained that on the rehabilitation programmes the Department needed to involve the community, and it might not always be the case that mines were completely closed or destroyed.

The Acting Chairperson noted the comment about gaps in legislation and asked how the Mining Charter fitted in to this.

Mr Mabuza said that amendments provided clarity on the law. The Department would ensure that sufficient attention was paid at all times to the Mining Charter.

The Acting Chairperson said that the scorecard had a lot of grey areas, and wondered how this would be addressed.

Mr Mabuza said that the Department was going to develop guidelines, so everyone would be working consistently and from the same basis.

Mr Ramontja pointed out that issues were still being discussed with the Minister and this was not necessarily the final version.

The Acting Chairperson said that other issues would be discussed on Friday 19 October. She commented that the licensing issues and the question of Internal Audit needed to be clarified. The DMR needed to coordinate its work on royalties with the National Treasury. She was disappointed that the same issues arose every year, with vacancies, and overtime and bonus issues. She reminded the Mine Health and Safety Branch to focus on women. Finally she noted the comment from the AG on the possible mismatch around predetermined objectives.

Mr Lorimer said that although it was perhaps not necessary to have a physical meeting, the Committee at least needed to have sight of quarterly reports. He agreed on the comment around bonuses and asked who would get bonuses, and on what basis they were paid.

Ms Gamede answered that employees would be assessed each year, and these assessments then determined whether bonuses were paid. She did not have the numbers of bonuses paid with her.

The Acting Chairperson continued listing matters that the DMR must work upon, which included how the licensing system worked, the different rights, and numbers of people being awarded rights.

Other Committee Business: Adoption of Minutes
The Committee tabled, went through, and adopted minutes of meetings held on 13 June, 21 July, 8 August and 19 September, with no amendments.

Minutes of 29 August were adopted, with a note being added that the Committee must come to a conclusion on a timeframe. The minutes of 12 September were adopted with a minor technical correction.

The meeting was adjourned.
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