Mining Charter Report: adoption

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Mineral Resources and Energy

13 March 2013
Chairperson: Ms F Bikani (ANC)
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Meeting Summary

The meeting was scheduled to consider the Mining Charter report for adoption, but the Committee decided at the outset that the composition of the Committee on the day did not permit that. It was resolved to go through the report and decide on an approach for adoption. It emerged during the course of the meeting that the report was still incomplete, and that some changes in format were needed. It was also decided to remove a table of statistics from the report. Shortcomings in the report were mostly related to information received from the top ten mining companies, who had been heard by the Committee in November 2011. It was felt that the mining companies had not been properly guided, and had not been given a proper scorecard to adhere to. Consequently there were ambiguities related to the way in which the mining companies scored themselves for implementation of the Amended Mining Charter requirements.  The Committee had previously contested figures given by mining companies about mine ownership by historically disadvantaged South Africans. It was remarked that it was difficult to assess to what extent mining companies had implemented the Mining Charter. In addition, the Portfolio Committee had not called back the mining companies after November 2011, as they had resolved to do. Companies had to undertake a learning curve about what the Committee exected of them. The Chairperson advised that reports received from mining companies since November 2010, be worked through, and that findings be incorporated into the report. There had to be a workshop where Committee members could each express their views.

It was decided that findings, observations and recommendations in the current report, be integrated. There had to be more information about labour plans and ownership patterns in mining companies, as well as application of BEE principles. Mining companies had to spell out their own challenges related to the implementation of the Mining Charter. It was concluded that the report was not yet detailed enough. A workshop date would be announced.

Meeting report

Background
A Mining Charter to give effect to the entry of historically disadvantaged South Africans (HDSAs) into the mining industry, was signed in 2002. Signatories were the erstwhile Department of Minerals and Energy (now the Department of Mineral Resources); the Chamber of Mines; the South African Mining Development Association (SAMDA), and the National Union of Mineworkers (NUM). A Mining Charter Impact Assessment Report was published in October 2009. The Charter was then amended to make transformation more effective. Key elements in the Charter were to be HDSA ownership; procurement and enterprise development; beneficiation; employment equity; human resource development; mine community development; housing and living conditions; sustainable development and growth in the mining industry, and reporting (monitoring and evaluation).

The Amended Mining Charter was published in September 2010. There were accusations of lack of consultation. The Department of Mineral Resources (DMR) responded that the bulk of the amendments were based on a stakeholders declaration signed by all stakeholders represented in the Mining Industry Growth Development and Employment Task Team (MIGDETT), which included the Chamber of Mines, South African Mining Development Association (SAMDA), NUM, United Association of South Africa (UASA) and Solidarity.

In 2011, the Mineral Resources Portfolio Committee undertook public hearings to listen to mining industry stakeholders, organised formations, mining communities and mine workers, and to ascertain whether they were aware of the revision of the Charter and satisfied with the amendments. There were hearings in the provinces in March and in Parliament in August and September. The Committee also conducted hearings on the implementation of the Mining Charter by the top ten mining companies in November 2011.

The draft report under consideration for adoption, sought to summarise the key issues raised by the organisations during the public hearings. The draft report included findings, observations and recommendations made by the Portfolio Committee.

Consideration of the Amended Mining Charter report
The Committee Secretary announced that due to the absence of the Chairperson, an Acting Chairperson would have to be elected. Ms F Bikani (ANC) was nominated to act as Chairperson in the place of Mr Gona.

The Chairperson noted that the Committee had held public hearings in 2011 to look at the implementation of the Mining Charter. She asked for suggestions on an approach to be followed, if the report was to be adopted on that day. There were challenges and grey areas. The question was what actions had to be taken.

Mr H Schmidt (DA) commented that the composition of the Committee was not suitable for adoption. He suggested that the meeting be used to go through the report.

Mr R Sonto (ANC) agreed that the report could not be adopted on that day. He agreed that the report at least had to be discussed, but could only be adopted at a later stage.

The Chairperson suggested that the Committee go through the document page by page, up to the observations and recommendations, which could be discussed. The Committee might decide to change the recommendations. The Mineral and Petroleum Resources Development Act (MPRDA) would be under review during the year, and that would bring up minerals issues. There were also issues related to state-owned mining companies. Strategic issues had to be decided in conjunction with the Department of Mineral Resources (DMR) before the decision to adopt.

Mr C Gololo (ANC) said that he did not understand what was meant under point 4.3.1.

The Chairperson said that the Committee had challenged the assertion by the mining companies, as represented by the Chamber of Mines, that they supported the New Mining Charter.

Mr Schmidt remarked that it was not accurate to say that the mining companies appreciated the shortcomings of the old Mining Charter. “Acknowledged” would be a more suitable term. 

Mr Sonto referred to the bullet under 4.3.3 where the NUM pointed out that the designation of all women as historically disadvantaged South Africans (HDSAs) had an unintended consequence of promotion of white women to key positions at the expense of other HDSAs.

The Chairperson noted that the NUM had made the point that white women were in fact privileged, but had been counted as HDSAs in the Charter.

Mr Gololo raised the matter of royalties.

The Chairperson explained that royalties no longer belonged to communities. Money went to the National Treasury who decided how to distribute it. The Committee had to debate whether royalties were being discussed in the right place in the report or not.

Mr Sonto asked what was meant by the statement that mining was an industry with a long lead time on investment decisions.

Mr J Lorimer (DA) explained that whatever was invested through investment decisions could only be regained far into the future.

The Chairperson referred to a statement under the analysis of submissions, that the presentations of the mining companies could not be properly analysed, as most of them did not adhere to the Charter scorecard guidelines.

Mr Schmidt said that he was not sure where that statement had come from. In his view it was too critical. He advised that the sentence be left out.

The Chairperson agreed that the PC had not given the mining companies a guide. They had not been given a scorecard to adhere to. Presentations of mining companies were based on local views and experiences.

Mr Sonto agreed that the paragraph containing that statement could be removed.

The Chairperson commented that she was not comfortable with the table on page 16, based on information provided by the top ten mining companies. There had been a lot of criticism about it. The table had been compiled by the Committee Researcher.

Mr Schmidt reasoned that the table had been compiled by a single individual. It would be better to remove it. The mining companies could very well object that the information in it was wrong.

The Chairperson remarked that there had been wrong interpretation. Mines had scored themselves for houses, when in fact they only provided flats.

Mr Gololo suggested that the mining companies had a look at the table.

The Chairperson said that the researcher had extracted the information from mining company reports, but all of the top ten companies were not represented. The Committee had different views to the mining companies. Exxaro had given themselves 80 percent, but she would have given them five percent. The DMR was not always able to assess reports they received.

Mr Schmidt noted that according to the table, one mining company had only two percent compliance. Another got three percent for housing. Yet another got two percent for BEE ownership. It was impossible for the figures to be that low.

Mr Sonto remarked that the extrapolations in the table had been questioned in a subsequent meeting. He proposed that the table be removed.

The Chairperson agreed that it be removed, and that the Committee depend on the presentations.

Mr Schmidt said that it was important to note that the Committee had adopted a procedure to workshop, but had not gone back to the mining companies. Further comments had to be made.

Mr Sonto commented that reports had been received as they were. The Committee was supposed to make observations and recommendations. It would not do to go back and ask the mining companies if they liked the Committee observations.

Mr Schmidt held that the Committee had indicated a certain approach.

The Chairperson agreed that the Committee had indeed undertaken to call the mining companies back. The Committee was supposed to have given their views. There had to be a learning curve for mining companies about what the PC expected of them. There had to be a workshop or a public hearing. The PC had been willing to consider more information. The mining companies had to be given a chance to elaborate. She accepted that the table had to be taken out.

Mr Schmidt referred to the required targets for HDSA ownership, on page 16. The old Charter had set a target of 15 percent by 2014. That was in fact the target for 2009.

The Chairperson advised that a sentence be inserted to say that the new target for 2014 was 26 percent.

Mr Schmidt opined that the paragraph referred to was skimpy. There was only reference to a few of the ten mining companies. Mining companies had to be quoted accurately.

The Chairperson said the Committee needed to confirm whether companies had responded. For some it was the first time they had appeared before the Committee. It could be checked with Mr Gona what had come in, and then include that.

Mr Gololo noted that the PC had disputed ownership figures provided by the mining companies. Most had declared themselves to be above the percentage of 26 percent for HDSA ownership required.

Mr Schmidt noted that the PC had only reported back on three of the ten companies. How could that be explained?

The Chairperson said that discussion had been based on the Charter, and not all companies had been included. There had to be a workshop before conclusions could be reached. The Committee had to provide views based on observations of ownership patterns and the like. There had to be a request for anything possibly received by the Chairperson. Such material had to be distributed to PC members, and included as part of observations and recommendations.

Mr Schmidt referred to mining companies listed separately, on page 24, saying that the report was at odds with itself.

The Chairperson agreed that it would be a hard report to adopt.

Mr Gololo proposed a workshop to develop the format.

The Chairperson advised that the Committee be part of preparations for workshops. On a second date the PC could go back to the mining companies. A workshop date had to be found. Each member had to make observations, the Committee had to take up a position on the Mining Charter that year. The Committee had to provide inputs for the Mining Charter. The researcher had to listen over tapes of the public hearings.

Mr Schmidt suggested that a presentation be made by each mining company, so that a proper study could be made.

The Chairperson said that the summary was inconsistent. The researcher had to look into the reports, and rework the summary. A workshop had to be prepared, for the PC to develop an approach. She asked what members had to say about the recommendations of the report.

Mr Sonto suggested that the findings, observations and recommendations be integrated.

The Chairperson said that the question was how to decide which mining companies to quote, and which not.

Mr Schmidt noted that all the mining companies were not adequately represented.

The Chairperson agreed that only three companies had been discussed with regard to findings.

Mr Gololo opined that the ownership figures disputed by the Committee counted as an observation.

The Chairperson felt that findings and observations had to be combined. One thing had been found and quite another observed.

Mr Sonto remarked that there was a difference in sentiment expressed, among the mining companies. Some supported the amendments, and others supported them with reservations. The two sentiments had to be captured.

The Chairperson concluded that findings and observations had to be condensed under one heading. General observations about the ten mines had to be included. The Committee had commented on the Chamber of Mines, but the ten companies had appeared on different dates.

The Chairperson stated that the Committee took too long to go back to reports. The Committee lost track of what had been said, before issues were resolved. There had to be a shorter turnaround period. The Committee had to submit a list of recommendations to the DMR, perhaps by means of a workshop. It had to be added to the report. The Researcher had to look at reports on meetings with the top ten mining companies. There had to be a report on their operations with regard to the Charter. Labour plans could be looked at, ownership patterns, and appliance of BEE, especially concerning methods of procurement. Companies had to report on their own challenges in terms of the Charter. Other entities had to be brought in to present their own views, for instance the difficulties of small-scale miners. Communities and other entities could appear on different dates to the mining companies. Recommendations could be based on the meetings. The report was not detailed enough to serve as basis for Committee Recommendations. A date for a workshop to develop further recommendations would be supplied.

The Chairperson adjourned the meeting.

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