Department of Mineral Resources on Strategic and Annual Performance Plans 2013, with the Minister in attendance

NCOP Economic and Business Development

22 April 2013
Chairperson: Mr F Adams (Western Cape, ANC)
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Meeting Summary

The Department of Mineral Resources presented its Annual Performance Plan and Strategic Plan to the Committee.

The Department explained that its total budget for the 2013/14 financial year was R 1 394 billion. The amount represented an average growth of 10.8% from 2009/10 – 2012/13. The projected growth over the medium term was projected to grow by 11.7%. The funding was shared between the Departmental programmes and entities under the control of the ministry accounted for 54.9% and 45.1% respectively. The level of under spending was maintained to be far below 5% for the 2012/13 financial year. He expanded on the expenditure estimates analysis per programme. Administration was expected to increase from R 257.3 million in 2012/13 to R 2015/16 at an average rate of 4.1%. The increase was attributed to inflationary adjustments. Mine Health and Safety Inspectorate was expected to increase from R150.6 million in 2012/13 to 179.8 million in 2015/16. Mineral Regulation was expected to increase from R 187.8 million in 2012/13 to R 249.1 million in 2015/16. The increase was attributed to the additional funding received for the National Environmental Management Amendment Act implementation and the South African Mineral Resources Administration System upgrade of R 59 million. Mineral Policy and Promotion also expected to increase from R 579.9 million in 2012/13 to R 900.5 million in 2015/16. The increase was attributed to the new allocation for the rehabilitation of derelict and ownerless mines and economic support and the competitiveness package for the Council for Geosciences and Council for Mineral Technology.

The Department unpacked the objectives and targets of each programme. Programme 1 was aimed at providing strategic support and management services to the Ministry and the Department. The objectives of the programme were to; contribute to skills development, contribute to the sustainable development of vulnerable groups, facilitate transformation initiatives, strengthen internal processes and facilitate learning and growth. Programme 2 was designed to promote health and safety, to contribute to skills development, to develop and review internal processes and to improve turnaround times. Programme 3 was focused on job creation. This could be done by increasing the number of jobs attained from new mining rights, through the adjudication of applications for new mining rights. The sector also aimed to promote sustainable resource use and management, reduce state environmental liability and financial risk, and transformation policies and legislation also be implemented. Programme 4 dealt with promoting investment in the mineral sector, promoting sustainable resources use and management, facilitating transformation in the mining sector, developing and reviewing internal processes and improving turnaround times

From the objectives of all the programmes, the Departments’ overall main objectives were to promote skills development, to facilitate transformation initiatives, especially with regard to women, the youth and people with disabilities, to strengthen internal processes such as inspection, monitoring and evaluation, and lastly to facilitate learning and growth through exit interviews and the extension of mentorship and learnership programmes for new graduates.
The Minister of Mineral Resources informed the Committee that the Marikana incident had brought about various challenges within the sector. However the national conference of the ruling party reassured the country about the stability of the mining industry. The mining industry contributed about R 370 billion to the South African economy and employed more than 524 000 workers in 2012; this despite some mines facing challenges of retrenchments. The industry was thus in a process of transforming itself so that it sustained its competitiveness, both locally and internationally. The National Development Plan set out various plans on how various sectors within the country contribute to tripling the size of South Africa’s economy by 2030. The NDP also identified various issues which all industries needed to improve on such as that of infrastructure development, employment reduction and inequality reduction.

Members raised various concerns about the practicality of some of the targets set by the Department, one of which was the target to fill all vacant posts within 4 months. Another key concern raised was that of the lack of skilled personnel within the minerals sector to drive initiatives such as the exploration of gas and oil. Many of these explorations within the country were undertaken by foreign companies who were subsidised by the government. The Department therefore had to take a stronger stance on developing the necessary skills within the country to address such concerns. Members also argued that confidence in the mining sector had declined, both locally and internationally, as a result of the 2012 unrests such as the Marikana incident.  The Department therefore had a responsibility to boost confidence and investment in the sector. Concerns were also raised about the high numbers of young graduates who are unemployed. How was the Department aiming to address this in order to contribute towards skills development and filling of skills shortages within the Department?
 

Meeting report

Chairpersons’ opening remarks
The Chairperson welcomed everyone to the meeting and said that the Minister, Ms Susan Shabangu was running late, but would be joining the Committee shortly. In the meantime, the Department would commence with its presentations.

Briefing by Department of Mineral Resources (DMR) on its 2013 Annual Performance Plan
Dr Thibedi Ramontja, Director-General, DMR, said the Department would be presenting its Annual Performance Plan (APP) which was in line with its Strategic Plan. The presentation would be divided according to the various branches within the Department, beginning with financial administration followed by corporate services, mine health and safety, mineral regulation and mineral policy and promotion.
Dr Ramontja said that the presentation would be divided according to the budget and spending outlook, the resource plan per programme, expenditure estimate analysis, the resource plan per economic classification and the branch strategic objectives. The total budget for the Department was R 1 394 billion for the 2013/14 financial year. This represented an average growth of 10.8% from 2009/10 – 2012/13 and was projected to grow by 11.7% on average over the medium term. The funding was shared between the departmental programmes and entities under the control of the ministry accounted for 54.9% and 45.1% respectively. The level of under spending was maintained to be far below 5% for the 2012/13 financial year.

With regard to the expenditure estimate analysis, the overall expenditure was expected to increase in real terms from R 1 .394 billion in 2013/14 to R 1. 619 billion in 2015/16 at an average rate of 11.7% per annum. The increase was attributed to additional funding received over the Medium Term Expenditure Framework (MTEF), in respect of the following;

-R 102 2 million for improved conditions of service for the Department and Public Entities
-R 18 million for Economic support and competitiveness packages for the Council for Geosciences and Council for Mineral Technology
-R 81 million for waste scrap reprocessing and sensor based sorting projects
-R160 million for the rehabilitation of derelict and ownerless mines
-R 59 million for the implementation of the National Environmental Management Act, and the upgrading of the South African Mineral Resources Administration System

The expenditure estimates for Programme 1: Administration was expected to increase from R 257.3 million in 2012/13 to R 2015/16 at an average rate of 4.1% over the MTEF. The increase was attributed to inflationary adjustments. Programme 2: Mine Health and Safety Inspectorate was expected to increase from R150.6 million in 2012/13 to 179.8 million in 2015/16. Programme 3: Mineral Regulation was expected to increase from R 187.8 million in 2012/13 to R 249.1 million in 2015/16. The increase was attributed to the additional funding received for the National Environmental Management Amendment Act (NEMA) implementation and the South African Mineral Resources Administration System (SAMRAD) upgrade of R 59 million. Programme 4: Mineral Policy and Promotion was expected to increase from R 579.9 million in 2012/13 to R 900.5 million in 2015/16. The increase was attributed to the new allocation for the rehabilitation of derelict and ownerless mines and economic support and the competitiveness package for the Council for Geosciences and Council for Mineral Technology.

With regard to the Departments’ resource plan per economic classification, the compensation of employees’ budget had increased in line with an inflation adjustment. The increase in the goods and services budget for the 2013/14 financial year was attributed to new funding for Rehabilitation of Ownerless and Derelict Mines, NEMA implementation and SAMRAD upgrade. The transfers and subsidies budget had also increased by 20% owing to new funding being obtained for waste scrap processing and sensor based sorting projects (MINTEK) and economic support and competitiveness packages for DMR entities.

Ms Cathy Leso, Acting Chief Financial Officer, DMR, presented on the Branch Strategic Objectives, these were the stakeholder perspective, internal processes, learning and growth and the financials.

Under stakeholder perspectives, the Department aimed to provide reliable and timely information by submitting reports within the prescribed timeframes of National Treasury’s reporting calendar. Service delivery would be improved by assessing the number of defined turnaround times the Department adhered to according to the customer satisfaction index. An annual survey in this regard would be conducted. Stakeholders would be educated and empowered by assessing the percentage of complaints reduced. The percentage of non compliance with internal processes was also to be reduced. Workshops were also conducted to make sure that stakeholders are aware of internal policy processes. The Department also aimed to make sure that Information and Communication Technology (ICT) systems were provided to improve the service capacity of the Department. The desired aim was a reduction in the number of calls logged due to system response time. Transformation policies would also be promoted by making sure that invoices to suppliers were paid within 30 days.

With regard to internal processes the Department aimed to improve the number of implemented policies and to implement the approved processes and procedures in time. Turnaround times would also be improved, and ICT be aligned to the business objectives through the Master System Plan (MSP) strategy. Under learning and growth, the Department aimed to facilitate management and leadership development, to fill funded vacancies and to attract, develop and retain skills. Under financials, the Department aimed to produce a clean audit. This was be done by maximising the utilisation of resources through a tighter management policy. Added to that, the Department aimed to align its budget to the strategy and manage costs effectively through the reduction of irregular expenditure, promoting corporate governance through the full implementation of both internal and external audits, and adhering to the compliance framework. 

Programme 1 Administration – Corporate Services
Ms Nthatisi Likhete, Chief Director: Corporate Services, DMR, said that the purpose of branch corporate services was to provide strategic support and management services to the Ministry and the Department. Stakeholder perspectives consisted of various objectives. The first was that of contributing to skills development through various initiatives such as career awareness initiatives and the acquisition of bursaries for learners from poor backgrounds. This would be done through various internship and learnership programmes. The second objective was that of facilitating the sustainable development of vulnerable groups through the implementation of various projects for women, the youth and the disabled. The Department also aimed to communicate its policies and programmes by implementing its communication strategy, facilitating media and stakeholder engagements through various public participation programmes. Lastly, the Department aimed to facilitate transformation initiatives through the promotion of women’s’ projects in mining.

Ms Likhete said that under internal processes, the Department had various objectives, which included the development and implementation of policies and procedures within corporate services. Other measures included timeous responses to opinions, appeals and litigation, the implementation of a national vetting strategy through the screening of employees and contractors, and the facilitation of compliance with the Human Resource litigation through declarations of financial and performance agreements.  The last focus area of corporate services was that of learning and growth. The objectives included the facilitation of management and leadership development through various management development programmes, and the filling of funded and vacant positions within 4 months. Added to that were the attracting, development and retaining of skills within the Department, this would be done through the improvement of employment equity, the reduction in staff turnover and the development of various human resource intervention and training programmes.

Programme 2- Mine Health and Safety
Mr David Msiza, Deputy Director- General: Mine Health and Safety, DMR, outlined the sectors’ strategic objectives as follows;

-To promote health and safety
-To contribute to skills development
-To develop and review internal processes
-To improve turnaround times

The fist strategic objective of the programme was to transform the minerals sector. This would be done by promoting health and safety through the reduction of occupational fatalities, injuries and dangerous occurrences. The target in this regard was to achieve 20% improvement per annum. Other targets included a 10% per annum reduction in overexposure to the Silica occupational exposure limit, a 10% per annum reduction in overexposure to Noise Occupational Exposure, and an 80% completion of investigations and inquiries per annum. The Department had conducted 396 audits and 8000 inspections to monitor the effectiveness of their systems. The sector also aimed to provide for sufficient and relevant skills in the mining sector by contributing to skills development, through the review and implementation of certificates of competency models to improve pass rates.  The Mining Qualification Authority and other stakeholders also be engaged to ensure the proper accreditation of service providers. Lastly, the sector aimed to achieve a 100% implementation and adherence to Service Level Agreements, through the capacity building of mine inspectors. 

Presentation: Programme 3- Mineral Regulation
Mr Joel Raphela, Deputy Director General: Mineral Regulation, DMR, outlined the strategic objectives of the sector to be as follows;

-Promoting job creation
-Promoting sustainable resource use and management
-Reducing state environmental liability and financial risk
-Implementing transformation policies and legislation
-Monitoring and enforcing compliance
-Improving turnaround times

Mr Raphela said that the sector aimed to achieve equitable and sustainable benefits from mineral resources. The first objective was to promote job creation. This could be done by increasing the number of jobs attained from new mining rights, through the adjudication of applications for new mining rights. Social and Labour Plans (SLPs) and Environmental Management Programmes (EMPs) be given priority.  Also SMMEs projects for sustainable development could be developed through increased compliance inspections, and Local Economic Development projects also be improved in the same manner.

The sector also aimed to promote sustainable resource use and management, reduce state environmental liability and financial risk, and transformation policies and legislation also be implemented. The programmes also aimed to achieve a 100% compliance with regulatory requirements through monitoring and the enforcement of compliance. Turnaround times also be improved through the emphasis on adherence to prescribed time frames, such as the granting and issuing of rights, the registration of rights and recording of mining permits.

Programme 4- Mineral Policy and Promotion
Mr Mosa Mabuza, Deputy Director-General: Mineral Policy and Promotion. DMR, outlined the branch’s strategic objectives to be as follows;

-Promoting investment in the mineral sector
-Promoting sustainable resources use and management
-Facilitating transformation in the mining sector
-Developing and reviewing internal processes
-Improving turnaround times

Mr Mabuza stated that in dealing with stakeholder perspectives, the branch made use of targeted publications, technical and strategic partnerships, SMMEs were also supported, Small Scale Mining Workshops were also held in an attempt to engage all relevant stakeholders. A beneficiation strategy also developed for the completion of the integrated implementation plan. With regard to the facilitation of transformation in the minerals sector the branch established a Monitoring Committee for augmentation of regulations for the exploration of shale gas. This was done in collaborations with the department of Science and Technology, the department of water and environmental affairs. And a minimum target of 95%set for the improvement of turnaround times.

Input by the Minister of Mineral Resources
The Chairperson thanked the Departments’ delegation for their presentations and handed over to the Minister of the Department, Ms Susan Shabangu to give a presentation to the Committee.

Ms Shabangu apologised for arriving late at the meeting, she explained that she had just arrived as she could not get any flights the night before. The Minister thanked the delegation for their presentations of the Departments’ Annual Performance Plan for 2013/ 2014. Reference was made to the Marikana incident which shook the mining in 2012, this brought about various challenges within the sector. However the national conference of the ruling party reassured the country about the stability of the mining industry. The mining industry contributed about R 370 billion to the South African economy and employed more than 524 000 workers in 2012; this despite some mines facing challenges of retrenchments. The industry was thus in a process of transforming itself so that it sustained its competitiveness, both locally and internationally. The National Development Plan (NDP) set out various plans on how various sectors within the country contribute to tripling the size of South Africa’s economy by 2030. The NDP also identified various issues which all industries needed to improve on such as that of infrastructure development, employment reduction and inequality reduction.

In 2010 the mining industry as a whole developed a mining strategy with a 2020 vision. The intention was to align the mining industry to address some of the gaps addressed by the NDP, such as electricity, export, capacity building and human resource and skills development. With regard to the Departments’ strategic vision for 2014, the vision was to align the Departments’ vision to that of the NDP. Mining also needed to continue to be relevant, as it was the backbone of the economy. The core objective of the mining industry was therefore to ensure the sustainability and competitiveness of the sector. Measurable targets therefore needed to be set. Key deliverables of the industry were contained in the amendments of the Minerals and Petroleum Development Act as well as in the Mine Health and Safety; these were critical in unlocking some of the bottlenecks in the industry. The question of job creation was also a huge area of focus. Another key issue for the Department was that of rehabilitating of mines which were operating in ways which were not approved of, inspectors played a key role in this regard. Treasury also allocated more funding to the regulatory branch of the Department to make sure that issues such as those of licensing were properly addressed. The Department also acknowledged the role played by the Committee in its public hearings and bringing Parliament to the people. One of the departments’ initiatives was that of promoting jewellery making. A summit would be held, with the intention of creating an informed sector. Entrepreneurs must be created through partnerships with various Further Education and Training colleges.

Discussion
The Chairperson thanked the Minister for the presentation. However he pointed out to the Department that it had received an unqualified report regardless of its outstanding presentation. He further noted that South Africa had an abundance of knowledge and expertise in the mining sector, and asked why the Department did not share this with other countries such as Mexico.
Mr J Nyambi (ANC; Mpumalanga) suggested that the Department inform the Committee about any developments resulting from the “Taking Parliament to the people” initiative. He then asked whether it was practical for the Department to aim to fill all funded vacancies within 4 months. He further asked what the vacancy rate was in terms of percentages and what impact the NDP had on the Departments’ programmes, and what were the implications of these?

Mr B Mnguni (ANC; Free State) complimented the Department on its good work and outstanding presentation. He asked about the nationalisation of mines, and what the Departments’ strategy was for the restoration of business and investor confidence in the sector. Were there still foreign companies subsidised by the South African government to explore gas and oil in the country? What impact did that have on Broad Based Black Empowerment (BBBE)? What plan did the Department have in place to achieve its 2014 target for the 26% ownership of mines locally? What strategy was in place for attracting investment for the development of the devastated arable land as a result of mining activity in the area, such as in Mpumalanga? The country also had large reserves in gas, what technology did the Department have in place for its extraction locally? Attention was drawn to the skills shortages in the minerals sector.

Ms E Van Lingen (DA; Eastern Cape) thanked the Minister for her presence. She raised a concern about some blank targets in most of the presentations; there were no clear explanations about where the money would be going. She made reference to the 80% target set for addressing issues of mining rights for small miners, especially in traditional areas such as the diamond industry. Did the Department have a plan on how it would go about achieving this target? She further asked for more details on the waste processing programme which had cost the Department an estimated R 81 million. Concern was raised about the licensing of one stop shops such as the diamond sector in the Northern Cape. What the Department doing to align provincial plans and strategies with the NDP?

Mr K Sinclair (COPE; Northern Cape) also asked about the nationalisation of mines. He argued that there was a great divide within communities who wanted to become part of the mining sector. Investor confidence in the industry had declined; this indicated by the recent devaluation of gold. What plans did the Department have in place to deal with this issue? The Marikana issue was seen as one of the main contributors to the problem.

Ms B Abrahams (DA; Gauteng) congratulated the Minister on the Department’s jewellery design initiative, and asked for more information of the upcoming jewellery summit. Questions were also raised about the insufficient monitoring and evaluation within the industry, what plans did the Department have in place to deal with this matter. What did the Department do to empower and develop skills of disabled people who are employed there? With regard to SMMEs, what timeframes did the Department put in place for them to be independent and self-sufficient structures? How frequently monitoring and evaluation done throughout the various programmes?

Ms M Dikgale (ANC; Limpopo) commended the Minister on her work in the Department and with the Committee. She asked whether the Ministerial Girl bursary programme was targeting young girls from disadvantaged communities. Why where only girls targeted?

Mr D Gamede (ANC; KwaZulu-Natal) asked about the Departments’ plans with regard to shale gas and fracturing. What plans did the Department have in place to make sure those relationships with labour and trade unions were in good standing so that the Marikana incident not would be repeated? He suggested that the Department build structured relationships with the Department of International Relations and Cooperation so that solid partnerships would be facilitated with international stakeholders. He then asked what outcomes the Department envisioned as a result of South Africa’s role in BRICS.

Ms Van Lingen asked whether the Department would be supporting the construction of supply chain management production units closer to the mining areas.

The Chairperson raised a concern about the challenges facing the industry with regard to inputting raw materials. How did the midget task team respond to issues of social unrest emanating from the 2012 unrests from the industry?

The Minister responded that the Department was in the process of cooperating with other Departments in an attempt to strengthen the achievements of the goals set out in the NDP. The industry however was facing a challenge with regards to the securing of raw materials. On the question of ‘Taking Parliament to the people’ she responded that the Department had shared its report with the Chairperson of the National Council of Provinces. However, it seemed like they failed to communicate it with the Committee. The Department had also aligned its strategic plans with those outlined in the NDP; the Director General of the NDP had engaged with the Department to make sure that all strategies were aligned.

The Minister addressed the question of nationalisation. The Department had identified various issues about nationalisation which would not grow the industry. The mining sector for example was already well established, it was an old sector with long established partnerships. The country could not afford to disrupt these. Extensive research had been done, looking at cases where nationalisation had been implemented, and the results indicated that it had not been a success. The Eastern Bloc was an example of such a collapse. However stakeholders should work together to identify what it was that needed to be done to grow the sector in the country. Issues such as infrastructure development, energy and electricity, the improvement of roads and railways needed to be developed for example. As for skills development, there was a challenge in growing the economy in this regard, and the country as a whole had a responsibility to invest in the development and enhancement of various skills necessary for economic development.

The Minister said that the Department had a key interest in job creation, especially for young graduates in the fields of geology and mining engineers. The ‘take a girl child to work’ initiative would be extended to boys as well. The exploration of gas and oil was a sector with a lot of potential; however the country lacked the skills for exploration and this was why foreign explorers were still being contracted to do the job. The Department was engaged in partnerships with the Council for Geosciences, where talks were held about funding being made available for research institutions in an attempt to cultivate and develop the skills South Africa already had. Governments’ response in this regard had been very positive, as the need for specialised skills within the country was a matter of most importance.

The Minister indicated that the Department was on track with regards to meeting its targets, regardless of its decline in performance during 2009/10. With regards to small scale mining, one of the challenges which faced the Department was that of regulation. The Department still had to figure out what it could do to create an enabling environment for small miners to benefit. Partnerships with the Department of Trade and Industry, the Department of Energy as well as with the Department of Education were to be strengthened, for information exchange and skills development. Steel was an important resource in the country; however South Africa was still importing steel from overseas. Steel beneficiation was therefore an issue which had to be addressed as a matter of urgency. South African products had to be value-added products so that they could contribute towards the export markets.

Mr Mnguni asked why government could not fund patents for steel.

The Minister responded that innovation within South Africa was needed. The country needed to figure out what would be done to make sure that the industry was sustainable. South Africa was the hub for the Southern African Development Community (SADC), especially for diamond trade. Young people therefore needed to be developed and empowered to contribute positively towards improving the sector, which was why initiatives such as jewellery design and watch making were of great importance. Added to that, the Department aimed to introduce these initiatives as part of the curriculum for FET colleges. Mentorship would also be provided for these young graduates. In sum, South Africans needed to invest in South Africa.

Dr Ramontja responded that the vacancy was relatively high at 12%. The Department was struggling to attract the right skills, especially in the mining and mechanical engineering sectors. Most of these skills were taken up by the mines. The Department therefore needed to develop its own people to fill these vacancies. He added that the entire Departments’ targets were reflected in the Annual Performance Plan.

Ms Abrahams asked about how the Department accommodated disabled people.

The Minister responded that most of the disabled staff were people who been injured in their line of work. Therefore the companies who employed them retained them and moved them to more administrative vacancies.

Mr Mngoni asked about the Machabeni Municipality and what programmes the Department had in place to improve mining in the area, as most mines were closing down. He indicated that there was a dam close to that community which was highly populated as a result of the mining in the area. Residents were not pleased with that, and so the Department was asked to intervene.

The Minister responded that the Department would investigate the issue of the dam. Other departments would also be drawn in, such as the Department of Water Affairs. With regard to mines closing down in certain areas, the Department planned to look at these depressed areas around mining towns, and implement projects aimed at poverty alleviation, rehabilitation of communities as well as job creation. These depressed areas were those which were former gold mining towns such as Rustenburg, Randburg and Welkom.

The Chairperson thanked the Minister for her leadership and for always making time to appear before the Committee despite her demanding work schedule. He reiterated Members’ positive feelings about the hard work of the Department.

The meeting was adjourned.
 

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