Mintek Annual Performance Plan 2013/14 briefing

Meeting report

Chairperson’s opening remarks
The Chairperson thanked Members for their hard work that promoted the image of Parliament. He noted a change to the agenda, noting that although the Committee was scheduled to hear a presentation on mineral beneficiation, this had not yet been approved by Cabinet, and so Mintek had been asked to step in and present its Annual Performance Plan for 2013/14.

Mintek Annual Performance Plan 2013/14 briefing
Mr Abel Mngomezulu, Chief Executive Officer, Mintek, wanted to emphasise, at the outset, that Mintek did not play any role in the exploration or mining phase of the industry and could not deal with any questions relating to these operations.

He explained that the core business of Mintek could be summarised as:
- Research and development of efficient mineral processing technologies and value added products and services
- Promotion of mineral based economies
- Building world class research and development excellence, which was linked to building the human resources (HR) capacity of employees

Mr Mngomezulu demonstrated, through the Index of Global Mining (see attached document), that the mining industry as a whole had faced some challenges and downward slopes. These challenges were especially prominent during the 2008 financial crisis and were still being experienced in the current mining market. Over the past two years, there had been a visible decline in the Chinese, US and European demand for metal. This reduced demand for goods and services was expected to continue through to 2013/14 and 2014/15. Despite this decline, business at Mintek had continued. There were currently two vacancies within the management structure: the first for a General Manager: Corporate Services, and the second for a General Manager: Pyrometallurgy.

Mr Mngomezulu noted that Mintek had an internship programme. Seven development partners were assisting with the development of interns.  They wished to have a high impact.  He took one division as an example and showed how the interns had been incorporated into the company.  Some of the former interns listed had been employed at Mintek, and, for the rest, Mintek had implemented a tracking system to tell where they had moved. Taking on and developing interns was an important goal.



Mr Mngomezulu described some of the Department of Science and Technology (DST) programmes where Mintek was developing young people.  A list of students that had been placed at the various foundries, with a mix of full time and part time bursary holders, was available.  A number of employees had entered Mintek without degrees and were being assisted in achieving these.  It was seen as preferable to award bursaries to current employees than new employees.  In postgraduate studies, there was a higher proportion of part time bursary holders studying than full time students.  In the African culture in particular, family pressures made it difficult for students to continue their studies on a full time basis.  New employees were encouraged to take on post-graduate studies, which helped with the retention strategy. 


Mr Mngomezulu presented the key plans for 2013/14 financial years, which included the following:
-Strengthening the professional and leadership pipeline
-Formalisation of coaching and mentoring
-Achieving increased numbers of Masters and PhD enrolments
-Building strategic collaborations with local and international institutions
-Undertaking skills audits
-Targeted placement of people with disabilities
-Automation of the HR process
-Reviving Adult Education and training
- Enhancing staff retention interventions

Mr Mngomezulu set out the financial statements and indicated that the revenue statements would be more or les consistent, except in the 2012/13 financial year. Mintek hoped that the state grant would continue to increase as it had in recent years, and he tabled an annual income graph showing the variations between 1968 and 2013.

Most of Mintek’s expenditure was on salaries, around 55% of expenditure. This pattern was not expected to change before 2015.

He added that over the past five years, Mintek had only had one year in which it saw a drop in profitability, but otherwise showed good surpluses, and the organisation continued to be successful financially. Mintek hoped to maintain a strong balance sheet, at about R300 million. This excluded assets that were fully funded. Total assets exceeded R5 million and the liquidity ratio was 2:1, with a plan to maintain this ratio. Income should reach R500 million in the next year, for the first time. He noted that a large investment had been made into the smelting, by the new atomiser, and this should generate more revenue. 2012/13 had been the final year of a three-year rehabilitation programme. He noted that the 2013/14 year was, for a number of projects, the mid year of the Medium Term Expenditure Framework (MTEF) and there would continue to be a number of small projects.

Mr Peter Craven, General Manager: Business Development, Mintek, then discussed the Mintek business development activities, which included:
-Commercial support to other Mintek operating units
-Minerals industry business intelligence via MESU
-Intellectual Property management and commercialisation
-Coordination of Mintek marketing
-Initiation and leadership of certain projects as outlined
-Management of the Mintek’s contribution to Department of Mineral Resources (DMR) rehabilitation programme

Mr Craven said that the three-year programme of mine rehabilitation for DMR, valued at R90 million had ended on 31 March 2013, with 14 projects completed and over 300 temporary jobs created. DMR and Mintek were now finalising a new three-year agreement to begin in 2013/14. DMR had allocated R165 million towards this programme, but the number of projects was undetermined.

Mr Craven went over the issues that occurred in Osizweni, a 20-hectare area of exposed coal that was surrounded by formal and informal housing. The informal mining in the area had extended towards the nearby school, and created a high safety hazard that was to be complex and expensive to treat and rehabilitate.

Mr Craven went on to describe some of the technology projects (see attached presentation for full details).

Continuous Autoclave Facility: The pilot plan had been commissioned and this technology was to significantly increase ability to treat refractory ores

Precious Metal Smelting/Atomising: The Bay 2 Atomiser was based on an existing furnace, which worked by converting molten metals into powder, for which there were many applications.  The Mintek device was the biggest of its kind in the world, and Mintek was hoping it would attract business. It would improve the process of platinum smelting. Anglo Platinum had invested R44 million, and a further R24 million had come from Mintek's own funds.  There was a two-year project with Anglo Platinum.  The plant had already been commissioned and was up to 50% of production capacity. It operated around the clock.

Advanced Sensor-Based Sorting: This technology recovered ore from waste material and was seen by many mining companies as the way forward in technology. It used various characteristics to sort out coal. It could be used to recover most metals, but the focus was on coal.

Rare Earth Element Refinery: This was hoped to produce more commercial revenue than any other project, as it made use of high technology components. Mintek was looking to stimulate the establishment of a single refinery, which was a complicated process. The pilot plant should be ready by the end of 2013. China was seen as a dominant player in this technology although South Africa had large, but scattered resources.

Savmin Water Treatment: This was a technology used in the treatment of acid mine drainage (AMD).  A pilot project was being developed at Mintek, with the assistance of Veolia, the largest company in this field in the world. 

Mr Craven also presented on the research and development aspect of Mintek. He said that Mintek was working with rural communities and that a technological transfer was being conducted under the Biomin project. There was a pilot project in the Marble Hall area to increase fertility where the target was to create four small, medium and micro-enterprises (SMME) with 60 job opportunities.  Mintek was assisting with the training of 120 learners in the rural areas in various skills. There was a partnership with the National Youth Development Agency (NYDA) and local mines. Mintek had a particular focus on learners with disabilities.



Mr Craven said a project in the treatment of mine water and effluent was ongoing.  This would have the double benefit of rendering effluent harmless before disposal while also recovering minerals from the effluent. There were a number of projects where Mintek was cooperating with international partners.  These included a project on uranium heap leach with a Spanish company, copper heap leach projects in Namibia and the Democratic Republic of the Congo, and nickel bioleach operations with a Canadian company. A very successful measurement and control technology had been developed, and a number of products had been developed for both the local and international markets. One example was the Matrix Cynoprobe, which could measure cyanide content at a low level. In the past, these levels had been measured in terms of parts per million, but was now being done in terms of parts per billion.



Mr Craven described the work of the Advanced Material Division. The catalysis group was to host a conference in October 2013. The HySA Catalysis Competence Centre had 25% of the world market.  It would optimise the performance of the Membrane Electronic Assemblies fuel cell electrodes.  A Clean Room Nanotechnology Laboratory would soon be opened, which might be the only such facility in the country.  Production of nano-particles would be up-scaled.  The outputs of the DST Advanced Metals Initiative – the Ferrous and Base Metals Development Network - would be increased.  Mintek was part of the Council for Scientific and Industrial Research's (CSIR) titanium plant.  An automated platform was being developed for drug recovery.  A facility would be opened for the local industry.  Mintek would collaborate with the Technology Innovation Agency (TIA), science councils and other higher education institutes.

Mr Mngomezulu concluded by stating that Mintek was trying to become a people oriented institution and an organisation that was continuously improving and maintaining partnerships.

Discussion
Ms B Abrahams (DA, Gauteng) said that she really appreciated the intern follow up system.

Ms Abrahams enquired about the sustainability of the asbestos projects, and also wanted to know how security would be maintained at dumping sites after they had been rehabilitated. She asked if there was any truth in the rumours that some dumps were sold to China.

Mr Craven replied that rehabilitation was done in a way that was perpetually sustainable. The best was done to return the slopes and vegetation to their original state although that was very difficult to do. Guaranteeing that rehabilitation would be sustainable was problematic, because once the ground had been disturbed, it could never return to perfect condition. Mintek was trying to encourage programmes where there would be monitoring of the land done for a few years after rehabilitation.

Mr Craven explained that there was no longer a market for asbestos, and so there was no longer any incentive for people to restart mining operations. However, the same did not apply to coal, because once it was levelled, there was no guarantee that people would not go back to mine the area again. Maintaining security at rehabilitated sites was more of an enforcement issue. He noted that most of the dumps had been re-treated many times. He had no personal knowledge of any dumps being sold to China. Private companies ran many of the dumps and there were no Chinese technologies that would allow them to treat those dumps.

Mr K Sinclair (COPE, Northern Cape) asked if Mintek was doing any research currently on hydraulic fracturing. He also asked if Mintek was involved in the research on liquefied coal reserves. He raised the issue of mineral beneficiation, especially in the Northern Cape, where substantial resources were leaving South Africa without any value being added and asked what Mintek was doing on that aspect. He wondered if Mintek was involved with the Kimberley International Diamond and Jewellery Academy. He was surprised to see that Mintek was still mentioning bringing in new officials and consultants, given that the budget on bursaries and training was cut in 2010.

Mr Mngomezulu re-emphasized the point he had made earlier, that Mintek did not play any role in the mining or exploration phase, and as such did not play a role in hydraulic fracturing. He also explained that the role of Mintek was to manage processes on behalf of the Department of Mineral Resources and not to make policy. He stated that Mintek was not aware of, or involved with the Kimberley Academy.

Ms M Dikgale (ANC, Limpopo) asked if Mintek was working on the issue of consultants and trying to reduce them.

Mr Craven replied that consultants were categorised under the “outsourced work” category. This was work given to private companies who did earth moving work, since Mintek did not have the capacity to do that type of work. As such, hiring consultants was essentially a process of getting money in, and paying it directly out to the consultants, and no losses were incurred. He reiterated that consultants were used for specialisation purposes.

Ms Dikgale asked if the internship programme was ongoing, and asked how many people would be selected from Limpopo as many people in that province were suffering from lack of opportunity. She wondered also how shortly the vacancies would be filled.

Mr Mngomezulu replied that there was no discrimination between provinces. The students were taken into the internship program based upon their skills and merit, not based upon their provincial background.

Ms E van Lingen (DA, Eastern Cape) stated that there was a lack of provincial focus in this presentation. What was done on the provincial level was only at “the beginner stage”. She was also rather concerned that the presentation had mostly taken the form of graphs, but no substantial figures had been presented.

Ms van Lingen asked whether there would be any real gains from the rehabilitation of mines. She had several concerns regarding progress on the acid mine drainage. She noted that Mintek was spending R165 million on the new contract, which was encouraging but would like to see more results for the amounts spent.

Mr Mngomezulu agreed that there was little progress with regard to rehabilitation but said that this issue was for the State to deal with, as they must come to terms with the large amount of money that was associated with rehabilitation. The numbers were not of such importance, but the context and effect must be looked at.
Ms van Lingen made an observation that Mintek was spending R12 million, but when looked at sales by market establishment, she realized that sales were declining, from 335 in 2013 to 303 in 2016.

Mr Mngomezulu said that the decline of sales was a direct result of the decline in the market and in the business itself.

Ms van Lingen asked for clarification regarding the staff component, particularly why 44 employees were retrenched and some were rehired. She asked if the staff establishment had changed over time.

Mr Mngomezulu said that those employees who were retrenched were associated with a particular programme. At the end of the programme, there were regrettably no companies that required any treatment for their resources, so there was no work for those employees to do. Mintek had tried, for six months, to keep them occupied with various other tasks, but having realised that there was absolutely no work and a complete lack of productivity in that particular field, it had little option other than to retrench. However, some of these workers were rehired once more work became available on a contractual basis.

Mr D Gamede (ANC, KwaZulu Natal) asked how the performance of Mintek in regard to new and improved technologies would be measured, enquired what the targets were and what informed them.

Mr Craven replied that Mintek was using many different techniques for the separation of minerals and these techniques varied depending upon the characteristics of each rock.

Mr B Mnguni (ANC, Free State) asked if there were new methods for the separation of minerals. He also enquired how coal would be upgraded from low grade, to higher quality.

Mr Mnguni wondered if Mintek had looked into the relative advantages and disadvantages of solar and wind energy.

Mr Mnguni asked if students were absorbed within Mintek.

Mr Mngomezulu replied that the best students from the programmes were employed, because Mintek did not have the capacity to employ all the participants.
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Mr Mnguni asked where intellectual property attached, in respect of contracted research, and whether the intellectual benefit was deemed to lie with South Africa, or the foreign country. He asked how many projects were pursued, on average, each year that involved this field.

Mr Craven replied that if contracted research was used, the basic rule for the intellectual property was that Mintek was involved, it would gain full ownership. If it were to allow ownership to other partners, then it would effectively be left with nothing. IP legislation may provide the consultants with some exclusive rights and licensing, but all of that was subject to the approval of the National Intellectual Property Office, and the ownership would not be removed from Mintek.

Mr Sinclair did not agree that Mintek played no role in mining and exploration. He asked what Mintek’s involvement was with gemstones.

Mr Mngomezulu replied that Mintek began a project looking at gemstones in the provinces and once the beneficiation plan was complete, perhaps there would be more opportunities for beneficiation of gems.

Mr Mnguni asked if Mintek had any stabilisers that would stop dumps from smouldering.

Ms van Lingen stated that the Committee’s job was to scrutinise the presentation, and she remained concerned that the Powerpoint presentation had only provided detail of what Mintek wanted the Committee to see. There was fine print in the document that was not part of the presentation. She asked how Mintek came up with the prices for rehabilitation. She asked if any research was done for small miners in South Africa.

The Chairperson asked if Mintek was involved with some of the work that was funded by the United Nations in the Northern Cape.

The meeting was adjourned.