Introductory meeting with new Managing Director at Richards Bay Minerals; South African National Energy Development Institute: briefing postponed

NCOP Economic and Business Development

29 July 2013
Chairperson: Mr F Adams (ANC; Western Cape)
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Meeting Summary

The South African National Energy Development Institute (SANEDI) had been scheduled to brief the Committee on its overall performance on research and development.  However, the delegation from SANEDI did not make it to the meeting. Members were not impressed, and described this as wasteful expenditure.  A formal complaint would be forwarded to the Chief Executive Officer of SANEDI.

The Committee had an introductory meeting with the new Managing Director at Richards Bay Minerals (RBM) to discuss the progress of the organisation.
RBM said that some of the challenges it faced were because the business was surrounded by poor communities.  As a result, local residents were demanding better employment opportunities. Added to this, copper cable theft was on the rise, as well as instances of violence. RBM was, however, working with provincial authorities and the police to address these issues.  The mining industry as a whole was facing challenges of its own, such as low demand, and the impact of the 2008/9 global financial crisis was still very much evident.  RBM was, however, receiving support from the provincial government and members of the Executive Council for Economic Development and Tourism, as well as from local traditional leaders and the Ithala Development Finance Corporation Limited.  RBM was also investing about R3 billion in creating economic development opportunities for local communities, with the youth being a specific target.

Members made a few suggestions to RBM on how to address challenges that arose from local communities, such as creating better employment opportunities and strengthening partnerships with traditional leaders.  Members also noted that it seemed Richards Bay would be one of the growth points within South Africa in the future. Government was planning to build Special Economic Zones (SEZ) in the area, so RBM would be working with the provincial government in an attempt to align its manufacturing plans with the government’s SEZ.
 

Meeting report

Opening Remarks
The Chairperson welcomed all the Members present and invited other attendees to introduce themselves. He announced that the team from the South African National Energy Development Institute (SANEDI), which was supposed to have briefed the Committee on its overall performance on research and development, had been unable to make it to the meeting.

The Chairperson introduced Mr Mpho Mothoa, the new Managing Director at Richards Bay Minerals (RBM) to the Committee. His appointment had been a positive move by RBM because in the past, all managing directors had been foreign nationals.  
He also introduced Ms Fundi Dlamini, General Manager: Communities and Corporate Relations, at RBM.  He said the documents handed out by RBM would not be discussed; they would be discussed only in a formal meeting, which still needed to be scheduled.  The appointment of the new managing director was one of which the Committee should be proud, due to the pressure the Committee Members had put on RBM to make a local appointment.

Briefing by Richards Bay Minerals
Mr Mothoa thanked the Committee Members for giving the RBM the opportunity to meet and brief the Committee on the progress the organisation has made thus far. He informed Members that he was delighted to head RBM as the new managing director. Transformation was an important element within RBM.  One of the challenges which faced RBM was that the Richards Bay area was surrounded by poor communities, such as Mkhwanazi and Dube.   The Sokhulu area, where residents were demanding better employment opportunities, had been experiencing great challenges.

The mining industry was currently also facing challenges of its own, such as high input costs, which had increased substantially over the years. These were challenges which were outside of anyone’s control. The impacts of the global financial crises of 2008/9 were still being felt, especially on the currencies. Although it was a challenging time for the mining industry, RBM had put together initiatives to try and tackle these challenges head on.   Local economic development was a major concern. There had also been a rise in sabotage, with residents in local communities making it a mission to steal copper cables. The mining area was very open, and it would be difficult to fence it in. Incidents of violence had also been observed.  These complaints had been directed to the provincial authority and the South African Police Services (SAPS) in the area, both of which had been of great assistance.

Ms Dlamini said RBM had taken a good turn towards embracing transformation.   Not only were there females as part of the executive management, but the managing director was a South African for the very first time.  RBM had had a good relationship with the Committee in its oversight work and in addressing issues of transformation and other matters of interest within communities.  RBM was receiving considerable support from the members of the Executive Council for Economic Development and Tourism in the province, especially in matters relating to engaging stakeholders. RBM was also working with the Ithala Development Finance Corporation Limited to establish whether they could build an industrial area which would support the mines and the province as a whole.

Discussion
Ms B Abrahams (DA, Gauteng) said RBM needed to find ways of creating employment opportunities for residents of local communities, so that copper theft would not be such a serious area of concern.

Mr Mothoa agreed that the root of the cable theft was poverty.  RBM was busy working towards creating an environment which would enable the youth in these communities to earn “bread and butter” for themselves. The economic development opportunities on which RBM was focusing, were around manufacturing. Its criteria made it clear that the manufacturing needed to happen in these rural and underdeveloped communities.   So far, around 50 different opportunities had been identified, and of these, four were already under way.   RBM was certain that through these initiatives, local spending would be drastically increased and improved. R3 billion would be a good start.  RBM was also looking to build an industrial park.  RBM had a R5 billion plan for the development of the Mkhwanazi community and the surrounding areas, in order to extend the life of the mine beyond 2040.   Despite the challenges, such as the global crisis and low demand in the mining sector, RBM was busy exploring new opportunities to strengthen the business.

Mr K Sinclair (COPE, Northern Cape) said it seemed Richards Bay would be one of the growth points within South Africa in the future. Government was also planning to erect special economic zones in the area, so an RBM industrial park would lay the foundation for that. As for transformation, challenges from the communities were a manifestation of their frustrations.  What plans did RBM have for filtering down the wealth from mining?  What plans did RBM have for building partnerships with traditional leaders in these communities?

Ms E van Lingen (DA, Eastern Cape) asked to what extent gas from Mozambique would be used.

Mr Mothoa said RBM would definitely be working with the provincial government in an attempt to align its manufacturing plans with the government’s special economic zones. On the question on transformation, he said that historically RBM had spent a lot of money on education in rural communities, but this had proved to be not enough.  Economic development and establishing a local supply capacity would be a starting point for empowering residents in these local communities. It was also necessary to educate residents on the impacts of RBM on the local economy.  Black Economic Empowerment would also be monitored so that more dividends were trickled down to local communities.  RBM had built strong partnerships with traditional leaders, and most had seen the mutual benefits of such partnerships.  The Inkosi of the Sokhulu had been of great support, through the traditional council.  Regarding the use of gas from Mozambique, he said RBM was experiencing an energy challenge, and was planning to spend R5 billion on building a new mining concentrate, and gas from Mozambique was one of the options which they were pursuing.

Ms Van Lingen asked what kind of technology RBM was considering.

Mr Mothoa replied that there were three potential suppliers available to generate power for RBM using gas.  One supplier was from the United States. A power supply from Sasol would also be explored if it seemed like a viable option.

The Chairperson thanked everyone for the discussion, and welcomed Mr Mothoa as the new managing director of RBM once more.  The meeting with SANEDI would have to be rescheduled -- the Chief Executive Officer would be contacted, as the missed meeting was a cause of wasted expenditure.

The meeting was adjourned.
 

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