Mine Health and Safety Council & Petroleum Agency South Africa 2013/14 Strategic Plans

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Mineral Resources and Energy

10 September 2013
Chairperson: Ms F Bikani (ANC)
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Meeting Summary

The Mining Health and Safety Council (MHSC) briefed the Committee on its Strategic Plan. The briefing touched on the MHSC’s mandate, it’s vision and mission, goals, 2013 milestones, initiatives and research projects, and finances and approved budget. The MHSC was committed to the growth of capacity and skills to deliver on their mandate, achieving a zero rate of fatalities and injuries, the elimination of silicosis, and the elimination of Noise Induced Hearing Loss.

In discussion, safety of women in mining caused considerable interest. There were questions about implementation of summit plans; minimum standards; the state of mine hospitals, and the balance scorecard. It was asked if the Association of Mineworkers and Construction Union was recognised. Members enquired about short and long term research objectives. Airborne pollutants caused concern. Members wanted to know if rock falls were still occurring, and whether the use of nets were widespread. There were questions about sustainability. The Chairperson commended the Council for honouring their commitments.

The Petroleum Agency South Africa (PASA) briefed the Committee on their Corporate plan, which talked to their strategic role, functions, petroleum exploration and production activities, strategy, staffing requirements, finances and challenges. PASA explained to the Committee that they expected oil to be found in deep water off the South African Coast. PASA had applied to the United Nations in 2009 for an extension of the 200 nautical mile offshore limit around South Africa and the Prince Edward Isles. PASA promoted to exploit coal bed methane gas. There was a moratorium on shale gas. There was a dearth of petroleum skills in the country. A trust for study had been created with the industry. Challenges were future funding; the Mining and Petroleum Resource Development Act (MPRDA) amendment bill; capacity, and the location of the Agency with both The Department of Mineral Resources and the Department of Energy.

In discussion, the Committee was interested in the dissolution of the PASA board, the implications for PASA of the coming MPRDA amendment bill, and the PASA location. The Chairperson asked for a report about directions taken in terms of the MPRDA Amendment Bill. Public hearings were starting the following Wednesday. There were further questions about the size of the Ibhubezi operation; coalbed methane on the Springbok flats; Karoo shale gas; the feasibility of deep drilling for oil; fracking; monitoring of compliance for offshore drilling; the Karoo licencing round; the upstream training trust; and options for funding if PASA would continue as an independent entity. The Committee noted that PASA was going to run out of funding in 2017. The Chairperson asked that the Portfolio Committee be informed as soon as possible when there was clarity about the current uncertainties regarding PASA’s location and future. A briefing on the matter by the Department of Mineral Resources was needed.

Meeting report

Briefing by the Mine Health and Safety Council on the 2013/14 to 2017/18 Strategic Plan
Mr Thabo Dube, Chief Executive Officer of the Mine Health and Safety Council (MHSC), stated that the MHSC goal was zero rate of fatalities and injuries, and knowledge leadership. Other goals included the elimination of silicosis and the elimination of noise induced hearing loss. Benchmark countries were Australia and the USA. The briefing touched on the MHSC’s mandate, it’s vision and mission, goals, 2013 milestones, initiatives and research projects, and finances and approved budget.

The MHSC depended upon cooperation between the State, labour and employers. Legislation, regulations, guidelines and standards were supplied by the Mining Regulations Advisory Committee (MRAC). The MHSC adopted a customer and stakeholder perspective to provide advice reports that influenced mining health and safety performance. From an internal business perspective, the objective was to implement summit agreements. The Culture Transformation Framework (CTF) was being given prominence and promoted.

The MHSC had completed research on analogue versus digital X-rays and protective personal equipment for women in mining. There was a new project dedicated to safety and security for women in mining. There were research projects on the elimination of rock fall risk. Other research initiatives were designs to control mud rushes and airborne pollutants, especially diesel.

Risk management and compliance received attention, as well as financial sustainability and growth towards adequate capacity and skills to deliver on the mandate. The business plan captured targets and initiatives linked to corporate strategy. There were monthly scorecard updates, quarterly reports, and an internal management system. 

Mr H Schmidt (DA) remarked that the MHSC was in fact an academic institution, which had to rely on others for practical implementation. He asked how items like research and administration were differentiated from each other in the budget, and what was meant by research expenditure. It seemed to him that all categories had to do with staff.

Mr David Msiza, Council Chairperson, replied that The MHSC indeed only coordinated research, but it was moving into promotion as well. Capacity was being looked at, as personnel were needed to go into the regions. It had to be seen to that research was implemented.

Mr J Lorimer (DA) asked what had been achieved with regard to safety for women. He asked what was working, and about direction that research was headed in.

Mr Msiza replied that there was effective engagement with the sector about the safety of women. Initially it was a matter of not allowing women to walk alone underground. Personal Protective Equipment (PPE) for women was a problem for women. Research conducted underground would provide guidance. There were 50000 women in the sector.

Ms N Ngele (ANC) asked if anything had been done about the safety of women, or whether it was just starting.

Mr Msiza replied that things were only starting. Decisions to promote women’s safety had been taken in the previous year’s annual report. Previously the focus had only been on preventing sexual harassment. Sector policies had to be reviewed. There had to be measures to prevent murder.

Mr J Moepeng (ANC) referred to the development of the summit action plan (slide 10). He asked when the existing action plan would be reviewed.

Mr Dube replied that there was a summit every two years, during which the state of affairs was reviewed, to see what had to be done. Milestones were developed after interaction with stakeholders, and were the outcome of the summit action plan.

Mr Moepeng asked about minimum standards related to the promotion of health and safety.

Mr Moepeng remarked that the budget had to speak to key objectives. He asked where goals fitted into the budget.

The Chairperson asked about the state of hospitals. There were nice buildings, but they did not seem functional. She asked about the monitoring role of the Council. She asked if it might be a Department of Health responsibility. Hospitals were not being used effectively. She asked if mine health would have an impact on the coming bill related to the Mineral and Petroleum Resource Development Act (MPDRA).

Mr Msiza replied that Audit 2 had been performed two years before, to look at TB and HIV, and living conditions. The audit included a monitoring of hospitals, with regard to staffing and treatment. It was advised at the 2011 Summit Committee that the community had to have access to mining hospitals. The terms of the MPDRA had to be defined concerning health. There had to be a review of the Mine Health and Safety Act in terms of harm prevention mechanisms.

The Chairperson asked about the MHSC advisory board. She asked about the structure of the MHSC, which seemed to be composed of the State, employers and employees. What was the position of AMCU union, and the relation between them and the MHSC?

Mr Msiza replied that the board had agreed to recognise AMCU, and were working with them.

The Chairperson asked if there were discussions with AMCU.

Mr Msiza replied that there were.

The Chairperson asked how the balance scorecard was used, and whether it was effective.

Mr Dube replied that there was a focus on satisfaction of customers (stakeholders). Poor performance in that area was a leading indicator of the relevance of the MHSC. Targets were looked at. There were reviews of occupational health and safety, and legal advice. Promotion followed an approval by the Minister.

The Chairperson asked that the Council provide clarity about short and long term research projects, and to provide time frames and information about budgetary issues. There had to be clarity about how much had been spent, and when projects would be completed.

Mr Navin Singh, Chief Director of Research, replied that expenditure on short and long-term research could be provided. Projects were funded on an annual basis, once there was assurance about project progress. Money was tracked to milestones.

Mr David Molopo, CFO, added that research expenditure was not related to administration. There was a direct link to the four pillars of the balance scorecard. The question asked was what resources were needed to drive strategic objectives. Administration expenses related to rental, electricity and water.

The Chairperson remarked that there were no standards for health risks related to the use of diesel. She asked about progress with standards.

Ms Nkhesani Masekoa, MOHP Director, replied that the Council had not yet acted on diesel. It could have serious consequences leading to respiratory and obstructive pulmonary diseases like asthma. The Safety in Mines Research Advisory Committee (SIMRAC) had to measure the baseline, as it was not yet known what the consequences of diesel emissions were. It had to be checked against possible diseases. The minimal exposure limit had to be quantified.

Mr Lorimer asked if nets for rock falls had spread to other companies.

Ms Ngele asked if rock falls still happened.

Mr Msiza replied that it still occurred, but the frequency was coming down. The coal sector had been free of rock falls for a year. Research needs had to be identified. Zero harm had to be reached. There were other hazards like mud rushes. The law had to be strengthened, and there had to be leading practice.

The Chairperson asked for more detail about key projects.

Mr Singh replied that minimum standards for cultural transformation had been set at the 2011 summit. Criteria had been set for each pillar. It had to be articulated to the sector what they had to do. There was first of all a gap analysis needed to identify challenges. The cultural advisory committee would do a survey. It had to be seen how effective cultural transformation was.

Mr Moepeng advised that minimum standards had to be part of the document. There had to be a review, and the cost implications of such a review had to be looked at. He asked about the link between original and new milestones.

The Chairperson remarked that the Committee wanted to see how things were done. Limits of targets had to be established. Financial sustainability had to be ensured.

The Chairperson commended the Council for keeping to what they said they would do.

Petroleum Agency South Africa Corporate Plan for 2013/14
Remarks from the Chairperson

The Chairperson asked about the dissolution of the Petroleum Agency of South Africa (PASA) board.

Mr Msiza said that there was interaction with PASA and the Department of Energy on the matter.

Ms Ngele remarked that she was suspicious. It looked as if something was being hidden in the pipeline.

The Chairperson asked until when PASA would operate under that name.

Mr Lorimer remarked that there could be a positive outcome, with minds changed about the future of PASA.

The Chairperson asked for a report about directions taken in terms of the MPRDA Amendment Bill. Public hearings were starting the following Wednesday.

Briefing by PASA Chief Executive Officer on the Corporate Plan for 2013/14
Ms Ntsiki Van Averbeke, Acting CEO, said that PASA expected that oil would be found in deep water off the South African coast. PASA promoted to exploit coalbed methane. There was a focus on resource evaluation. PASA had applied to the United Nations in 2009 to extend the 200 nautical mile offshore limit for South Africa, and also around the Prince Edward Isles that belong to the country.

There was a moratorium on shale gas. PASA’s location was currently uncertain, as the agency also reported to the Department of Energy. Staff members were uncertain about their future. There was a dearth of petroleum skills in South Africa, as resources were geared more towards mining. Industry contributed to a trust for petroleum studies. It was not written in law, but negotiated with the industry.

PASA promoted onshore and offshore exploration for and production of petroleum, and received applications for permits, exploration rights and production rights. PASA depended on cooperation between government, explorers, internal stakeholders and citizens.

Ms Olivia Mans, Chief Financial Officer, took the Portfolio Committee through an income statement and cash flows. The income statement showed that PASA forecast a R29.2 million net loss for 2013, which would escalate to a R74.4 million net loss in 2014. A cash flow statement showed a closing cash balance of R309.8 million for 2013, a balance of R235.5 million in 2014, R138.4 million in 2015, and R18.5 million in 2016. 

Ms Van Averbeke concluded that challenges faced were future funding; the impact of the MPRDA draft amendment bill; capacity, and uncertainty about PASA location.

The Chairperson asked that PASA’s role in the MPRDA be explained, and their relation to Petroleum South Africa. Areas in the Bill that affected PASA had to be identified, as well as the role of minerals and petroleum in the MPRDA.

Ms Van Averbeke replied that both PASA and Petroleum SA reported to central funding. PASA had the role of licenser.

Mr Petrus Fusi, Chairperson, added that according to the Bill, the agency would be replaced with the regional manager.

Mr Lorimer asked how big Ibhubesi was, and how close it was to the production of coalbed methane.

Ms Van Averbeke replied that Ibhubesi was to provide reserves. It was not yet licensed. Reserves could increase. Forest Oil in Houston owned it.

The Chairperson noted that licences applied for were exploration rights.

Mr Lorimer asked about coalbed methane on the Springbok flats.

Ms Van Averbeke replied that Anglo American had run a pilot study for three years, to determine the amount of coalbed gas. There were 10 trillion cubic feet of coalbed gas on the Springbok flats.

Mr Lorimer referred to the downscaling of Karoo shale gas, and how the assessment of resources could be focused on. He asked about access to prospecting data.

Ms Van Averbeke responded that in terms of technically recoverable shale resources, South Africa had gone down from number five to number eight on the world rankings. What was looked at was the volume of natural gas that could be recovered with existing resources. Assessment of resources interpreted seismic and magnetic data.

Mr Lorimer asked who paid for the survey of Discovery Ridge.

Ms Van Averbeke replied that surveying was done by a French vessel. Regulations were being drafted.

Mr Lorimer asked if Canadian national resources would be able to dig deep enough for oil.

Ms Van Averbeke replied that there was a commitment to drill deep enough for the oil window.

Mr Lorimer asked if drilling was eminent.

Ms Van Averbeke replied that drilling would start in November.

Mr Lorimer remarked that PASA was on the fracking task team. He asked about proposals for amendments to regulations.

Mr Lorimer asked how compliance was monitored, especially of off-shore drilling.

Ms Lindiwe Mekwe, General Manager, Regulation, replied that compliance was monitored, it was checked whether rights had been granted. There were inspections, and monthly, quarterly and annual reports.

Mr Lorimer asked about the impact on human capital due to PASA location uncertainty.

Ms Van Averbeke replied that a geologist had been lost, and a manager in frontier geology in October. The Council was unable to answer retrenchment questions.

Mr Lorimer asked when the Karoo licence round would begin.

Ms Van Averbeke replied that the Council had applied for a moratorium to deal with applications.

Mr Lorimer asked about the upstream training trust.

Ms Van Averbeke replied that the training trust was negotiated by the agency with explorers. There was a lack of petroleum engineers.

Mr Lorimer asked if the trust had yielded results.

Ms Van Averbeke replied that interns had been appointed. There were graduates from the University of Cape Town and the University of Western Cape. The industry paid for studies.

Mr Lorimer asked about options for funding, if PASA were to continue as an independent entity.

Ms Van Averbeke replied that an agency had been established to get money from the National Treasury. PASA was fighting with National Treasury for funding.

The Chairperson remarked that the Treasury prioritised differently.

Mr Fusi responded that the ball was in the court of the Treasury. There had to be enabling legislation for funding. There was no Act to guide the Treasury.

Mr Lorimer asked when PASA would run out of funds.

Ms Mans replied that it would be in 2017.

Mr Msiza advised that PASA had to engage with shareholders. These shareholders had to address the Portfolio Committee.

The Chairperson concluded that the position of PASA was in limbo. There would have to be a follow up to MPRDA issues looked at. The roles of petroleum and minerals in terms of the Act, had to be looked at. The DMR should let the Committee know when they could brief Members about the uncertainties.

The Chairperson adjourned the meeting.


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