Council for Geoscience (CGS) on the 2012/2013 Annual Report briefing

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Mineral Resources and Energy

26 February 2014
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Meeting Summary

Both Mintek and the Council for Geoscience presented their annual reports to the Committee.
During the discussion on the Mintek presentation, the DA member was primarily concerned about turning a profit on all of Mintek's initiatives. On the other hand, the Chairperson was concerned whether Mintek was helping the unemployment issues the country is facing.  The issue of Acid Mine Drainage and atomizing plants were discussed.  Mintek has agreements with several organizations, both in South Africa and internationally, and leads the world in rare earth mining. Additionally they also have one of the most environmentally friendly procedures, along with biotechnical methods, which allow the extraction of elements needed for pharmaceuticals, something which no other country can do. Mintek has an intellectual property agreement with two companies which allows the market for their techniques to be controlled. The atomizing plant is still in the testing stage. Once the decision to use it has been made, it would take five years to build. These plants would allow platinum to be mined at a profit, as currently it is made with a loss.  Mintek is also working to create a technology that would allow for deeper gold mining, where lifting anything up to the surface requires too much electricity to make the mining worthwhile -- especially considering Mintek wants to mine at depths of 12 km.  The Chairperson was mostly concerned with having Mintek assisting those who have completed their university degrees but do not have employment.  Mintek did not agree, as they did not see it as their role to solve unemployment issues.

The Council for Geoscience had had some issues regarding funding and communication with other entities, including Mintek. The funding issues were in respect of the Mineral and Petroleum Resources Development Amendment Bill. The discussion consisted mainly of addressing the shortcomings in the communication process. The allocation of documents, such as records and reports, had not been happening. The Chairperson thought it would be easier for the Council simply to absorb the entities that were not cooperating, but the Council responded that this was not feasible because they were already underfunded.

Towards the end of the meeting, the Council had told the Committee that there was efficient and effective communication and collaboration between them and Mintek.   Mintek completely disagreed, saying that they were uncomfortable with working with the Council and had written the Director-General of Mineral Resources about the issue, but that it had not been addressed. Other than these ambiguous remarks, however, details were not given.
The comments regarding funding were addressed harshly by the Chairperson. The Chairperson assumed the Council had someone from the Treasury looking into the matter, but this was not so.  She blamed their lack of funding on their failure to have the issue addressed.

Meeting report

The Chairperson opened the meeting by addressing the issue of completing a Bill on the diamond trade, and a regulation which was dependent on approval from the Speaker.   The Committee would need to set aside alternative days from the Committee’s already scheduled meetings, in order to address the Bill.

Briefing by Mintek
The Mintek representatives gave their presentation. The PowerPoint version is attached to this report and is accessible on the PMG website.

Mr Abiel Mngumezulu, President and CEO of Mintek, indicated that the company’s vacant positions were in the process of being filled.  Income trends were promising, as they had not been hit heavily by the global economic crisis. He was proud of their audit opinion, which was mostly unqualified.  Mintek had cut the number of full-time undergraduate bursars, but had increased the part-time bursars.

Mr Alan McKenzie, General Manager: Technology, said they would be running their Bay 2 Atomising Plant, operated by Anglo American Platinum, for two years to prove the technology.  Another of their initiatives was a water treatment system.  Acid Mine Drainage (AMD), in conjunction with Veolia, would promote environmentally friendly mining techniques.  Platinum production was not turning a profit, but their new technology would allow for a more efficient means of production.

Dr Makhapa Makhafola, General Manager: Research and Development, Mintek, described another technology developed by Mintek.  This was a malaria testing kit which required a small blood sample.

Mr J Lorimer (DA) asked how Mintek was addressing the prospect of declining international revenues. Would the Committee see the majority of Mintek’s income coming from local sources?  Regarding the atomizing plant, had Mintek briefed their technicians on how to run it, and would the plant make money? Is any other company mining rare earth in South Africa, now that the prices are recovering?  Will AMD make money? Besides the company, Jubilee, who else will be using this technology? The biotechnology seems interesting -- will nine countries be using it?  Do we make money through being a world leader in biotechnology? He concluded by asking how the malaria test kit worked.

Mr McKenzie said that demonstration atomizing plants were used to test the equipment and train how to maintain them. He said that their viability would be determined after two years.

The Chairperson asked what Anglo American’s role was, and if there were any exclusivity issues.

Mr McKenzie answered that the agreement with Anglo American would end in March, and they would determine what to do after that.   They could not sign anything till they were in compliance, and decisions would be made at the end of March.

The Chairperson asked about the benefit from this approach.

Mr McKenzie answered that the benefit was that platinum had been produced at a loss, and this initiative would solve that.   Rare earth was not being mined anywhere in South Africa, and the projects were quite small -- it cost R1bn to set up a refinery. However, the mine would not cost that much, as deposits would be sent to a central location, the refinery.

Mr Lorimer asked if Mintek was in talks with these other companies.

Mr McKenzie answered that they were in talks with all the respective companies, and that many had already begun sending materials.

The Chairperson asked if this was related to the rehabilitation of mines.

Mr McKenzie replied that in regards to rare earth, this was not the case, because there were no rare earth mines until recently. He believed that AMD was the cheapest option, and Mintek was in the final stage of determining if it would be the method they would use. They wanted to apply these concepts to other mines around the world.  South Africa wanted to use it for coal mining.

Mr Lorimer when it would be complete.

Mr McKenzie responded that the point of the pilot plant was to prove that it was economical.

Mr Lorimer asked where the pilot plant would be located.

Mr McKenzie answered that it was at a Gold One site, using AMD that had been pumped out of the ground.

Mr Lorimer asked how toxic the end product was.

Mr McKenzie said that the end product would produce drinkable water, but it was not the case in all situations, which was a problem with comparing technologies. If you wanted to have water that could be environmentally friendly, there were quite a few technologies Mintek had already.  Getting to drinking water was still being developed, however.

The Chairperson asked if this would address the illegal mining and gold settlements issues.

Mr McKenzie replied that this was not the case, as it had to do with pumping water out of old mines, and had no connection with rivers.

The Chairperson challenged him, asking again if it had anything to do with rivers.

Mr McKenzie replied that they needed to address the legal mines first.

The Chairperson stated that illegal mines needed to be dealt with as well.

Mr McKenzie said that mercury was an element that needed to be dealt with.

Mr Lorimer asked if the AMD water would be more toxic.

Mr McKenzie replied that Mintek was not an implementation company.   A plant would take five years to become operational. They were currently receiving payments from two companies.  Due to agreements, no one could use this technology for three years, apart from these companies.  This prevented others from entering the market.

Dr Makhafola explained the malaria technology, which was similar to testing glucose levels for diabetes.

Mr Peter Craven, General Manager: Business Development, Mintek, stated that the recent biotechnology they were inventing will allow biological treatment to process minerals in order to extract elements needed for pharmaceuticals.  They plan to use bacteria to recover the minerals.  South Africa is the world leader in this practice and is way ahead of the rest of the world. Mintek's opposition companies focus on gold, but Mintek focuses on other minerals.  They are in Mexico and Chile.  People come to South Africa to test their technology. The international revenues were explained in the PowerPoint presentation, which showed commercial revenue peaking in 2009.  The global recession affected Mintek a year after it started, but they did not drop as much as they thought they would.  Test work depended on new project prospects, which were recovering slowly worldwide. Ferrous metallurgy and energy research were among other initiatives that will make electricity more efficient, and this was good for Mintek and for South Africa.

Mr S Mohai (ANC) asked that because gold requires deeper mining and new technologies to be productive, was there any progress to allow deeper mining?  Did the green economy initiatives have some sort of relationship with Strategic Infrastructure Projects (SIPs)?   He asked about the lack of skills for all the discussed projects and the need for highly trained technicians. Did they have any solution? Were they making a large enough contribution to address higher education issues such as training/internships and employment?

Mr Craven responded that in respect of innovations for gold mining, they were in collaboration with AngloGold Ashanti Ltd.  Electricity was the most expensive aspect of mining and a way needed to be found to keep the waste underground, as it takes too much electricity to hoist it to the surface. Crushing techniques and blasting underground are other initiatives Mintek was looking into. Their target depth for mining was 12 km deep.

Mr Mngumezulu said that Mintek had wanted to be a part of SIPs, but were never invited.  Skills training was not their problem. He acknowledged the country’s need for training skilled workers, but stated that they trained only those they were partnering with within higher education and universities, to address what they needed.  They had played a role in helping training with the universities but they were not an organization which was aiming to train. They did apprenticeships, but the people who did them were not guaranteed a job with Mintek.

The Chairperson stressed that Mintek needed to understand the role of skills training in their organization. She asked if Mintek trains only internally, or also externally. Was funding a factor when considering internships and apprenticeships?

Ms Gugu Nyanda, General Manager: Corporate Services, Mintek, replied that Mintek did both internal and external training.

The Chairperson stated that the work Mintek was doing was good, but considering the unemployment numbers in South Africa, it was troubling to see their employment numbers low, and she wanted an explanation for it. She asked if the reason was due to unskilled labour.

Mr Mngumezulu stated that if Mintek took an intern for a year, it was not good if a job could not be offered at the end of the period.  Mintek took interns only if it knows they would be hired, and these interns would be Masters and PhD students, or graduates. He wanted interns to get jobs.

The Chairperson asked if technology-based institutions, who have trained personnel, go through some sort of qualification process.

Mr McKenzie stated that they have a Work Integrated Learnership Programme, where part of the university course requires students to do a year of in-service training.  Mintek does take in those who they do not hire, and that this makes their intake quite large.

The Chairperson said that the bottom line was that they do not get a job.

Mr McKenzie stated that two-thirds of the students taken on do not get a job after the year-long internship.

The Chairperson thanked Mintek for their presentation.

The Chairperson called for a break while the Council of Geoscience prepared their presentation. Once they were ready, she stated that the Committee was pressed for time due to the Minister of Finance’s impending budget speech.

Council of Geoscience Presentation
The Council of Geoscience (CGS) gave their presentation. The PowerPoint presentation is attached above and accessible on the PMG website. The Council was very pressed for time so some of the presentation was not presented.

Ms Khomotso Mthimunye, Director: CGS, apologised for arriving late and gave the opening remarks,.

Mr Mxolisi Kota, CEO of CGS, presented the “Corporate Performance”, “Audited Financial Statements & Multi Year budgets” and “Transformation Trends” sections verbatim.

Mr Gerhard Graham, Executive Manager, presented the various mapping slides.

Ms Mosidi Makgae, Manager: Environmental Geosciences Unit, CGS, presented the “Key Geoscience Projects” section verbatim.

Mr Kota presented “Aim of the MTEF Project” section verbatim.

Mr Graham presented the “South African National Seismograph Network” section verbatim.

Mr Kota presented “School Mapping” section verbatim.

The Chairperson said she had an issue with the report on the Geosciences Act, which had problems with implementation.  There was an indication that there were funding problems.  She wanted an update on the International Organisation for Standardisation (ISO) projects and managers.

Mr Lorimer said that there were funding proposals in the Mineral and Petroleum Resources Development Amendment Bill (MPRDA). He wanted to know how this affected their capacity and how much more funding they would need to fulfill these functions.

Mr H Schmidt (DA) asked if the budget for AMD was enough. He asked about the rehabilitation budget as well. He wondered if their regional cooperation was unlimited, and whether the MPRDA bill was environmentally friendly.

Mr Mohai asked if there were any meaningful relationships with Brazil, Russia, India or China regarding scientific exchanges.

Ms Mthimunye said that appointments were made by the Minister of Mineral Resources, and that they did not have an answer for the Committee now.   They would discuss this with their chairperson and follow up with the Committee.

The Chairperson asked if she was a part of that process.

Ms Mthimunye stated that she was not, and that it was the Minister's sole responsibility to make appointments.

The Chairperson asked for clarification.

Ms Mthimunye stated that there was a request for nominations, and then the Minister made appointments. The board was not involved in this process.

Mr Graham stated that when the MPRDA was proclaimed, they had discussed with the Department of Mineral Resources the formulation of a budget. The Department had called on the CGS to play a more intense role in the curation of information from companies. Seismological information had to be considered as well. They had attempted to get more funding from Treasury, but had been unsuccessful.

The Chairperson asked how they could have funding issues when they had partnerships with other organisations.

Mr Kota responded that they were in constant communication with their partners and with the Department, so they could understand what the situation was.

The Chairperson asked if there was a communication problem, or whether this was an aid issue.

Mr Kota replied that they were in communication, but that they had reached the stage where they would address that issue.

The Chairperson asked if the CGS could absorb any of their partnerships.

Ms Mthimunye said they had a meeting tomorrow where they would address these issues.

The Chairperson asked for an elaboration.

Ms Mthimunye stated that if there was insufficient funding to implement the Act, what could happen if another entity was absorbed?

The Chairperson asked when the Committee could receive a report on this issue.

Mr Kota said that ISO certification was not happening because they were having trouble finding an experienced person to drive the project. They had appointed a person who would be putting it back together and monitoring it.  With regard to regional cooperation, the CGS was the permanent secretariat for the Organization for African Geological Surveys. There were a number of projects which they had been involved with historically, two of which were currently being run.  With regard to the relationship with the BRICS countries, they were currently in contact with China.  Two or three years ago they had gone to Russia.  China was the largest and most represented outside the Americas in the International Geological Congress.

The Chairperson asked what the costs of rehabilitating the mines were, and what funding they needed.

Mr Leonard Matsepe, CFO of CGS, stated that AMD initiatives were in need of funding and that it would take 100 years with the current funding and budget to complete. He stressed the need for strategic funding.

The Chairperson stated that the Department had an overall budget.  Mintek did research, then the Council did its part. She asked if the there was collaboration between Mintek and the Council.

Mr Kota replied that they did work with Mintek.

Mr Mngumezulu, without using the microphone or permission from the Chairperson, said there had been no collaboration.

The Chairperson asked Mintek to speak.

Mr Mngumezulu said that it was not working the way it should be working. He had written to the Director-General because of the “uncomfortability” he had with the whole situation, and how things are not working out the way they were set up to.

The Chairperson asked how long the current budget was supposed to last.

Mr Mngumezulu said that it lasted for three years.

The Chairperson asked who decided on the distribution of funds.

Mr Mngumezulu stated that he thought it was the Treasury.

The Chairperson said that was only one person, who was not part of their board.  This was an issue Mintek needed to address. She said that mapping copies had been distributed to both the ANC and DA.

The Chairperson said that if there were funding issues within the Act, they should speak to the Treasury so they could resolve the issues before the next meeting.

The meeting was adjourned.


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