The Portfolio Committee on Mineral Resources met with its stakeholders to receive input on the challenges and opportunities faced by the mining industry.
The Association of Mineworkers and Construction Union (AMCU) said the mining sector was still grappling with the triple challenges of inequality, poverty and unemployment even though mineral deposits were discovered in the second half of the 19th century. Some of the main challenges faced by the sector were that of the migrant labor system, compounded labor, fragmentation and the informal settlements (hostels). One improvement in the sector however was that of reduced fatalities which were at an average of 690 to 1000 per year before 1994 but were currently standing at an average of 116 for the current year. AMCU however had a target of reducing this average to zero by 2024. Other challenges within the sector were volatile commodity prices, labor unrest as a result of low salaries and the wage inequality, lack of community development and social upliftment within mining communities, the lack of implementation of social and labour plans and electricity pricing and power fluctuations. Poor transformation within the mining industry was also still a serious concern with very few people benefiting from Black Economic Empowerment (BEE) deals and mining companies failing to meet Broad Based Socio-Economic Charter targets of 26% ownership by historically disadvantaged South Africans. This could be addressed by changing the BEE model to employee profit sharing schemes and community ownership programs.
Some of the questions raised by Members were: How serious was AMCU about picking up some Amplats mines? What was AMCU’s take on union accountability; does AMCU support freedom of association? What were AMCU’s views on strike balloting and interest mediation? From where would funding for employee profit shareholder schemes come? How would the zero percent target for fatalities be achieved? How should illegal mining be addressed? How many permanent terms were within AMCU? How was dual membership being addressed?
Solidarity argued that some of the possible solutions to increased worker and community frustrations were compliance with social and labour plans, the implementation of effective local government infrastructure development programmes and improving technical training and Further Education and Training (FET) college recruitment. A more favorable migrant labour system needed to be put in place. Investor confidence in the mining sector needed to be improved. With regard to opportunities within the sector, there needed to be favorable employment opportunities for women and disabled people. South Africa was a world leader when it came to mineral reserves and the country possessed world-class skills and technology. There was also an abundance of skilled and unskilled labour.
Members asked Solidarity what prevented migrant labourers from going home more often? Was it the shift system, if so what was stopping the shift system from changing? How many members were part of Solidarity and what was the Committee comprised of? Was there enough being done at the home base of migrant laborers (70% of migrant laborers were from the Eastern Cape) to ensure that they are able to move from unskilled labour to skilled labor?
The National Union of Mineworkers (NUM) focused on the Minerals and Petroleum Resources Development Act (MPRDA) of 2002, social and labour plans and the Broad Based Socio-Economic Empowerment Charter for the South African Mining and Minerals Industry. Captains of industry needed to spearhead the process of transformation, with executive decisions, backed by the necessary financial support. Social and labour plans implementation should result in skills development for employees, developed mine host communities, and mining operations significantly contributing to local economic development through procurement and enterprise development. Some of the challenges with the implementation of social and labour plans included:
• There was no direct link between the Mine Works Programme, social and labour plans (SLP) commitments and Industrial Development Plans;
• Non compliance was not linked to heavy penalties;
• Lack of coordinated monitoring and evaluation programmes;
• Section 101 was not adhered to in the appointment of contractors.
Members asked what was NUM’s take on union ownership of shares in the mining sector? Was it not time that the state took control of mineral resources? What was the role of political leadership in the mining sector and how did such interactions interfere with the role of the state in the sector? How was NUM dealing with the issue of transfer pricing?
The Chamber of Mines said the key characteristics of mining were that it was a high risk industry with long lead times from exploration through to mine development and ultimately closure. It was very capital intensive and a large portion of capital was spent on the development of mines. The industry was geographically captured and was also labour intensive. Therefore in order to encourage investment in mining, policies needed to recognize the unique characteristics of mining and help in the reduction of risks in the investment in long term projects. In order to grow the industry, there needed to be government-industry-labour partnerships and joint problem solving.
The Chamber was the voice of the business component of the mining sector. It had 72 members and represented about 90% of the value of mining production in South Africa. Some of the broad strategic goals of the Chamber were to resolve key priority issues for the industry, build relationships with stakeholders, deal more effectively with legacies of the past and develop a positive contribution model to the country. Some of the key issues on the radar screen were around transformation, sustainable development, economic growth, safety and skills development.
Some of the questions raised by Members were: How much was being spent on white capital, how much were the bosses taking home? Was there a plan to ensure that Chamber of Mines’ members complied with rehabilitation rather than leaving these responsibilities to the state? How many ex miners have been compensated as a result of injuries sustained at work, death or illnesses contracted at work? How was the Chamber ensuring that the mining companies got involved in building capacity and ensuring that skills development took place in the sector? How were skills being developed from tertiary education level right through to the mining sector? What attempts were being made to compensate sufferers of silicosis?
The South African Mining Development Association (SAMDA) was started in 2000 as the Junior Mining Initiative by South African junior and black economic empowerment (BEE) mining investors. While the founders' initial impetus was to present a united response to government on the Minerals Bill, the need for a strong, permanent lobby, representative of the interests of junior mining companies soon became apparent. In the research conducted by the MECP on the junior mining sector the following definition of junior mining companies was concluded:
• Junior Miners are companies with an asset base of R50 million to R7 billion
• Above R7 billion are the majors
• Below R50 million are small scale miners.
SAMDA's vision was to be the vehicle for the development of a vibrant and sustainable junior mining sector which contributes towards the growth and prosperity of the mining industry. The Charter required a minimum effective participation of 26% by historically disadvantaged South Africans (HDSA) which mining companies needed to have complied with by 1 May 2014. The current ownership structure was a neo-colonialist ownership model that perpetuates ownership of the country’s resources and mines by a foreign investor monopoly. Many of the Broad Based Black Economic Empowerment investors have not yet realised 26% unencumbered net value by the 1 May 2014 as prescribed by the Mining Charter. Transfer pricing was again highlighted as a serious hindrance to transformation within the mining sector. Serious punitive measures needed to be employed. The mining industry was behind in producing active HDSA executives compared to State Owned Companies, such as Chief Executive Officers, Chief Operating Officers, Managing Directors, Finance Directors. There was also a lack in mining community development through social and labour plans. The majority of the mines were developed in underdeveloped rural areas where communities continue to be poor while their mineral wealth was being explored, exploited and exported. Due to time constraints, questions to SAMDA would be forwarded in writing.
Chairperson’s opening remarks
The Chairperson said the Committee had agreed to have an interactive session with all primary stakeholders within the mineral resources industry in an attempt to improve all working relations going forward. He explained that the Committee would be attending a strategic planning workshop soon and it was therefore important that Members interact with stakeholders prior to the workshop.
Association of Mineworkers and Construction Union (AMCU) submission
Mr Jimmy Gama, National Treasurer, AMCU, thanked the Committee for the invitation. He explained that the organization was not given sufficient time to prepare for the submission, however the submission forwarded to Members was the best AMCU could have done in the given timeframe.
Mr Thulani Khumalo, Spokesperson, AMCU, explained that the submission would be looking at industry challenges and opportunities over the next 20 years. The mining sector was still grappling with the triple challenges of inequality, poverty and unemployment even though mineral deposits were discovered as long ago as the second half of the 19th century. Some of the main challenges faced by the sector were that of the migrant labor system, compounded labor, fragmentation and informal settlements (hostels). One improvement in the sector however was that of reduced fatalities which were at an average of 690 to 1000 per year before 1994 but were currently standing at an average of 116 for the current year. AMCU however had the target of reducing this average to zero by 2024. Some of the labor relations challenges were the need for freedom of association, volatile industrial relations, and the emergence of AMCU and the poor acceptance of change by employers.
Other challenges within the sector were volatile commodity prices, labor unrest as a result of low salaries and wage inequality, lack of community development and social upliftment within mining communities, the lack of implementation of social and labour plans, electricity pricing and power fluctuations. With regard to retrenchments and job losses, the industry was continually shedding jobs, labour broking therefore needed to be banned. On housing, he said the hostel system was in the process of being abolished and proper residential areas were being developed which would be comprised of single units, family units and flats. These projects would be completed in the next 18 months. Poor transformation within the mining industry was still a serious concern with very few people benefiting from Black Economic Empowerment (BEE) deals and mining companies failing to meet Broad Based Socio-Economic Charter targets of 26% ownership by historically disadvantaged South Africans. This could be addressed by changing the BEE model to employee profit sharing schemes and community ownership programs. The industry also needed to invest in health and safety preventative measures and look into introducing a National Health Insurance (for employees without medical aid). On transfer pricing, he said research indicated that most mining companies had off-shore companies which they sold commodities to at below market prices, to be sold at a profit. Such matters needed to be dealt with under pricing and tax evasion.
Mr Khumalo explained that some of the opportunities which were present within the sector included:
• Beneficiation: developing value adding industries to process mineral commodities within the country
• Diversification: creating new industries to take the fiscus burden from mining
• Regional integration: utilizing regional blocks and trade partners to create regional markets for South African products
• Skills Development: investment in training and development t for just transition and portable skills. This included training and re-skilling mine workers for longevity and employment in the labor market
• Environmental rehabilitation: ensuring that mining companies rehabilitate the environment damaged by mining activity.
In conclusion, Parliament needed to play a developmental rather than a regulatory role in emphasizing the country’s development priorities. The second transition agenda needed to be underpinned by the transformation of the mining industry. There also needed to be more investment in research and innovation.
Mr J Lorimer (DA) appreciated AMCU’s offer to provide the Committee with its research on transfer pricing. According to the submission, Mining Charter targets have not been met; what was this conclusion based on? He agreed with AMCU that BEE has been a disappointing initiative in the mining sector; there needed to be far more involvement of communities in the mining sector. How serious was AMCU about picking up some Amplats mines? On employers being held more accountable, what was AMCU’s take on union accountability? Does AMCU support freedom of association? The platinum strike which had recently ended was a very violent one; what was the extent of union accountability in this regard?
Mr H Schmidt (DA) said that according to the submission, collective bargaining needed to be changed. What were AMCU’s views on strike balloting and interest mediation? Reference was made to social labour plans; how did AMCU plan to discount the current economic environment if mining companies were proved to be non-compliant? AMCU led a strike which lasted for five months, so how could mining companies still be expected to comply with the targets of the Mining Charter?
The Chairperson cautioned Mr Schmidt and asked that Members use the time simply to ask clarity-seeking questions from the stakeholders. The duration of the strike and such matters were not of relevance to the current session. If Members wanted to engage labour specifically on such matters, time would be allocated for those kind of discussions at a later stage. The current session was for stakeholders to assist Members in doing their oversight work.
Mr Schmidt asked about employee profit shareholder schemes; community shareholders were important but from where would the funding come? The submission referred to the substitution of platinum; what was the cause of such commodities not having an impact and what would be the implications of that?
Nkosi Z Mandela (ANC) thanked AMCU for the submission. According to the submission, fatalities for the current year were at an average of 116; what were the specifics? He indicated that post 1993 there were over 600 fatalities and this number has significantly been reduced to 93 fatalities according to a 2013 report, should AMCU not consider this to be a success? According to the submission, there was a target to have zero fatalities in the mining industry by 2024; how would this be achieved seeing that most fatalities were as a result of accidents? How should illegal mining be addressed? With regard to labour unrest, for what were the state resources being utilized, who was using them and how many people have been detained? Reference was also made to political interference in the political unrest and AMCU was asked to clarify this statement and indicate which parties were responsible for the political interference. How many ‘permanent’ terms were within AMCU?
The Chairperson clarified and said AMCU was referring to the employment pattern which was that of the usage of labour broking, ‘temporal’ and ‘permanent temporals’. These were not necessarily within AMCU but within the industry.
Nkosi Mandela said AMCU introduced the term of ‘permanent terms’ therefore in terms of the industry and AMCU itself, how much of the membership was that of ‘permanent’ terms?
Mr J Malema (EFF) asked whether a study had been conducted on permanent terms within the industry; what was the percentage of permanent terms and temporary workers?
Ms M Mafolo (ANC) asked about dual membership which was verified by the Commission for Conciliation, Mediation and Arbitration (CCMA); how did AMCU verify this?
Mr Khumalo thanked Members for the questions and their interaction with the submission. He replied that AMCU would be very happy to share information on transfer pricing with the Committee. On the targets of the Mining Charter which had not been met, he said reference could be made to housing; there were still a lot of informal settlements around the mines and this could be primarily attributed to the closure of the hostel system and the introduction of the “living out allowance”. This meant that instead of workers going to purchase housing, they received an allowance which was incorporated into their salaries and could therefore be used for their pressing needs. Research indicated that the average number of dependents for miners was seven to twelve people. The salaries being earned by mine workers did not meet their immediate needs.
A study was conducted by Patrick Bond on the level of indebtedness of mine workers, especially in the platinum belt. This study indicated that mine workers were heavily indebted to loan sharks who charged exorbitant interest fees. Mine companies have not assisted miners with the process of finding alternative accommodation after the closing down of hostels. Even the cost of rentals in the mining sector was not commensurate with the amount paid as a living out allowance. The issue of housing was therefore just one example of the failure of the Charter. The other target was that of the 26% BEE ownership which many mining companies were still trying to catch up on. A scorecard was supposed to be developed, a proposal by the Chamber of Mines, however it still had not been developed. He also accepted that BEE has actually not benefited employees. On holding AMCU more accountable, he said there were allegations of intimidation. AMCU went on strike in January 2014 with 70 000 people going on strike for five months and none of these members were intimidated to go on strike. People decided to stay on strike voluntarily and when the strike ended, people went back to work. AMCU is a very peaceful organization, made up of people bound by the common will to transform their own lives. On interest bargaining, he said there was an opportunity to deal with the strike but AMCU learned from the Department of Mineral Resources (DMR) that the country did not have enough interest arbitrators. The DMR wanted to fly people in from Canada. Interest arbitration was voluntary and as AMCU they chose not to explore that route because it limited the right to strike. On employee profit sharing schemes, he said there were opportunities for employee share ownership schemes in the mining sector. Employees however were not included in the process of declaring dividends. Share ownership schemes were therefore not sitting well with AMCU.
On the substitution of platinum,
AMCU learned from research that there were other metals which were doing similar work with the metals within South Africa. For example there was a lot of recycling within the platinum sector and this was competing with the platinum which was being mined underground. This was creating various difficulties and challenges. There was therefore a need to further understand these issues. There was a need for an investment in developing new markets so that South Africa’s own products can be sustained; regional integration and the creation of diversified industry were currently at the top of the agenda. Beneficiated products need to be manufactured within the country to cut down on exported products. On the fatalities, he said no death could be justified which was why AMCU was looking to achieve a zero fatalities target by 2024. Even though the primary result of these deaths were accidents, in mine health and safety there were still preventative measures which could be explored. On state resources which have been used to shift the balance of power in labour relations he said the statement was referring to the South African Police Services (SAPS), specifically the Mine Policing Forum in Rustenburg which was set up to identify and arrest AMCU members. A list of complaints has been submitted to the National Economic Development and Labour Council (Nedlac) and to the then Minister of Police, Mr Nathi Mthethwa however nothing has been done. This information could be made available to the Committee. On permanent terms he said in 2010 there were over 4 million people who were employed by labour brokers and most were on rolling contracts of over 12 months. Within AMCU there were also a number of sub-contracted workers however the statistics were not readily available on hand, they would be forwarded to the Committee. On duel membership he said when a member resigned from one union to join another union they forfeit the original membership. At no stage could an employee be a member of two unions at the same time.
The Chairperson asked that AMCU provide insight on how the Committee could improve its interactions with labour.
Mr Gama replied and indicated that it was the first time that AMCU was invited to make a submission to the Committee and to share their views on the conditions of the mining sector, the opportunities and the challenges faced by the sector. He said such interaction were highly valuable for all parties concerned and should therefore not be “one off” engagements. Labour and the Committee should meet time to time to share ideas. On the question on Amplats, he said AMCU was not intending to buy those mines but workers have indicated their interest. However AMCU has not taken any decision to buy the mines on behalf of the workers.
The Chairperson thanked AMCU for their interactions with Members.
Mr Gideon Du Plessis, General Secretary, Solidarity, said some of the possible solutions to the increase in worker and community frustration were; compliance with Social Labour Plans, the implementation of effective local government infrastructure development programmes and improving technical training and Further Education and Training (FET) College recruitments. There also needed to be a more favorable migrant labour system in place.
He argued that in order to improve social wage and increases while increasing productivity and eliminating unprotected strikes there needed to be a decline in the use of contractors and the outsourcing of services and employee reduction also needed to be decreased through natural attrition and automation. With regard to costs he said unreliable electricity supply and the increasing costs of electricity had a negative impact on production, and this would have a knock-on effect on production bonuses, overtime pay and wage increases. These threatened job security. There were also concerns around the impact of possible introduction of the carbon emission tax as these costs would be passed on to employers and would be paid for by employees. With regard to investor confidence he said the image of South Africa’s mining industry needed to improve. There was also a growing lack of in the misunderstanding of South African policies and legislation. The increases in illegal mining activities were also a serious concern.
With regard to the opportunities within the sector he said there needed to be favorable employment opportunities for women and disabled people within the sector. South Africa was a world leader when it came to mineral reserves and the country also possessed world-class skills and technology. There was also an abundance of available skilled and unskilled labour. He concluded that the mining industry was a microcosm of the South African society, and if we find solutions to the mining industry challenges, then we have the blueprint to manage South Africa’s challenges.
Mr Lorimer asked what stopped migrant laborers from going home more often. Was it the shift system, if so what was stopping the shift system from changing?
Mr M Matlala (ANC) asked why Solidarity was always represented by one individual and not a team. He highlighted this as a concern.
The Chairperson interjected and said Mr Matlala’s question was simply an observation. Members should rather ask questions which would assist the Committee in preparation for the coming strategic planning workshop.
Mr Malema asked whether Solidarity had a Committee of members and how many members were part of the organization.
Nkosi Mandela said the Eastern Cape (“the home of legends”) contributed about 70% of labour to the mining industry. It was therefore of interest that Solidarity was speaking about building skills and capacity; there was a tendency of migrant laborers going to areas such as Rustenburg and the platinum belt where economic development took place nothing happened in the places of their origin where these mine workers came from. With regards to capacity and skills training, was there enough being done in the home base of these migrant laborers to ensure that they are able to move from unskilled labour to skilled labour? Secondly, what ought to be the line of thought on ex mine workers benefiting post their work, especially around health. Reference was made to the “one stop shop” which was recently opened in Umthatha”. What other means were in place to look after these ex mine workers?
Mr Du Plessis responded to the question on migrant laborers and what prevented them from going home more regularly, he explained that there were many reasons for this, these included the shift and leave cycles, transport challenges and productivity challenges and various logistical challenges to name a few. Family responsibility leave was between four to five days and workers had long distances to travel and some mine companies did not provide transport. On the question on the Solidarity team, he said Solidarity has all union structures like any other trade union and had a membership of 132 000 people and 31% of this was black. There were a number of Solidarity people giving various submissions throughout Parliament at any given point in time. On the question on development he agreed that there was not much being done in the home base of the mine labour. For ex miners to be looked after he said more can definitely be done in this regard. What Solidarity was fighting for was an increase in the Pension Fund and an increase in retirement age.
National Union of Mineworkers (NUM) submission
Mr Peter Bailey, National Chairperson, NUM thanked the Committee for the invitation. The submission would focus primarily on transformation within the mining sector.
Mr Sidwell Dokolwana said the submission would be centered on the Minerals and Petroleum Resources Development Act (MPRDA) of 2002, social and labour plans and the Broad Based Socio-Economic Empowerment Charter for the South African Mining and Minerals Industry. On the implementation of social and labour plans, he said the mining industry has the necessary legislative frameworks to achieve greater transformation and ensure the development of its employees, mine host communities and labour sending areas. The biggest impediment to achieving these objectives was the industry’s lack of commitment towards transformation. The captains of industry needed to spearhead this process with executive decisions, backed by the necessary financial support. SLP implementation should result in skills development for employees, developed mine host communities, mining operations significantly contributing to local economic development through procurement and enterprise development, etc.
Challenges with the implementation of social and labour plans included:
• There was no direct link between the Mine Works Programme, SLP commitments and Industrial Development Plans
• Non compliance was not linked to heavy penalties
• Lack of coordinated monitoring and evaluation programmes
• Section 101 not adhered to in the appointment of contractors
With regard to housing and living conditions he said the conversion of all hostels into single and family units as per the charter targets needed to include all contractor employees. In addition, mining companies needed to ensure all new developments house prices are affordable for mine workers. Non-compliance with the Mining Charter was still a serious concern. Punitive measures for non-compliance needed to be enforced and the current draft amendment Bill needed to provide for this. People with disabilities needed to be included in the Charter.
Mr Malema referred to union ownership of shares in the mining sector; what was NUM’s take in this regard? He argued that NUM’s neoliberal perspective on the private ownership of resources had not worked, and this has resulted in unemployment, exclusions and perpetuated poverty among mine workers. Was it not time that the state took control of mineral resources? What was the role of political leadership in the mining sector? He referred to the stakes which Deputy President Cyril Ramaphosa had in the mining industry. Do these kinds of relations not undermine the role of the state in intervening in conflicts within the sector? He argued that transfer pricing was a white-collar crime committed by mining bosses who continued to benefit from the mining sector heavily. These mining bosses sold mineral shares to themselves at very low prices. What was NUM’s take in this regard? What was the role of the police in labour disputes? He argued that labour disputes were not supposed to be resolved through police brutality and force.
Mr Bailey said there was a vast difference between perception and reality. He explained that NUM took a resolution to not invest in any of the sectors which it organized such as mining, energy and construction. NUM has never invested in those sectors. On the state ownership of mineral resources he said fortunately NUM’s view on the matter is what gave life to the Minerals and Petroleum Resources Development Act (MPRDA) because minerals below and beneath the soil belonged to the state. The MPRDA clearly specified that any person who wanted to mine needed to apply to the state for the right to mine. The debate should therefore not be whether the state should nationalize mineral resources but rather how optimally the rights of the state are utilized to own on behalf of the people. If there were loopholes in legislation, these needed to be rectified. Naturally the state needed to own mines; however the state needed to build capacity in line with the MPRDA. It would not be progressive for the state to run mines and run them to the ground. The other reality was that the expectation was that the state would not have the rights to pay low salaries or to retrench. The state would also be expected to provide housing and everything else, leading by example. The state would therefore need a healthy commodity which was not a depleting commodity. For the state to take over the existing mines was a serious burden because the mining industry was over 150 years old. On the role of political interference he said NUM could not speak on behalf of any of the political parties, parties needed to have their own internal policies regulating such matters. On transfer pricing he said NUM was fully aware of this terminology and its implications, and the matter has since been raised with the Governor of the Reserve Bank. NUM condemned transfer pricing and anybody found to be advancing this was actually robbing the people of South Africa.
Mr Dokolwana responded to the question on the role of the police and said the question was out of NUM’s scope. As a trade union, NUM specialized in union related matters. Everything dealing with violence or anarchy was out of NUM’s scope and should be redirected to government.
Mr Bailey said it was not right that there were violent scenes which reminded us of the country’s violent history.
The Chairperson thanked Members and NUM for their interactions with the submission.
Chamber of Mines submission
Mr Bheki Sibiya, Chief Executive Officer, Chamber of Mines, argued that mining had significant potential to contribute to the National Development Plan (NDP). The key characteristics of mining were that it was a high-risk industry with long lead times from exploration through to mine development and ultimately through closure. It was very capital intensive and a large portion of capital was spent on the development of mines. The industry was geographically captured and was also labour intensive. Therefore in order to encourage investment in mining policies needed to recognize the unique characteristics of mining and help in the reduction of risks of investment in long-term projects. In order to grow the industry, there needed to be government-industry-labour partnerships and joint problem solving.
Mr Vusi Mabena, Senior Executive, Chamber of Mines, explained that the Chamber was effectively an Employers Organisation that represented the interests of its mining company members. It lobbied on the collective interests of its members. Its main role was to influence debate on policy challenges within South Africa. The Chamber had 72 members and represented about 90% of the value of mining production in South Africa. Some of the broad strategic goals of the Chamber were to resolve key priority issues for the industry, build relationships with stakeholders, deal more effectively with legacies of the past and develop a positive contribution model to the country. Some of the key issues on the radar screen were around transformation, sustainable development, economic growth, safety and skills development to name a few. The Chamber was the voice of the business component of the mining sector.
Mr Roger Baxter, Chief Operations Officer, Chamber of Mines, explained that mining was the “flywheel” for the South African economy. However confidence in the sector was still in crisis, prices continued to fall, revenues were flat and Net profit was down 72% to a decade low of R 20 billion dollars. South Africa was in need of a faster and more balanced and inclusive economic growth. The mining sector created 1.35 million jobs and accounted for 19% of the country’s Growth Domestic Production (GDP) and 20% of the country’s private investment. However transformation and localization were still some of the areas which needed improvement.
Mr Malema disagreed with Mr Mabena on the matter of transformation and said there was no genuine transformation in the mining sector. Very few mining companies were owned and run by black people; as a result, the sector remained one of the most untransformed in the country. Black ownership of mines was at 3.9%. How much was being spent on white capital, how much were the bosses taking home? On the rehabilitation of mines, he said this responsibility was usually given to government; was there a plan to ensure that members complied with rehabilitation rather than leaving these responsibilities to the state?
Ms Mdaka asked that the Chamber of Mines to provide an indication of the number of ex mine workers who were compensated for injuries, health related matters or death sustained at work.
Nkosi Mandela said from what Members have observed, only a few individuals have benefited from BEE, the majority of community members did not benefit from the country’s mineral resources. In terms of social responsibility he asked how the Chamber would ensure that the mining companies got involved in building capacity and ensuring that skills development took place. How were skills being developed from tertiary education level right through to the mining sector? On the Mine Health and Safety Act he ask about silicosis and the mounting litigation from ex mine workers, what attempts were being made to compensate sufferers of silicosis and other mining related illnesses and injuries?
Mr Schmidt asked whether there was an objective and/or goal focusing on all the vested stakeholders’ point of view on growth and job creation.
Mr Mabena thanked Members for their interactions with the submission. He said due to time constraints, any questions not responded to would be forwarded to the Committee in writing. He agreed that there was a need for a social plan, and it has been argued that because democracy was negotiated South Africa’s economic transformation would be a challenge, especially within the mining sector.
Mr Baxter responded to the question on white capital and said more than 50% of the mining companies were owned domestically by millions of South Africans who invest in the industry locally; therefore this would not be defined as “white capital” but rather as “South African capital”. For example, the dividends which were paid in 2011 (the latest statistics would be forwarded to the Committee at a later stage), R20 million was paid in direct taxes. The industry spends over 6% of its payroll on skills development and there was no other sector in South Africa which even came closer to that. Over 10 000 students were subverted at tertiary level, bursaries and various awards were provided to these students. The Chamber was also looking at how it could adopt Further Education and Training (FET) Colleges because this was where a gap was still evident. He said it would be a great idea to have further discussions on the matter of transfer pricing, Section 21 of the Income Tax Act addressed matters concerning the administration of Tax, with various protection mechanisms.
Mr Mabena responded to the question on the compensation of ex mine workers for work related illnesses and injuries and agreed that silicosis was still a problem.
Mr Sibiya responded to the question on the rehabilitation of mines and said money was put aside for post mining rehabilitation but when the mine was no longer operational remedial actions were put in place. The point of concern was that of sites where no rehabilitation had taken place and the regulatory framework had not been followed. The simple reason was that in such instances the owner of the mine was not able to undertake his or her responsibilities as a result; the responsibility then falls to the state. But the consequences of non-performance were severe.
The Chairperson said there was indeed a need for further engagement with the Chamber of Mines. He thanked Members for their engagements with the submission.
South African Mining Development Association (SAMDA) submission
Ms Bridgette Radebe, President, SAMDA, explained that the South African Mining Development Association was started in 2000 as the Junior Mining Initiative by South African junior and black economic empowerment (BEE) mining investors. While the founders' initial impetus was to present a united response to government on the Minerals Bill, the need for a strong, permanent lobby, representative of the interests of junior mining companies on several fronts, soon became apparent. In the research conducted by the MECP on the junior mining sector the following definition of junior mining companies was concluded:
• Junior Miners are companies with an asset base of R50 million to R7 billion
• Above R7 billion are the majors
• Below R50 million are small scale miners.
SAMDA's vision was to be the vehicle for the development of a vibrant and sustainable junior mining sector which contributes towards the growth and prosperity of the mining industry. She argued that some of the elements of the Mining Charter were some of the Mining Economy’s National Development Plan tools in the elimination and reduction of poverty and the reduction of inequality by 2030. Some of the elements in the Charter which were of high significance were:
• Ownership - 26% equity participation by May 2014
• Procurement and Enterprise Development
• Employment Equity - 40% black managers by May 2014
• Human Resources Development – Skills Development Spend by May 2014 should be 5% of payroll
She explained that the Charter required a minimum effective participation of 26% by Historically Disadvantaged South Africans (HDSA) which mining companies needed to have complied with by 1 May 2014. The current Ownership Structure was a neo-colonialist ownership model that perpetuates ownership of the country’s resources and mines by foreign investor monopoly. Many of The Broad Based Black Economic Empowerment investors that have not yet realized 26% unencumbered net value by the 1 May 2014 as prescribed by the Mining Charter through section 100(2) a of the MPRDA are the following:
- Employee Ownership Schemes (ESOPs)
- Community Trusts
- Broad Based Business Trusts
- BEE Technical Producers
- Women In Mining
- Youth In Mining
- People living with disabilities.
With regard to transfer pricing she said this was a term used to describe arrangements involving the transfer of goods or services, at an artificial price, in order to transfer income or expenses from one enterprise to an associated enterprise in a different tax jurisdiction. These companies sold the companies commodities to its marketing divisions at lower than market related prices. This resulted in the exportation of profits to the tax heaven off shore accounts and the declaration of low profits and the payment of low tax in the country where the commodity is being produced and exported from. With regard to beneficiation, she said mining companies needed to facilitate local beneficiation of mineral resources of mineral commodities by adhering to the provision of section 26 of the MPRDA and the mineral beneficiation strategy. Unfortunately the majority of the companies import finished (manufactured) goods from off shore instead of manufacturing goods locally. By complying with the Mining Charter through Beneficiating minerals, small and medium enterprises and manufacturing industries would be promoted – thus stimulating job creation and economic development.
In addition, the mining industry was behind in producing active HDSA executives compared to State Owned Companies, such as Chief Executive Officers, Chief Operating Officers, Managing Directors, Finance Directors. There was also a lack in the lack of mine community development through social and labour plans. The majority of the mines were developed in underdeveloped rural areas where communities continue to be poor while their mineral wealth was being explored, exploited and exported. With regard to housing and living conditions she said it was unacceptable that Hostels still exist in 20 years of our democracy despite the housing and living conditions standard requirements of the Mining Charter and Section 100 (1) of the MPRDA. Mining towns and villages were currently overburdened by informal settlements instead of decent housing and living units.
She concluded that all South Africans should be committed to a South Africa economic and investment strategy and model. That would ensure the economic sustainability of the country and the people of South Africa. A “South Africa first” strategy needed to be adopted.
Due to time constraints, all questions which Members had for SAMDA would be forwarded to the entity.
The meeting was adjourned.
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