Mintek, Council for Geoscience & Mine Health and Safety Council on their 2013/14 Annual Reports

Meeting report

Opening remarks
The Chairperson said he had received apologies of some Members and others were unable to attend the meeting due to obligations on other Committees, like Communications and Energy. He said that information could never be of waste, thus comforted the delegations that whatever they were going to present to the Committee was going to be put to good use. He called on the presentation from MINTEK.


MINTEK on its 2013/2014 annual report
Mr Abiel Mngomeni, Chief Executive Officer (CEO), MINTEK, began by apologising for his absence at the meeting with the Committee when they made an oversight visit to the Mintek offices. He had really wanted to attend the meeting, but had been unable due to health reasons. The fact the meeting took place and was successful showed that Mintek could function very well, even in the absence of the CEO/President.

The day’s presentation was restricted to the document available, but in the case of any discrepancies with the annual report, the report prevails. He wanted to make the Members aware that Mintek had a language policy, so the report had been translated into Zulu and Tswana. Mintek had an eight year history and it was the first time that it had a lady as the Chairperson of its board.

The core business of Mintek was to do research and development of efficient mineral processing technologies, value added products and services. In a nutshell, the role of the organisation was to do beneficiation for the country. It was also tasked with the small, medium and micro enterprise (SMME) development of the mining sector; to look at skills development within the sector; execute their obligations in an authorised manner with oversight from the Auditor-General (AG), and to make people aware that there was an institution called MINTEK. Their functions were not performed in isolation, but in support of national priorities. The entity was relevant to the National Development Plan (NDP) in the sense that they had improved extraction efficiency to extend ore resources, and had improved energy and water efficiency. Mintek was not only responsible for activities in South Africa. Its technologies were widespread and used almost everywhere in the world.

The sector had been affected by several factors, like the global financial crisis, but had managed to recover from this. However, it was still facing a downward trend with its development, which had also affected its financial performance. The entity’s total revenue was determined by its commercial activity -- where there was an increase in the commercial activity, the total revenue would increase. The position changed only in 2013, where their commercial activity had decreased but total revenue had increased. The increase in total revenue resulted from funding from the government. However, the government funding was project based and the projects were on a three-year cycle, so after the three years the entity would have to rely on commercial activities for its revenue. The government funding was good, because it showed that government had confidence in Mintek activities. Project-based funding was good in that it made them focus on specific projects, but when the project ended it meant that the funding also ended.

The presented statistics indicated that MINTEK’s revenues were not increasing year after year and this was a worrying factor. The situation had worsened in 2014, which meant that the entity had continuously achieved less revenue, and this was not good for the institution. However the decrease in revenue did not currently have any negative bearing on profitability, because the institution had gone into a saving mode. However, if the trend continued, a stage would come where it would be totally impossible for the entity to make a surplus. 

He said that the entity had started becoming too “cocky,” because for the past four years it had received a “clean audit” and thus thought that its operations were perfect and it would never reverse. Unfortunately for the year under review, it had received an unqualified audit with findings. The actions leading to this decision had been wrong, and measures to correct this unfortunate position had been put in place. The audit opinion resulted from several factors. They did not fully indicate all the disclosures during the financial statement preparation. The other major problems resulted from procurement.

The first problem on procurement resulted from an advertised tender that had a clause requiring the tenderers to have a Construction Industry Development Board membership (CIDB). Unfortunately, not all the tenderers had CIDB membership, so they had decided to relax the clause and require the tenderers to have the CIDB by the time they started executing their tenders. During the audit process, the AG had identified the approach as incorrect -- it should have been stopped at the beginning. The right procedure of a relaxed clause should have been re-advertising the tenders.

The second problem on procurement resulted from tax matters. Mintek had put up a tender requiring the tenderers to have a tax clearance, and at the time when the winning tender was accepted, the bidder had a tax clearance. However, the tax clearance had expired at the time when the Department did the final appraisal of the tender. Nonetheless the bidder was awarded the tender and before he executed his tender, he had handed in a new tax clearance. The AG identified the appraisal of tenders with an expired tax clearance as a problem, because this indicated that at the time when the tenders were being appraised, the tenderer did not have a tax clearance and as such the tenderer should not have been appointed. Going forward, this would not happen again, because as of 1 November 2014, SARS had launched a new programme which allowed individuals to register with SARS so as to achieve access their data base.

Mintek had resolved to report to the audit and risk committee on a quarterly basis on progress in resolving the problems that had been identified by the AG, and this report had also been forwarded to the board of directors at MINTEK.

The entity had made progress with the feedback which showed the dissatisfaction rate among their clients, because they were more interested in looking at how dissatisfied their clients were, than how satisfied they were. In the year under review, the rate was 5%, which meant that 95% of their clients were happy with the work that they were doing. On the public dissatisfaction rate based on the number of times people complain about Mintek activities, they had received four complaints, exceeding their target of one, based on the noise levels that were coming from Mintek, especially at night.

The entity managed a rehabilitation program on behalf of the Department of Mineral Resources. The project was started in July 2008, and was currently beginning a new three-year DMR cycle. It was targeting 12 sites over three years, with a total budget of R165 million. Regarding their progress in 2013/2014, they had completed one project -- the Strelley asbestos mine repair and re-vegetation, which was an abandoned area.

The senior management of Mintek comprised of less than 50% women. They were going to continue trying their best to attract more women in the senior management positions. 79% of the vacant positions had been filled and 50% of these positions had gone to staff within Mintek as promotions, which proved that their skills development programme worked.

MINTEK 2013/2014 Annual Report: Briefing on Research and Development
Dr Makhapa Makhafola, General Manager Research & Development, Mintek, tabled the presentation on the research which was taking place within the entity.

He said that cumulative sales of Mintek’s standard gold based catalysts to industrial application developers was now about half a ton.  The HySA fuel cell catalyst was in the early stage of commercialisation, and the first sale had been made to the Zimbabwe Technology Centre. It had successfully hosted the 2013 conference of the Precious Metals Development Network (PMDN).

Under their Nanotechnology Innovation Centre (NIC), their diagnostic malaria test kits were sent for trials in Kenya and if they are successful, they will be supplied in Kenya to be used in testing for malaria. They had established the Peptides Synthesis Facility and were taking a leading role in this research. The head of the NIC had won the NSTF-BHP Billiton Award for the outstanding contribution to science and technology through research capacity development. They were preparing for the MAM-14 International Conference, and had invited the President to be one of the speakers at the Conference.

Under physical metallurgy research; they had established local collaboration with mainly Transnet, Scaw Metals and Eskom, which was aimed to show confidence in the local industry with the work done at Mintek. Internationally, they had formed partnerships with two highly reputable institutions – the University of Houston in Texas for research on materials for rail transportation (they were also working with Transnet on the same project), and Cambridge University on computational material research and development. They intend to expand the range of the metals for their Metals Technology Centre (MTC). They had successfully commissioned a gas atomizer facility for the platinum group metals (PGM)-based powders. Phase three of the Department of Science and Technology (DST) Work Integrated Learner (WIL) programme, which will include foundry and general engineering companies, had been approved and 52 interns had been placed. Previously, some of the interns that were placed had been absorbed for permanent employment within the project.

Under the process control instruments, the Carbon Concentration Meter had reached the commercialisation stage. This instrument measures the carbon concentration in gold leaching tanks. Mintek had just received the first order for the product from Anglo Gold Ashanti (AGA) Mponeng, and for the financial year 2015 they will focus on the roll-out and controlled development of the product. The Cyclone Underflow Control Prototype was almost at the commercialisation stage. This product is mainly used in PGM and Base Metal Concentrators. To date, three cyclone underflow angle measurement instruments had been sold.
Under community development, six SMME’s were set-up and 61 jobs were created. 151 people were trained in jewellery, beads, gemstones, pottery and small scale mining (SSM). They had managed to produce 18 feasibility study reports, and one of the successes of this project was the development of a solar oven for drying of clay products in Mamokgadi, Giyani. In order to dry their pottery they used to dig holes, add fire and put their clay pottery to dry, but Mintek had managed to commission this invention for drying pottery because there was no electricity in that area. They had set-up a training and beneficiation centre in Prieska, Northern Cape, and the products of the project were going to be shared with the Committee, to determine the success of the project.     

MINTEK 2013/2014 Annual Report: Briefing on Technology
Mr Alan McKenzie, General Manager Technology, Mintek, tabled the presentation on Mintek’s technologies.

He said the Rare Earth Element refining plant was a project that was funded via the medium term expenditure framework (MTEF) as a three year project, and had been successfully completed at the end of the financial year under review. The plant was currently being run and allowed for the pallet scale refining of rare earth elements into their individual metals or into groups. The Savmin Water Treatment plant had been successfully installed and was currently running. This project was aimed mainly at treating Acid Mine Drainage (AMD) from the gold mining industry around Johannesburg.

There were quite a number of projects that had been developed to support the local gold mining industry, which was currently suffering from economic strain. The first project was the advanced leach facility. This was an automated facility that was put in place to enhance the efficiency of the industry, hence their economic viability. The second was a Pressure Oxidation Autoclave plant, which was a leaching plant in its final stages of installation. The plant was the third of its kind globally, the other two being in Australia and Canada. The third project was the Cyanide centre. Cyanide is used in the extraction of gold, but it is very toxic and can cause enormous environmental problems. Mintek was instrumental in the development of the international cyanide code, and has one of the few facilities that can analyse cyanide samples on an international basis to ensure compliance with the cyanide code. Finally, it was assisting the industry with processing technology for removing residual gold from tailings, and also from the re-processing of gold dumps. Hopefully, with the technology which Mintek and other institutions have developed, in time the dumps will disappear because they will be reprocessed and the material will be disposed of underground again.

Mr McKenzie gave an update on Mintek projects. The two-year Bay 2 water atomization project which they ran with Anglo American Platinum had officially ended in June 2014. The Mintek ConRoast PGM smelting technology, which had been under development for a long time, was currently being commercialized under Jubilee Platinum. It was hoped that within the next few months, there would be announcement from Jubilee on the go ahead of the first actual furnace.

Internationally, the mining industry was depressed. However, there had been an emergence of a number of unconventional commodities and projects that Mintek was undertaking. For example, phosphate is a major ingredient in fertilizers, and internationally there is a lot of interesting activity taking place in the processing of phosphates with the intention of fertiliser production, as globally people realise that food security is becoming a very important component. Thus, they were busy developing technologies and processes that help to process phosphates locally and regionally in an effort to stimulate the fertilizer industry. There had been similar interest in graphite and other industrial minerals.

When the entity experienced a down turn, with some of the opportunities that were coming in, they had taken the opportunity to re-engineer some of their facilities and their business units both from an equipment and physical facility perspective, as well as with staff. Mintek was doing this to allow the entity to prepare itself for the future, because they expect an upturn and wanted to be able to meet the needs of the future efficiently.  


MINTEK 2013/2014 Annual Report: Briefing on Finances
Mr Sakhi Simelane, General Manager Finance, Mintek, made the presentation on the financial status of the entity.

He said one of the significant features of the entity’s financials was that its state grant had grown drastically during the year under review, compared to previous years. This was mainly because of the Medium Term Framework (MTF) funding that they had received. Overall, the entity’s financial report for the year under review showed that total revenue was at R462 million, indicating a 2% reduction from the previous financial year. The surplus for the year was R17.8 million, compared to R16.2 million the previous year. This was because of their cost cutting methods and expenditure controls. Total assets were R647 million, and liabilities were R206 million.

For the year under review, there was a significant increase in state funding, and a slight decrease in the funding for contract research and products and services. 43% of the entity’s commercial revenue came from Africa, including South Africa. This was followed by Europe at 17%, and Australia at 15%. There was a direct link between Mintek’s revenue and the world economy. In the year under review, international revenue declined by 8%.

The state over the past six years had increased its investment in research into precious metals. Additional focus has been directed to the energy minerals, mineral beneficiation and eco efficiency, which related to the projects run by the Department. The biggest expense for the entity was salaries, because they dealt with mainly researchers. The entity had no labour brokers. They used to have casual workers, but this system had been phased out.  They were spending R12 million on bursaries annually. R36 million had been spent in 2012, R40 million in 2013 and R28 million in 2014 on capital items, such as plant, equipment and facility upgrades. For the financial year under review, they had made a profit over R17 million, and the entity’s profitability in the future could be maintained. Overall, Mintek maintained a strong balance sheet with assets of more than R300 million. It foresaw a decrease in commercial revenue as a result of economic conditions. There would be a slight increase in research and development due to the skills and capital investment that was required. The entity had obtained an audit opinion with findings, but management had implemented corrective action.

MINTEK 2013/2014 Annual Report: Briefing on Corporate Services
Mr Mngomeni tabled the presentation on corporate services.

He said that last year the entity had 704 employees, most of whom were African men, so there were few females employed.  The bulk of the employees sat at the skilled, technical, academically qualified, junior management and supervisory level. The main problem areas were at the professional skills and management levels. In the past there had been a high number of resignations at Mintek after three or four years and because this, they had decided to reconfigure the way they worked. For example, they had formulated a graduate development programme. With this programme, all the new graduates that are employed within Mintek are not assigned work for a year, but are rather given the opportunity to visit all the divisions within Mintek so that they can understand its exact mandate, as having a global idea of Mintek would encourage them to remain employed with the entity for longer. This has improved the resignation statistics by a year -- from three/four years to beyond four/five years -- but management still wanted an improvement to try and retain graduate employees for at least seven years.

The development of human capital at Mintek was divided into two. There was internal development focused on the employees at Mintek, looking into their skills development and issuing them with bursaries for undergraduate and post graduate studies. There was external development focused on issuing bursaries for students in science and engineering disciplines as a pipeline for Mintek’s future requirements.

Discussion
Mr I Pikinini (ANC) said that the presentation did not speak about the issue of people with disabilities. What was the percentage of people with disabilities working for the entity? He did not agree with the entity’s position with regard to its staff complement because they were a caring government, and therefore needed to find a balance to address issues of transformation.  After the Committee’s visit to Mintek, they were now able to agree that there was ageing equipment.  A big part of the presentation had made it seem like there were no serious problems with the entity, as had been highlighted by the AG. However the graph in the document presentation indicated that there were a lot of areas that were affected, for example, supply chain management and IT. He recommended that they find a way to ensure that there were daily and monthly controls and reconciliations, and not wait for 31 March when the official audit process occurred. This would prevent such issues from being highlighted by the AG and would ensure clean audits going forward. He commended the water project, and said that he was pleased to drink the water during their oversight visit. He requested more investment in the water project on the grounds that it would solve the water problem in South Africa. 

The Chairperson said that considering the high level of unemployment in South Africa, he did not believe that Mintek had come short in terms of designated groups, specifically women, employed within the entity. The presentation had unintentionally shown that women had little inclination to study further. The institution needed to go not just an extra mile but a major mile to encourage women to pursue opportunities for their further development. The failure to close the employment gap within the institution between men and women was an indication that there was something that the institution was not doing right, and not an indication that women were having problems to go beyond a certain level of development.

He asked for more information on the next stage of the water purification process, because reports indicated that they had completed their rare earth element stage. He always believed in people who pointed to a next stage after completion of a specified project. On their oversight visit to Mintek, he had asked about the asbestos project in the Northern Cape -- the challenges that it faced, as well as the possibility of relocating the project and the cost implications. He wanted to know how far the institution had gone in trying to address this issue.

What were the causes of the revenue reduction within the entity? What were the cost cutting measures that the institution had undertaken, and was this not materially affecting the entity? He commended the entity on its financial position, especially the fact that they were not seeking a bail out from government but had managed to record profitability from their transactions, despite the decrease in revenue from their commercial activity. He requested clarification on the causes of the decrease in contracted research, as he thought that there could be factors other than those submitted. The institution could be doing good work but lacked an extensive marketing strategy to advance its products, and this would also cause a decline in its international revenue.

Overall he thought that there was something that could be done to solve the challenges that the entity was facing, some of which had not been explored by Mintek. He asked why the entity had 100% black unskilled labour, yet they had targeted for only 95% blacks. This position was bad, as it could signify that white people did not want to do unskilled labour. He wondered whether white people had ever been considered for unskilled labour, because in his own experience he had never seen a white person doing unskilled labour. Further, he wondered whether the problem was that management refrained from employing white people as unskilled labourers for fear of public criticism. The current position indicated that the entity was satisfied with having 100% unskilled labourers as blacks and the majority of top management as white. Overall, there was a need to manage the issue of employment composition within the institution. 

MINTEK’s response
Mr McKenzie said that the institution had a number of other projects that it was busy with, like the rare earth project and the pilot production plant. The ultimate aim of the project was to try and develop a local rare earth processing capability so that they can ultimately have downstream fabrication from the rare earth resources of South Africa and regionally. Rare earth products in this process are what are often considered as the green elements, because they are re-used in highly efficient electric motors amongst others, aimed at driving towards a green economy. The ultimate aim was for the institution to try and facilitate and develop that industry locally. The pilot plant was seen as a mechanism to facilitate this project. The project was ready to produce tangible results for probably the next five years because it had to go through the evaluation stages before a rare earth plant could actually be built. The other activities and different projects that the institution was looking at were around the green economy and eco efficiency, focusing mainly on various mining activities -- how these could be controlled in the first place, but where there was contamination of the environment, how could this be cleaned up.

The Savmin plant was looking at the water around the Johannesburg area, dealing with the AMD legacy of the gold mines. Mintek was developing the technology, but they would not be implementing the technology in the Johannesburg region. An agency had been identified to be the implementing agency for the technology to treat the AMD around Johannesburg. They were working with the mining industry to look at the implementation of Savmin in other areas, like the coal mining sector.

The entity had started looking into the cost of rehabilitation of the derelict mines, but this was a difficult and complex exercise. The Council for Geoscience had data that showed that there were more than 6 000 derelict mines in existence and had estimated that the cost of this rehabilitation would be around R5 million per site, meaning it would cost over R30 billion to deal with all the sites. However, actual field work was needed in order to ascertain a proper estimate for the work done. It was going to cost billions of rands and as a cost saving mechanism, some sites would have to be left out on grounds that the risk was not so great, so it was not worthwhile to spend money fixing them.    

Mr Simelane agreed that there were several causes leading to the decline in commercial revenue from one year to another. He highlighted the “DNO” project from the 2012/2013 financial year as one of the causes of the decline in revenue, where over R60 million had been directed to funding this project. There was also a decline in research and development, where some companies had pulled out of research projects. They hoped that this trend would improve going forward. One needed to be very cautious when looking at the issue of profitability, because part of their total revenue comprised of state grants, so the profitability on such income could only be attributed to revenue actually made by the institution from its commercial activities. The entity’s profitability could be directly attributed to both the firm’s contracts and services, or products and services, but it excluded state funding. He thought that there was room for improvement, but in difficult times they could not expect it to increase. The entity’s normal profitability was about 10% to 15%, but there had been exceptional products that had pushed this profitability to about 25%. Mintek aimed to break even and once it was attained and the financial records were balancing properly, they were happy with that position.

Mr Mngomeni requested Members not to look at commercial activity issues in isolation. Mintek was a South African entity and most of its business was from South Africa and the African continent. In September, the economy of South Africa had shrunk by 1.5% and the mining industry in South Africa had shrunk by 5.7%, and he wondered how they could have increased commercial business if their industry was shrinking more than the country was shrinking. The institution’s revenues were reflecting the status of what was happening in the world and not only in South Africa. For example, Anglo Gold had closed down the Obuasi Gold mine in Ghana to which Mintek was supplying several products and services. This closure meant that Mintek had lost all their revenue from that partnership. They had ventured into the atomiser project, from which the entity had never made a profit, but had continued with it because it gives a new dimension to the mining industry. Thus, the Committee would get a better perspective if they measured the entity on the basis of the new things they had contributed to industry, rather than profitability.

He thought that Mintek had become “cocky” in its operations because they had been doing very well in the previous four years, and they knew the methods of correcting the wrongs that they were doing and had put the measures in place. The general problem in the country was that the people making regulations were not the ones experiencing the regulations, and there were loopholes. He advised entities to speak out on wrong regulations by writing to the Treasury, highlighting the problems encountered in finding ways of solving the problems encountered. The Treasury often replied by giving the current position of the law, and once they receive this response, the entities become aware that the law is wrong. It they interacted more constantly with Treasury, they would wake up and revise the wrong laws that they had made. He gave examples of procurement requirements which, he said, were unfair and mostly affected black people who were struggling to try and do business with the government business. Such problems needed to be raised at the correct level, which was Treasury, and wait for a solution from them. If they did nothing about it, it should then be re-directed to the Committee, highlighting that the system is unfair.

On the question of transformation within Mintek, he said it was useless for the entity to set targets at 100%, as targets were meant to be achievable. About two years back, they had a 95% target for blacks at the unskilled level, and had 5% of white males working at that level, but unfortunately they had disappeared. They had started a new strategy -- rather than looking for white males to occupy the 5% of unskilled positions, they would rather seek out young black graduates who were sitting at home without jobs and have them occupy the 5% vacant positions. The idea was that rather than the young graduates sitting in the townships and not knowing what to do, it was better for them to work at Mintek doing the unskilled jobs.

The Osizweni project was very complicated, so it was taking them time to pave a way forward. The reason was that a school existed on the mining site, and there were illegal miners carrying out mining activities under the structure of the school. As a result, it had started cracking and falling apart. Cooperative Governance and Traditional Affairs (COGTA) had provided the learners with alternative accommodation as they waited to occupy their new premises. Despite this, the site still had illegal miners who were continuously mining in the area, and if they were not moved at the time when Mintek acquired the mining tender within the given area, no rehabilitation of the mining site would happen. The higher authorities had to make a decision on how the illegal miners were going to be moved and where they are to be taken to

He said that the entity had achieved its target of employing people with disabilities. The rate of people with disabilities within Mintek was at 2.6%.

Ms Linda Makatini, Chairperson, Mine Health and Safety Council (MHSC) Board, said that the board at Mintek agreed with the Committee that Mintek had an unfavorable track on the number of women employed within the entity, and more needed to be done on this area. It was important for a institution to avoid coming to the Committee on recurring occasions, apologising in advance for failure to meet this target, among others. The institution was trying to deal with the challenges of transformation of the entity, particularly the transformation of women. The context that needed to be kept in mind was the environment which the entity was recruiting into. Traditionally in South Africa, females were challenged at particular skill levels, and this had not stopped post-apartheid. Girls were inclined to different subjects when compared to boys. Mintek was recruiting a pool base which produced very few girl children who were encouraged either at home, educationally or socially, to enter the science area. Mintek is a science hub – and once you have made it to Mintek, they try to encourage their employees through bursaries to further their studies. However, women within the institution were not taking up this opportunity. The playing fields were level on the education policy within Mintek, but there were reasons why women were not taking up this opportunity and she did not know whether these reasons were related to social stigma, or on how far women could go as scientists. They would take the Chairperson’s advice and monitor the women in the Department very closely to know of their challenges, so that they could come up with the reasons.

The entity had also undertaken an initiative to make furtherance of education easier. One of the initiatives was the control established on external bursaries, where they were encouraging more female applicants, and the statistics in this area had improved. They would continue with these initiatives -- the issue of women in the institution was not a position that they were taking lightly.

The Chairperson said that the Committee and the Council for Geoscience needed to address the matter of the Osizweni project, as there was need for practical steps to be taken. The issue needed to be brought to the attention of the Minister for his intervention. There was also a need to attend to the asbestos issue in the Northern Cape. When an entity did well, it was always expected to do well. This was an unfortunate situation, but the reality. He said that he knew that they had resolved most of their problems but the Committee’s oversight on their activities was an aftermath process and despite their explanations, the decision of the AG would have already been given. The Committee could not find reasons to justify to the entity that they were doing what they were not supposed to do; but added that if they needed the help of the Committee to resolve some of their challenges, they would help them.

The academic approach in South Africa was an issue which government had to deal with, but if the entity had a problem of not attracting women, this problem had to be addressed. The Committee was aware of South Africa’s historical past and how this could affect particular groups within the entity.  It needed to look into the interventions that the institution was making to address the problem of women not taking up educational opportunities, in order to determine whether or not enough efforts had been made to address this issue. The entity needed to set up deliberate programmes for women, especially in their partnerships in the provinces and the institutions of higher learning, so as to attract them to Mintek. They needed to look into the entry levels for opportunities within Mintek to ensure that some were restricted for women only. He advised the Chairperson of the Mintek board to interact with her team and advise them on the entity’s target of closing the gap between males and females, and devise a mechanism on how to achieve this goal.

He thanked Mintek for their presentation.  They had not performed bacly, but had just slipped from their previous good performance.  

Council for Geoscience on its 2013/2014 Annual Report
Ms Khomotso Mthimunye, Board Member, Council for Geoscience (CGS), opened the presentation for the Council of Geoscience by introducing her delegation.

Mr Mxolisi Kota, Chief Executive Officer, CGS, tabled the presentation on the annual report. He said that CGS had a dual reporting role; in terms of governance and operations, they report to the Department of Mineral Resources and in terms of the scientific output of the organisation, they report to the Department of Science and Technology. The board of directors was constituted by both public and private sector representatives. Like many geological surveys for the world over and not only unique to South Africa, CGS’s mandate was continuously evolving and it was the principal consideration for evaluating all of its activities. As a geological survey, the institution possessed expertise and was continuously called on by society to shed more light on this expertise and resolve issues for society like climate change and carbon sequestration and storage. This was a principal area in which the CGS had been called upon to look into the geology formations of the country to see how they can find areas for the sequestration of the carbon in the rock formations of the country. Historically, they had been involved and continued to be involved in issues such as finding appropriate rock formations for the disposal of things such as nuclear waste.

The mandate of the entity evolved from the principal Act of the organisation -- Act No: 100 of 1993; and was subsequently amended by Act No: 16 of 2010; and more recently the proposals and changes mooted for in the Mineral and Petroleum Resources Development Bill, which was currently sitting before the President. This Bill had significant implications for the evolution of the mandate of the CGS. The organisation’s head office was in Silverton, Pretoria, and it had offices spread out through the different provinces of South Africa.

The organisation had a dual mandate similar to that of Mintek. Its mandate was partly funded by the government, and this funding was relatively stable if looked at over a ten year period. The other source of funding was its commercial activities. However this funding was highly volatile, and unstable when compared with the government funding. The commercial activities of the organisation made it relatively difficult for management to predict how it would perform from one period to the next.

The corporate performance of the organisation was determined by the Balanced Score Card (BSC) system and started to be used by the entity in the early 2000’s. The organisation had set several targets for the financial year under review. It had managed to achieve some of the set targets but there were targets that were not achieved. They had failed to achieve the target on the Regional and African Development Project reports completed -- here they had a target of 25 reports, but achieved only 16 reports.

There were a number of international projects on the African continent funded by the World Bank and the European Union, which had been put out to tender, and CGS had been a major beneficiary as one of the most sophisticated geological services on the African continent. It had been preferred by international counterparts to partner with them to deliver these services to the different countries. However, since the economic depression, there had been a significant decrease in tenders, which had compromised the organisation’s ability to acquire projects of a commercial nature and particularly projects of significant gain in terms of commercial revenue.

On the number of seismic stations installed for the financial year under review, the organisation had a target of ten stations but managed to install only five stations. The failure to achieve this target was attributed to the delay in the allocation of funds from the Mine Health and Safety Council.  CGS had to find funds internally to fund the five stations that had been installed.

CGS had stopped producing articles for publication in industry publications due to a lack of funding. The organisation’s commercial revenue was affected not only by the lack of tenders, but also by the significant reclassification of its ring-fenced funding by the Department of Mineral Resources that had classified the entity’s funding as a grant. This gave an indication of reduced revenue for the organisation, because its projects were now generally regarded as part of the baseline grant. The organisation had managed to obtain only half of the contract revenue which they had targeted to achieve for the financial year under review. The organisation had a major problem with overhead costs and this was principally because of the type of organisation that it was.

The issue of preferential procurement with regards to BEE considerations was crucial for the organisation and had been strongly highlighted internally, particularly by the board of directors. Due to the challenges of the past, they had started to implement strategies to impose requirements, particularly on sole providers with international bases that were providing the organisation with big ticket capital items, to ensure that they have local partnerships to increase the local procurement content. Preliminary results were starting to give positive results and showed that the entity was on the right course.

The organisation had plans to review five of policies in the financial year under review. These were delayed principally because it had implemented a new strategy that had been approved by the board in the second last quarter of 2013. This meant that some of the policies set to be reviewed had been impacted by the new strategy, and therefore had been deferred to the new year for review. They were currently being reviewed in the ongoing financial year.

They had planned on not losing staff in the financial year under review. However, there were marginal deviations from this target, and as such it had not been achieved. The number of staff with MSc and PHD degrees was a significantly important strategic thrust for the organisation, because they were knowledge-driven and had to have people to drive its scientific programme at a cutting edge.

There was a need to corroborate the internal work of the organisation, but the Council had failed to achieve this performance for the reporting period. This was partly because they were struggling to capitalise on the organisation’s scientific programmes and this had a spin-off effect on their ability to attract top talent to work with the organisation. They were reasonably pleased with their achievement of the employment equity statistics in terms of the number of whites versus blacks.    

CGS annual report: key geoscience programme activities
Dr Gerhard Graham, Chief Operating Officer, CGS, tabled the presentation on the key geoscience programme activities at CGS.

He said that the organisation had divided its programmes into four main thrust areas. The core of their work was geoscience mapping which could take the form of geological mapping, geochemical mapping, and meteorological mapping. This was the area where they generated most of their data and this data and information was being used by some of the other thrusts in research or more applied work that was executed within the organisation -- typically environmental and water, engineering and geo-hazards, and mineral resources and energy.

Under mineral resources and energy, the CGS focused on projects to improve investment in the mining industry. With regard to the energy environment, if one looked at countries like Kenya, they had an extensive geothermal programme in place, and geothermal energy was a way of generating baseline electricity supply. South Africa had a long way to go to implement this programme, but was at a stage where they had mapped out the areas where the project would be more successful for the use of geothermal energy production. Engineering and geo-hazards are often grouped together and relate to the typical dolomite risks that are experienced mostly in and around Gauteng.

The Rare Earth Elements in South Africa were becoming very important in green technologies; and the more investment in the development of this area, the bigger the demand for rare earth elements. The CGS could foresee that the mines would outstrip the current supply of these elements and had thus increased their focus on research on the rare earth elements in South Africa. CGS knew that the concentrations of rare earth elements were fairly low, but the deposits of these elements were available in South Africa and just required to be identified. It was developing a process to bring these materials together during the extraction process. There were other types of mining happening in South Africa, and the CGS had to look into regulating this, because some of the mining sterilized the ability to extract rare earth elements at a later stage.

Uranium was another important mineral that CGS was investigating. It was aware that in some parts of the world there was a programme established to reduce the use of nuclear energy. However this position was completely the opposite in countries like the United Kingdom, where they had more reliance on nuclear energy, and hence the availability of uranium isotopes was crucial for the nuclear industry. South Africa had a plan to have implemented approximately about 96 000 megawatts of energy produced through nuclear facilities by 2030. The major uranium deposits were found on the Witwatersrand and the north of the Springbok flats and CGS was researching the type of uranium isotope that might be found in these areas. South Africa would need just over 100 000 tons of uranium to implement its nuclear energy production, and currently the reserves of this metal sit at about 700 000 tons, so there was potential for export. The extraction of coal on the Springbok flats had been stopped because of the presence of uranium in the area. It occurred in the upper layers of the coal and the carbonaceous shale that occurs in this area. CGS had drilled several holes in this area and was busy analyzing to determine the quality of the coal and uranium isotopes available.

South Africa was also very blessed with large deposits of platinum group elements. It was available in the critical zone in the Merensky Reef, and mining and extraction of this mineral had been ongoing in the Eastern Bushveld complex over the years. The Eastern Cape had large deposits of black granite (Dolerite), particularly in Willowvale and Bojeni where they extract the Transkei black-- a stone that can easily be crushed and used in road construction, amongst others, because of its aggregate but this stone has got much more value in its nature as a dimension stone and can be used for furniture, like making table tops.

CGS had several coal databases. The information contained in these databases had been gathered for several years and should not be underestimated, because it was of value to the country. The database had information of over 115 000 holes that had been drilled. CGS had set up an analytical laboratory section, currently referred to as the coal laboratories, where they use equipment to look into the quality of the coal, in particular its total carbon content.

Stimulating investment in the minerals sector was a programme that CGS was engaged with. It was an integrated process of using different types of data for the purpose of target generation. As a geological survey type of organisation, CGS’s aim was to conduct research as cheaply as possible over large areas of the country to identify the zones of potential mineralisation. Once they have information on the zones, they can start focusing on them and the next step would be to identify the potential targets, or mineral deposits, in these areas. The aforementioned programme had led to the division of the country into priority areas. This project had started off in the Tugela terrain in KwaZulu-Natal and moved to the Northern Cape, where they had just completed an airborne survey. They were also targeting the Sabi and Barberton areas in Mpumalanga. Research completed in the Tugela area in KwaZulu-Natal had been conducted using magnetics and radio-metrics technology as well as airborne magnetics. Since the project was an integrated process, apart from the remote techniques applied in research, CGS also collects soil samples for geochemical survey. These samples are analysed for up to 50 different earth elements. The combination of the knowledge of geophysical and geochemical data, and the geology of the area, enables them to start identifying target areas. 

Dr Graham spoke of the earthquakes in the Augrabies area, where CGS was trying to understand their source. The other problem that was faced in this area was the reliance of people on ground water, because the Orange River flowed through this region. A geochemical map had to be drawn to ensure that the water was free of contamination and there was adequate water supply for all the people in the given area. Geochemical mapping was done with a helicopter and by taking a soil sample for every square kilometer.

Another research approach used by CGS was the geophysical mapping technique. They had developed software that was unique and compared to no other method worldwide available currently. This software helped with the building of slices of information to create a model of assessing information from all angles, in terms of how detailed the information is. The information is particularly necessary for on-shore diamond exploration.

CGS was engaged in the geological storage of carbon dioxide as a clean coal technology, because the country uses mixed energies and power stations that rely solely on coal but have adverse effects on the environment. The geological storage of carbon dioxide is done before the gas is released in the atmosphere. Currently there are millions of tons of the gas that have been stored and will forever be kept away from the atmosphere. CGS had considered dumping this gas in several of its redundant basins where it would not permeate back to the atmosphere, since carbon dioxide was an element that turns into liquid below 800 meters and becomes fairly inert unless disturbed. This research was in its infancy stages, but they expected a pilot study in the next three or four years.

In terms of geo-hazards, the entity had a problem of dolomites and had started taking soil samples to particularly test on the properties and the characteristics of the soil with the idea of foundation studies on the potential for the formation of sinkholes. Sinkholes close to communities were very high risk areas, because some appear fairly small on the surface yet there was a possibility that they could be very deep.  Unfortunately rehabilitation of such a hazard can be very expensive. During the past year, there had been very high and unusual seismic activity in the Northern Cape in the Augrabies area.        

CGS Annual Report: Derelict & Ownerless mines project (D&O project)
Ms M Makgale, Manager, CGS, said that CGS’s D&O project started in 2012. The main objective was to continue with the field investigations for the continuous improvement of the data base. They were also looking at the closure of the mine holings in Limpopo and Gauteng for the previous financial year and were extending into Mpumalanga for the current financial year. They had also looked into the designs and the bills of quantities of the highly prioritized asbestos sites, and this information had then been turned over to Mintek. In essence, all this work was done to annually review DMR’s liability with regard to the mines. Over the two year period, they had managed to visit one-third of the D&O mines, and were yet to visit 3 872 mines accounting for 65% of the information on the database. Of the 2 128 visited mines, 42% required no rehabilitation, 16% were mines that were currently owned, thus no longer part of the D&O project, and therefore reducing the liability of the government for these areas. Seven percent of the sites required urgent rehabilitation, but these were not necessarily as many as the entries made on the data base.

For the financial year under review the organisation had managed to close 27 shafts in Gauteng and Limpopo. They had also had an opportunity to go to the field with the DMR officials so that they could look at the challenges that they were facing in the field. The sites were prioritised according to how close they were to communities, particularly the informal settlements. After the sites have been cleared, the CGS engages the local authorities on how best they can utilise the given sites. For example, a similar interaction had happened with the Ekurhuleni municipality. There activities did not look only at the core mandate of the CGS, which is mining and the stimulating of mineral resources, but they also look into the ground water supply, thus contributing to the millennium development goals. They also go to the communities, like in the North West Province and Limpopo, to help them with ground water because they have the facilities that can assist in this regard.      

CGS Annual Report: Briefing on the CGS facilities
Dr Graham said that the organisation had some of the facilities to conduct airborne or offshore surveys. These facilities were by no means capable of conducting surveys for the whole of South Africa, but for smaller areas, they had access to a plane. The upkeep of the plane and its equipment unfortunately needed constant attention and they were at a stage where they needed to upgrade some of the equipment that was on the plane to continue to be able to use it.

The survey vessel was for near shore surveys only. It was a fairly robust vessel that could be used in rough waters, but not in deep sea. Because of its size, the staff can not stay on it overnight, and  thus have to return onshore whenever they use the vessel. Their helicopter was currently going through a 12-year inspection period and was mainly used for their geochemical surveys.

CGS had been fairly active on the African continent for many years in terms of the projects that it engages with. Currently, they had projects in Burkina Faso, Malawi, Tanzania and Namibia. They also had a metallogenic mapping project in Haiti. They had a project in Zambia which in the past had been suspended, but it was being restarted in the current financial year. They would engage with their geological survey in terms of strengthening the capacity within the Zambian geological survey. They had the OneGeology project, which was meant to cut across the continent to collect and bring together geological information to be essentially used across the world, and wanted to make this information accessible to all countries.

CGS was the permanent secretary to the Organisation of African Geological Surveys (OAGS). They often received delegations from other countries who wanted to see how a geological survey type of organisation was operating or should operate, but often the visits had a level of commercial undertone, in that some delegations were interested in the work that CGS was able to perform for them. 

CGS Annual Report: Briefing on finances, 2013/2014 to 2015/2016
Mr Leonard Matsepe, Chief Financial Officer, CGS, tabled the presentation on the finances of the organisation.

He said that for the financial year under review, they did not achieve their target on the sales and contracts revenue. They had a target of R79 million, but had achieved only R40 million because there were several commercial projects that did not materialize in the year under review. The organisation was also co-funded by sundry income -- funding that is received but was not planned for. They expected R3 million from their short term investments, but were able to benefit from foreign currency gains. They received funding from the Mining Qualifications Authority (MQA) for the internship programme, and did well with their short term investments. Overall the entity’s total income was R314.3 million, while total expenditure was R312.8 million. On bursaries -- a mechanism which they were using to try and transform the organisation – R2 million rand had been budgeted and spent.  Because they had not achieved their commercial targets, the costs on expenditure were correspondingly lower than what had been budgeted.

The CGS was facing a challenge of ageing infrastructure. In good years, when the organisation had registered a surplus, this surplus was often redirected towards re-capitalisation of their infrastructure. However, since the economic recession, the recapitalisation programme had been affected, because it had no reserves to invest in recapitalisation of infrastructure. Significantly, this position had improved for the financial year under review and they had actually invested about R20 million towards the recapitalisation of infrastructure.

The financial year under review had been a very difficult for CGS, because they had achieved an unqualified audit opinion with findings -- a position which was not known to the organisation for a period of 12 years. In the same year, they also learnt that their newly appointed procurement manager had been involved in irregular practices, leading to his suspension even before the audit process. The organisation was subsequently subjected to a forensic investigation to determine the extent of the effects of the irregular practices. The findings indicated that the irregular expenditures for which the procurement manager had been suspended were the only irregular expenditures within the organisation, and no others had been highlighted after his suspension. A disciplinary hearing had been conducted, which ended up with him being dismissed. The irregular practices included acts of not declaring an interest where one existed, there had been unfair awards of tenders, and tenders not being advertised during the correct periods, amongst others. To try and improve on this situation, they had re-capacitated their procurement division and had introduced a system of proper separation of duties. They had outsourced an internal audit unit for the meantime, who had come in to execute the internal audit process, but this was not the same as having an internal audit unit where someone would continuously monitor and evaluate if things were getting out of hand. They had advertised these positions and believed that by the end of December they would have found the proper candidates to execute these functions. With the new re-positioning strategies that they had put in place, they were closely following all the requisite processes and making sure that the new structures and controls that had been implemented were actually put in place and as such would improve on their audit outcomes going forward.

The organisation was also faced with other internal control deficiencies, such as lapses in financial control, but with the repositioning strategy, management was looking into the whole organisation and its processes were being re-mapped and controls implemented, so that if in the future they implemented an electronic system to move away from the manual system that is currently operational, proper structures were in place to support the system.  This would project a better image for the organisation, with it not being in transgression of the AG requirements.

CGS hoped to secure some projects for the next few years which in turn would improve their commercial revenue income. They believed that the D&O project was going to need increased funding going forward. They also needed to be spending close to R1 billion towards the stimulation of investment in the mineral sector. If the funding for such projects keeps coming and the work is done, it will be well managed and bear significant fruit.

CGS had secured funding to improve on the condition of the infrastructure. Significantly, most of the organisation’s buildings did not have air-conditioning and this was being resolved, especially for the laboratories because the temperatures of their environment need to be controlled. The organisation had continued to submit proposals to National Treasury for funding. It needed funding for the hosting of the 35^th International Geological Congress due to take place in South Africa in 2016. Overall, they had submitted proposals for funding from treasury for projects totalling to R1.4 billion.
 
CGS Annual report: Briefing on human capital
Mr Kota tabled the presentation on the human capital of the organisation.

The key focus areas of the human capital strategy within the organisation were focusing on issues of transformation. The cost of training scientists and ensuring that they gained sufficient experience to be able to be independent and operational within the organisation, was huge. The younger scientists help a lot when the organisation has to submit tender bids for international competitive work. They had had an unfortunate experience, where a master’s level scientist with eight years’ experience was not accepted for a tender in Tanzania -- where they had said that the scientist did not meet the minimum requirements for the level of work that was required for the tender. The question was not for the scientists to join the organisation and gain the necessary experience, but being able to keep them so as to gain relevant experience was critically important for them as experts.

The organisation employed 60% persons of African descent, 29% whites, with other groups, including foreign nationals, forming the balance of the employees. It was critically important for the organisation to have a strong dichotomy skills pool that was dominated by Africans and whites, but it was a struggle to attract and retain coloureds and asians. The bursary programme had been focused to try and help with this problem. The organisation was male dominated, but the difference between the male and females within the organisation was not that significant.

The demographic composition of the organisation’s bursaries was dominated by Africans and whites, which in a sense reflected the majority of students enrolling for geosciences in South African Universities. The composition of bursaries by gender was largely male dominated. For the financial year under review, 17 bursaries were awarded through the organisation’s bursary programme. The organisation was very proud of its internship programme, which was mainly dominated by the MQA, where a number of students had joined the organisation as interns but were later absorbed into permanent positions within the organisation. The organisation attracted many interns because of its unique geological field school. The organisation had an active outreach programme, where they adopted schools and exposed them to geoscience work on a yearly basis.

South Africa had won the right to host the 35^th International Geological Congress (IGC) under the auspices of the International Union of Geological Sciences. This was a premier event on the calendar of the geosciences once every four years, and South Africa would have the privilege of hosting this congress in Cape Town on 27 August to 4 September 2016. 

Discussion
Mr Pikinini confirmed that he had seen the internship students benefiting from the internship programme at CGS. He commended the organisation’s efforts on the work they were doing towards achieving the 50/50 principle. The Members were proud to see more women than men engaging with the organisation’s internship programme.  The organisation’s report was very good and had responded to the needs of the Committee. Even the findings of the AG had been presented in a very good and comprehensible manner, and he hoped that in the next financial year the audit outcomes would be better than for the financial year under review. The most critical issue which needed to be looked into was how the entity could retain jobs for the scientists and ensure that on employment, they could also be retained longer periods. He recommended increased investment to try and resolve this challenge. He added that creation of employment for the specified group could be added to the National Development Plan as a proposal of the Department of Mineral Resources, as a contribution towards building the South African economy. He requested the organisation to increase the square kilometre geological research to cover a wider space, because he believed that South Africa could do more with regards to the research, and because the exploration methods for minerals over the years had changed. Minerals could no longer be found at the surface -- they were underneath the ground and mixed with the rocks. Increased investment needed to done to facilitate this project, which could in turn benefit the South African economy.
 
The Chairperson said that there was a huge difference and improvement in the operations and execution of its mandate by the CGS. The 44:56 ratio of women to men within the organisation showed that there had been an improvement in the human capital composition of the organisation. He requested them not to come back with the same ratio in the following year, because he wanted to see an upward movement with regard to the demographic composition. The difference between males and females within the organisation was six percent, and could easily be changed.

He requested them not to be in a defensive mode with their presentations for fear of interaction from the Committee, due to prior presentations. The Committee was aware that the entities presenting were different, although they were under the Department of Mineral Resources (DMR). There was a need for an increase in the Department’s resources so that they are able to comply with their mandate. The issue was not the extent to which the organisation was using its resources, but the extent to which it was helping the country to move forward, particularly around issues of investment opportunities and possibilities.

He was aware of the interventions made by the organisation in the neighboring states, and how they were beginning to reap the rewards of the intervention, but the same needed to be done for South Africa. He requested clarity on what constituted strategic minerals in South Africa and to what extent those minerals could be exploited, because there was an ongoing debate on the matter in the country. It was at the centre of their work as CGS, and could also help the country to focus on priority minerals for exploration purposes. The Committee had fears on the regression of the entity’s audit outcomes, but hoped that as they had implemented structures to improve on this outcome, they could be improved going forward.

CGS’s response
Mr Kota said that the majority of the organisation’s findings in terms of the AG’s audit opinion did not result from lapses in internal controls. Most resulted from one transgression, and from their preliminary investigations into the matter, it was clear that someone had deliberately circumvented processes that had been established in the CGS. The audit record of CGS could speak for itself in terms of the aforementioned issue, and that was why it had been very easy for the particular investigation to lead to a dismissal. As a pre-positioning strategy, they had embarked on the implementation that could make work processes transparent. They had embarked on an internal organisational business mapping project within the organisation, starting with the procurement unit. They hoped to complete this process for the entire organisation by 15 November in order to have all the business divisions within the organisation published so that they could be automated. Once these processes were implemented, it would become very easy for the internal audit function to be executed. He was confident that the integrated internal control facility would ensure that they had a whistle blowing facility, and appointing a permanent internal division within the organisation would go a long way to help the organisation on a proactive basis rather than a reactive basis.

The organisation had areas that were prioritized and were likely to give the country immediate or near term benefits, based on the intervention that they can make. The organisation was aware of the showings of mineralisation in several regions of South Africa -- for example, in the Northern Cape, the Tugela area in Natal, and the copper and lead-zinc ore deposits, all of which had not been exploited -- and was advocating for an intervention for the specific areas to be opened up as mining camps. Overall, although the research was not covering the whole country, the researched areas provided adequate information on the prioritised areas, but CGS believed that there were exploitable resources in areas where research had not yet been conducted.

There was an opportunity with the capital programme that Eskom was reassessing. There was a case to be made for a small coal fire station to be opened up in the Eastern Cape. He thought that this was a good project to be engaged with, because there were resources of coal existing in the given area -- relatively low quality, but good enough for generating electricity. There could be no better business case for transporting them to power stations that were much further than where the resource was to be found, simply because of the value. If Eskom set up the small power station in a given area, it would open it up for coal exploration. The organisation had resolved to start working to see whether they could influence the programme at Eskom.

They were trying to tailor their approach to attract women in the geosciences. CGS was a unique organisation. It had similarities with other science councils, but as a geoscience institution they were unique in South Africa and had to control all these issues in any interventions that they proposed. CGS had a lot of scope to extend the discussion on strategic minerals in South Africa. However the area had not yet been looked into by the organisation but it was an area that needed to be looked into and taken into consideration. The organisation had focus areas which had been outlined, based on the strategic minerals of the country. However, based on the questions raised by the Committee, there was need to reconsider the established focus areas, and perhaps there might be scope in the future to extend these focus areas. 

The Chairperson commended CGS for their presentation and advised them to go and do their work so that when the Committee cames back to questions, they had suitable answers. He advised them to read the Committee’s recommendations on the issues raised, because some of the recommendations were reflecting 2012/2013 issues. The Committee would do the same to check that there were no issues skipped. He expected a clean audit from the organisation and not an unqualified audit with findings. They were a public entity, but they needed to do their work in such a way that one day they could be able to stand on their own, and when this occurred it should be able to be sustained. He requested them to find a way to ensure that they were accessible to the South African people, as well as market their activities, products and services. They were doing a very good job, but they were unknown. He requested them to partner with academic institutions in an effort to advance their mandate and make their activities widely spread, comprehensible and accessible to all, and this would in turn help the organisation in its self-evaluation process. He also asked the organisation to look into other ways of trying to acquire funding opportunities in order to advance their bursary programs.    

Mine Health and Safety Council (MHSC) on its Annual Report 2013/2014
Mr Thabo Dube, Chief Execute Officer, MHSC, tabled the presentation on MHSC’s annual report.

He said the vision of the organisation was to be the trusted advisor to the Minister of Mineral Resources and to stakeholders of the South African mining sector, as a knowledge leader in occupational health and safety issues towards the achievement of zero harm to mine workers, communities and the environment. The mission of the organisation was to promote occupational health and safety in the mining industry, mainly promoting the outcomes of the work that they do in terms of research and studies undertaken, so that they become relevant to the industry and the industry gets value for the money it invests in the projects of the organisation.

The organisation had a five year rolling plan, based on the input of the tripartite stakeholders, the mining opportunities and the challenges of the mining industry. With regard to the performance on the different perspectives, the organisation had managed to deliver on the customer perspective which was comprised of two strategic objectives. The organisation had completed several research projects for the financial year under review, such as on the seismic networks and with the CGS. The organisation had had several challenges with the project, but was trying to deal with them. They were at the stage of validating data in terms of the accuracy of the locations, thus causing a delay in some phases of the project. The other project they were working on with CGS was the early warning system for risk reduction in fluid-induced seismicity.

The organisation had corroborated with other state research institutions on other projects, like the adverse health impacts with dust emissions from gold mine tailings. This research related mainly to the dumps found in gold producing regions like the Johannesburg area. The organisation had embarked on different initiatives which were at different stages of completion. The first initiative was the use of analogue versus digital x-rays. This initiative was mainly to address the issue of how they reproduce x-rays and how they could make a transition to the digital system, since most the mine hospitals were using the analogue system. This initiative was intended to enable early diagnosis of lung-related diseases, as well as to assist in guiding the mines on how they could move from the old system to the new one in terms of making sure that they were efficient in terms of lung diseases. It was intended to finish the project in the current financial year.

The second initiative, which had actually been completed, was the Personal Protective Equipment (PPE) for women in mining. They were at a stage where they were going to showcase the work that they had done as the MHSC at the upcoming summit, and were in the final stages of the procurement process of the PPE.

The organisation was battling with the issue of safety and security for women in mining. Work on the project had been commenced, but they were not at the stage where it was going to be completed soon. In the meantime, the organisation had resolved to create awareness about sexual harassment in the mining industry, and was at the stage of finalizing an awareness programme. Miners would have to be inducted into this programme in order to create awareness of the challenges faced by the entity in terms of sexual harassment.

One of the major outcomes of research by the organisation was on acoustic emissions and thermal imaging. The project was used for identifying loose rocks underground. It was in talks with the technology agency and CSI in terms of commercializing this type of research. They were also working on a knowledge transfer project in terms of hazard identification for rock mass classification to identify the dangerous rocks, so that when rock engineers do their extraction designs, they can take certain things into consideration. The first phase of the project had been relatively successful, to the extent that the mining industry had requested that the organisation continued and extends the project.

On the integration of national and mine seismic networks, the MHSC wanted to validate and do a calibration of the system to ascertain how accurate it was before it could be extended to other areas like the platinum belt, because the mines in these areas were getting deeper and were likely going to be affected by seismic effects. Before the system could be transferred to another area, they had to make sure that they were working with an accurate system. The system had proved accurate when the country faced seismic effects in August, where they had more accurate information compared to the American Geological Council.

As part of its promotional initiatives, the organisation had developed a heat stress board game similar to monopoly for mine workers to play. This enables the organisation to teach miners in a different medium on how to manage heat stress underground. The project had been completed and acquired positive feedback during its pilot study as an effective mechanism of training. The game was going to be distributed to most of the mines in South Africa.

The organisation had not spent its entire research budget for the financial year under review. One of the reasons for this was the timing of approval for the research projects, as well as the process of integrating them in the research budget. When the organisation budgets it knows the exact cost of certain projects, and not estimated figures. Thus, they need a two-year period before the project commences to reconfirm the project, and procure the necessary services in terms of the service providers that are going to be assisting the organisation with the project. This ensures that the organisation is on the right track in terms of costing.

Investigation into the surface activity of airborne pollutants was one of the critical projects of the MHSC. This project was mainly carried out around the mining areas, especially where they have communities close to the dumps, like in Gauteng and the Free State. The project was mainly looking at the level of toxicity in the dust so that they can come up with measures to address it. The project was nearing completion and as such the Council was looking forward to the recommendations of the Committee on what needed to be done, and also identify the extent of exposure to hazards that are probably contained in the mine dumps. They expected to complete the project by the end of the ongoing financial year.

The entity had partially achieved its internal process perspective. The area in which they had not yet achieved their objective, was the summit initiative. The failure to achieve this initiative was a lesson for the organisation. Now that they were going into a new summit action plan, they had to consider how they needed to do things differently to make sure that the initiatives that they had were very impactful, realistic and radical, to make sure that they were going to effect change in the mining industry. Overall, there were a number of lessons that the organisation had learnt from its action plans, as well as their implementation. They needed to think about how they were going to be implementing the set plans. This was something that they did not do very well in the previous summit, but what they had learnt was that when they came up with plans, they needed to ensure that they had resources and there wereproper plans for delivering the set action plans.

On the financial side, they had under-spent on their allocated budget. This was mainly on research, so this objective had been partially achieved. They had achieved their target of collecting funds from the mines. The under-spending was caused by, amongst others, the time problems with regard to the starting of the planned projects, savings due to operation costs and vacant positions within the organisation.

Despite the challenges in the audit process, the organisation had obtained and improved its audit outcomes compared to the previous year. This improvement had been facilitated by the strategies and measures they had put in place at the beginning of the financial year under review. The findings of the Auditor General related, amongst others, to the overpayment of R37 000 to a supplier. This had been identified as one of the shortcomings in contract management. Measures had been put in place to deal with this problem, as well as linking it with the management of projects. One of the major contributors to the problem of fruitless and irregular expenditure within the organisation was the issue of tax.  MHSC was deregistered for Value Added Tax (VAT) in 2002, and they thought at the time that the matter had been closed, only to be notified early this year that they still owed some interest. It had appeared from the SARS records that the entity had two VAT accounts, and when this had been highlighted to the AG, he had recommended that the amount be classified as a fruitless and irregular expenditure. The organisation had settled its account with SARS and had resolved that going forward they would have to check in with SARS to confirm that the organisation had not been registered for VAT without its knowledge. The other cause of wasteful and fruitless expenditure resulted from a wrong appointment. To resolve the problem, the organisation had conducted an investigation and a disciplinary process. The R78 000 expenditure on the wrong appointment had been fully recovered and the affected employee had since terminated his employment with MHSC. They had also picked up on some loopholes in controls in terms of HR matters, but had developed strategies on how to improve on this problem to ensure that a similar problem did not arise in future. Further; their turnaround strategy included a re-engineering project for the SCM which was started in January 2013, where senior managers had been appointed to be chairpersons of the big committees, as well as guiding other members on the big committees. They had tightened their performance reviews and accountability, especially for SCM staff members. They had also improved their electronic supplier data base to help resolve issues arising from tax matters and the appointment of suppliers without a valid tax certificate.        

MHSC strongly believed that zero harm was achievable, and this issue was up for discussion at the MHSC summit 2014. The theme of the conference was “Every mine worker returning home unharmed every day, striving for zero harm.” He hoped that this target could be achieved in the next ten to 20 years. The summit was also going to look into the performance of the organisation over a ten-year period to evaluate its performance levels and the lessons that they had actually learnt, so that in the next ten years a new milestone for transforming the organisation was implemented in terms of targets resulting in the vision of zero harm.

The organisation was also going to launch a centre of excellence. Its rationale was to address some of the issues faced within the organisation like research, expenditure and making sure that the outcomes of research were implementable. The rationale of the centre was to conduct and facilitate research, facilitate the implementation of outcomes, conduct laboratory tests that were required by law, provide training for the mine workers based on the outcomes of the research, creating economics of scale in terms of research to avoid the duplication of research available in the country -- especially research that relates to mine health and safety -- and strengthening domestic and the international collaboration in terms of available research.  National Treasury had allowed the organisation to keep the surplus funds resulting from their under-expenditure, to fund the project for the centre of excellence. The resources were going to be a game changer as far as research relating to occupational health and safety in the mining industry was concerned.

He closed by saying that the zero harm target was possible and was the target which the organisation wanted to achieve, but they needed to have the right mind set, do things the right way and provide the necessary support to the stakeholders in the industry.      

The Chairperson commended MHSC for their presentation and performance in the financial year under review. Of all the presentations that had been made during the meeting, they had the best presentation. It was quite friendly in reading, and easily comprehensible. He requested the Committee Researcher to help the other organisations on methods of making presentations to the Committee, as well as the documents they may need to make available to the Members. 

Discussion
Mr Pikinini recommended that the issue of dealing with sexual harassment within the organisation needed to be a policy matter made known to workers at the time of employment or appointment. They should be required to sign a contract of not engaging into sexual harassment at the work place. If they breached this contract, punishments like expulsion or termination from the work place should be imposed. The audit process was easy to deal with, but the mistake with most of the entities was to wait for the audit advice from the AG. If the audit was done internally on a daily basis and controls were implemented, he was certain that the organisation would get a clean audit in the next financial year. The issue of over payment of suppliers was an issue of carelessness in oversight -- a careless mistake which must never happen again.    

The Chairperson said it was true that the audit outcomes for the organisation over the years had not been good, but there had been improvement in the financial year under review. He wondered what was preventing them from obtaining a clean audit, because their position made it seem like they preferred to stay in one place. The organisation was completely different from the other entities of the DMR, because it was a combination of stakeholders. This meant that neither the government nor commercial business could help to keep finances in the right field in a correct way. All the requisite entities were integrated and a strategy of having them work side by side needed to be implemented. He requested them to establish a system that showed where money was spent so success could be attributed to the proper funders within the organisation.

The presentation lacked information on the actual deliverables of the organisation. The Council was expected to present such information to the Committee or, better still, corroborate information on similar grounds to those that had been presented by the other entities within the DMR.  Dealing with issues of mine health and safety was not meant to be reported by one entity within the DMR, and if they failed to make a presentation on these issues, it meant that they were not fulfilling their mandate.

The project on the centre of excellence was exactly what the country needed. It also needed to reflect the country’s historical data -- where they had come as a mining sector. This suggested that the organisation needed to work with the Heritage Council to try to execute this mandate.

He requested for a justification on why the Treasury had found it fit for the organisation to keep its surplus revenue. The Committee needed to be convinced that it was necessary for the organisation to retain R187 million of surplus revenue. Generally, the performance of the organisation was quite good, as well as its performance in spending what it had been given. However, it was necessary to find other alternative forms of funding. He asked the organisation to create mechanisms that would make it self-sustainable, even when they achieved their zero harm targets. He said that the Committee was going to take the entity’s promise for a clean audit opinion for the next financial year. 

The meeting was adjourned