Mining Charter 2015 audit and transform: Department of Mineral Resources briefing

Meeting report

Apologies were tendered on behalf of the Minister, Deputy Minister, and Director General.

The Chairperson said great challenges bedevilled the mining industry, especially the gold industry. Negotiations would help our standing both in the industry and internationally. He hoped for a commitment for resolution to come soon from both parties, and that the Department could mitigate these issues. All parties must work to avoid crisis and job loss. The purpose of the meeting was to take stock of the committee’s current progress.

Mr Mosa Mabuza: Deputy Director General Policy Promotion, Department of Mineral Resources, tendered apologies for the Minister, Deputy Minister, and Director General from the DMR.

Briefing by Department of Mineral Resources
Mr Mabuza explained that the Mining Charter was implemented in 2004 and amended in 2010 to become broader. The Department developed a plan for evaluation in 2014 and worked with a MIGDETT task team that included unions and a web based report system. An actuarial scientist helped the Department use weighting to give a more realistic picture of their data. Weighting was based on the size of the mine and number of employees.

The scorecard considered three categories with no weighting and thus required their achievement: Reporting, Ownership, and Housing & Living Conditions. Other categories, including Procurement, Employment Equity, Human Resources, Mining Community, and Sustainable Development, were weighted and aggregated. Right holders must provide the Department with correct information on these issues in order to receive benefits.

A graph showed that only 15 operations employed two out of every three workers. 962 mines were eligible to submit data for this study- only 442 replied but these accounted for 95% of employment. The Department found that 79% without weighting of mining rights holders reported meeting the 26% HDSA ownership target with the average HDSA ownership being 30%. Two graphs illustrated that with weighting workers were benefiting significantly but mainly at larger companies. Based on the data the Department received, they found the economic benefit of the rise in HDSA share value to also benefit employees of larger companies far more greatly.

The Department wanted all hostels converted by 2014; to date roughly half have complied. The Charter aims to keep companies above 50% compliance for their combined score. The target for procurement (of capital goods) is above 40% compliance. In the weighted category, roughly 80% of companies are above the target in the various procurement subcategories. A table was presented showing that employment equity issues still exist: women of all races, for example, were heavily underrepresented. Only 35% of companies have not met their Mining Community Development targets. Less than half of companies have complied with EMP standards, regardless of size. Performance has also been poor on Health and Safety compliance. Most companies do use South African labs to analyse their samples.

The Department is concerned that by 2014 not all companies had complied with the Charter. Mr Mabuza pointed out that this harms mineworkers and small communities. Mr Mabuza hoped the economic benefits could become more broad-based to prevent loopholes.

Discussion
Mr J Esterhuizen (IFP) said that the Department is incorrect on the issue of mineral licences and rights: 10 000 mineral rights have been issued, and asked where the Department’s 440 figure originated. Government needs clearer legislation to prevent illegal mining. He noted with reproach that traditional leaders are still prevented from attending meetings and that local communities are ignored. The mining industry is shedding thousands of jobs and is becoming unsustainable. He was concerned that unions and government now control the industry, not workers.

Adv H Schmidt (DA, Gauteng) noted that statistics could be manipulated to show more favourable progress. The Chamber of Mines disagreed with this report. He asked how the court case between the Department and Chamber was going? Were permits that could explain the finances available? What were the consequences for non-compliance by companies? Many companies would be closed; what were the emergency closure provisions? Who oversees such provisions? Who would pay the bank loans if a mine closes down? What would be the impact of dividends not being paid? He pointed out the recent happenings with Exxaro as a precautionary tale.

Mr Z Mandela (ANC, Eastern Cape) asked how many of goals of the 2010 amendments were achieved? What percentage of shareholders gained broad based empowerment? Had the set targets from 2014 been met? What did the number of houses mean in relation to individual right holders? He gave an example of Limpopo where the company does not meet the charter’s requirement of providing housing because the people “live in a community nearby”. He asserted that a family unit is more than just walls and asked who defines a family unit for the Department. How were companies held accountable for not improving housing or community development? He asked for a more specific number and exploration of the companies who have not complied with the 2014 goals.

Mr Mabuza clarified that many of the rights referenced were prospective, not mining rights. A judgment from the Free State decided that illegal mining would be explicitly stated in the law. He pointed out statistics that show how few foreign workers are involved in mining. The law requires communication with tribal and local leaders. A study should be done on the extent of communications.

Mr Mabuza claimed that the Chamber of Mine’s statistics were not significantly different. The only issue is the definition of empowerment. He asked the committee to view such a court case as a healthy democratic process. He agreed that there was a direct link between the number of employees and the fiscal index. This correlation existed only because South Africa’s economy is labour intensive. The Department did not need permission to regulate these companies from the companies themselves. The Department could not and did not take licences overnight, but after repeated offences and refusal to correct; the Department must have the power to stop non-compliance. If the process worked, there would be no necessity for immediate closure. The charter accounts for a negative economic environment; he warned against abusing this clause. The Minister fully supported mining and was not an enemy to mines.

Mr Mabuza said the housing transformation system was very variable. Broad based meaningful change had occurred in about 6% of places. Progress in ten years had taken the charter very far, but not far enough. Non-compliance punishments had already been invoked. He urged Mr Mandela to look at the success of the programme in other categories. Fines under the MPRDA were not an effective deterrent; fines should rather be 10% of revenue. Weighting was not linked to housing. Many houses that in 2010 had over 16 occupants now had less than 4. Section 100 of the MPRDA defined both housing and living conditions to prevent the issues that Mr Mandela raised. He admitted that many areas still fell short of meeting basic living condition standards, but by invoking the MPRDA those companies would eventually lose their licence if non-compliance continued.

Mr Mandela asked whether specific companies that had not complied with housing standards were known? Where were these 67 mines that still operated hostels, and when would these be single room units?

Adv Schmidt asked whether the committee had access to the full report, and whether another public hearing with companies present would be beneficial?

Mr Esterhuizen said we had many resources in this country, and they would go unused if prospective rights are not converted into mining rights. Some people never actually mined because regulations in the seven-year window were not enforced.

Mr J Lorimer (DA, Gauteng) asked what kind of impact these steps would have on employment? Why was environmental compliance so low? People in this industry had little risk and only bought shares, thus they were not entrepreneurs. He suggested that perhaps this language should be changed.

Mr M Matlala (ANC, Limpopo) asked what efforts were actually being taken to increase diversity and employment equity?

The Chairperson said the presentation was a summary of the report, not the report. What happened now that the ten-year plan was concluded? Why were disabled persons not considered under employment equity, and expressed concern at the lack of diversity in all categories. Relations between companies and communities were strained, especially when deciding who was in charge. The committee must process the report as soon as possible.

Mr Mabuza admitted that a full report existed and promised to send it later in the day. He was unclear about the validity of the report showing 10 000 prospective rights, because the Department found only 962 valid mines. He defended the recognition of black entrepreneurs as people who started mines by themselves, and declined to speculate on why environmental compliance was so low.

Years of oppressive laws historically prevented women from mining; this has been remedied on all levels to a small degree but not sufficiently. Various scholarships were in place to increase female interest in mining. He welcomed the Chairperson’s point on disabled persons, and would inform the Committee on that subject at a later date. Local leaders must be educated on their roles. 

Broad based black empowerment was the main goal moving forward, and amending the charter was a critical next step. While transformation was taking place, however, the old charter must still be enforced. The threat of a vacuum being created between the charters was highly unlikely.

The Chairperson wondered whether the Charter could still be enforced with legal standing after the seven or ten-year window had expired. It would be hard for anyone to support such a venture without it being clear that work had been done. He was concerned that provinces and municipalities felt irrelevant in this process. The Committee would process this matter the following week when it had access to the full report. The Department wanted this process finished within the financial year. .

Mr Matlala asked when the Department would be satisfied that their work was done? What would that look like? He was concerned that the Committee was not making progress and recommended interrogating the Mining Charter.

The Chairperson agreed that time must be set aside by the committee to process this issue.

Mr Esterhuizen pointed to a quote from the Sunday Times as supporting his 10 000 prospective rights claims.

The Chairperson held the Department as more reputable than the Sunday Times.

Committee business
The Committee programme for the next term was reviewed and approved.

Minutes dated 24 June 2015 were adopted with one amendment.

The meeting was adjourned.