Department of Mineral Resources on job losses agreement, in presence of Minister

Meeting report

Job Losses Agreement implementation: Department of Mineral Resources (DMR) briefing
Mr David Msiza, Acting Director General, Department of Mineral Resources, noted that there had been a declining trend in mining employment which dated back as far as 1986. Since the introduction of the Mineral and Petroleum Resources Development Amendment Act (MPRDA) in 2004 there had been a substantive growth in employment which peaked at approximately at 530  000 in 2012, with the platinum industry becoming the leading employer in the mining industry. The recent decline in employment levels is attributed to a number of factors - global economic challenges, the slowing down of demand for major commodities and the sustained low commodity prices for some of the key minerals. A study was done into the employment trend in the mining industry between 1994 and 2014, conducted for the three commodities of gold, coal and platinum. This showed that coal had the least number of job losses between 1994 and 2014, while platinum had the most job losses, with more than 400  000 job losses in 2001. The number of job losses for the gold sector has also declined, falling from the high of 400  000 in 1994 to just a little over 100  000 in 2014.

The mineral price trends between 1994 and 2015 showed that from January 2015 to December 2015 the price of iron ore fell by 21%, coal price fell by 20% and platinum fell by 31%. The industry growth rates for the third quarter of 2015 showed that agriculture, mining and electricity had negative growths. Mining was at -9.8%, agriculture was at -12.6% and electricity was at -8.0%. Manufacturing, trade and finance showed better results in the quarter; with manufacturing showing a 6.2% growth rate.

In response to the challenges relating to job losses, the Department of Mineral Resources (DMR or the Department) had convened a mining leadership retreat of organised business and labour and government, with both the Department of Mineral Resources and the Department of Labour (DoL), to try and address the potential job losses in the mining sector. The stakeholders who attended the retreat identified interventions that should be implemented to save jobs or minimise job losses. In addition, the stakeholders signed a declaration which supported the interventions to save jobs on 31 August 2015. The proposed interventions included, amongst others, enhancing productivity and managing cost pressures, facilitating the sale of distressed and other mining assets, supporting mine workers in the event that job losses cannot be avoided, streamlining the process for downscaling, updating the database and exploring fiscal instruments and communication.

In the progress of saving jobs the implementation of retrenchments was delayed, concurrent rehabilitation activities to create alternative jobs for mineworkers were accelerated, facilitation of sale of distressed mining assets was undertaken, support to mine workers was given in the event that job losses cannot be avoided and a multinational companies’ procurement levy to support employment opportunities for retrenched mineworkers was utilised.

The declaration had reinforced the Commission for Conciliation, Mediation and Arbitration (CCMA) process and resulted in 16  000 affected jobs being held in abeyance while all other available alternatives are being considered. The decision to restructure and unbundle mining assets heralds a new era for emergence of new and transformed mining companies to drive the national development imperative. The DoL retrenchment response team is being reactivated to consolidate the services rendered to affected workers; including the Unemployment Insurance Fund (UIF) benefits and financial planning advice. The alignment of business processes underpinning Section 52 of the MPRDA and Section 189 of the Labour Relation Act  is being undertaken.

Other interventions which have been taken to save jobs include collaborations with other stakeholders. As a result of this, about 3 900 direct jobs were saved in the gold sector and a further 3  031 in the coal sector. The Department is also leading further interventions in collaborating with key stakeholders to secure medium to long term sustainability of the mining industry. These include implementation of the Mineral Beneficiation Action Plan in terms of the 9-point plan. The DMR continues to lead the investment promotion of SA’s mining industry as a favourable destination.

Mr Msiza concluded that the DMR, through collaborations with stakeholders, will continue to play an active role to save jobs in the mining industry. The declaration and other initiative for saving jobs have yielded some positive results .However, greater effort is still required from all stakeholders to deal with the scourge of job losses. Lastly, the DMR will continue to implement interventions that take into account sustainable growth of the mining sector.

Discussion
Mr M Matlala (ANC) asked Mr Msiza whether, in his acting post, he was able to tell the Committee which matters the DMR was currently attending to; if he could not answer that now, then he should kindly tell the Members and work on the response for the next meeting.

Mr J Lorimer (DA) said that it is convenient for the Department to blame the job losses on the international setting. He asked what costs are involved when a mining company’s operations are affected by poor management or regulation. He pointed out that there are inefficiencies in the mining sector due to the strikes and the cost of electricity. There has also been an increase in labour costs, not only the cost of paying employees but rather the inefficiencies within the labour system. The fact that mine workers could strike for months without any control proves that there are inefficiencies in the labour system. The initiatives by the Department seem to be laudable but they do not seem to be solving the number of jobs which have been lost, and the figures are also affected by inaccuracies in the mining sector. He maintained that a mining policy has to be developed which will stipulate the rules under which a mine is conducted. He said that the international companies are retracting their investments out of South Africa because ownership seems to be more important than sustainability - Anglo American, for instance, had taken its coal industry out of South Africa. The government refuses to grant companies free mining rights if they do not have a 26% Black Economic Empowerment (BEE) partnership. The problem is that the companies which have BEE partnerships do not have enough capital to provide for the industry. He thought that the only possible way to solve the inefficiencies is to rewrite the MPRDA to make it investor friendly, and also to rewrite the Mining Charter as to decrease the BEE percentage. He asked the DMR if it could actually account for the 100  000 job losses in the market.

Mr H Schmidt (DA) said that the role of developing countries in the international economic setting will soon start to fade away but it is imperative that South Africa remains relevant to the global markets. He felt that the Department should have included figures representing the employment trends for 2015. The decrease of the agriculture and mining sector is disturbing, because these are South Africa's biggest markets. He asked Mr Msiza to explain the role of the Multi National Companies, and to state what their procurement levy is. In light of the current economic condition there is an increase in awareness that concurrent rehabilitation needs to be done, instead of rehabilitating after the mine has closed down. He asked the Department why it would accelerate concurrent rehabilitation activities to create alternative jobs.

Mr Z Mandela (ANC) said the decreasing commodity prices had led to a number of job losses, but he wanted to know exactly how many jobs had been lost in the sector. He pointed out that there are also mining companies that retrench workers when their prices start decreasing. He asked if the DMR had done anything to hold the mining companies accountable for retrenching their workers. One of the other Members had already alluded to job losses close to 100  000 and he asked for clarity on the correct number of job losses.

Mr Mosebenzi Zwane, Minister of Mineral Resources, replied that there are a number of mining companies which showed signs of distress, including Kumba Iron Ore and Anglo American. The DMR had been able to intervene in the companies. Anglo American had also indicated that it would be leaving South Africa with some assets. One of the contributors to job losses was indeed the inefficiencies which one of the Members had alluded to. The ongoing strikes are not a result of the price decreases in the market. All the companies which are investing in SA expect their returns. He asserted that the companies which have closed in SA did not do so because of the Neutral Mine Drainage (NMD).Section 54 is an important tool for safety and security for the mining industry. All the stakeholders with whom the Department had met with agreed that the safety and security measures had made a significant contribution to the sector. The issue that should be dealt with was the manner in which the Department had been dealing with transformation.

He pointed out that Anglo American had closed its operations down in most countries, including Australia and Brazil, because of its own financial problems. When the leaders' Declaration to save jobs was signed, there were already 16  000 jobs at risk and jobs were being lost everywhere in all sectors in South Africa at the time. However, South Africa is doing much better than most countries, particularly when compared to Brazil. The mineral price trends indicated that iron ore prices had improved between 2008 and 2015; in fact, in 2009, all three commodities' prices started increasing due to the implementation of the MPRDA.

The Chairperson said that the Committee was mostly concerned with the stakeholders’ agreement, and would like to be given a chance to intervene in the matters concerning the agreement. He asked the Department whether the progress made had been fruitful for the mining sector. The Committee had noticed that there was only one stakeholder who had not signed the leaders’ agreement. He asked why the stakeholders have not been able to comply with the Declaration which they signed and what were the root causes of the difficulties.

Mr Lorimer  agreed that the crisis of job losses in SA is not found only in the mining sector, but in other industries as well, and as a result of this it has become difficult for mining companies to invest in SA. There seems to be a misdiagnosis of the problem with the mines, and that misdiagnosis was becoming a problem because it could cause a threat. Speaking to section 54 of the MPRDA, he said that no one disputes that the government and mining companies have done a great job in improving safety and security on the mines. However, he asked whether the Department could have not arrived at the same point in a different way, and one that would have been less disruptive to the mining industry. He said that he does not understand why the BEE Charter requirements should be raised to 51%.

Mr Lorimer wanted to emphasise that he was pleased to see the Minister present at the Committee briefings and that he was able to answer questions posed to him by the Committee. The changes to the MPRDA could be made immediately and he did not understand why the Minister is avoiding the questions regarding rewriting the Act.

Mr Schmidt said that intervention 1 of the Declaration states that the MPRDA shall be equally applicable, which indicates that everyone has to comply with section 52. The MPRDA itself also stipulates that the Minister needs to be notified within a certain amount of time if a company intends to retrench workers. However, he questioned how and why the Department was linking section 52; which relates to safety, to the retrenchment of workers. The commodity prices are on a rise but people are still continuing to lose their jobs, so he wanted to know what was then the root cause of this problem.

The Chairperson referred to intervention 2 of the Declaration and said that the Committees’ task is to look at the agreement and find ways which the Committee can intervene to ensure that stakeholders carry these interventions out successfully. In addition, he pointed out that the Preamble indicates that this agreement is voluntary. Members should be able to justify their arguments, especially with regard to their concerns with the BEE charter increase to 51%. If someone has been treated unjustifiably then it is their right to report this to the Committee; however, any person should be able to prove beyond reasonable doubt that s/he has been treated unfairly.

Mr Msiza said that the global markets should also be considered when analysing the issue of job losses. The Department regards it as very important that it must respond to the challenges and monitor the mining industry. As a result of its monitoring mechanisms to date, the DMR has found that 15 people have already lost their lives in the mines, and that figure would exclude the mine workers who are trapped at the Lily Mine. He added that some of the reported deaths could have been avoided. With regards to the leaders’ agreement, he said that this agreement is not legally binding; and so some stakeholders have not been complying with the agreements.

Mr Mosa Mabuza, Deputy Director General, Department of Mineral Resources, explained that the number of job losses in the mining industry cannot be confirmed as yet, until Statistics South Africa officially announces them. The information on page 7 was recorded in the third quarter of 2015; therefore the comments about the decrease in the agriculture and mining sectors may not be a true reflection of the whole year. These sectors could have done extremely well in the first two quarters.

Mr Lorimer said that the mining industry is a long term commitment investment for most of the investors, and as a result of the Mining Charter, the investors may not want to invest into SA any more because it limits their time of investing. He referred to the mine that closed for a total of 24 hours and said the question was not whether correct procedures were followed, but rather how viable was the closing of this mine. Due to the closure of the mine the investors lost their money and mine workers lost their jobs. Also, he pointed out that there are a number of corruption cases within the sector. That too is causing problems for the industry.

Mr Matlala said some Members of the Committee, through their own research, had found that mine workers do not comply with the mining regulations. The Committee has been told that there are not any monitoring mechanisms in place to ensure that proper procedure is being followed. He thus wanted to know exactly what mechanisms the Department has put in place to ensure that there is compliance from the side of the workers.

Mr Schmidt asked how much money has been given for the Multi National Companies’ procurement levy. He asked for further clarity on the correct time period for reporting retrenchment to the DoL and DMR.

Mr Msiza said that if any of the Department’s officials are involved with corruption activities, then such should be reported to the Department. He added that both he and the Minister have an open-door policy and are always open to suggestions from stakeholders on how best to deal with the matters.

Mr Mabuza said that a concurrent rehabilitation process is not possible for the mining industry right now. Provisions for rehabilitation can only take place once the mine has been closed down; these provisions are also stipulated in the MPRDA.

An official from the Department of Mineral Resources said that section 52, which does relate to reporting retrenchments, stipulates that mining companies should have a future forum that is comprised of management and labour. The Minister must also be notified of any job losses in the industry, or in the case that a company is expecting that there will be a loss of jobs once the future forum has been consulted. 

The Chairperson said that during visits he often receives a number of complaints from individuals. When he asks them to write to the Committee they often refuse, saying that the matter has been resolved, or they firstly want to explore other avenues for the matter. When people complain they must also provide the Committee with evidence which is beyond reasonable doubt, and the Members of the Committee must feel free to bring up matters of complaints to the Committee. He reminded the Committee that they will have a joint meeting next week with the Committee on Rural Development and Land Reform and the Women’s Caucus. He suggested that the Committee should thus hold an earlier meeting, prior to that joint meeting, to adopt minutes and look at the possible way forward with regards to the Leaders’ Agreement. He added that the death of the 15 people is unacceptable.

Mr Mandela and Mr Lorimer indicated their support for the Chairperson's suggestions.

Adoption of Committee Minutes
Members adopted the Committee Minutes from the previous meeting

Future discussions
Mr Schmidt said he would like to raise issues for consideration at the next meeting. This included the legal matters against the mining industry. He said that he had some of the cases with him, but is unsure whether these could be discussed at the meeting.

The Chairperson responded saying that matters would have to be grouped according to similarities. He also noted that the Committee should set aside time to deal with the MPRDA amendments and the  and the Mine Health and Safety Amendment Bill.

The meeting was adjourned.