The Minister and the Department on Mineral Resources (DMR) presented the DMR’s Annual Performance Plan and Budget for 2016/17. In the presentation the DMR discussed its strategic overview, including the mandate, vision and mission; a situational analysis of the sector; and an overview of the 2016/17 APP, budget and MTEF estimates. One of the items that the DMR highlighted is that it aims to have 100% adherence to it various turnaround times and to shorten these. Regarding mine injuries, there has been a slight increase in injuries in platinum mines, but gold, coal and other mines had all decreased over the 2014/15 year.
The DMR conducted a situational analysis of sector performance over the past decade. It noted that the depressed global economic environment continues to create challenges in the industry and will affect overall performance of the industry including job creation and investment in the industry. Despite the depressed economic conditions, a number of milestones had been achieved in 2014/15. Gross fixed capital in the mining industry increased from R18 billion in 2004 to R87 billion in 2014.
The DRM has aimed to create 35 000 jobs through mining over the Medium Term Economic Framework period. However, the DMR has been short of this target as it has only managed to create around 5000 jobs in the past year as a result of some of the challenges facing the sector.
Members were anxious about action being taken in the event of non-compliance by mining companies, and cited some examples arising from their oversight visits. They were also worried about the number of jobs being lost in the sector. In addition they wanted to be briefed on DMR’s involvement in Operation Phakisa.
The Chairperson asked about movement of staff across the DMR and its entities. He was concerned that in the presentation, the 2016/17 expenditure target is noted and the 2014/15 expenditure, but 2015/16 is missing, and asked if this is deliberate.
The Chairperson opened the meeting by reflecting on the death of Sikhosiphi Bazooka Rhadebe who was killed in front of his family, his wife and children. This situation is very concerning.
He noted that the Committee was supposed to have heard from both the DMR and its entities today. Unfortunately, parliamentary committees had only been granted up until 10:45am that day to meet. The Committee wanted to deal with the APP thoroughly and asked if some DMR staff could be present in the next day’s meeting, even if the Minister could not be present.
Mr Z Mandela (ANC) said that some members had not received any messages about the meeting times for today and asked that this be attended to so that in the future members know when meetings are happening.
The Chairperson said that the Committee would follow up on the matter.
He asked the Minister and his team to give the DMR’s presentation and asked that it be in line with the time allocated in the agenda.
Department of Mineral Resources 2016 Annual Performance Plan
Minister of Mineral Resources, Mosebenzi Zwane, said that it gave the DMR great pleasure to present the annual performance plan (APP) and budget to the Committee. He said that they were presenting at a time when the mining industry is facing challenges. It is also at a time when the community leader of the Amadiba tribe is being mourned. He said that the DMR’s thoughts are with the victim’s loved ones and it hopes that the perpetrators of this heinous crime are found and brought to justice. They had been keeping abreast of media reports in this regard and that the law must be allowed to take its course.
The life and health of mineworkers is of utmost importance to the DMR and it is the DMR’s firm belief that those who cannot ensure the health and safety of mineworkers should not mine at all. The hearts of the DMR’s staff are with the families of those mineworkers who lost their lives in January this year.
The APP is informed by the DMR’s mandate and is aligned with the National Development Plan, and in the medium term, responds to the recommendations made by the Auditor-General. The DMR also takes into account issues that were raised in the President’s State of the Nation Address when drawing up the APP. In addition it understands the need to continuously promote South Africa as a preferred investment destination. In drawing up the APP the DMR also took note of the Finance Minister’s Budget Speech. The Minister then asked Mr Msiza to present the DMR APP and budget.
Mr David Msiza, Acting Director General and Chief Inspector of Mines, spoke about DMR’s mandate, vision and mission. He provided a situational analysis of sector performance over the past decade. The depressed global economic environment continues to create challenges in the industry and will affect overall performance of the industry including job creation and investment in the industry. Despite the depressed economic conditions, a number of milestones had been achieved in 2014/15. Gross fixed capital in the mining industry increased from R18 billion in 2004 to R87 billion in 2014.
Foreign direct investment in the mining industry grew considerably, from R112 billion in 2004 to R377 billion in 2014. Employment in the mining industry grew from 448 909 in 2004 to 495 592 in 2014 (however tentative data for end of 3rd quarter 2015 is about 477 321. From 2004 to 2012 there was an increase in total employment. Whilst more needs to be done, employment of women in the mining industry is steadily increasing, from well below 1% in 2004 across all levels to marginally above 10% in 2014. Gross sales of primary materials appreciated from R125.3 billion in 2004 to R395 billion in 2014. Mining total sales revenue also increased from 2004 to 2014.
Regarding mine injuries, there has been a slight increase in injuries in platinum mines, but gold, coal and other mines have all decreased over the 2014/15 year. A graph was provided showing the prevalence of tuberculosis (TB) over the past 20 years, from 1993 to 2014. From 1993 until 2007 there was an increase in the prevalence of TB in mineworkers, but since 2007 there has been a gradual decline.
Looking at the fatality frequency rate between 2003 and 2015, there has been at least an 85% improvement over this period, for commodities other than gold, platinum and coal. It is important for the DMR to compare South Africa with other countries (comparisons were provided on page 12 of the document). For the past ten years there has been a reduction in the fatality rate.
The budget, which should be read with pages 22-24 of the APP, shows most of the budget has gone towards Programme 4. For the 2016/17 year, Programme 1 Administration had been allocated R310 million; Programme 2 Promotion of Mine Safety and Health R184 million; Programme 3 Mineral Regulation R270 million; and Programme 4 Mineral Policy and Promotion R902 million.
The overall budget of the department increases at an annual average growth rate of 3.7% over the medium term. Mine Health and Safety increases by 2.4% over the medium term which is partly due to the transfer payments to the Mine Health and Safety Council which ceased in 2014/15 and will resume in 2017/18 and outer years. The Mineral Regulation budget increases by 19.7% which is attributed to the Petroleum Agency of South Africa (PASA) additional allocation of R305.127 million. Mineral Policy and Promotion decreases by 1.8% in 2018/19 due to the discontinuation of the Economic Support for Competitiveness Package (ESCP) allocations attributed to the Council for Geoscience and Mintek. ESCP is a five year project ending in 2018/19.
The budget according to economic classification was provided. Most of the budget for 2015/16 will be spent on transfers and subsidies. Compensation of employees will represent 34.3% or R572.130 million of the 2016/17 total budget of R1.669 billion and 32.9% or R1.756 billion of the R5.341 billion over the MTEF. The Mineral Regulation, Mine Health and Safety and Mineral Policy and Promotion programmes constitute 69.6% or R1.223 billion of the total compensation of employees budget of R1.756 billion over the medium term. The higher contribution to compensation of employees is as a result of the work that the DMR does, that is,, the labour intensive nature of inspections and technical expertise required for the job.
Expenditure for Goods and Services represents 15.5% (R259.235 million) of the budget. The main cost driver is the subsistence and traveling costs of 24.8% of Goods and Services (R204.980 million) and this is mainly for monitoring compliance and inspections. This is followed by operating leases at 13.3% (R110.083 million).
Transfer Payments constitute 49.4% (R824.090 million) of 2016/17 total budget of R1.669 billion or 50.9% (R2.721 billion) of the R5.341 billion budget over the MTEF. The Mine Health and Safety Council is funded under Programme 2. There is no allocation for 2016/17 but the baseline of R12.681 million is still maintained over the MTEF. The South African Diamond and Precious Metals Regulator is funded under Programme 3, R53.205 million is allocated in 2016/17 and R168.175 million over the MTEF. The Petroleum Agency of South Africa (PASA) was added in the MTEF under Programme 3. R305.127 million has been allocated over the MTEF commencing in 2017/18. Once the regulations are finalised, the responsibility report on PASA financial matters will rest with the DMR. The Council for Geoscience, Mintek and small scale mining transfers to the Industrial Development Corporation (IDC) is funded under Programme 4. Mintek receives R371 416 million in 2016/17 and R1.069 billion over the MTEF. Council of Geoscience receives R378.598 million in 2016/17 and R1.052 billion over the MTEF. IDC receives R27.434 million in 2016/17 and R86.712 million over the MTEF.
Capital expenditure will represent a small percentage of the 2016/17 budget at 0.8% (R13.622 million) or 0.7% (R37.853 million) of the R5.341 billion budget over the MTEF. The majority of the capital budget is under Programme One. Machinery and equipment represents 67.8% or R25.679 million of the total budget for capital assets; and those are computer hardware (laptops and desktops) and systems. Building and other fixed structures represents 32.2% or R12.174 million of the total budget. This relates to tenants’ installation for building at regional offices.
The strategic objectives of the four programmes were presented. Mr Msiza did not go through each objective in but rather spoke to some of the key ones.
- With regard to contributing to skills development, 83 bursaries had been made available and recipients from poor backgrounds identified to study towards mining qualifications.
- A new measure highlighted in Programme 3 is 100% implementation of the DMR’s communication strategy. It is very important that the DMR communicate its work with both internal and external stakeholders.
- DMR aims to have 100% adherence to turnaround times and to shorten turnaround times. It aims to have 100% employee and contractor screening. The DMR also plans to vet its employees.
- With regard to complying with the HR and Occupational Health and Safety legislative framework, actions are implemented to ensure timeous submission of financial disclosures.
- Twenty affirmative action measures were implemented. The DMR is trying to implement employment equity targets in its new staff appointments, particularly with regard to women and disabled people. The DMR has been aiming the advertising of vacant posts specifically at disabled people.
The targets for each of the programmes were noted.
Programme 1 Administration
It aims to provide efficient services to internal and external customers and monitor customer satisfaction. Its goal is to have an average customer satisfaction score of 3.5 (on an index of 1-5) every year moving forward. In its management of financial resources, the goal is for the DMR to properly manage its assets as a department.
Programme 2: Mine Health and Safety
It has the objective to reduce mining-related deaths, injuries and ill health through the formulation of national policy and legislation, the provision of advice, and the application of systems that monitor, audit and enforce compliance in the mining sector. Its strategic objectives are:
1) Most importantly, the promotion of health and safety;
2) Contribute to skills development;
3) Implement Service Level Agreements (SLAs) between the DMR and mines;
4) Develop and review internal processes;
5) Improve turnaround time and;
6) Promote corporate governance.
In promoting mine health and safety, the ultimate goal is to achieve zero harm. The DMR believes that with a 20% improvement every year in reducing occupational injuries and fatalities, it will ultimately get to that point. It also aims for a 10% reduction in occupational diseases, including tuberculosis.
Relating to promoting health and safety, one of the DMR’s five year targets is to conduct 40 000 inspections and audits over the MTEF period.
With regard to focusing on turnaround times, it is important to help mineworkers that are complaining of a lack of medical care by achieving an 80% adherence to prescribed timeframes for medical appeals between 2014 and 2019. The DMR also helps with MPRDA applications, and aims to ensure 100% adherence to prescribed timeframes for MPRDA applications.
Programme 3 Mineral Regulation
It regulates the minerals and mining sectors to ensure economic development, employment and ensure economic transformation and environmental compliance. Its strategic objectives are:
1) Promote job creation;
2) Promote sustainable resource use and management;
3) Reduce state environmental liability and financial risk;
4) Implement transformation policies and legislation;
5) Monitor and enforce compliance and;
6) Improve turnaround times.
The DMR recognizes that whilst it is in the process of saving the jobs, it is also important that the DMR come up with plans for job creation. One of the five year targets for Programme 3 is to have 600 Social and Labour Plan (SLP) development projects. Another target is to ensure that for the MTEF, 35 Black industrialists are created through procurement.
In cases where mines have not been compliant with the Act, one of the five year targets is to have closed or referred to competent authorities 60% of environmental complaints.
Programme 4 Mineral Policy and Promotion
Its purpose is to formulate mineral-related policies and promote the mining and minerals industry of South Africa, making it attractive to investors. Through research to aims to provide relevant information to enhance global competitiveness, review policies and formulate legislation to achieve transformation and attract new investment into South Africa’s minerals industry. The strategic objectives for Programme Four are:
1) Promote investment in the Mining, Minerals and Upstream Petroleum Sectors;
2) Manage and implement mineral resources diplomacy with other countries and institutions;
3) Promote sustainable resource use and management;
4) Facilitate transformation in the Mining Sector through development and review of relevant legislation;
5) Develop and review internal processes and;
6) Improve turnaround times.
It is very important in Programme 4 to support small, micro and medium (SMME) scale mining, to promote the potential that we have as a country, in terms of mining.
A new measure is percentage implementation of Mining Phakisa Initiatives.
The links to the plans of its public entities are noted on pages 130-136 of the APP. These entities provide related services that support the Department’s mandate and enhance its ability to achieve its objectives.
Mr H Schmidt (DA) said that he has previously asked for a gauge or a barometer that measures the real state of affairs in the mining industry. This had not been included in the DMR’s presentation, or if it had been, he had missed it and would like the DMR to point out where in the presentation it appeared. He referred to page 51 of the presentation where DMR indicates that it aims to create 35 000 jobs between 2014 and 2019, but has only managed to create 5 338 jobs in the 2014/2015 year. He asked why so few jobs had been created in 2014/15 and how DMR means to keep to the five year target if it was progressing at such a slow pace.
Mr J Lorimer (DA) asked what the prospects are for the DMR to get a higher budget to work with, and if there is any prospect for additional research in geoscience and mapping. He asked the DMR to elaborate on the vetting of employees. He said that it seemed from the presentation that there were fewer environmental inspections targeted. If he was right in this assumption, he asked DMR to explain why this is the case.
He asked if the 100% implementation of Ocean Economy Operation Phakisa plans is the only involvement that DMR has in Phakisa. Further, the Committee is still in the dark about DMR’s involvement in Phakisa. He asked when the Committee was going to be briefed on Phakisa.
Mr Z Mandela (ANC) said that he appreciated the presentation. He referred to the 83 bursaries. He said that he comes from rural South Africa where there a lot of young people who have a desire to access the bursaries and internships provided by the DMR. He asked where young people access these bursaries and internship programmes. He said that, constitutionally speaking, the DMR was failing these young people somewhat by not being able to steer them in the right direction to take advantage of the opportunities that should be available to them. He asked who is in charge of internship programmes and bursaries in the DMR.
He referred to the 10% maintenance of the vacancy rate, currently there is a serious unemployment rate in the country and as such DMR should not be maintaining this vacancy rate, but should be looking at ways to lower this. He asked DMR how it could lower the vacancy rate and the country’s unemployment rate.
Mr Mandela referred to page 51 of the presentation where it states that 35 000 jobs will be created through mining between 2014 and 2019. However, previous Minister Ramatlhodi had said that 19 000 jobs were lost. He asked if this was still the case or if the situation had worsened since Ramatlhodi had said that. The Committee heard time and again that 19 000 jobs had been lost. Mr Mandela asked if this number had actually worsened. Therefore, was the sector losing or creating jobs?
Mr Mandela noted the Mining Phakisa Initiatives on page 58 of the presentation. He said that the Committee had been eagerly waiting for a briefing on Mining Phakisa.
The Chairperson said that he was sure that the DMR could provide answers to these questions but requested that in providing answers, the DMR did not take as long as it did to give the presentation.
The Minister replied that the DMR would try and save time but also try and get into details of what members asked. He asked DMR staff to reply to the members’ questions, one by one.
Mr Msiza replied to Mr Schmidt, saying pages 12 and 13 of the presentation show the rate per million of fatalities. This allows the DMR to compare South Africa with other countries, or apples with apples; so to speak.
He replied to Mr Mandela about bursaries and internships. The DMR has established regional offices, like the one in the Eastern Cape, as reaching the communities in the Eastern Cape has been a big challenge for the DMR. It also has a regional office in Gauteng. DMR will take further details from Mr Mandela on the community that he comes from to ensure that the DMR assists where it can.
In terms of the 10% maintenance of the vacancy rate, this applies because DMR aims to attract both skilled employees as well as train employees with the necessary skills, which takes time. But he agreed that this rate should be lower and it is considering ways to lower this.
In terms of the 5000 jobs Mr Mandela asked about, the five year target for the MTEF period is 35 000 jobs created through mining. The DMR has been short of this target as it has only managed to create around 5000 jobs in the last year as a result of the challenges facing the sector.
The DMR will have to promote the implementation of the procurement of SLPs. This will assist DMR because it is one of the key areas that it is working together with other stakeholders on, to achieve compliance.
Mr Joel Raphela, Deputy Director-General, Mineral Regulation, replied about the number of process certificates issued in the last year. Firstly, there are requirements for operating that are set by other regulators, such as the Department of Water and Sanitation. The requirements of these regulators need to be met first. It is only when these regulators are satisfied and the State is convinced that there will be no comebacks on these requirements for the issuing of the process certificate, that the administration for obtaining one is started by the DMR.
On the creation of Black industrialists through procurement and whether this is focusing on the DMR or the mining industry, Mr Raphela said it is focusing on the industry. The rationale behind the creation of Black industrialists is focused on creating and supporting suppliers to industry who are Black controlled. Through choosing suppliers who are BEE controlled or have BEE shareholders, the industry aids in the creation of Black industrialists.
Mr Raphela replied about the action being taken against non-compliant mining companies. Firstly, it is important to highlight that there is no room for non-compliance. As and when non-compliance is identified, the necessary measures are taken. Auditors are used to determine how and when the faults need to be remedied by. In the event that that they are not remedied, action is then taken to higher levels, and that is when Section 47 of the Act is invoked. Rights may be cancelled or when these companies apply for rights renewal, they get refused.
On Mr Mandela’s question about the responsibility of mining companies to improve the living conditions of the communities in which the company operates, this continues to be a very important issue and it is not an isolated one. Companies and right-holders may have their rights revoked if not complying with the Act. If companies do not comply with the Act, then actions are taken. With regard to the Limpopo company Mr Mandela spoke about, action has been taken against that specific company.
Mr Raphela replied that the target that the DMR has is the target for job creation. However it is also taking steps and initiatives with stakeholders to save jobs. Job creation remains very relevant and important and through various interventions and programmes within the DMR, it will continue to save jobs while at the same time creating jobs.
A DMR representative replied that measures are being put in place to enhance the sector’s exploration technology and improve the sector’s geoscientific knowledge. DMR is aware that the fiscus is currently constrained, but it is working hard to get its budget adjusted to allow for more research in the sector. DMR is cognisant of the value created by research and has to put its case to Treasury for a budget adjustment to allow for more research.
On IDC transfers, these are transfers that are intended to support small-scale mining development. In the APP one can see that the DMR is committed to support small-scale mining and has been doing so by providing non-financial support as it has learnt from past experience that when funds were transferred to the beneficiaries, these funds were not necessarily utilised for projects. Therefore the focus has changed from financial to non-financial support, such as environmental guarantees, technical support, geological support, and metallurgical support, which is a pre-requirement for the issuing of a permit. So DMR is providing support to small-scale mining in that way.
The DMR had expected the Mining Phakisa to have been concluded this year and as such had included it in the plans for this year. The regulations have been published which set the tone for the processing of the applications that the DMR have already engaged in.
Mr Xolile Mbonambi, Acting Chief Inspector of the MDR, said that there is a difference between the health inspections and audits. Mining companies have to ensure that all working conditions underground are safe for mineworkers and there are rules that mine employers must adhere to. As mine inspectors, DMR is expected to inspect that employers are adhering to those rules. The audits relate to programmes that should be implemented by mining companies and audits are conducted to determine the progress of a mining company in implementing such programmes.
On the 100% adherence to prescribed timeframes, certificates require that every employer or applicant comply with the Mine Health and Safety Act. It is DMR’s duty that before processing or granting certificates, it needs to ensure that the applicant will be able to adhere to this Act so that by the time the certificate is granted, DMR is sure that the applicant will be able to comply with this Act.
Ms Patricia Gamede, Deputy Director General: Corporate Services at DMR, replied that it is normally senior DMR officials who have access to classified documents, that are vetted.
On the 83 bursaries, Ms Gamede said that Mr Mandela was right as DMR had found that it is unable to access far flung areas rural areas of the country. So although the system is fairly open and everybody is welcome to apply for bursaries and internships, DMR is aware of that problem. To remedy the problem DMR is trying to reach these communities using a targeted approach and a targeted advertisement process in those areas from which DMR normally does not receive applications.
Ms Gamede replied that 10% is the prescribed vacancy rate but, as requested, the target should be lower than 10%. DMR is trying to implement a policy filling a post within four months of it becoming vacant. DMR is currently conducting research on this policy and the requisite process and it will let the Committee know when that study is complete.
The Chairperson said that unfortunately there was not enough time allocated that day for the members to ask follow up questions. Members would be given thirty minutes to ask follow up questions at the start of the meeting the following day before the Mine Health and Safety Council gave its presentation.
The Chairperson said that he did not have an issue with DMR but that the primary entity that is accountable to the Committee is DMR and therefore the Committee will have to spend more time with DMR than with its entities as DMR has more responsibility to the Committee than its entities do. It is fine to say that there is a strategic plan and an annual performance plan but it needs to be kept in mind that these plans are linked to a budget. As DMR is the one accountable to the Committee, the Committee’s focus will be on DMR, and the Committee needs to be sure about what is being proposed in the budget and what it is consenting to, if it approves the budget.
In the presentation, the last financial year, 2014/15, is listed, which is the actual expenditure of the last year. Then the 2016/17 target is listed, but 2015/16 is missing. Is this deliberate? In addition, in some instances, DMR makes comparisons across years and in other instances it does not.
There are some areas that the Committee visited during its oversight visits, such as Palabora, where there is another entity that is responsible for mining, which is supposedly competing with the IDC for space for mining. The Committee needs to get clarity on this and about areas of contestation of authority.
The Chairperson asked if there is staff movement across entities because recently there was no Acting Director General in DMR and now suddenly there is an Acting DG transferred from one of the DMR entities. This means there is a vacancy in the entity. And perhaps in the absence of the Deputy Director General there is now a new DDG in one of its entities. He was concerned who carries the cost of the staff salaries in those instances.
The Chairperson said the Committee has to refer back to DMR and to do a thorough job in considering the APP. He requested that some of the DMR staff remain for the next day’s meeting. Often DMR presents and then leaves the meeting, and the Committee can therefore not engage further with DMR.
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