Department of Mineral Resources on its 2016 Annual Performance Plan

Meeting report

Department of Mineral Resources on its revised 5-year Strategic Plan

Mr David Msiza, Acting Director-General (ADG), Department of Mineral Resources (DMR) said that the depressed global economic environment had created challenges in terms of commodity prices and job security, as well as investment. Since the introduction of the Mineral and Petroleum Resources Development Act (MPRDA) there had been some encouraging milestones, though challenges remained. The decrease in gold production from 2004 to 2014 was because of the increased difficulty in getting to the depths where reserves of gold could be found. He said that concerning for DMR was that most of the fatalities in the mining sector were in regions with gold and platinum mines.

Ms Irene Singo, Chief Financial Officer (CFO), DMR, said there had been no significant increase in the DMR budget for the year under review. Regarding compensation of employees, she said that mineral regulation and mine health and safety (MHS) were line functions requiring warm bodies, which was why 69.6% of the total R1.756 billion of the compensation of employees’ budget over the medium term would go to those sub-programmes.

Programme 1:

Corporate Services

Ms Nthatisi Rapoo, Corporate Services and Human Resources (HR), DMR, said that in terms of complying with HR and Occupational Health and Safety legislative framework objectives, senior management staff (SMS) were required to submit their financial disclosures and their performance agreements annually and timeously. The new change for both submissions was that a measure had been introduced to ensure the submissions requirements would be complied with.

Financial Administration

Ms Singo said that the financial administration branch was composed of the finance, supply chain management (SCM) and the information and communications technology (ICT) units respectively. In terms of the implementation processes and systems objective, the DMR had 100% implemented its Master Systems Plan, where it had identified projects required by business to ensure efficient operation of its systems. That had included the enhancement of its South African Mineral Resources Administration Database (SAMRAD) system and had ensured that when there were upgrades or changes to SAMRAD, its business processes would be revised accordingly.

Programme 2:

Mines Health and Safety

Mr Xolile Mbonambi, Acting Chief Inspector of Mines, DMR, read with the Committee through his section of the presentation.

Programme 3:

Mineral Regulation

Mr Joel Raphela, Deputy Director-General (DDG): Mineral Regulation,DMR, said that the reduction in some of DMR’s targets under mineral regulations was linked to the reduction in the Department’s budget. A new measure that DMR had introduced into its annual performance plan (APP) and Strategic Plan (SP) was the use of procurement to create black industrialists. The target was the creation of five new b;acl industrialists over the medium term expenditure framework (MTEF) period. 

The DMR had also introduced two new measures in terms of the reduction of the state’s environmental liability and financial risk objective, which flowed from the implementation of the imperatives of the National Environmental Management Act (NEMA). These were:

• Investigations of cases of illegal mining, where the target of completion had been capped at 50%.
• Handing over upon completion of investigated cases to competent authorities which would include prosecution as and when the need arose. The target DMR had set regarding the referral of cases was 60%.

Mr Raphela said that the adjusted targets for monitoring and enforcement of compliance were related to the adjusted resources. It was important to note that though the DMR was lamenting the reduced budget’s affect on its targeted achievements, it was not going to go easy in terms of enforcement of compliance. Additionally going forward, the DMR understood the need for it to work smarter, appreciating that its resources were very limited.

Programme 4:

Mineral Policy and Investment Promotion

Mr Mosa Mabuza, Chief Director (CD): Mineral Policy and Investment Promotion, DMR, said that in terms of the promotion of investment in the mining and upstream petroleum sectors objective, the investment and policy unit undertook research and published technical reports on the state of the minerals sector. The DMR’s responsibility in the Ocean Economy Operation Phakisa, as initiated by the President, was on the oil and gas work stream. The Department was committed to implementing and sustaining 100% of its commitments within the work stream which had been made in the Phakisa plans.

Regarding the promotion of the use of sustainable resources and the management thereof, the DMR had developed reports on mine closures, and derelict and ownerless mines. In implementing closure of derelict and ownerless mines, the Committee would note that there had been a downward revision from 50 as a target, to 45, and the number could possibly eventually be lower as a result of the revised MTEF budget.

Mr Msiza said that DMR had ensured that its entities’ APPs and SPs were aligned to its mandate as a Department, and to the national imperatives as well.

There had been progress with some of the legislative instruments for the provision of regulatory certainty by the DMR. It had published and gazetted the Mining Charter Review for comments. The Mineral and Petroleum Resources Development Amendment (MPRDA) Bill had been sitting at the National House of Traditional Leaders (NHTL) would be presented on 4 May 2016 at the Preferential Procurement Council (PPC). The African Exploration Mining and Finance Corporation (AEMFC) draft Bill had also been gazetted and was going through the economic cluster before going to Cabinet for consideration.

Discussion

Mr J Parkies (ANC, Free State) asked the DMR to submit to the Committee a list of the locations where it had created the 5 338 jobs to which it had alluded in its presentation under the mineral regulations programme. Similarly, he required the names of the 87 supported Small, Medium and Micro-sized Enterprises (SMMEs), their locations and addresses and their contacts as reported under the mineral policy and promotion programme.

In terms of the 268 social and labour plan (SLP) inspections, 1 856 environmental authorisation inspections and the 133 SLP development projects had been reported by DMR. Mr Parkies said his sobering experience from the Committee’s oversight visit in 2015 was his feeling that the numbers were reporting grandiose achievements. That was because the situation at the local level was quite different from what was being reported. Even the enforcement of compliance which had been presented was not occurring.

With regard to the visits the Committee had made in 2015 to North West and Limpopo, he remained uncertain how DMR advised or enforced compliance with SLP development projects, because the mining companies were doing as they wished. In Madibeng Local Municipality there were at least 15 mining companies, but the conditions of the local community in that municipality were so appalling that one could smell the poverty in the streets. That situation was untenable, because even basic and simple infrastructure was not evident. Government was not serious about compliance, and that needed to be said. Moreover his sentiments were not an opinion -- they were backed by scientific facts, because the Mayor of Madibeng would tell anyone who cared to ask, how many mining companies were operating in that local municipality.

Mr M Rayi (ANC, Eastern Cape) said that he believed the briefing to be about the DMR’s APP and the commitments made therein, while comparing targets against what had been previously achieved. Therefore he was proposing the Committee’s focus be kept to what had been presented by the DMR.

Mr Parkies countered that unless Mr Rayi was proposing that what he (Mr Parkies) had said was irrelevant, members had a right and authority to interrogate and dissect any information tabled before a Committee. That had been the reason he had started his discussion with outlining what DMR had reported as having achieved, before moving on to the Committee’s oversight findings.

Mr Rayi continued that he understood DMR’s budget to have slightly increased from R1 638 million to R1 669 million in the 2016/17 financial year. In that regard, he had expected the DMR to maintain its targets unchanged in the APP, even if the increase in the budget was slight. Therefore he was concerned about the downward revision of targets across all the programmes.

Regarding mineral policy and promotion, he wished that the Committee knew exactly what the Mining Phakisa initiatives were because without breaking those down, the Committee would struggle to measure them when considering the Annual Report. Could the DMR give the Committee that breakdown?

He noted that mine health and safety (MHS) seemed to be focused on currently employed miners. What would happen to those that had retired from mining but were suffering from mining-related diseases? 

Ms C Labuschagne (DA: Western Cape) said she had struggled to find the annual targets in the presentation and she was pleading with any of the officials before the Committee to identify a baseline target for her. For example, in 2014/15 the DMR had implemented 10 national employee and contractor screenings, and for the DMR to have said it had achieved 100% against that target without a baseline to compare it with, left her unconvinced because that percentage had to be accompanied by a number. The addition of new targets was commendable.

Looking at the performance of the mining industry graph describing mining jobs, why had it stopped at the 2014 numbers? Looking from 1994 to 2014, there had been a decrease in mining jobs overall. Where had there been an increase in mining employment?  

Could the DMR elaborate on the variations in the occupational diseases by commodity, as described in the graph in the presentation? Could the times of doing a cycle of inspections have affected those numbers?

She wanted to know what the reasons had been for the stoppage of the transfer of payments to the MHS in 2014/15, which would only return in 2017/18.

How many inspectors did each province have, and how regular were inspections? 

She also requested that the DMR brief the Committee separately in future on the Petroleum Agency of South Africa (PASA). At what point had PASA had their funding depleted and what had caused that depletion? What had caused an increase in PASA’s budget from then on?

Where had the projects for women, youth and people with disabilities been located, and how many women had actually participated in those projects? Could the DMR also break down into the three categories how many individuals had been involved in those projects?

Whose financial reports had been delivered on time, as alluded to in Programme 1 (financial administration)?

What was the current status of all the Bills alluded to in the presentation? Would the MPRDA bill finalisation be stalled or changed because of the PASA Bill, or were they correlated?

What had been the impact of the non-finalised legislative instruments on jobs in terms of the economic situation in the country? What had happened to the 10-point plan that had been announced in 2015 before the new Minister of Mineral Resources took over?

How many complaints had the DMR received in terms of state environmental liability, and what would be a 60% finalisation of investigations estimate?

Did the review of the environmental management plan annually within the APP of DMR include the management of air pollution and waste disposal at the mines? Seeing that it was new measure, she requested that the DMR also prepare a separate briefing in terms of that management plan. She also made a similar request regarding shale gas.

The Chairperson asked to what extent the decline in commodity prices had affected local job creation, as the country had a significantly export-based economy.

He asked for details of the DMR’s allocation per province for training of mine inspectors and inspections, as this would assist the Committee. 

Mr Msiza replied that DMR would submit the information as requested by Mr Parkies, and though there had been some progress in certain areas, the DMR was also concerned about the issues he had raised, especially regarding SLP compliance and the impact those projects had had on the affected communities. One of the challenges that the DMR had been grappling with was the alignment of the SLPs with the Infrastructure Development Projects (IDPs) of municipalities, including those of Madibeng Municipality. One of the issues in reviewing the MPRDA Bill had to do with ensuring alignment between the SLPs and the IDPs. Moreover communities, including traditional leaders, had raised the issue of proper consultation by mining companies regarding SLPs. The amendment would enable the DMR to enforce compliance by the mining companies.

Regarding the review of the mining charter, the DMR was trying to disaggregate what accrued to the employees, the communities and the amounts that would be used by the mining companies on the SLPs because of the concerns and complaints that the DMR had received. The DMR acknowledged the capacity challenges that had been brought up by the Committee regarding the monitoring of compliance, but the bigger challenge was the resources, and what that had done was to force the Department to ensure that compliance was enforced one way or the other.

The budget increase which Mr Rayi had alluded to had been mainly for PASA implementation, as could be seen from the presentation. PASA had previously been reporting to the Central Energy Fund (CEF) under the Department of Energy, but would now be reporting to the DMR.

He said that from page 98 of the actual APP of DMR, there were baselines that had been highlighted. On page 24 of the same document, the DMR’s resources from financial years 2012/13 until 2015/16 had been outlined. The DMR had been hoping to address the Committee on the 2014/15 Annual Report (AR) to deal with some of the issues that Mr Parkies and Ms Labuschagne had raised in terms of the capacity of the mine inspectors.

The last column of each branch programme had annual targets from 2016/17 until the end of the MTEF period. However, the DMR had also been requested to give a five-year rolling plan from 2014/15 onwards and therefore it had shown how the remaining three financial years’ targets related to the annual performance targets per each separate year. The column showing achievements to date was to give the Committee a sense of what the DMR had done since the start of the MTEF period.

The reason behind the DMR referring to 2014 as an end year for reporting was that most of its figures, except for Occupational Health and Safety (OHS), were audited figures from Statistics South Africa (StatsSA).  The DMR was certainly not disputing the fact that there had been a reduction in jobs, but long term planning required historical performance to be considered. For 2015/16, the numbers were still to be audited by StatsSA and tentatively the presentation had alluded to job shedding by the sector, but the numbers were up to mid-year of that financial year. A lower demand for commodities and a decline in their prices generally had an adverse knock-on effect on mining jobs.

Mr Msiza said that the fluctuations in diseases by commodities could be the result of a lack of reporting, unlike with actual fatalities which were the result of mining accidents. Occupational diseases had a latent period -- a mining-related disease took time if compared with a rock fall accident. Continued silica dust exposure, for example, took on average 12 years to manifest as full blown silicosis.

Mr Raphela said that implementation of a stakeholder declaration on saving jobs was still continuing. For example, the DMR had effected the alignment of business processes that had formally underpinned section 52 of the MPRDA with section 189 of the Labour Relations Act, which dealt with similar imperatives. Consequentially, the Commission for Conciliation, Mediation and Arbitration (CCMA) had adjusted its template for dealing with retrenchments to incorporate the uniqueness of the mining industry. Secondly, sessions where job shedding was being discussed were now being considered in cooperation with organised labour, the mining companies, as well as DMR, though facilitated by CCMA. All of that was happening at an operations level.

Other areas related to a call that had been made where it had been said that during the process of consultations, mining companies had to stop unreasonably withholding consent to extend beyond the stipulated period in the law. That had assisted the DMR in saving jobs while alternatives were being explored.

On the capacity that the DMR was developing for environmental mineral resource inspectors, to enable a wider footprint in terms of coverage on the ground, it had been training inspectors as part of the one environment system implementation. To date, the DMR had trained 92 inspectors and there were plans to train an additional 27 during the current financial year.

Ms Singo said that DMRs compensation of employees’ budget had been elaborated more on the hard copy of the APP, indicating that it had been cut by around R52 million, while the budget for goods and services had had a R21 million decrease.

Regarding the targets for inspection, the DMR had people who physically went to the mining sites to do inspections and therefore when the compensation of employees’ budget had been decreased, that had affected how many people could be employed as inspectors. That was why the inspection targets had been decreased.

Regarding the depletion of PASA funds, the agency had historically been able to generate funds from its royalties.  When the Royalties Act had been amended, those royalties had then accrued to the South African Revenue Service (SARS). Without that revenue, PASA had used up all its reserves, with 2015/16 being the financial year in which there had been no more available for administrative operations.

On the financial reports that had been delivered on schedule, these were prescribed regulatory financial reports that had to be submitted by specific dates for decision-making, in terms of the Public Finance Management Act (PFMA).  The DMR strived to deliver those reports on schedule to avoid delays in decision-making.

Mr Mbonambi said that the reason that gold figures looked similar to the overall total in terms of diseases by commodity, was that gold mines constituted most of the mines where reports of diseases had been lodged. The diseases were pulmonary tuberculosis (TB), noise-induced hearing loss and silicosis, and that was also why the overall trend was similar to that of gold, because all three diseases were prevalent in gold mines – more so than in any other mineral mines. 

MHS had done some work with the Department of Health (DoH) and the Department of Labour (DoL) in relation to former mine workers with the establishment of one-stop health service centres, which had already been established in the Eastern Cape, as well as in Carletonville. Most recently, a centre had been opened in Limpopo, and the work of the centres was to screen for silicosis, TB and other occupational lung diseases, and to assist with rehabilitation. There was also a toll free number for enquiries about mine-related diseases for those former and current miners.

The DMR and DoH had also embarked on a process of integrating the Compensation for Occupational Injuries and Diseases Act (COIDA) and the Occupational Diseases in Mines and Works Act (ODIMWA), which were the two legislative instruments meant to deal with compensation of retired and current mine workers.

Mr Mabuza said that the initiatives of the Mining Phakisa had been published as part of the plan in the website of the Department of Planning, Monitoring and Evaluation (DPME).  In it, all the work streams from the different line Departments had been elaborated. The DMR could certainly extract the information and submit it in writing to the Committee for ease of reference.

PASA had been established by a ministerial directive many years ago, and therefore it would be the first time that the agency would be legislatively established. That was also why its legislative establishment had been linked with financials, and once the PASA Bill was processed that would make it easier for Parliament to hold the agency to account. Therefore the allocation for PASA was not an increase, but was from a zero base.

The AEMFC Bill had been published and gazetted and comments had been received from affected and interested stakeholders. These had been generally positive towards the establishment of a state-owned mining company. The DMR was processing these inputs and the intention was that the Bill would come to Parliament in due course.

The MHS Amendment Bill had been concluded and published. Comments had been received, and it had gone through the National Economic Development and Labour Council (NEDLAC) processes as well.

The MPRDA had been referred back to Parliament and the NHTL had considered it early in 2016. It had been brought to Parliament again and Mr Mabuza had been informed that it was a Bill in motion.

The review of the Mining Charter had been published. The DMR had been robustly engaging the affected and interested stakeholders, and the closing date for public comments had been set for 31 May 2016. There was a series of workshops that was ongoing in that regard as well. 

The Chairperson reminded the DMR that whatever outstanding responses it owed the Committee had to be submitted in writing. As the Committee was out of time, he said the remaining agenda items would move over to the following meeting date and that possibly there would have to be a workshop between the DMR and the Committee so that Members could speak to such issues as the SLP compliance matters and their impact, and the situation regarding fracking.  The MPRDA could also be better elaborated at the workshop.

The meeting was adjourned.