Mining Charter implementation & uplifting economically depressed mining villages: Department of Mineral Resources progress report

Meeting report

Implementation of Mining Charter

Mr David Msiza, DMR Acting Director General, said that they appreciate the opportunity to brief the Select Committee on the progress made in the implementation of the Mining Charter and efforts to uplift economically depressed mining villages.
 
The briefing by Mr Joel Raphela, DMR Deputy Director General: Mineral Regulation, covered the background and progress made with the implementation of Mining Charter, the review of the Mining Charter, the revitalisation of distressed mining towns, and integration and cooperation with IDPs and SLPs.

The Mining Charter was implemented in 2004. It was amended in 2010 to facilitate sustainable growth, development and transformation of the South African mining industry. The 2010 amendments introduced Effective Historically Disadvantaged South Africans (HDSA) ownership through meaningful economic participation and full shareholder rights (broad based). The year 2014 marked the ten year anniversary of the Mining Charter, and the period at which all targets set should have been met. DMR developed a reporting template through a consultative process with the Mining Industry Growth Development and Employment Task Team (MIGDETT). It developed a Web-based system to collect the data from mining right holders. The data was assessed with the assistance of an actuarial scientist.

Mr Raphela said that the Mining Charter requires that each mining right holder has to submit reports and there must be documentary proof. On ownership, the right holders should have achieved 26% ownership to enable meaningful economic participation of HDSA, with identifiable beneficiaries such as entrepreneurs, communities, and workers. On Housing conditions, there should be conversion and upgrading of hostels to one person per room or family units. On Procurement and Enterprise Development, the large chunk of procurement spent must be from HDSA companies (40% of capital goods, 70% of services, 50% of consumables). On Employment Equity, QSAs representation should be at a minimum of 40% across all levels. On Human Resource Development (HRD), expenditure should be 5% of total payroll. There should be Mine Community Development and Implementation of approved mining community projects. On Sustainable Development, there should be Implementation of an approved Environmental Management Plan (EMP), and implementation of Health and Safety action plans.

Mr Raphela said that in terms of progress made in implementing the Mining Charter, assessment results indicated that a number of right-holders did not meet the targets set in the Mining Charter. On ownership, the interpretation of the ownership element is the subject of a judicial process, as instituted by the Chamber of Mines, while an independent legal firm has also filed court papers questioning the legal validity of the Mining Charter. DMR has filed its responding affidavits in both cases. A process of resolving the matter has been initiated and deliberations are at an advanced stage. Orders are being issued against mining companies for failure to comply. Over 400 orders had been issued for non compliance against mining companies. Engagements with communities and other stakeholders were held as part of implementation of the Mining Charter, in areas such as Steelpoort and Phola.

One of the key observations made from implementation of the Mining Charter, relates to challenges with accessing procurement opportunities within the mining industry. In response to this, a Youth in Mining Transformation summit was held in June 2016 in Fourways focusing on young entrepreneurs. Over 250 entrepreneurs attended and resolutions were agreed upon and are being implemented. The key outcome included intensification of youth participation in procurement, mentorship for young entrepreneurs and government intervention in assisting entrepreneurs to access opportunities in the mining industry.

Mr Raphela said DMR is currently in the process of reviewing the Mining Charter after noting the outcomes of the Mining Charter assessment. The review process takes into account the need to align and integrate government policies to remove ambiguities in interpretation. The reviewed Mining Charter will be aligned to the provisions of the Broad-Based Black Economic Empowerment Act, 2003 (as amended), the Codes of Good Practice (DTI Codes) and the Employment Equity Act. DMR will revert back to Parliament with a more detailed presentation dedicated to the review of the Charter.

Revitalisation of distressed mining towns
Mr Raphela said that an Inter Ministerial Committee (IMC) for the Revitalisation of Distressed Mining Communities was established during 2012, to address Part 3 of the Social Accord (SPP): Addressing socio-economic challenges in mining districts and their labour sending areas. The IMC has focused on: Integrated and sustainable human settlements, led by the Department of Human Settlements; Improved socio-economic conditions, led by Department of Trade and Industry; Improved working conditions of mineworkers led by the Departments of Health and Labour; Decent living conditions for mineworkers and contribution to the development trajectory of mining towns and labour sending areas, led by DMR.

Mr Raphela said that efforts to uplift economically depressed mining villages meant that approximately 66 public sector housing projects are currently being implemented in the 15 prioritised mining towns. In 2014/15 more than R419m was spent of the ring-fenced budget for informal settlement upgrading in prioritised mining towns in Free State, Mpumalanga and North West provinces. Overall over 5 000 units have been delivered in the mining villages. For 2015/16, the Department of Human Settlements has aimed to improve this delivery figure and has ring-fenced R1 billion that is anticipated to deliver approximately 19 000 housing opportunities in mining towns. Approximately 592 hectares of land has been acquired by municipalities supported by the Department of Human Settlements for the purposes of human settlement development in the prioritised mining towns. The majority of this land is in the Fetakgomo (Limpopo) and Rustenburg Local Municipalities (North West). A further 5,646 hectares has been identified for acquisition.

In addition to the ring-fenced human settlement grant funding for distressed mining towns, the Department of Human Settlements' housing agencies have contributed over R1 billion to integrated human settlements within mining towns, as follows: 17 341 loans amounting to R239m for incremental housing from the Rural Housing Loan Fund (RHLF); R673m delivering 3 405 units (mortgage and social housing) from the National Housing Finance Corporation (NHFC); bridging loans of R95.6m for 1 177 affordable housing units; and R36m for 4 546 subsidy units from NURCHA Finance and Construction Programme Management.

The Department of Water and Sanitation (DWS) has through engagement with municipalities and the Department of Cooperative Governance (DCoG) prepared high level water supply needs assessments for the fifteen mining areas in the five provinces. These assessments include: current water service levels; current backlogs: settlements requiring extensions to existing infrastructure, settlements with functionality problems, settlements with water source problems; interventions proposed: new scheme development, existing scheme refurbishment and operation and maintenance intervention, water conservation and demand management.

Currently projects are generally being funded through grant funds such as the Municipal Infrastructure Grant and the Social and Labour Plans of the mines. The DWS is currently implementing 29 water and sanitation projects with a total value of R6.186 billion in four provinces. These projects are at various stages of implementation.

Mr Raphela said that the Department of Trade and Industry (DTI), Economic Development
Department (EDD) and the Department of Small Business Development (DSBD) are facilitating both large and small scale industrial projects in the 15 mining towns. These are particularly critical in creating business and employment opportunities. In addition, the DTI is providing support to selected municipalities or regions in the development and implementation of Regional Industrial Development Plans. These include: Interventions in Bojanala and the Greater Tubatse local municipalities for the establishment of a Platinum Group Metals (PGM) Special Economic Zones (SEZ). Feasibility studies, business plans and appointment of a Project Management Unit (PMU) have been completed.

The Agri-hub in Bojanala (Madibeng and Marikana) for agriculture production and a processing facility for communities, is being established. The feasibility studies and business plans for the establishment of an agro-processing SEZ in the labour sending area of OR Tambo District Municipality (Eastern Cape) has been completed. The land for the SEZ has been secured; and the Vulindlela Industrial Park Revitalisation initiative in King Sabata Dalindyebo (KSD) Municipality (Eastern Cape), is underway. This includes a multi-sectoral business park to promote sustainable manufacturing investments.

The Departments of Mineral Resources, Health and Labour are collaborating in the establishment of One Stop Service Centres to assist ex-mineworkers with compensation, UIF and pension fund payments. One Stop Service Centres have been established in Mthatha (Eastern Cape); Carletonville (Gauteng); Burgersfort (Limpopo) and in Kuruman (Northern Cape). Government together with organised labour and business have launched Operation Ku-Riha to pay R1.5billion to approximately 103 000 ex-mineworkers.

Mr Raphela said that in terms integration and co-operation one of the objectives of the Social and Labour Plan is to promote employment and advance the social and economic welfare of all South Africans. Through the SLPs, the mining companies identify key LED programmes which have largely been identified in collaboration with local municipalities, and approved by the DMR. These LED initiatives are aligned to the national socioeconomic development priorities, provincial economic growth and developmental strategies, and district and local municipalities integrated development plans (IDPs). However, in cases where projects identified in the IDP do not necessarily address the objective of the Mineral and Petroleum Resources Development Act (MPRDA), a process to identify projects which would have sustainable impact on communities should be followed. DMR monitors the implementation of the SLP projects. During 2015/16, DMR conducted 772 legal compliance and SLP verification inspections which resulted in 666 notices being issued. In 2015/16, the implementation of SLP projects has enabled the construction of roads, schools, clinics and other critical infrastructure.

Mr Raphela concluded that it is clear from the assessment that a number of right-holders did not meet the targets set in the Mining Charter. The DMR is currently engaging individual right holders and orders are issued to address non-compliance. Better alignment of SLPs and IDPs at municipality level will improve socio-economic development in area where mines operate and also in labour sending areas. The MPRDA Bill has also been amended to provide better coordination and alignment of the Social and Labour Plans with District Municipal IDPs. An integrated government approach on contribution of the mining industry to socio-economic development is being implemented to optimise the development impact.

Discussion
Mr J Nyambi (ANC; Mpumalanga) welcomed the presentation from the DMR. As a National Council of Provinces (NCOP) Committee they always give credit when they see that issues raised in the past in ensuring that the department addresses the provinces when it presents to the Committee it so that they understand what is happening in the different provinces.

Mr Nyambi asked in terms of the judicial process what the timeframe is so they could see if there are some developments because if they left it hanging they would not be able to make DMR account at a later stage.

Mr Nyambi asked for clarity on the review of the Mining Charter because of the challenges that have been stated, is there a date and when DMR is going to submit it to Parliament so that they could address the whole range of challenges raised.

Mr Nyambi asked for clarity on the one stop centres since they were in four provinces. How did they intend to deal with other provinces because there are people there that are affected.

Mr Nyambi asked for clarity on the combined schools, what is the name of the school or is it just called combined school.

Mr Nyambi asked what the status is of the people that are trapped in the Mpumalanga mine.

Mr L Gaehler (UDM; Eastern Cape) welcomed the presentation. He asked for clarity on the entrepreneurs mining transformation summit whether all the provinces were represented at that summit, and what the selection criteria were for those entrepreneurs.

Mr Gaehler asked what the value was of the Social Labour Plan projects, and how they were selected because if they look at jobs created they will see that some provinces have more jobs created than others.

Mr Gaehler also asked how they inform ex miners and their families about the payment of over R1bn which is overdue to them because this is a problem. They received complaints from ex miners in their constituencies that they are still waiting for their money.

Ms C Labuschagne (DA; Western Cape) asked for clarity on the reporting template whether mining companies report on that template according to all the subsections on ownership, housing, procurement and employment equity.

Ms Labuschagne asked whether the principle of 26% ownership is being practised which is described on page 5 of the DMR report and if it is in compliance with the Employment Equity Act.

Ms Labuschagne asked if DMR has the register of the companies that were benefiting from procurement and enterprise development as indicated on page 5 of the report. How does DMR make sure that the same company that benefited from the procurement process in mineral resources is not the same company that is benefiting from state owned entities, and the same company benefiting from other departments? 

Ms Labuschagne asked if every mine has a mine environmental plan, and if not how many are there, and what is the reason every mine does not have it.

Ms E Prins (ANC; Western Cape) asked what the status is of the 400 outstanding orders for non compliance against mining companies. Did the number reduce as they comply?

Ms Prins asked for clarity on the challenges in accessing procurement opportunities in the implementation of the Mining Charter, which is indicated on page 9 of the report.

Mr C Smith (DA; Limpopo) asked for clarity on the 26% ownership. How did the department ensure that politically connected individuals do not benefit from this specific deal? Is it true that the ex Minister of Mineral Resources, Ramathlodi, benefited in the Anglo PCC mine, either him or his wife, because they have a situation where politicians gave away pieces of land owned by municipality to mining companies to develop houses for their employees as well as water contracts. The community of Makralakwena is subsidising that specific mine for grey water and there is a 30 year agreement signed between the municipality and the mining company for supplying grey water for 37c per kilolitre with a demand of 6 megalitre a day.

Mr Smith asked in terms of skills development how the youth of Makralakwena could be expected to develop themselves so that they can become employable as boilermakers, plumbers, etc. What is DMR doing in collaboration with Department of Higher Education and Training to ensure skills development is taking place in that community?

Mr Smith asked how DMR will ensure that SLPs are properly consulted with local as well as district municipalities and the communities so that the services provided or the project implemented is in line with the need of that specific community and complement what is necessary to sustain infrastructure like roads and water.

The Director General replied about the one stop centres that government intends to have them in all the provinces including Lesotho. As indicated they have started in the Eastern Cape, there is one in Carletonville, Gauteng, one in Limpopo as well as in Northern Cape.

The DG replied on the status of Lily mine in Mpumalanga, that government viewed that matter very seriously and it has been an unprecedented incident they experienced. They remain committed to assisting the affected families and were engaging with the mining company about the people trapped in that mine. The current status is that the mine has been placed under a business rescue practitioner who has been employed to assist the mine to bring it to full production. And from the information they received there is still gold in that particular mine that could be mined over the next ten years. In fact the company has two mines in that area. There is Lily mine and Baprock mine. Lily mine was the better performing mine in terms of the value add. The biggest challenge the mine experienced previously was finance. At one stage there were indications that a Canadian company was going to inject about $11m, but there were challenges with that because the company did not meet a payment deadline.

They have been engaging with the CEO in terms of the business rescue periodically. The company has indicated to the Department there might be other investors. As government they have also been trying to find ways of assisting that mine to come back into operation. For them it is key to try to get to the container, but most importantly to assist the Nkomati communities because they depend on that mine for their well being.

They have been also engaging with the employer on what is happening with the current employees to try to move them into one of their other mines as well. But they have promised that once that mine reopens they will consider those mine workers. Obviously, this is a very sensitive and painful process the families were going through especially given the time that has passed. But they would like to assure the Committee that they are very serious, together with the Minister, in ensuring they find a solution.

The DG replied about the entrepreneurship youth summit programme that the plan is to go to all the provinces. Currently, they have done the initial summit in Gauteng where 250 entrepreneurs attended. There was one in KZN province, and also they were going to Limpopo and planning to go to all the provinces. Obviously, they appreciate the fact that the needs of entrepreneurs in different provinces might not be the same. Therefore, they had to find ways of working with and accommodating different stakeholders.

The DG replied to the question about ex miners not getting paid, saying that the main reason for establishing one stop centres was the fact that the Department could not get easy access to the ex mine workers. They had one centre in Johannesburg to ensure that compensation reached the workers. Therefore, government has started with the process of establishing centres where the ex miners could be reached, especially in labour sending centres. They have started in the Eastern Cape and have also conducted workshops through their principals in those areas, engaging with the unions as well to assist them on how to get information on ex miners and their families.  Therefore, it is a continuous programme, but it important to highlight that the programme does not only focus on compensation, but also on job opportunities. There are current projects they have embarked on to assist ex miners that are not working.

The DG said on ownership and the environmental programme of mines that the current Mineral and Petroleum Resources Development Act (MPRDA) is clear that a mining company could not be granted prospecting rights or mining rights or mine permits without the environmental programme. Currently, the issue is the implementation of those Environmental Labour Practices (ELPs).

The DG said in terms of the judicial process and the court ruling that their approach as a department together with the sector is that they should come up with the position of not continuing with this judicial process. They have been engaging with the Chamber of Mines to not to continue with this process and they were at an advanced stage moving forward.

The DG appreciated the engagement with the Select Committee because the inputs and questions from Members of the Committee strengthened their relationship with the Select Committee.

The Chairperson thanked the DG and his delegation. The answers to questions that could not be answered due to time constraints could be forwarded in writing to the Committee Secretary.

The minutes of 16, 25 and 31 25 August 2016 were adopted.
  
The meeting was then adjourned.