Mining Indaba 2017; Mineral Investment Promotion; Lily Mine disaster update: Deputy Minister and Chamber of Mines briefings

Meeting report

Promoting the South African Mining Industry: briefing by Chamber of Mines
The Head of Public Affairs and Transformation at the Chamber of Mines, Tebello Chabana, explained the nature, aims, and organogram of the Chamber, disclosing that the mining industry made a substantial economic contribution to the South African economy in 2015, even though it witnessed general losses. For example, real mining GDP shrank by 2.7% between 1990 and 2015. Overall, the industry contributed 25% of merchandise exports, 15% to FDI, 17% of private investment, 7.7% of GDP, 10% of the JSE market value, and 460 000 jobs. Mr Chabana affirmed that the mining industry’s significant potential for growth in several aspects of the South African economy is evident in the financial services sector, which grew 167% between 1990 and 2015.

Mr Chabana explained that fatality rates in the mining industry are much lower than in sectors such transport. Over the past two decades, safety and occupational health has improved in the mining sector with an 87% reduction in the number of fatalities between 1993 and 2015. However, the industry is facing huge challenges. These include depressed commodity prices, rising domestic cost pressures, and decreasing productivity because of declining grades, aging mines, and production disruptions. To address these challenges, sector leaders signed a declaration to save jobs and ameliorate the impact of job losses.

Mr Chabana stated that the Chamber actively promotes South Africa as a mining investment destination. It does this through mining conferences in and outside South Africa, strategic relationship with a mining indaba event company, participation in investment related events, participation in the Alternative Mining Indaba, editorial support for publications at and around indabas, leadership role in Mining Industry Association of Southern Africa (MIASA), and direct engagement with the investment community and rating agencies.

Mr Chabana stated that policies need to recognise the peculiar characteristics of mining to help reduce investment risks in long term projects. These characteristics include high risk, high capital intensity, cyclical commodity markets, and cost competitiveness. Recommendations for a successful mining sector were:
• More effective problem solving partnership between government, business, and organised labour.
• Stable and constructive labour relations environment and more impactful social development
• Access to available, efficient, and cost effective infrastructure
• Solutions to improve productivity and reduce cost pressures
• Regulatory and legislative environment that is stable, predictable, and competitive. In this respect, policy certainty is critical with respect to the Mining Charter, the Mineral and Petroleum Resources Development Act (MPRDA), and the One Environment System.  

Mineral Investment Promotion: Mining Indaba 2017
Deputy Minister Godfrey Oliphant and the Chief Director: Mineral Promotion, Ms Setepane Mohale, presented a report on mineral investment promotion.

Deputy Minister Oliphant stated that the rationale for the Mining Indaba, which will take place in February 2017, is to promote mining investment in South Africa. He expressed the DMR’s concern over fatalities in the mines, reiterating DMR’s aim of zero harm in the mines. South Africa and the CAR, the only African countries with the word ‘Africa’ in their names, have resolved to champion the African Mining Vision. Stakeholder engagement is underway to deal with monies due to retired miners, while the zero-harm policy is being robustly pursued. The problem with combating fatalities is the activities of illegal miners.

The Deputy Minister explained that the DMR takes transformation such as minimum wage and wealth distribution very seriously. Investigation into the causes of the Lily Mine disaster is ongoing and efforts are underway to compensate the families of victims. Each family was promised R200 000 by 15 November 2016, while R50 000 was promised to those injured. Unfortunately, the payments to the trapped miners’ families were not made by 15 November.

Lily Gold Mine Accident update
Mr Xolile Mbonambi, Acting Chief Inspector of Mines, briefly described the Lily Mine, details of the trapped employees, the cause of the collapse, rescue operations, government interventions, and efforts to recover the container. He noted that Lily Mine is a subsidiary of Vantage Gold Property Limited, a company listed in the Australian Stock Exchange and regulated by the MPRDA and the Mine Health and Safety Act (MHSA). The mine is in the uMjindi municipality. The trapped miners are Mr Solomon Nyerende (Lampsman), Ms Yvonne Mnisi (Lamp-room assistant), and Ms Pretty Nkambule (Lamp-room assistant). The tragedy was caused by a failure of the Crown Pillar. 75 employees in lower levels of the mine were evacuated through the ventilation shaft.

Mr Mbonambi explained that the Minister visited the mine shortly after the collapse. The President appointed an inter-ministerial committee to investigate the disaster. Several ministers and top government officials visited the mine. The project for retrieving the container will only commence once the access shaft has been completed and safety is guaranteed. The Department of Social Welfare is actively engaging with the families of the trapped miners and the mining company continues to pay the salaries of the trapped miners to their families. Following the closure of the mine, all employees were offered severance packages and many of them opted for this option. These employees will be re-employed on the same terms and conditions as they were previously employed. About 40 employees have resigned and 100 have been redeployed to the Barbrook Mine. The investigation of the accident will be converted into an enquiry in terms of section 66 of the Mine Health and Safety Act (MHSA).

Discussion
The Chairperson called on members to comment on the Mining Indaba and the Lily Mine presentations. He expressed concern that nearly a year after the disaster, three miners are still trapped underground. He expressed displeasure that the investigation seems to point at no potential culprit for the disaster.

Mr H Schmidt (DA) sought clarification over the shrinking mining GDP figures, wondering if they are in real terms or nominal terms. He asked why South Africa has slipped down the list of top mining countries in the world. He noted that over 800 000 were employed in the mines 20 years ago, while mining had contributed about half of South Africa’s GDP. He asked why these figures have fallen, why beneficiation and labour unrest were not addressed in the Chamber of Mines and DMR presentations, and what the DMR is doing to address challenges facing the mining industry, especially non-political challenges.

The Chairperson noted that the Department of Labour is not before the Committee, making it difficult for the delegations to respond to labour-related questions.

Mr J Lorimer (DA) noted that mining has the potential to uplift South Africa’s economy. He accused the DMR of presenting an alternative reality different from actual conditions in the mining industry. How credible is the DMR’s investment message when placed in context with the Mining Charter’s lack of provisions for credible consultations with mining communities? How credible is safety and investor-friendliness in the mining industry in the light of accusations of genocide levelled against some mining companies? Mr Lorimer asserted that no one tells the truth in mining indabas, which is why investment is poor in the mining sector.

Ms M Mafolo (ANC) asked why South Africa has fallen down the top mining countries list, what the composition of the Chamber of Mines is, and the agenda of the Mining Indaba.

Mr Chabana requested to make written submissions on some of the questions asked by members. He stated that there are two streams of thought on the Mining Charter regarding the issue of ownership. These are the ‘Ten-a-Side’ stream (group of ten industry leaders), and the ‘other elements’ of the Charter (employment equity, procurement, skills development). The Mining Chamber should have had further engagements with the DMR on the critical elements of the Charter. He promised to respond to the concern of shrinking mining GDP and the composition of the Mining Chamber in writing.

Deputy Minister Oliphant noted that the Constitution gives ownership of minerals to communities. As a democracy, government has a responsibility to communities, given that they are the most important stakeholders in the mining industry. Also, public officials have an obligation to understand the issues surrounding the mining industry. These issues are notably electricity supply, wages, and employment, all of which affect labour, productivity, and social welfare. The decline in employment figures in the mines started as far back as the 1980s. The main reason is South Africa’s export-oriented economy, which promotes foreign companies and makes it difficult for local companies to benefit from minerals. Uniform systems must be put in place to enhance beneficiation and ensure real transformation.

The Deputy Minister asserted that the DMR consults extensively on issues that affect mining. South Africa has one of the best security of mining tenure (30 years renewable). The Aquila Resources case was political and the DMR allowed due process to prevail throughout the process leading up to the litigation. There are numerous investors in South Africa from China, Canada, India, and Australia. They know the real story about South Africa and are more positive about South Africa than the South African media.

The Deputy Minister stated that housing situation is improving in the mining sector. He declared that speculative (‘fly-by-night’) investors are not welcome, arguing that participation in the Cape Town Mining Indaba was reduced because of falling commodity prices. The fact that South Africa has fallen from number one to number six on the list of top mining countries should not be isolated from the special skills and factors that surround deep mining, and does not mean that investor confidence is waning.

The Chairperson said that the Mining Indaba must first make the participants welcome before presenting challenges in the mining sector. He asked members to focus on four issues: (1) How parliament can contribute to industry leaders’ declaration against job losses. (2) The importance of dialogue between the DMR and stakeholders, especially the collective rights of communities. (3) Lessons from the Mining Indaba. (4) The DMR and Chamber’s promise to provide written feedback on the shrinking GDP in the mining sector.

Discussion on the Lily Mine
Mr Schmidt noted that 10 months has passed since the Lily disaster, lamenting that it is an indictment on society that nothing has been done for the families of the victims. He called for increased commitment.

Mr Lorimer asked why the Minister made public promises of compensation to the victims’ families without consulting the mining companies on funding.

Mr I Pikinini (ANC) called for regular updates on the Lily Mine disaster, as well as regular briefings on the safety measures of mining companies.

Mr M Matlala (ANC) echoed Mr Pikinini’s call for regular updates on the Lily Mine disaster. He urged the Committee to visit the uMjindi community next year. He sought clarity from the Mining Chamber on the reduction of employees in the mines.  

Deputy Minister Oliphant agreed that the handling of the Lily Mine accident is an indictment on the DMR’s efficiency. The dilemma is that by law, no one can go underground [into the mine] unless their safety is guaranteed. The DMR is discussing with a company that promises a technology to locate the trapped miners. Regarding compensation, mining companies are required to have insurance to cover accidental deaths. The IDC has assured that they have money ready to compensate the victims’ families. R200 000 was supposed to have been paid to each family by 15 November 2016, while R50 000 is due to be paid to survivors by 15 December 2016.

Deputy Minister Oliphant agreed to provide regular updates on the Lily Mine. He promised that the DMR will consider the four issues outlined by the Chairperson.

The Chairperson called on the Departments of Labour and Social Development to formulate a programme of compensation for the Lily victims’ families. He expressed a desire to hear from the victims’ families and mine business rescue practitioners.

The Committee then considered and adopted the minutes of their meetings of 23 and 30 November 2016.

The Chairperson thanked everyone. He urged everyone to promote safety on the roads during the festive season. He declared the Committee recessed until the end of January 2017.