Department of Mineral Resources Quarter 3 performance, with Minister present; Response to SONA

Meeting report

The Chairperson welcomed all members of the Committee and the delegation to the meeting. Mr J Lorimer (DA) raised a motion to change the process of interacting with the delegation. He wanted a process that would involve instant responses to individual questions asked as against the standard procedure where all the MPs ask their questions and the delegation then responded to them at once. Mr I Pikinni (ANC), Mr N Mandela (ANC) and Ms H Nyambi (ANC) all kicked against the proposal of Mr Lorimer. Adv H Schmidt (DA) however aligned himself with the position of Mr Lorimer. The Chairperson in his ruling was of the opinion that the meeting was not the best place for Mr Lorimer to table the issue.

Minister’s opening remarks

The Minister of Mineral Resources, Mr Mosebenzi Joseph Zwane in his opening remarks thanked the Committee for the opportunity to engage with them on the Department’s third quarter performance as well as the approach to implement the focus areas as outlined in the State of the Nation Address by His Excellency, President Jacob Zuma, including the National Development Plan and the Nine Point Plan.

The Minister and the team recently returned from a successful Investing in African Mining conference, commonly known as the ‘Mining Indaba’, which was attended by well over 6000 delegates. The quality and quantity of attendance at this Mining Indaba was encouraging, signalling a change from the winter season that had engulfed the sector during 2016, into a new one characterised by recovering commodity prices. The continuous support and participation of Honourable Members at this conference was highly appreciated, as it practically demonstrated closer collaboration by South Africans to grow mining and value addition to the mineral resources.

The main message at this conference was that South Africa was open for business. The platform was used to address areas identified by both investors and the public at large. Key amongst these was:

• Providing regulatory certainty which remained a priority for government. Steps were outlined to improve the investment climate by committing to gazette the Mining Charter by end of March 2017, and finalising the Minerals and Petroleum Resources Development Amendment (MPRDA) Bill by end of June 2017. The support provided by Parliament in prioritising this legislation was highly appreciated.

• Calling on the investment community to partner with government in the transformation programme of de-racializing the ownership of the mining industry, and expanding opportunities for black persons to enter and benefit from the development of the nation’s mineral resources in a meaningful and sustainable manner.

• On Mine Health and safety, emphasis was placed on the importance of placing greater value on the lives of the mineworkers in the sector and also highlighting that Government would continue to collaborate with organised labour and employers to ensure that the goal of zero harm which all parties committed to was achieved by ensuring compliance with the legal provisions.

• Providing platforms and support mechanisms for junior mining companies, women and the youth to grow. The DMR was of the firm belief that junior miners were a key segment that laid a foundation for some of the big mining companies of today, and their support was an investment into future sustainability of the sector.

• Promotion of intra Africa trade and investment as part of implementing the African Mining Vision.

As part of the Department’s Mineral Resource Diplomacy Programme, the DMR engaged with a number of States and organisations including Nigeria, Angola, European Union, China, Russia, Australia, Japan, OECD and others. Technical meetings were also held with the Federal Republic of Nigeria and the People’s Republic of China to implement the Memoranda of Understanding in mining and mineral development. The DMR would continue carrying this message to other platforms such as Prospector and Developers Association in Canada, Africa Down Under, as well as African Diamond Producers’ Association.

The Mining Company of South Africa (MinCo) Bill which was fundamental to the attainment of the strategic objectives of deepening State strategic participation was being processed through government clusters for approval by Cabinet. This would pave the way for its introduction into Parliament with the objective of establishing the African Exploration, Mining and Finance Corporation, as a proper state owned mining company. Whilst the process of establishing this company was underway, it was instructive to report that, this entity remained profitable, and it was expected to realise revenues exceeding R400 million by end of March 2017. Other projects were in the pipeline, and would contribute immensely towards job creation and economic growth.

Litigation remained an area of concern to government, due to the signals that it sent. Whilst efforts would continue to be made to address issues, it had to be made clear that the protection of lives of mineworkers and implementing economic transformation programme could not be compromised. As part of the publicly declared open door policy, the Department stood ready to engage with stakeholders in resolving the issues and this had to be embraced.

State of the Nation Address Response

As previously indicated, the DMR took note of the State of the Nation Address and it was ensuring that the plans for the year 2017/2018 clearly showed programmes that would be implemented to achieve the objectives set. DMR would be able to elaborate more on this in the policy statement still to come as it tabled the budget for the Department. Some of the responses to the SONA address were elaborated.

With regards to radical socio economic transformation, the finalisation of the MPRDA and the Mining Charter was key in achieving the objective of making decisive interventions to ensure increased black ownership and participation in the sector as well as advancing local mineral beneficiation. DMR would intensify its support to new and existing black participants in the mining sector in its drive to achieve inclusive growth. Working with other spheres of government, and other stakeholders, the DMR would also continue to create awareness amongst communities and black companies regarding mining opportunities in mining and finalise the women in mining strategy.

With regards to health and safety, it was a year since the tragic accident at Lily Mine on 5 February 2016. The main priority was to ensure that closure was brought to the affected families. The Department also continued to engage with the families, communities and mine management on this matter. On Monday 13 February 2017, the Minister visited the affected families and community with the Premier of Mpumalanga province, Honourable Mr David Mabuza. Government remained committed to working with the mine in resolving the matter by also providing the necessary support.

Illegal mining was a challenge that required collective effort. The DMR was continuing to work with law enforcement agencies and other stakeholders to curb the illicit activities. The DMR called on those who engaged in these acts, including those sustaining these markets, to desist from such. The Department would continue to provide assistance for those aspiring to mine in a responsible and formal manner.

Presentation of the Department of Mineral Resources (DMR)

Mr David Msiza, Acting Director General, Department of Mineral Resources, presented the third quarterly report of the Department to the Committee. He began his presentation by giving a background to the mining industry. The mining industry remained the mainstay of the country’s economy and was central to achieving the government’s objectives of eradicating poverty, unemployment and inequality as expressed in the National Development Plan (NDP) and the nine-point plan.The strategic outcome oriented goals of the Department and its entities were also aligned to the Medium Term Strategic Framework (MTSF) and the DMR also took into effect the 2016 State of the National Address.  The Department also gave effect to the National Development Plan as follows: “Promoting and facilitating an increase in minerals, mining and petroleum activity, including value addition to mineral resources extraction in South Africa, implementing transformation policies to redress past imbalances through broader participation in the Mineral Sector and providing a framework for managing health and safety risks, enforce compliance and promote best practice in the mineral sector.” The overall departmental performance showed that the Department for the third Quarter achieved 85% of its set targets. This showed a significant improvement when compared with the same period in 2015/16, where only 73% of the targets were achieved.

Ms Irene Singo, CFO, Department of Mineral Resources, presented the financial performance reports. This showed that the departmental revenue for the 2016/17 financial year was estimated at R30.2 million. Collection up to the period ending 31 December 2016 amounted to R30.1 million against projected revenue of R24.5 million. The actual collection was higher than projected due to efficiency in collection. The overall expenditure as at 31 December 2016 amounted to R1.274 billion or 76.3% of the total allocated budget. The projected expenditure for the period under review was R1.330 billion and a variance of 56.4 million or 4.2% was recorded. The projected expenditure for the remainder of the financial year was estimated at R338.8 million. It was anticipated that the budget would be fully spent. The aim of financial administration was to provide efficient services to internal and external stakeholders. Financial regulatory reports were delivered on schedule and this included interim financial statements and suppliers paid within 30 days during the Quarter. The targeted customer satisfaction level was partially achieved. The targets to ensure consistence availability of system were met. There were no incidents of irregular expenditure cases and the expenditure against the budget was on track. With regards to promotion of corporate governance, action plans on internal and external audit, compliance framework and risk management plans were fully implemented.

Highlights of the corporate services presented by the DDG: Corporate Services, Ms Patricia Gamede showed that there was a 100% implementation of the communication strategy during the Quarter.With reference to the pre-employment screening requests processed, all requests of shortlisted candidates from HR were screened during the third Quarter and all request for contractors and service providers were screened. On the number of wellness programmes, six wellness programmes were implemented. Talking about employment relations management, three Occupational Health and Safety (OHS) Programmes were conducted and 18 career awareness initiatives were conducted during the Quarter. Mining career awareness initiatives were conducted at Durban University of Technology (DUT), Nelson Mandela Metropolitan University (NMMU), UNISA Main Campus, UNISA Mtata, UNISA Nelspruit, UNISA Polokwane and UNISA Rustenburg. Mining career awareness initiatives were also carried out at basic education institutions such as Qwaqwa (Free State), Bluehills High (Gauteng), Diepsloot High (Gauteng), Mafu Secondary in Nkangala (Mpumalanga) and Phumzile Secondary in Nkangala (Mpumalanga). Fourteen human resource development (HRD) initiatives were implemented. The initiatives included:

• Adult Education and Training (AET).
•  Education and Training Development Committee (ETDC).
• Management HRD Policy.
• Management support
• Sector Partnership

Talking about the mine health and safety, Mr Mtholeozisi Zondi, Acting Chief Inspector of Mines, DMR, noted there was a 100% implementation of certificate of competency model to improve pass rate and 99% adherence to prescribed timeframes on administration for task. 403 audits and 6896 inspections were conducted to monitor compliance with the legal provisions. 54 mine health and safety tripartite workshops were conducted. There was a 67 % reduction in occupational fatalities, 20 % reduction in occupational injuries and a 38% reduction in occupational diseases. The mine health and safety tripartite summit, hosted by the Department of Mineral Resources and the Mine Health and Safety Council (MHSC), took place on the 17 to 18 November 2016. The mining sector came together during the Summit to critically assess how the sector performed, in line with milestones and targets set in 2014 and identified initiatives that would direct towards the goal of zero harm.

Ms Seipati Dhlamini, DDG: Mining Regulation, DMR, talked about mining regulations. 4 175 jobs were created progressively up to the end of the third Quarter. 96 Mine Economics (ME) verification inspections were conducted, 52 legal compliance inspections were conducted and 56 Social and Labour Plans (SLPs) compliance inspections were conducted. Some of the SLP development projects implemented in Quarter 3 included the upgrading of primary school in KZN, the safety centre for abused women (Northern Cape), the water treatment plant (Mpumalanga) and the construction of additional classrooms in Simelela primary school (Eastern Cape)

Mr Joel Raphela, DDG: Mineral Policy and Promotion, gave a highlight of the mineral policy and promotions. 50 Investment promotion events/ forums/ workshops were conducted and Ocean economy operation Phakisa plans were fully implemented. 25 Derelict and ownerless sites were rehabilitated and 65 SMMEs were supported. The small micro and medium enterprises in mining projects supported the Green Acre Brick co-operative in the Eastern Cape which consisted of 22 members, all employed at the mine. They mined clay and had potential to grow. The DMR was assisting to legalise the project. The small, micro and medium enterprises in mining projects also supported Platistone Pty Ltd, a black owned company, started in 2011 and located in Mogalakwena, Limpopo. Mine stone aggregate was being processed from waste dump and the mine employed 38 people. The Mineral and Petroleum Resources Development Amendment (MPRDA) Bill was currently being processed. Thus far, seven (7) provincial legislatures were briefed, with Limpopo and Northern Cape briefing scheduled to take place soon and public hearings were underway in various localities.

Discussion

Mr J Lorimer (DA) wanted the DMR to be specific about who was being talked to with regards to the Mining Charter 3.

Adv W Schmidt (DA) talked about illegal mining and stated that these were conducted in broad day light and members of the communities were involved in intimidating the police and private security members. In instances where the police attempted to intervene, there were no arrests made or confiscation carried out. He asserted that illegal mining was being allowed to thrive by the relevant Departments. He stressed that something had to be done about this situation. He also referred to the court cases where there were serious accusations against the DMR.

Mr M Matala (ANC) in his contribution condemned the attitude of constant criticism of the Department. He encouraged his colleagues to encourage the Department and help them in building. Speaking about the resignations in the Department, he wanted to know why this was recurring because the Department spent a lot of money on the training of its manpower.

Mr N Mandela (ANC) spoke about the vacancies in the Department and he wanted to know how many positions were to be filled. Speaking about the accidents at the mines, he asked if there were adequate measures in place to ensure that the families of the victims were properly compensated and the victims properly buried. If no, then he wanted the DMR to explain what was being done to address the issue. On the issues of injuries experienced during work by the workers, he wanted to know what support these workers received from the DMR. Lastly, he wanted to know what the DMR was doing to help small local operators who were being harassed by the local governments.

Mr David Msiza in his response stated that the DMR was doing all it could to serve the public with honour and dignity. Referring to Mr Mandela, he was optimistic the DMR could respond to any question posed to it at any given time. On the Mining charter question asked by Mr Lorimer, he noted that the relevant stakeholders had been met, especially the chamber of mines, and there was continuous engagement to ensure that the policies and legislation developed catered for everyone. He assured that there were challenges but it was constructive not to discuss these challenges in public space. On the issue of illegal mining, the approach was being changed to ensure better results. This was done in collaboration with all the law enforcement agents. He stated that a lot of miners preferred to be illegal rather than legal because such miners did not want to follow the due process, however this was not peculiar to South Africa alone. On the court cases, he stated that such cases were still in court but measures were put in place to deal with the challenges in the system. On the issues of safety, he also told the Committee that the DMR was doing all it could to help the miners but most of the injuries and deaths were caused by lack of adherence to legislation.

Ms Patricia Gamede responded to the issue about retaining staff, stating that this was very difficult.  She noted that there were retention plans by the Department but this was beneficial mostly to the older staff hence the younger staff tended to move because they were not interested in thinking about retirement plans for now. Talking about the vacancy in the Department, the current numbers stood at about 6%.

On the issue of illegal mining, Ms Seipati Dhlamini told the Committee it was no longer an issue of the Department. She spoke of a forum consisting of the DMR, law enforcement agents including the SAPS and the HAWKS. She lamented that information always found its way out of the meetings of this forum to these people mining illegally, making it difficult for the law enforcement agents to apprehend these people. She also stressed the need to arrest the masterminds of these illegal mining activities. Speaking about the court cases on the right and permits, she noted that these cases were usually as a result of people trying to stop transformation of the mining industry and this was more rampant in the Western Cape.

Mr Mtholeozisi Zondi highlighted that a number of employees were killed in some of these mines and this was a result of non-compliance of the mines to safety regulations. On the support being rendered to the injured mine workers and offering support to the families of the deceased, the DMR tried to attend these funerals. In some mines, if the deceased was the breadwinner in the family, the family was given a chance to nominate someone to replace such a person and the mines trained as such.

Mr Lorimer, in his follow up question, asked if anything changed in the proposed mining charter as a result of the intervention by the chamber of mines. He wanted a comment on the description of the DMR as incompetent by a Judge in one of the cases involving the Department. He also wanted to know if the former Minister ignored internal legal advice regarding the court cases involving the DMR. He wanted to know why it was taking so long for the DMR to act in cases of illegal mining. He also wanted to know how many arrests were made, how many equipment was confiscated and if there was any investigation as to who might be leaking information to the illegal miners. He was critical of the DMR for cracking down on people mining legally but flouting the laws and doing nothing about those who mined illegally.

Adv Schmidt wanted to know what was done about the environmental authorizations.

Mr Mandela also spoke about the illegal mining. He was of the view that this was a very complex issue. He wanted to know how far the DMR could go in relation to this and their limitation.

Mr David Msiza responded to the issue of illegal mining. He was of the opinion that the only way to deal with this was to deal with the root causes. He assured that government was working hard to deal with this problem. He noted that a global approach was being employed to deal with the issue.  Targets were set by the DMR and this helped the Department in achieving its mandate, considering its available resources. On the issues of the environment, the DMR was working with the relevant sister agencies to help in dealing with any issues that arose from that. On the issue of the mining charter, engagements were still ongoing and there was no finalisation on the matter for now. He responded to the issue of the former minister and said that was still subject to a judicial process.

The meeting was adjourned.