Zambezi Protocol: Chamber of Mines briefing, with Deputy Minister

Meeting report

Deputy Minister’s Opening Remarks

Mr Godfrey Oliphant, Deputy Minister (DM), Department of Mineral Resources (DMR) said the DMR faced challenges over the compensation of unclaimed benefits by ex-miners, and that possibly the Committee should arrange an urgent meeting with the leadership of the Chamber of Mines to obtain full details on the hold ups regarding the disbursement of the funds to the rightful beneficiaries. African countries had overwhelmingly embraced the African Mining Vision, which would be the guiding document for mining on the continent. 

The Zambezi Protocol: Chamber of Mines presentation

Mr Tebello Chabana, Senior Executive, Chamber of Mines (CoM), said the Chamber was a voluntary employer organisation which supported and promoted the SA mining industry. Member companies represented more than 90% of South Africa’s mineral production by value, representing 38 major mining companies, 32 junior mining companies, and four associations -- which in turn represented more than 100 members of small and medium sized enterprises (SMEs). Members were required to sign and adhere to a membership compact -- a code of ethical business conduct -- to which they committed to comply.

In Africa there was a heavy reliance on the extractive sector, with mining accounting for 28% of the continent’s combined gross domestic product in 2012, 77% of its total exports and 42% of all government revenues. South Africa’s economy was more diversified than the rest of the continent, however. Despite the resource endowment, Africa’s mining industry was in crisis. This was a consequence of a trust deficit between the governments, mining companies and civil society, often caused by misperceptions. It was widely, but incorrectly, believed that mines had massive wealth and that many deliberately stole ore or withheld tax through mis-invoicing or “transfer pricing.” The mining companies complained that the long-term nature of their business, through good and bad times, and the levels of risk they had to take, were not understood by those who set the rules. There was much policy uncertainty across the region. For example, the Zambian government had changed the mining tax and royalty regime three times in five years.

The issue of unpaid benefits was a massive challenge. R45 billion was owed to three million people. Of those unpaid benefits, around R3.2 billion (7%) was owed to 332 580 former mining industry employees.

The reasons for the benefits being unclaimed were varied:

• Many former employees were not aware of what was due to them when they left the industry’s employ;
• Many did not have fixed addresses, particularly after all the years;
• Some of the former employees came to SA from neighbouring countries, and tracking and tracing was more difficult.

The industry was concerned that the former mineworkers and their dependants had not received the benefits. Together with the government and other stakeholders, the industry was working on addressing the matter. There was progress, as outstanding benefits were being paid out, although the process did take time as incorrect payments had to be avoided.

Discussion

iNkosi Z Mandela (ANC) asked what the CoM had been doing about “zama-zama’s” (illegal mining activities) at abandoned mining shafts across the country. What was it doing about the high rate of unemployment in the country?

Mr S Jafta (AIC) asked that the CoM provide the Committee with its membership compact.

Mr J Lorimer (DA) asked if the CoM had been following the processing of the Mineral and Petroleum Resources Development Act (MPRDA) at the National Council of Provinces (NCoP), and whether it had given any input, given the length of time the law had been in process.

Mr I Pikinini (ANC) asked what women’s empowerment and black ownership programmes the CoM had undertaken, seeing that there remained skewed colonial ownership of profitable commodity mines in SA?

The Chairperson asked what the engagements of the CoM had been with stakeholders from the labour sending areas. What was its view and what action was it taking regarding illicit financial flows out of the country?

Mr Jafta asked how the CoM intended to deal with the distrust between the governments, mining companies and civil society.

Chamber’s Response

Mr Chabana said that because the Chamber had no police or security apparatus, it could not enforce any mining laws being breached, but could only point out operations which were taking place illegally. It was of the view that if some action was not taken against illegal mining, it would lead to the downfall of legitimate mining operations. The CoM could talk all day about the scourge of illegal mining in South Africa, but there were many other stakeholders within government and society who needed to pull together to deal it.   

The CoM would provide the Committee with its shareholder compact.

The CoM had been engaged extensively in the MPRDA process since 2012, when amendments had been introduced by the Department of Mineral Resources (DMR). It had made inputs before the amendment bill had reached Parliament.

Ms Zakithi Zama, Stakeholder Relations Manager: CoM, said the Chamber had recently made submission across the provinces on the current processing of the amendment bill by the NCOP. It would also be submitting inputs to the select Committees of Parliament.

In most cases, stakeholder engagements at the local level were normally handled by the mining companies which drew labour from labour sending areas. However, the CoM had initiated engagements with some provinces. For example, in 2015 a CoM delegation, as well as the mining sector, had held a briefing with the Premier of the Eastern Cape (EC) on the issues of ex-mine workers, and had covered the social labour plans (SLPs) programmes which were being implemented by mining companies in areas where they mined. The engagement had also looked at sustainable projects that the mining companies could support in the labour sending areas. Anglo American, for example, had implemented an agricultural project in the EC.

The CoM’s engagement with traditional leadership had been successful to an extent, as measured from what had occurred in the EC, but it was certainly an opportune time for the CoM to establish relations with the National House of Traditional Leaders (NHTL).

The CoM had commissioned a study to look into the alleged illicit financial outflows, and the CoM would brief the Committee in future on the outcomes of that study, as it was still ongoing. 

Mr Chabane said that the Chamber was grappling with dealing with distrust internally, and the reason it had reviewed the Zambezi Protocol and other legislative inputs in terms of historical occurrences in local mining was so that it could internalise and understand what it had to do. He would not be able to give a satisfactory answer to the Committee, but as 2017 wore on the outcome of the perspective of the CoM would become apparent.

The Chamber realised that during recent years the mining sector had been loss making, and that in 2015 it had been the only sector which was still loss making. The 2016/17 years seemed to have provided some green shoots, but platinum was still quite marginal, and there had also been a decrease in the rate of job losses in the sector. Although SA had the commodities, the problem seemed to be that the investment community had no clear confidence to invest in SA, among other issues. If the country could cultivate that confidence, the investment would come. This would lead to inclusive growth which in turn would result in higher employment. That journey was something which he hoped the country would start embarking on soon.

Ms Zama referred to the CoM leadership levels below its council, and its empowerment of women, and said its target according to the 2004 Mining Charter had been 10% women’s representation across the board. During its 2015 review, it had found it had exceeded the 10% target. In 2002, there had been 11 400 women in the mining sector, and by 2015 there were 53 000 -- an overall representation of 18%. 15% of the 53 000 were women in top management positions; 16% were women in senior management; 22% were professionally qualified employees, with 18% being skilled in technical areas. Much more could be done, and individual companies had programmes to fast track women’s participation in the mining industry.

Mr M Matlala (ANC) said that he was extremely dissatisfied with the answers from the CoM delegation. He suggested that they should be honest when they were unable to answer questions, and not give half answers. As the Deputy Minister had suggested, the Committee should arrange an urgent meeting with the CoM, as the unclaimed retirement benefits had long been held in trust by the Chamber. There was nothing convincing about it addressing the needs of the black majority who had been historically disadvantaged. He would not want written replies, but rather that the Committee should meet with the all male leadership of the CoM. Women’s empowerment did not refer to tea ladies or cleaning staff at mining companies. The women referred to had to be in leadership positions of the CoM, because the recently elected leadership still maintained the status quo since the dawn of democracy. The Committee Chairperson could even arrange a meeting with the CoM leadership over the recess period.

Mr Pikinini said he had been the one concerned about the colonisers and the manner in which the CoM had responded to the Committee, especially on the Zambezi Protocol, and it not belonging to CoM. The Committee was clear that it could not force the Chamber to own a document that had not been developed by it, and would rather focus on assisting it to ensure that the trust deficit between investors and government policy was dealt with, to move SA forward. Since there had been mutual cooperation between the CoM and government, there should be no obstacle in the CoM working progressively with the DMR.

iNkosi Mandela said that seeing that the CoM were saying there was R3.7 billion in unpaid benefits to local communities, he did not understand what it wanted to happen in labour sending areas, as the EC was contributing 38% of the migrant labour in the mining sector. He asked it elaborate on what it was doing to ensure the benefits went to those that had not yet claimed from the labour sending areas.      

How willing was the CoM to move from the Zambezi Protocol, to embracing the African Mining Vision? What was its position regarding the MPRDA and its legal implications locally?

Mr Chabane replied that there had been no intention by the CoM to manufacture answers, nor had there been manufactured answers. It was important for the delegation to make the leadership of the CoM available to the Committee, because they also wanted to engage the Committee, and the delegation would definitely try to ensure that happened sooner, rather than later.  

The fact that there was a large intake of migrant labour in the gold and platinum sectors could not be downplayed, as the salaries and remittances from mining were crucial to the economies of labour sending areas. There were more than 5 000 Mozambican migrant miners, and the government of that country had told the CoM how crucial the remittances were for the economies of the labour sending areas, as well as for Mozambique itself.

In terms of the mining companies SLPs, the MPRDA obligated companies to look at local economic development projects, not only in host mining communities but in labour sending areas as well. The CoM had been involved in one or two projects where it had attempted to foster collaboration between mining houses and communities.

He said that in respect of the R3.2 billion in unclaimed benefits, the CoM had case studies and a few success stories, where mining companies had gone on road shows to find ex-employees that had unclaimed benefits, and where grandchildren had been traced and the benefits of their grandfathers disbursed to them.  Going forward, the story was quite different, as employees were aware that part of their salaries were going to pension funds, and trade unions also ensured that employees were aware of their benefits. Therefore the numbers were not increasing, as recent retirees were receiving their benefits.   

The CoM had no obligation, nor allegiance to the Zambezi Protocol, as it was one input. It supported the MPRDA and the Mining Charter, as previous iterations of the Charter had been products of negotiations among the mining sector stakeholders as signatories.

Ms Zama said that when the MPRDA Bill had been returned to Parliament by President Zuma, the CoM had concurred with the President that there were two provisions that had not passed constitutional master. The definition of the MPRDA had been slightly unconstitutional, in that it elevated the codes of good practice, as well as the housing and living standards, to that of national legislation status. Furthermore, there were powers which had been given the Minister of the DMR to amend or repeal the standards and codes as and when the need arose, and that effectively bypassed the constitutionally mandated procedures of amending legislation. Secondly, were sections 26, 2 (b) and 26, 3 where the Chamber agreed with the President that the sections were inconsistent with South Africa’s obligations regarding international agreements -- specifically the Trade Development and Cooperation Agreement and the General Agreement on Trade and Tariffs. Both imposed quantitative restrictions on exports, and SA would face challenges on those in international fora.  The CoM had participated in provincial legislatures, in the EC, Gauteng, Free State (FS) and the Western Cape (WC), and had only sent written submissions to the other legislatures.

iNkosi Mandela thanked the delegation from the CoM for availing itself to the Committee, and said that the Committee would plan an engagement with the Chamber’s leadership.

Committee minutes

Mr Matlala and Mr Pikinini pointed out a few grammatical errors in the minutes of 31 May 2017. These were corrected.

Mr Matlala moved their adoption, seconded by Mr Jafta, and they were adopted with technical amendments.

The meeting was adjourned.