Optimum Mine: Minister, DMR, NUM & business rescue progress reports

This premium content has been made freely available

Mineral Resources and Energy

07 March 2018
Chairperson: Mr S Luzipho (ANC)
Share this page:

Meeting Summary

This was a follow up meeting with the Department of Mineral Resources (DMR) to discuss the industrial action, non-payment of workers’ salaries and the placing of Optimum Coal Mine under business rescue. At the previous meeting, the Committee had expressed dissatisfaction with the low-level DMR delegation attending the meeting who gave unsatisfactory and inconclusive answers to its questions.

At this meeting, the Minister Gwede Mantashe and the Director General Adv Thabo Mokoena were in attendance, including the business rescue practitioners that had been appointed by the court to oversee the rescue plan. The most important question the Committee asked was why the Optimum Coal Mine, together with the other mines owned by Tegeta, was placed under business rescue when it was a profitable and viable mine whose life span was projected to reach the year 2032. The business rescue practitioner Mr Johan Louis Klopper disclosed that even though the mines were making money they were left cashless because the owners of the mines were diverting funds from the mines to other holding companies which they owned instead of re-investing the funds into the purchase of mining equipment and rehabilitation of the mines. He assured the Committee that it was possible to rehabilitate the mines once a transactional bank was found for the mines. The mine was struggling to pay employees, contractors and other service providers not because of a lack of cash but because of a lack of banking facilities. Commercial banks were shunning doing business with the Tegeta group of companies because of their questionable banking transactions. Even the Bank of Baroda which was Tegeta’s official bank had attempted to sever relations with Tegeta only for the courts to force it to continue doing business with Tegeta. This left the Bank of Baroda with no option but to leave the country.

Minister Mantashe committed himself to helping resolve the problem and informed the meeting that he would be visiting Optimum Mine and would meet with all stakeholders including the workers. The Committee asked the DMR why they had not noticed the neglect of the mines by Tegeta and why they had allowed such high levels of non-compliance. The Deputy General Secretary of the National Union of Mineworkers (NUM) accused DMR of colluding with Optimum management and suspected that DMR was captured.

The Committee agreed to wait and see the progress made by the Minister in his intervention in the problem before taking any other step. DMR was asked to take keen interest in the matter and to conduct an inventory of all the equipment at all the mines to prevent them from being stripped of assets in the event of the business rescue degenerating to the stage of liquidation.

Meeting report

The Chairperson extended a special welcome to the new Minister of Mineral Resources, Mr Gwede Mantashe, whom he acknowledged as a veteran in the mining sector. He reminded Members that the meeting was scheduled to take the whole day so that all outstanding matters could be exhausted. He asked the Minister to make some preliminary remarks.

Minister’s Preliminary Remarks
Minister of Mineral Resources Gwede Mantashe expressed satisfaction and appreciation that the matter of the mines was receiving the urgent attention that it deserved. He disclosed that he took the initiative to talk to the business rescue practitioners and that he would travel to Optimum Coal Mine the following day. Once a business rescue practitioner (BRP) is brought in then the next step is liquidation. Business rescue practitioners are the successors of management. The creditors had been paid as well as the mine workers and, hopefully, the mines could be brought back to full operation. Mining was not for speculators but for long-term investment and those who were in a hurry to make money ended up creating situations like the one at Optimum Coal Mine. It was better to allow the BRP to explain the situation and then the deliberations could begin. Mining could sometimes be a harsh industry because Optimum was once a profitable flagship mine that employed a lot of workers and was highly mechanised but things had changed.

The Chairperson said the Committee simply wanted to establish exactly what was going on at the mine, although it had now emerged that there five mines involved and it was not just Optimum Mine. He invited the BRP to make his presentation.

Business Rescue Practitioner briefing
Mr Johan Louis Klopper introduced himself together with his fellow BRP, Mr Kurt Knoop. He said only the BRP was authorised to speak on behalf of the company and that Chapter 6 of the Companies Act stipulated that in the first 10 days the practitioner was obliged to hold meetings with staff and creditors. The mines are quite some distance apart so it was challenging. If the 10 days elapses without this happening, then the whole process becomes a nullity. The Companies and Intellectual Property Commission (CIPC) was notified on 19 February 2018 that eight companies under Tegeta Exploration and Resources (Pty) Ltd would be placed under business rescue. It was important to establish the reasons for the financial distress of the group of companies. He would, however, limit himself to the four mining companies in his presentation.

On 12 February 2018 the Bank of Baroda announced that it was withdrawing from South Africa and, thereafter, the Tegeta board of directors met and decided to place the company under business rescue. They foresaw that they would be unable to pay business commitments and on 22 February 2018 business rescue practitioners were appointed. All four mining sites had been visited and meetings were held with creditors. Business rescue proceedings are meant to rehabilitate companies. The mining group’s relationship with the Bank of Baroda was not good as the bank was not a transactional bank which made payments to suppliers difficult. A dispute between Optimum Coal Mine and Eskom caused the delay in the payment of salaries as Eskom claimed that the mine had not delivered the expected quantum of coal thereby imposing a R104 million fine. It took four to five days to get the salaries into the employees’ accounts. The mines do not have access to transactional banking facilities.

In the opinion of the two BRPs, the mines can be rescued. The primary objective of the BRPs was to find transactional banking facilities and only the major banks could provide those considering the size of the mines and the number of transactions that would require to be facilitated. The BRPs had taken control of the mines and complied with the hectic statutory schedules. It was important for all four mines operations to return to full production to fulfil contractual obligations. It was crucial for mine management and labour to be in a partnership and have a common goal. The various contractors and suppliers should return to the mine and provide services. Revenue streams gained should be used for the mines as in the past funds from the mines were sent to other companies in the group. Consequently, there was neglect of compliance, neglect of machinery, lack of maintenance and lack of protective clothing for the employees. The mines were left cashless despite their profitability. The mines have a good future if there is cooperation among all stakeholders. It will take time but it can be done. The mines have good contracts and Optimum is profitable. The low-price Eskom contract is coming to an end in September at Optimum and a new contract can be negotiated at a higher price. The price of coal can be adjusted upwards from R201 a tonne to R600 a tonne. Prevention of diversion of funds would assist resuscitate the mines.

Mr T Rawula (EFF) addressed Mr Klopper on his attribution of the financial distress of the mines to the lack of transactional banking facilities. He asked what the justification was for using the Bank of Baroda which had no transactional banking capabilities and why the board of directors could not find an alternative bank. He also drew attention to allegations that Tegeta had a fake BEE certificate.

Mr Klopper said he could not comment on the authenticity of the BEE certificate as the first 10 days of his tenure was taken up with other matters. The BEE certificate was currently a low priority. The directors could not find an alternative bank because the other banks had observed questionable transactions by Tegeta. The Bank of Baroda also wanted to terminate its relationship with Tegeta for the same reason but they were forced by a court order to continue and had no option but to leave the country. He stressed that if banking facilities are not found by the end of March, the mines would shut down. Without banks there can be no business and that is why finding a bank was the main priority. He added that 4 293 jobs would be lost if the mines shut down and that would be devastating for the rural communities that depend on the mines.

The Chairperson reiterated the point that what was important for the Committee was to establish what caused the distress of the mines.

Mr Rawula asked if the diversion of funds did not constitute criminal activity. He asked what would be the consequences if it was proven that the BEE certificate was false.

Mr Klopper replied that the BEE certificate would be looked at later. The Companies Act placed responsibility on the BRPs to report incidents of adverse activities or transactions to authorities. They would stick to the rules and comply with all the requirements.

Mr J Lorimer (DA) said contractors doing business with the companies were not being paid and when they complained they were being replaced. At Shiva Mine 43 people had been replaced.

Mr Klopper said the banking issue was still impeding the ability of the mines to pay service providers on time. The Bank of Baroda was using Nedbank for transactional purposes but the latter was nervous as they could be held responsible for any questionable transactions. It was, therefore, a major mission to pay the contractors.

Mr Lorimer asked, assuming that banking facilities were secured, whether the old management would be returned and if Tegeta would resume full control of the mining enterprises.

Mr Klopper answered that according to the Companies Act, once a company has been rehabilitated there was no requirement for termination. The Act requires the BRP to remain for as long as two, three or even five years. There was no termination date. In this case, a number of interested parties want to purchase the mines. There was significant interest and it was not inconceivable that these assets would go to new owners.

Mr S Jafta (AIC) noted that the BRPs seemed confident that the mines could be saved and he asked what they were doing to restore the confidence of the stakeholders.

Mr Klopper explained that he had had meetings with creditors over the past two days and all of them asked when the mines would pay their debts. They were seeking certainty. They said that as long as we can give them assurances, they would be happy to resume provision of services to the mines. Most of the contractors and suppliers are not major businesses but one-man and two-man companies. The other stakeholder was labour and the engagements had been extremely positive. He had addressed the entire workforce at Shiva Mine. There was cooperation at all levels and the workers carried on working. At Brakfontein Coal Mine there were issues which were being addressed and the BRPs would meet the Workers’ Committee. Koornfontein Coal Mine was a well-run organisation with good relations between management and workers. It is a model of cooperation and a model of responsible worker representation and management. At Optimum Mine the situation is a bit tricky as 75% of the workers are on contracts and the union representatives are digging in their heels. There were difficulties between labour and the BRP, however, common ground could still be found.

Mr A Pikinini (ANC) said the explanation of the BRP was clear but there was a story behind his appointment. He asked where and when the decision to appoint the BRP was made.  It was important to know what was happening before the BRP arrived.

Mr Klopper disclosed that investigations that have been done so far have revealed that the group conducted itself in a manner that raised serious questions. The previous owners viewed the mining operations as their own piggy bank and they used the funds in any way they liked. This did not just happen to the four mining companies but also to VR Laser Services. The companies have been severely damaged because of the diversion of funds. Loan accounts were created and company funds diverted higher up in the Group. The commercial banks had sight of all these 19 companies and terminated their business relationships. Significant amounts of cash were diverted into holding companies. The funds need to be returned to the mines.

Mr Pikinini asked who the directors of Optimum Mine were.

Mr Knoop said the matter of the appointment of the BRP came from an accountant who approached a certain attorney who sought information and engaged with Mr Klopper. All documents were lodged with CIPC.

Mr M Matlala (ANC) said it was important to ensure that the workers were not retrenched. He asked the BRP if they had any plans in place for the resuscitation of the mines. He asked who the people were that were diverting the funds and if it was possible to charge them. He also asked if a handover was done by the previous owners to the BRP. Is it possible for the BRP to lease a mine to a person that is non-compliant? He asked the BRP to state the challenges they were facing in the execution of their mandate.

Mr Klopper replied that the object of a business rescue operation was to produce a plan which clearly stated what had to be done and it had to be presented to creditors who had to vote on it. The BRP merely facilitates a plan and creditors vote yes or no. If the plan is not accepted, the next step is liquidation. The plan has to be produced in a period of three weeks. The BRP can only investigate the business under their control. On the question of where the funds were diverted, the BRP can only investigate the funds that were diverted within the group of companies under their control as they had no investigative authority to trace funds that had been diverted to companies that were outside of their control. Only government investigative agencies would have the power to investigate and trace the funds that were diverted to holding companies. The was not really a physical handover by the owners. The BRP can lead a mine; they are not specialists in mining but they are specialists in management. They have powers to remove directors and management if they are incompetent. Often leadership is poor where companies are placed under a business rescue. Poor leaders also tend to appoint poor managers, so often when the leaders are removed it also becomes necessary to remove other members of management. The Companies Act gives the BRP those powers.

Ms V Nyambi (ANC) asked who the shareholders were.

The Chairperson informed the meeting that the Minister had to leave for another meeting and gave him the opportunity to make some brief remarks.

Minister Mantashe said he was still being inducted and was pledging his commitment on four issues one of which was to assist resolve the issues at Optimum Mine. He said solutions would not be found in a day but pointers of what had to be done were already there.  The Portfolio Committee was not an enemy of the business rescue practitioners, but they were also not going to be in the pockets of the BRP. He told the BRP that they would be under pressure to account to the people of South Africa.

The Chairperson asked the BRP what was meant by the word ‘remove’. He requested them to provide a list of all Optimum creditors. He raised the status of the 75% of the Optimum workforce who were regarded as contractors. He asked if these would be regarded as creditors rather than employees. According to labour law, any person who provided labour was regarded and classified as an employee. There was information that contractors had not been paid from October last year. That would imply that 75% of the labour force would not start work and he wondered how the mines were going to resume operations in such a scenario. The Bank of Baroda was leaving in March and there was money that had been diverted. He asked assuming the mines made money and they paid all their obligations and creditors and there was excess cash left over where would this money go. He wondered if the excess funds would be of benefit to the directors because the mines were clearly not loss making enterprises. He asked if Eskom were creditors of the mines.

Mr Klopper, in reference to ‘remove’, clarified that the BRP had the power to remove from office any member of the board of directors or any member of management, but not the workers. In a business rescue, one has to look at the priorities as not all problems can be resolved at the same time. What was important was to set in motion a process of rehabilitation. On the question of whether the contracted workers were classified as creditors or employees, he said the Constitutional Court was in the process of interpreting section 198 of the Labour Relations Act. Unions were claiming that contracted workers were not creditors, but that they were labour. Clarity was required on who constituted a creditor and who constituted an employee.

Chapter 6 of the Companies Act stipulates that once a BRP is appointed, the BRP assumes the responsibility of a director of a company. He cannot pass the buck and all regulatory compliances are his responsibility including tax returns, safety and health. It is up to the BRP to ensure that they are implemented. Section 133 of the Companies Act, however, grants a general moratorium as it states that during business rescue proceedings, no legal proceeding, including enforcement action, against the company, or in relation to any property belonging to the company, or lawfully in its possession, may be commenced or proceeded with in any forum. On fears that there would be a repeat of the Aurora saga, he said there was no possibility of that as there was no appointment of a BRP in the case of Aurora. In that case, it was the handover from one company to another. On the question of excess revenue, profit does not equal cash. The BRP will exercise responsibility by directing the cash back into the operations, but it was also important to maintain reserves for future maintenance of equipment and future investments.

On the payment of contractors, the Bank of Baroda was not a transactional bank and it depended on Nedbank’s transactional capacity. It was an untenable and messy situation which was why it took six days to pay a contractor as there was a lot of paper work that had to be done and affidavits filed for each transaction and, unfortunately, there was a limit of R5 million per day using this system. A company of Optimum’s size requires volumes of between R200 million and R300 million a day to meet its business requirements. Ninety per cent of the problems of the mines will be unlocked once a bank is secured. Eskom is both a creditor and a debtor and negotiations were underway to agree on a new supply agreement. The following day the BRP would be meeting at Eskom Head Office to discuss the fine. On the possibility of finding new owners for the mines, there had already been expressions of interest and offers. Firm offers had already been received and cash would be deposited into a trust account.

Mr Rawula said issues of transformation were important and he could not help but notice that the two business rescue practitioners were two white males. He wondered how the BRP were appointed. He asked if the BRP were committed to the Social Labour Plan (SLP). Part of the SLP was the construction of the community clinic at Optimum.

In response to the question of transformation, Mr Klopper held in his hand a training manual which he had brought and which was used in training young black South African BRPs. He asserted that he was actively engaged and was concerned about building the capacity of young South Africans, especially black South Africans, to engage in this work but pointed out that it was not easy as it required multiple skills. On the question of the clinic, he said it was a priority but that currently there were higher priorities such as getting the mines up and running.

Mr Lorimer said the BRP had the power to determine the future of the companies and asked if they would choose to sell the mines to new buyers.

Mr Klopper said as the BRP they had the power to do that and if the best option was to sell the company off then that decision would be made.

Mr Matlala said, in his view, he thought the Committee would follow up this meeting with another one to see the progress that would be made by the BRP. This was not just a problem for the BRP, and after the Minister concludes his visits to the mines, it would be important to make a follow-up.

Mr Klopper said he would be happy to provide the Committee with an update in three weeks a time at which time the business plan would be ready. He requested the Committee give space to the BRP to do their work and that if this was done then things would go well.

Mr Knoop answered the question on who appointed the BRP. He named the accountant as Nigel Nair from Blue Sky Accounting and Tax Services. On shareholdings in Optimum Mine, he said Tegeta Exploration and Resources (Pty) Ltd owned 100% shares in Optimum. The shareholding in Tegeta was as follows: Oakbay Investments (Pty) Ltd 29.05% shares; Mabengela Investments (Pty) Ltd 28.53%; Accurate Investments (Pty) Ltd 8.01% shares; Fidelity 12.91% and others. The directors of Tegeta include Mr Ashu Chawla, Ms Ronica Ragavan, and Mr Ravindra Nath. On the clinic, he said the BRP had authority to allocate funds to certain categories of creditors, so it was possible to allocate funds for the clinic.

The Chairperson told the BRP that the questions addressed to them were not meant to attack them but simply intended to achieve clarity. He wondered who owned the mining rights at Optimum now that the company was under business rescue.

Department of Mineral Resources (DMR) briefing
DMR Director General, Adv Thabo Mokoena, covered the questions that were raised at the previous meeting with the Committee and included the other Tegeta mines: Shiva Uranium in the North-West, Vryheid Revival Mines in KZN, Brakfontein, Idwala and Koornfontein in Mpumalanga.

Optimum Coal Mine
Optimum Coal Mine is the holder of the mining right which is currently owned by Tegeta Exploration and Resources (Pty) Ltd. The main problem at Optimum was the non-payment of salaries for permanent employees and non-payment of contractors and suppliers which resulted in industrial action. The mine was placed under business rescue and notification was sent on 1 March 2018. The company was non-compliant with its Social and Labour Plan resulting in the issuance of a section 93 order on 19 February requiring remedial action and compliance by 18 April 2018. There was non-adherence to rehabilitation commitments triggering a section 31L NEMA notice on 15 February 2018.

Vryheid Revival Mines
The company has four mining rights of which two are operational. The business rescue applies to this mine although there has been no formal notification. Employees and contractors have been paid for February.

Shiva Uranium Mine
Oakbay Resources has three mining rights. Employees and contractors have been paid for the month of February. The BRP have taken over the running of the mine.

Sale of Assets
In terms of Section 11 of the Minerals and Petroleum Resources Development Act (MPRDA), a right, an interest in a right or a controlling interest in a company may not be ceded without Ministerial consent except in a case of listed entities. A Section 11 process is a commercial transaction entered into between parties and has to go through the Competition Commission and other regulatory bodies prior to lodging an application to transfer the rights. According to DMR records, there are no Section 11 applications received from this company to another entity.

Financial Provision for Rehabilitation
The financial provision is held with the Bank of Baroda for Optimum and Koornfontein Mines. The financial provision for both operations are subject to a freezing order granted in favour of OUTA on 16 September 2017.  DMR received a notification from Nedbank dated 14 February 2018 informing it of its intention to withdraw the guarantees. Upon receipt of this notification, DMR responded on 15 February 2018 directing the bank to transfer the funds into the DMR bank account.

Optimum Coal Mine had liabilities of R1 545 178 791.44 against a financial provision of R1 600 489 397.08. This meant that it had no shortfall. Brakfontein had liabilities of R20 902 065.91 against a financial provision of R9 056 030.86 resulting in a deficit of R11 846 035.05. Koornfontein had liabilities of R135 849 896.74 against a financial provision of R306 350 059.11 which meant that it had no shortfall. Idwala had liabilities of R8 625 934.77 against a financial provision of R2 479 957.27 resulting in a shortfall.

Interventions by the Department
DMR had engagements between October 2016 and February 2018 with the representatives of Optimum Operations. The purpose of the meeting was to address non-compliance and included the following issues: 
• Withdrawal of the financial provision from the Optimum Mine Rehabilitation trust held by Standard Bank.
• To confirm if there was a withdrawal/transfer of financial provision from Standard Bank to Bank of Baroda.
• If Optimum Coal had approval from DMR to withdraw/transfer the financial provision to Bank of Baroda
• To address the rehabilitation backlog at Optimum Coal covering approximately 3 400 hectares.
• According to its reviewed rehabilitation plan, Optimum Coal undertook to rehabilitate 598 ha per year.
• If such rehabilitation was successfully implemented, then the Department as part of further intervention may determine if there is surplus of submitted financial provision in order to release the excess funds.
• The engagements also addressed the review of the financial liability for all its operations.
• DMR conducted compliance inspections during the same period to monitor the implementation
• It was detected that rehabilitation programme was not implemented as committed by Optimum.
• Statutory non-compliance notice was issued on 15 February 2018 to remedy the non-compliance.
• The current liability for 2017/18 is yet to be reviewed and the formal annual financial provision assessment report is due March 2018.

Social and Labour Plan Compliance at Optimum
During 2016 a complaint was received by DMR about non-payment of the service provider for the construction of the Local Economic Development (LED) project, Kwazamokuhle Health Centre. Upon investigation of the general compliance of the SLP, DMR detected the following non-compliance: Annual Report(s), Human Resource Development (HRD), Local Economic Development (LED), Procurement Targets.

Social and Labour Plan Non-Compliance interventions by DMR
In the arranged meeting it was detected that the approved SLP has since expired in December 2017.
DMR instructed Optimum Mine to identify all areas of non-compliance with the first approved SLP commitments and provide remedial action plan (See annexure SLP 1).  In addition DMR instructed Optimum to submitted the second SLP to be assessed by DMR. Based on all the non-compliance DMR issued the Section 93 statutory notice on 15 February 2018 directing the Company to remedy all the identified non-compliance. The Company is still under the 60 day period and Department is awaiting representation from the Company.  DMR has since been notified of the Business Rescue Practitioner (BRP) process.

Social and Labour Plan Compliance at Koornfontein
Koornfontein Coal Mine is the holder of the mining right which is currently owned by Tegeta Exploration & Resources (Pty) Ltd. As part of the material terms and conditions of the right, Tegeta must comply with the conditions of the approved Social and Labour Plan (SLP). Upon investigation of the general compliance of the SLP DMR detected the following non-compliance: Annual Report(s), Human Resource Development (HRD), Employment Equity, Local Economic Development (LED), Procurement Targets.

Social and Labour Plan Compliance at Brakfontein
Brakfontein Mine is the holder of the mining right. As part of the material terms and condition of the right, Brakfontein operation must comply with conditions of the approved Social and Labour Plan (SLP). The  SLP inspection was conducted on 26 January 2018 and DMR detected the following non-compliance: Annual Reports; Human Resource Development; Local Economic Development; Housing and Living Conditions; and Establishment of Future Forum. DMR issued a section 93 order on 15 February 2018 directing the Company to remedy all the identified non-compliance. The company is still under the 60 day period and Department is awaiting representation from the Company

Social and Labour Compliance at Shiva
The company is implementing SLP 1 (2011-2016): HRD – only external and internal learnerships implemented, all other training programs not implemented; Management control/ EE – Mining Charter targets not met. LED – Company committed to three projects and one is delayed. Housing - no historical hostels, no home ownership scheme in place, the company pays a transport allowance. Downscaling – Department will be informed within five weeks through a section 52 if any jobs will be lost. SLP 2 has been submitted, assessment and approval is pending. An audit whereby non-compliance was identified – 02 March 2018
A contravention notice  has been issued.

Mr Rawula said it was clear that the mines were profitable but banking was the challenge. He asked if there was justification for placing the companies under business rescue and if it was something that was anticipated. DMR had been too lenient with Optimum about non-compliance.

Mr Lorimer asked when did DMR become concerned about non-compliance. When did DMR notice the clinic was not being completed? When were the other notices issued? Why were shortfalls allowed to accumulate? How much was taken out of the rehabilitation fund? Why had it taken investigators to reveal these matters? When was the previous inspection at Brakfontein? Why was Shiva still implementing the old SLP? Why were 43 jobs cut at Shiva? What will happen if the business rescue succeeds? Will the company return to Tegeta?

Director General Mokoena replied that the process of the business rescue was one over which the DMR had no power as the empowering provision was the Companies Act whereas DMR operates under the MPRDA. The BRP are appointed independently. In reply to Mr Lorimer, he said some of the work was undertaken by regional offices which also have specific areas of operation. Compliance inspections are carried out during routine work schedules. On the contentious issue of the DMR Regional Manager who was fired for apparently delivering a directive to Optimum Mine, he asserted that he was not fired for delivering the directive but because he had not been attending to his duties. It was just incidental that he was in the vicinity of the mine when he was located.

On why the Shiva old SLP Plan was being used, Adv Motlaso Kobe, Chief Director: Northern Regions, said it was normal to undertake evaluation exercises as SLPs were living documents. The Shiva Mine old SLP plan ran from 2011 to 2016 and it was important to make reference to it time and again to learn lessons and to keep focus on the objectives. On who would own the mine if the business rescue succeeded, she said that question had already been answered by the BRP. It was not really “investigations” in the strict sense of the word but actually inspections. It was the routine inspections that disclosed the non-compliance.

Ms V Nyambi (ANC) asked if the company was still under the 60 day period during which it has to ensure compliance with the SLP.

Adv Kobe replied that the Companies Act had now taken precedence over the MPRDA with the implementation of the business rescue as section 133 of the Companies Act granted a moratorium against enforcement. The DMR is disempowered to do anything as a regulator.

Director General Mokoena said this was a lacuna in the law that needed to be addressed as all that the DMR could now do was negotiate with the BRP on compliance but enforcement could not be done.

Mr Lorimer asked what the real reason was for the failure to complete the clinic as there appeared to be conflicting reasons.

Director General Mokoena replied that there was a shortfall in the funds required to complete the construction of the clinic.

The Chairperson said there was information that even though inspections were being carried out, compliance directives were not being issued with the proper delegation or authorisations from Head Office and that was why they were being ignored.

Adv Kobe replied that after an inspection, an inspector can issue an instruction. If there is a concern with the instruction, it can either be set aside or amended.

The Chairperson asked for the degree of compliance on the Social and Labour Plan.

Director General Mokoena replied a written response would be sent to the Committee.

The Chairperson disclosed that information had been received that the regional manager that had been fired when he went to issue a directive to Optimum, had been re-instated by the courts.

Director General Mokoena confirmed that it was true and that he had already started work.

Mr Rawula asked about the content and status of the directive that was sent to Optimum Mine.

Director General Mokoena replied that the content of the directive was not amended but it had been overtaken by events as the business rescue granted a moratorium to the mine.

The Chairperson asked the National Union of Mine Workers (NUM) to make its presentation.

National Union of Mine Workers (NUM) briefing
The Deputy General Secretary, Mr William Mabapa, asserted that the DMR Regional Manager that had been fired had been threatened by the CEO of Optimum Coal Mine, Mr George van der Merwe, that something would happen to him. He said the letter was not sent by hand but electronically. The union doubted the credibility of DMR. It was highly likely that DMR was corrupt and was taking bribes. DMR used to be good and reliable in the past but since the former Minister, Mr Zwane, took over things changed. The union trusted DMR before he assumed office and DMR could be relied upon to take action whenever there were issues that needed addressing about compliance or grievances of the workers. DMR was captured. If the majority of the officials in DMR were appointed during the tenure of Mr Zwane then there was likelihood that they were compromised.

Optimum Coal Mine used to be big with a big number of workers but the numbers had now dwindled and that was why the workers at Optimum were vigilant compared to workers at the other mines. Business rescues had created problems wherever they had been implemented. He questioned why the workers were not involved or consulted in the appointment of the BRP as the appointment could have been a collective effort between the board of directors, management and the workers. VR Laser was a company having a Gupta as a director. It was important to get a reputable mining firm to take over the running of the mines. Many companies do not like to buy mining companies during a business rescue, but they wait until the process of liquidation starts because the value of the assets decline and some assets can be purchased for next to nothing. He compared the purchase of companies during liquidation to the purchase of cattle during a drought. The union would call a meeting with DMR to discuss matters of concern. He challenged the BRP report that mining operations were resuming. He asked how the mines could resume operations when most of the machines were not in working order and there had been no explosives at Optimum for three weeks.

Mr Rawula said the BRP gave the impression that they were consulting but it appeared that it was not the case. He asked if the appointment of a BRP was a looting process.

Mr Lorimer observed that there appeared to be differing views on the firing of the DMR Regional Manager.

Mr Mabapa said that Optimum was deducting medical and pension contributions from the workers’ salaries but was not remitting the money.

The Chairperson observed that there was information that NUM and some outsiders possessed but of which DMR was not aware.

Mr Lorimer said even though Minister Mantashe said he would keep an eye on the problems at the mines he was still concerned.

Mr Jafta said there was still a long way to go to resolving the problems at the mines.

Ms Nyambi said her concern was ensuring that the mines resumed operations because if they did not, then there would be no income.

Mr Pikinini urged DMR to get closer to these mines and the communities so that they could get to the bottom of the problems which would assist them to come up with solutions.

The Committee gave DMR the following tasks:
• Visit all the Tegeta owned mines and conduct inventories of all mining equipment
• Conduct audits of all the SLPs in operation when Glencore owned the mines and which were part of the commitments to the going concern agreement; provide status update; and degree of compliance
• Investigate if workers were given protective clothing and report on injuries suffered by employees as result of not having protective gear.
• Investigate the supply chain of protective clothing
• Investigate allegations that there were no explosives at the mines
• Research the advantages and disadvantages of a business rescue.

Meeting was adjourned.

Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: