State Diamond Trader & CGS & Mintek & SADPMR Annual Performance Plan

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Mineral Resources and Energy

19 April 2018
Chairperson: Mr S Luzipho (ANC)
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Meeting Summary

The Council for GeoSciences took members through its Annual Performance Plan, the key activities planned and the budget for the year 2018/2019. The CGS training of associates  featured prominently in the presentation, two members of staff who had completed their PHDS and were associates at the CGS were present and were introduced to the Committee. Less than 5 % national coverage is published at a scale of 1:50,000, which is something the CGS is working to improve. The discovery of water at Beaufort by CGS was discussed and the Committee voiced its concern that CGS may be deviating from its core mandate of geological mapping. The Committee requested CGS to focus on its primary mandate.CGS agreed and guaranteed the Committee that it has not shifted from its primary goals.

One of the activities which elicited debate was the seismic monitoring which could be used to avoid fatalities in the mines. The Committee wanted to know what was being done to improve predictability. CGS cautioned that it is not able to perfectly predict and that the ability to predict is reliant on the time scale. It however confirmed that it is working to improve its predictions.

Members also raised concerns on the possibility of coexistence between Agriculture and mining activities, vacant positions especially on the executive level.

The main challenge faced by CGS is funding which if made available will enable it plan better.

Mintek presented its APP plans which are linked to the National Development Plans (NDP). Key among them was the mineral beneficiation strategy and the investment in emerging technologies particularly the Nano technology. The representation of women in the organisation is not encouraging but Mintek confirmed that it has changed its recruitment process with a view to shift the demographics. Despite Mintek having a net worth of R 202 M, the liabilities were higher at R 301 M. Mintek confirmed that it is looking at commercializing its technology and improving its profile so as to make it more profitable. Mintek confirmed being  involved in the African Mining vision through its intervention in DRC. It also supports the Kimberly process and in doing this works together with the DMR and the state regulator. One of the key activities that the Committee wanted a better understanding of  was the viability of the gold dump processing. Mintek confirmed that it is aiming to make the process profitable and that it hopes the model which is a pilot programme will be emulated by other mining companies.

The SADPMR presented its APP and the budget for 2018/2019 and highlighted that it had improved the efficiency of issuing licences. 75 % of  new licences are processed within 60 working days, 100% of new renewals are finalised within 60 days. It also confirmed that it is assisting new entrants into the market in acquiring the beneficiation licences.

The intervention by SADPMR in Central African Republic (CAR) was not clear to the committee who wanted to know whether there are South African diamond companies operating in CAR that necessitated the need for SADPMR to closely engage with the mining industry in CAR. The Committee however noted the shocking demographics in terms of race where the numbers of Indians and Coloureds was shockingly low at SADPMR.

The SDR thereafter presented key activities it will undertake in the year 2018/2019 which will support the APP. Key among the activities was the attraction of new entrants of local beneficiates. SDR is also looking at securing more gem quality and obtaining more funding. In doing this SDR is pursuing a loan of R 60 M from the Industrial Development Corporation(IDC).

The Committee noted that out of  Sales of R 751 378 905, the SDR only made a profit of R 30 M. The net profit was also less than R 1M which showed that the entity was not doing well financially. The Committee raised the question on whether the entity was indeed necessary since it was not economically feasible to sustain it.SDR defended its role in the improvement of local beneficiation and stated that it is looking for additional funding to assist it improve its clients.

The Committee requested information on two companies who had supposedly used stolen money to purchase diamonds from the SDR. The Committee confirmed that it will look further into the issue.

The Chairperson advised the entities to focus more on their primary roles as assigned to them and to work more in fulfilling their mandates. He noted the lump sum expenses that some entities had  directed to payment of salaries and other expenses. He encouraged the entities to look more at what they are doing to fulfil their core mandates and to direct the funds to those areas.

Meeting report

Briefing by Council for GeoSciences (CGS)

Dr Humphrey Mathe, Board Chairman, CGS, began by introducing members of his delegation. He confirmed that the morale is high at CGS since there has been 80% completion of all assigned projects and that there is currently 87% employee satisfaction. He specifically pointed out two members of staff of CGS who had completed their PHD programmes and affirmed that CGS prided itself in its’ training of associates. He further pointed out that the two key achievements of the CGS was the drilling of two water boreholes in Beaufort and the unqualified audit track record of the last 16 years which it hopes to maintain.

Mr Mosa Mabuza, CEO, CGS, took members through the organisational structure of CGS and confirmed that there is instability because of many positions being vacant or having personnel employed in an acting capacity, he confirmed that the CGS is working on filling the vacancies within the next two months. He affirmed that the focus areas for CGS in its APP are the following:

  • Delivery of the mandate through integrated thematic and systematic mapping and research.
  • Advisory, stakeholder engagement and knowledge management.
  • An empowered, transformed, motivated and capacitated work force.
  • Organisational effectiveness and efficiency.
  • Financial stability.

He stated that the geology of South Africa is published at 1:100,000 and 1:250,000 scales but less than 5% of the country is published at the 1:50,000 scale.CGS have a programme to cover the whole country at a scale of 1:50,000 in order to give a more informed position of the country. In respect of airborne survey the country has 30% airborne high resolution geophysics and 23 % soil geochemical surveys .

CGS has taken the four NDP imperatives of Economic growth, Environment and Health, Innovation and International relations and looked at the contribution of CGS towards the NDP. This is what has assisted to define the themes. CGS has targeted certain areas categorised as rural poverty nodes. CGS intends to dispatch scientific expertise to do various layers of geological tests in these identified areas. He gave examples of the Eastern Cape area where it has been said that there are no minerals but tests are yet to be done .Smaller blocs to the far west part of western cape have also been targeted. He identified the following as some of the benefits of the integrated multi disciplinary geosciences mapping programme:

  • Identifying of emerging minerals.
  • Investment attraction for mineral/upstream petroleum exploration.
  • Catalysis of junior mining activities.
  • Improved ocean governance and data management.
  • Sustainable food security.
  • Improved predictive capability of geohazards.
  • Improved Infrastructure and spatial planning/land use.
  • Safer water and environment to communities.
  • Socio economic development and rural upliftment.

The following projects of national importance will be undertaken by CGS in order to deliver on its APP:

  • Near shore Geosciences mapping
  • Seismic network monitoring-extending research to come up with an instrument that will improve the ability of the CGS to predict.
  • Management of derelict and ownerless mines, this is being done in partnership with the Mine health and Safety Council.
  • Strategic mine water management project, to manage risks associated with mining activities.
  • Karoo Deep drilling and environmental baseline-This is a five year geo environmental baseline study to asses potential geo environmental impacts that could arise from the possible shale gas exploration and exploitation in the Southern Karoo.
  • Carbon capture and storage, the focus  is on Zululand and orange basins land basin.
  • Geothermal energy potential of South Africa-The CGS has produced a preliminary geothermal map of SA and is continuing to evaluate deep geothermal energy production potential.
  • Geoscience diplomacy program.

Mr Leonard Matsepe, CFO, CGS, presented the budget. He took Members through the revenue analysis for 2017/2018-2020/2021 and informed members that CGS derives 95% of its funding from the fiscals and that 5% is from collaborations or commercial activities. He elaborated that there is the Baseline funding which is meant to sustain the operations and the ring fenced funding ( MTEF ) which is project specific. On expenditure, he stated that CGS being a science institution most of the funds are spent on training of personnel  and this is the reason why the allocation on personnel has increased by 10 percent per annum. Once the expenses are deducted from the income, there will be a surplus from which the CGS intends to invest in capital expenditure, replacement of vehicle and components and purchase of major scientific equipment. He stated that the new baseline has been reduced because of treasury cuts.CGS secured R 90 million to cater for digital information which is a one-time funding. There is also R 386 million which has been allocated for the new MTEF project from 2019/20 to 2020/21, these funds do not form part of the baseline. He stated that the challenge is the rate at which the funding comes because it affects the planning. The rate of funding is low and not sustained. The Liquidity ratio is 2: 1 meaning that the CGS is able to meet its financial obligations. Income generation is expected to be R 414 million. This includes baseline allocation, ring fenced MTEF projects and revenue from collaborations.

On Human resources, Mr Maboza reiterated that CGS is committed to developing the career paths of young geoscientists which is evident from their staff profiles. Through the 94 bursaries issued by the CGS,  it is building a solid base of scientists.


Mr J Lorimer (DA) asked what  the initial studies show of geothermal potential  of the country and how hard it is to get a geothermal station.

Mr Maboza replied that CGS is at a preliminary stage in gaining information and that by the end of the year it  will be in a better position to advise on the position.

Mr H Schmidt (DA) remarked that the R 386 M  one time funding could be redirected to partly settle the R 20 billion required by the department given the urgency to invest in the department so as not to  miss the economy commodity life cycle. He requested for more information on the use of the R386 M.

Mr Matsepe answered that it is important that the baseline for CGS is augmented since it is a long term business. There is scarcity of skills and there is need for an incubation period which is also funded. CGS appreciates the 3 percent given but it will need assurance going forward that the funding will be long term to enable it plan better. The request made was for R 2 billion a year and that the lesser money CGS gets the longer it takes for it to do the job.

Mr N Mandela (ANC) thanked the CGS for the presentation. He asked when the vacant positions in the organisation are likely to be filled. What is being done to seek growth in the 1:50,000 scale coverage and what are the targets? Since most of the project focus areas fall under the control of traditional leaders, what role do the traditional leaders play in line with the CGS strategic objective of advisory role and stakeholder involvement? He sought clarity on the conflicting area of agricultural land versus mining and the threat on food security. How is CGS using the seismic network monitoring to reduce fatalities? He also requested CGS to expound on their findings on derelict and ownerless mines, how many CGS have been able to trace and how are they holding the owners accountable.

Mr Maboza responded that by the end of June 2018 the senior executive positions will be filled and that the Board had planned not to fill the positions below so that the senior executives will have an opportunity to be involved in the recruitment of the managers they will be working with. On involvement with the traditional leaders he confirmed that CGS is building its stakeholder capacity and that it is involving not only the traditional leaders but also the farmers in the rural areas with a view to building long term relationships and unlock opportunities. On food security he responded that

mapping will identify areas of great agricultural potential.CGS can also assist with the issue of soil erosion and the chiefs can begin to anticipate the kind of changes to expect. He stated that there is no reason why agriculture and mining can not  coexist and it will be prudent to also determine how to issue licences so that it is easier for both agricultural and mining activities to coexist. On derelict and ownerless mines,CGS has accessed a system at the department of rural development  which is assisting in tracing the owners of the mines. Primary rehabilitation program is on state land, it is currently not apportioning  liabilities on private land unless it is a risk to communities in the surrounding areas.

On the target for 1:50,000 scale coverage CGS has done an audit of the completeness of data existence. There is however, need for more capacity and new technologies in order to accelerate data collection and ensure national coverage in 10 years. On seismic activities he stated that the prediction is based on the time scale and that CGS needs to venture more into the predictive environment. On food security, mining companies are providing land for agriculture and are also training  farmers on good farm practices , another example given was what happens  in Northern cape, once the miners complete mining they proceed to  close the holes and plant. It is thus possible for agriculture and mining activities to coexist with each other.

Mr Mandela also wanted to find out what has been the direct impact to the people on the discovery of new groundwater in Beaufort west.

Mr Maboza responded that the discovery of water in the area was timely since the people were on the verge of running out of water. The entire community is solely dependent on the two boreholes. Science can make a real and meaningful difference to people’s lives  and that is the reason CGS will be testing  ground water in every area so as to extend the provision.

The Chairperson remarked that CGS did its work and found water but when it comes to sustaining the project, CGS should let that be done by the responsible department. He stated that the geological responsibility for CGS goes beyond mapping but the committee will want a guarantee that the focus for CGS will be on its primary goal and not on its secondary and tertiary outcomes. He also advised CGS to be prudent and work on career paths  within the organisation and ensure a succession plan is in place.  He also asked what had been done on the ICT backup system requirement at CGS.

Mr Maboza responded that the R 90 million allocated in the current financial year will be used to sort out the ICT problem, the board is also in the process of creating a position of Chief Information Officer (CIO) who will be in charge of ICT management within the organisation. He agreed with the Chairperson on the need for a comprehensive HR plan and career planning which the board will look more into in July 2018.He concluded by saying that the mandate of CGS is to advise the state and that geologists are path finders who are not precluded from collecting data and that everything being done in isolation may end up not helping.

Dr. Mathe also confirmed that when CGS drills minerals it usually ends up finding water which in geology is referred to a geological serendipity.

Briefing by MINTEK

Ms Khetiwe McClain, Board Member, Mintek, introduced members from Mintek and highlighted two notable achievements. Mintek was awarded two awards, Top performing public service award in 2017 and in 2018 Oliver top empowerment award as a result of its activities in empowering the rural communities.

Mr David Msiza, CEO, Mintek, began by giving an overview of the mandate and vision. He stated that the organisation strategy 2030  has 4 key pillars linked to the government imperatives including the NDP, the  SONA and  the DMR strategic plan. The key pillars are the following:

  • Mineral Beneficiation- Mintek’s focus is on refining and manufacturing  which will assist drive demand and assist junior miners.
  • Re innovation- Mintek seeks to continue enhancing innovation through breath taking technology, including robotics, biotechnology and electric vehicles.
  • Transformation.
  • Business strategy - To Sustain Mintek as a business case through medium and long-term strategy. The commodity prices have been going down but there has been a revival within the metals which Mintek will look more into.

Mintek had a one day session with all its employees and involved them in the planning of the APPs. Being in the fourth industrial resolution, Mintek is currently looking at ways to improve technology an example being  the nano technology. He touched on the production of electric vehicles which uses batteries and confirmed that the country can reap great opportunities from this technology because of its platinum and platinum group minerals (PGM) deposits. Mintek has also  been engaging with the company CEOs to raise its profile and to  also  learn about new opportunities in the mining industry. To support the mining vision for Africa, Mintek visited Democratic Republic of the Congo (DRC) and assisted in the operation of mines in that area.

On staff compliment  Mintek  has 41.3% of the employees who are female and it is working towards improving the demographics. Disability is at 3 %. Mintek has a skills development program where it has issued bursaries for Masters and PhD students. It also assists the unemployed graduates through internships. There are also community training programmes to assist impoverished rural communities

 With focus on retrenched mine workers. Key interventions for Mintek are the following:

  • New technology innovations.
  • Engaging CEO of companies.
  • Improving women representation demographics in the organisation.
  • Improving the safety, health, environmental and quality in the organisation.
  • Extending ore resources and unlocking mineral wealth with a focus on Bushveld complex.
  • Gold dump processing and how to make it profitable
  • Driving demand for PGMs, through looking at theDiesel gate, Fuel cells, membrane electrode assembly markets.
  • Sustainability-Savmin water treatment, Mine effluent treatment and Electronic waste treatment.
  • Support to the Kimberly process by analyzing diamond from 7 countries especially from Africa. In doing this Mintek works together with the DMR and the state regulator.
  • Derelict and ownerless mines rehabilitation, giving priority to previous  asbestos mines.
  • Investing in emerging technologies
  • Collaborative research
  • Technology commercialization. There is great technology produced by Mintek, it will work to promote the technology so that it is shared with other countries.

Mintek derives its annual income from State grants and commercial revenue. He stated that Mintek is grateful that government has been funding its programmes. He noted that commercial revenue has been going down since the recession of the year 2008 but Mintek has been prudent in terms of expenditure. He took members through revenue and expenditure patterns and said that the expenditure is mainly  on staff costs. He confirmed that they are working to maintain Mintek as a going concern and that its net worth is R 202 million. He also took members on how the state grant is allocated per commodity. He noted that there has been increase in investment in infrastructure. In conclusion he reiterated that Mintek is doing all it can to have a positive impact and that it will accelerate its efforts to get a better understanding of mine operations.


Mr Schmidt wanted to know why on the capital expenditure funding there was a variance in the years 2017/ 2018 compared to the year 2018/2019 and why the  MTEF funding capital allocation for 2017/2018 was an all time low of R 600 000 compared to other years. He also wanted to be advised on the State grant per commodity where 22 percent had been allocated to derelict and ownerless mines. In his opinion 30 years was a long time to deal with the derelict and ownerless mines.

Mr Alan McKenzie, General Manager: Technology, Mintek, confirmed that the figures were correct since there was not a lot of capital expenditure in that year which is different for the financial year 2018/2019.

Mr Lorimer asked what is needed to make gold dump processing viable and also asked Mintek to expound on its efforts to commercialize previous projects, He also requested for more information on why there is a slight increase on state grant allocation for the year 2018/2019, why there is an allocation on gas pipeline reticulation and what Mintek mean by getting a better understanding of mining operations.

Mr Mckenzie stated that Mintek is working with the mining companies and that it is an opportunity to work with distressed communities around the dumps, the program is a pilot project and hopefully it will be a model that will be used by other mining companies in gold dump processing. He remarked that technology is moving slowly  and that the stumbling block is the huge amount of capital that is needed

Mr Mandela wanted to know what activity Mintek is involved with that incorporates the countries’ mining universities. He also asked what Mintek is doing in furthering the African mining vision. He remarked that the staff component is shocking. Among the 6 in top management only 1 is a woman, on senior management team of fifteen, five are women. In a group of ninety professionals, thirty-eight are women and among a disadvantaged group of fifteen, three are women. He also requested more information on mine rehabilitation.

Mr Msiza answered that Mintek is working together with the universities and that it  hosted some graduates  last year. Mintek will continue involving the universities including the University of Limpopo. On the marketing of Mintek, he said that Mintek has some great work in terms of technology and it will be beneficial if it can share this technology with other countries. On Africa mining vision, he stated that value lies at the market and that Africans should benefit from its minerals. He said that there is value in understanding the ore bodies and that the focus on elements in the ore bodies is to enable Mintek extract more value. In response to Gas pipeline reticulation, he answered that Mintek uses a lot of gas and they had thus entered into an agreement to have the gas supplied directly to Mintek rather than make use of gas cylinders hence the additional cost. Though Mintek demographics are not good, he reminded members that the position was worse in November 2017. The change in demographics is a steady rise, it is not as fast because the staff turnover rate is low. Mintek however adheres to the policy of retirement which will assist to change the demographics.

Ms McClain confirmed that there is a membership and organisation issue but Mintek has changed in its recruitment process. The Board had also impressed on the CEO to reach out to other companies with a focus in improving the profile of Mintek, the target companies include mining industries (upstream), the vehicle manufactures and telephone companies. She reaffirmed that the Nano technology is a project that can have huge ramifications not only in South Africa but in the continent,

The Chairperson remarked that the assets value for Mintek is unfortunate since its liabilities are at R 301 million whereas it’s net worth is R 202 million. He on a light note encouraged Mintek to go look for money but not to go anywhere to use the money allocated to them.

South African Diamond and Precious Metals Regulator (SADPMR)

Mr Xolile Mbonambi, Acting CEO, SADPMR, stated that the entity advocates for domestic beneficiation. It facilitates buying, selling and exporting of diamonds. The Organisational structure headed by the Board has total of 49 male employees and 70 female employees. He outlined the 5 strategic objectives  to include  the following:

  • To improve competitiveness, sustainable development and job creation in the diamond and precious metals industry. To do this SADPMR has ensured that 100 percent of all new licenses applied are issued. 75% of such new licences are processed within 60 working days, 100% of new renewals are finalised within 60 days. It also supports new entrepreneurs, the assistance entails  issuing of  information on application of beneficiation licences which the new entrepreneurs can use to obtain funding. Licensees are assisted with skills on cutting and polishing of diamonds to enable them trade more profitably.
  • To transform the diamond and precious metals sectors- SADPMR promotes participation of historically disadvantaged South Africans (HDSAs), checks on whether commitments are being met and is currently working on decreasing  the number of businesses that are inactive.
  • Promote equitable access to resources for local beneficiation- The SADPMR has increased access to local beneficiation of diamond to a target of 108, this stems from the number of beneficiates  who accessed the diamond exchange and export centre for purposes of trading which was previously at 103 in the previous year.
  • Enforce compliance with the legislative requirements- SADPMR conducts diamond valuation services to ensure fair market value is determined. In case of disputes SADPMR negotiates  to reach a fair market value. It also makes inspections and has a target of 1615 from a previous target of 1610, compliance inspection audit in terms of mining charter, the  target is 471 from a  previous baseline of 461. SADPMR also oversees the Kimberley process to ensure compliance.
  • Improve organizational capacity for maximum execution for excellence-implement approved HR plan.

On Transformation agenda SADPMR has intensified its efforts by ensuring more audits on charter commitments by licencees. It has made plans to capacitate a unit to monitor performances of licencees. The unit will look at the areas of ownership, HR, procurement and employment in the companies  A lot of companies have been forced to adhere to the undertakings before applying for their licences. South Africa is currently Chairing the KP working group on monitoring for the next 3 years since 2017 and the SADPMR having been appointed by the minister for mineral resources as the focal point. It conducts peer review visits on KP certification minimum requirements, it has contributed to the readmission of the CAR and acceptance of Lesotho in the Kimberly process. An MOU has been signed between South Africa and Central Africa Republic (CAR) which has provided opportunities for talks and exchange on mining policies between the two countries.

SADPMR was invited for a technical visit in CAR last year where it observed the need to share skills and support in the field of mineral resources. There is an ongoing training where SADPMR is  assisting its counterparts in CAR. It has committed to assist CAR in the training of different aspects of minerals for CAR to comply with requirements of the KP. On Beneficiation strategy, SADPMR came up with a turnaround strategy to ensure that it pursues beneficiation of the diamonds and local metals. If one applies for a beneficiation licence, there is a turnaround time of 60 days with the aim of promoting local beneficiation. SADPMR has also approached one of its clients Virginia jewellery school for support and it has recruited disadvantaged companies to take part in an 8 months course in manufacturing diamonds at the school. Mintek will assist those companies apply and obtain beneficiation licence with an end goal to ensuring that independent businesses are established.

Mr Sibusiso Mandlazi, Acting CFO, SADPMR, added that in order to deliver all the plans, Mintek will prioritize spending according to medium term plans.

Mr Mbonambi concluded by highlighting the challenges of access to start up capital for disadvantaged South Africa and the lack of access to international market. He stated that the fact that the regulator is chairing, is an opportunity to promote intra African trade especially in the Diamond trade.

Briefing by State Diamond Trader (SDT)

Mr Mandla Mnguni, CEO, SDT, listed the following as its key challenges:

  • The access to start up finance and limited resources and skills,
  •  availability of suitable diamonds in both quantity and quality
  • Unstable and shrinking prices in the global market
  • The Diamond act of 1986 together with the amendments

SDT has Seventy-eight clients, there are 11 new entrants in the market whom special attention is given to, thirty-three equitable access clients and thirty- four large clients. These companies have employed 49 youths. SDR also has some trainees working with it. The key activities which SDR has discussed with the DMR include the following:

  • Attract new entrants of local beneficiates, special focus on women and youth
  • secure more gem quality
  • Search for suitable rough within the country especially in SADC region
  • Increased efforts on the Enterprise Development project- EDP is about to come to an end Mintek is looking up to see whether it can extend and come up with new intakes
  • Building an incubator for training, this is the reason SDR may need to relocate its venue so as to assist in establishment of a hub.
  • Expose clients to both local and international markets,
  • Look for alternative ways of funding the entity

Ms Mpume Danisa, CFO, SDT, took members through the 2018/19 budget where sales are R30 million whereas overheads will be R 29 million, meaning SDR will have less than R 1 million as reserve. She stated that SDR does not have any source of funding and that it operates on a commercial basis where it has to sell diamonds. Thus, there is need to develop its clients in order to sell more.


Mr Lorimer remarked that diamonds and precious metals are assets that can be used to avoid  or perpetuate crime. He wanted to know whether SADPMR is a regulator or  an economic  agency. He also wanted to know whether any South African companies are based in CAR.

He asked the SDT what percentage of sales are by the top companies and whether it is doing business with two specific companies .He also asked what percentage of sales is cut and polished locally.

Mr Pikinini (ANC) wanted confirmation on a particular project SDR was to undertake which would enable them to interact more with jewel traders in order to assist in trading of diamond.

Mr Mnguni responded that SDR is in the process of relocation to OR Tambo where this project will be more relevant.

Mr Mandela remarked that as the SADPMR is working on empowering women it should also look at the racial breakdown and see how it can grow the numbers of colureds and Indians in the organisation. He also asked SADPMR to confirm how much beneficiation is being done locally and to also expound on how some companies are exempted through section 74 of the Diamond Act. He also asked the regulator to give more information on the relationship of CAR and the MOU on technical training and to be specific on which institutions are involved so as  to prevent a case where certificates issued  are not recognised. He asked SADPMR to explain what is classified as other expenses which had been budgeted for at R 12 million. He also commented that the presentation by SDR that all rough diamonds produced in SA can be roughed and produced locally is more of a myth and wanted SDR to expound further. He wanted further information on the 10% run off mine purchased by SDR, whether the purchases are done on a month to month basis. He asked SDR to confirm what it is doing in training young black entrepreneurs to be effective clients of the SDR.

Mr Schmidt commented that the regulator had only given a presentation on diamonds, nothing much had been said of precious metals. He wanted the regulator to expound on its plans with precious metals. He also remarked that diamond trade is not economically viable since South Africa is trying to cut and polish diamonds yet it is not economically feasible to do so. On SDR, he commented that from sales of R 751 378 905 it only made a profit of R 30 million which it is using to keep a number of people employed at SDT. He said that the economic model is not justifiable since the profit margin is very low and that there is no reason for the existence of the SDT. He also asked SDT to expound on the interest income and interest expense.

Mr Mandlazi answered that the other expenses of R 12 million included a total of all the operating expenses each of which costs less than R 1 million including but not limited to domestic travel, stationary and printing.

Mr Conrad Mlondo, GM: Diamond Trade, SADPMR, expounded on the Intervention in CAR. Immediately after war, CAR was suspended from the KP, conditions were thereafter put in the country for readmission. South Africa was identified as qualified to identify sources of diamond and thus assist CAR. There are no South African companies in CAR and the intervention is as a result of a directive by the KP.

Mr Mbonambi responded to the issue of exemption of certain companies under section 74. SADPMR monitors to ensure that the conditions put in place for the exemption are met. On the training in CAR, he stated that what is transferred are the in- house skills within the regulator and that there are evaluators from CAR that are not exposed to new technologies. SADPMR will work with the minimum qualifications Authority (MQA) to ensure the training is recognisable. He also responded that the regulator had not dealt  much on precious metals because the challenges it is facing currently are more on the diamond side. On the question of how many diamonds are beneficiated locally, he responded very few and that the recent numbers in 2016 were that out of 700 000 carats only 212 000 carats were beneficiated locally.

Mr Mnguni responded on the questions raised by Mr Schmidt on the relevance for the entity to exist. If the entity was not there it could not have achieved the strides in terms of beneficiation it has achieved so far. On the percentage of sales from the top  companies,SDR  did not have the integrated report but confirmed that  preference is given to the emerging companies.

On the two companies which Mr Scmidth wanted confirmation on its dealings with SDR, he confirmed that the SDT deals with companies that are authorised to trade  and since the two are licenced it  does deal with them. On the purchase of 10% run off mines and the subsequent sell of the 15% of the 10% acquired he said that SDR only purchases the stock that it is able to sale and that  it is difficult to sell  because of the quality that SDR receives. If SDT only focussed on diamonds that are required it will be more sustainable. He added that because of the lack of funding SDT had made an arrangement with Industrial Development Corporation (IDC) for a loan of R 60 million, and that it will need to pay it within a short time.

Ms Danisa added that of the 10%  SDT does not buy on a month to month basis but that sometimes it  buys  3 % and other times 4% and that SDT only picks  that which can be beneficiated locally. She stated that SDT will increase consumption of local diamond when the strategy to facilitate beneficiation is improved, at the moment SDT is lucky to cherry pick. She added that SDT is trying to work with black traders on a development basis but it needs funding. The net profit is low and sometimes SDT breaks even so it is not about profit, SDT works to balance between development and profits. The story is different today because of the existence of the entity,

Mr Lorimer commented that he had brought up the issue of the two companies because there is possibility that stolen money of approximately R.4.5 million was used to buy diamonds from SDT.

The Chairperson commented that both the SADPMR and Mintek had their CEOs working in an acting position and that for something dynamic to be done the departments need to find  a way of creating stability with extreme urgency. The process of finding CEOs should be running simultaneously with creating stabilities in the entities. On the relevance of SDT, he commented that no entity can prove its relevance to exist, only those who saw the need for its existence can be asked to comment on the relevance of the entity. He added that the issue raised by Mr Lorimer on the use of stolen money to make purchases from the SDT has to be looked into by the committee. He said that in the case of the regulator where R 84 million is spent on salary expenses and R12m on overheads, it raises the question whether the entity exists to pay salaries. He asked the entities to ponder on the question whether it is the APP that follows the money or whether the money follows the APP.

Meeting adjourned


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