Mining Charter consultative review

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Mineral Resources and Energy

12 June 2018
Chairperson: Mr S Luzipho (ANC)
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Meeting Summary

The Department of Mineral Resources (DMR) told the Committee that public consultations on the 2017 Mining Charter were concluded 31 May 2018 and it is drafting a revised charter with the aim to finalise by end of June. The draft Mining Charter will then be published for public comment and a summit is planned as part of the consultation process. DMR, the mining sector and social partners have agreed that the Charter would serve as secondary legislation to facilitate transformation in the industry.

The Department said it met with 2 846 attendees at public consultation meetings across all nine provinces. Some of the high level comments included concerns about the linkage between the municipal Integrated Development Plan (IDP) and the mining Social Labour Plan (SLP). The challenge was that SLPs were not accessible and transparent. Mining companies were accused of consulting with different formations outside the IDP consultation process. A SLP had to be based on the IDP which had been consulted on ward-to-ward. It would be inappropriate for mining companies to ignore other forums such as youth forums and not engage with leadership in the area which might raise concerns that lie outside the IDP. DMR was looking at integrating SLPs to have a bigger funding pool for bigger projects with which the state could partner.

Members wanted to know about the details of the Mining Charter rather than the process which was what DMR had presented on. Was it going to be a more broad-based Charter? There must be a mechanism to account for money that goes out of the mining companies to the community. The community must participate in the development of both the IDP and SLP, the two must be complementary. The SLP had to be more transparent and inclusive so the community could monitor its implementation. Questions were asked about the Optimum Mine court case and the deaths of mineworkers at Sibanye-Stillwater’s Masakhane mine. “Profit must not be made on the carcasses of mineworkers,” the Chairperson said. It was noted that the Committee looked forward to the new Mining Charter and was hopeful the process would be amicable and that all stakeholders would agree to it.

Meeting report

Chairperson opening remarks
The Chairperson opened the meeting on a sad note. Soon the Department of Mineral Resources will be called the Department of Fatalities where instead of digging commodities it seems to be feeding funeral parlours. He noted the four mine workers who died and with another mineworker still unaccounted for underground at Sibanye-Stillwater’s Masakhane mine bringing the death toll to 31 this year in mines. It cannot be correct he expressed in dismay. He called on the Department to do something drastic and unusual to ensure consequences. “Profit must not be done at the carcasses of mineworkers”. He wondered what the shareholders of Sibanye-Stillwater’s Masakhane mine say when they get their dividend and take it home when that money is done on the backs of dead mineworkers. Are their profits more important than the lives of the mineworkers? It cannot be normal and modish to lose people in this manner. The biggest problem in South Africa, as he had said numerous times before, is that it is safer to join the army where you are guaranteed to retire than to work on the mine. How do the executives get bonuses when they are failing badly because this was a dismal fail? Whilst the economy must thrive, it cannot do so in this way. There can be no excuse for these fatalities and there must be consequences. The Committee wants to know for each and every incident what has happened. If the law is a barrier to obtaining this information, as DMR has previously stated, then it must be fixed.

Adv H Schmidt (DA) suggested DMR compiles a report detailing the circumstances of each loss of life including illegal miners because the two go hand-in-hand even though they are two different scenarios. The Committee needs to understand what DMR is doing or not doing or what the mining industry is doing or not doing about loss of lives. Every loss of life is one too many.

The Chairperson pointed out that no decisions could be taken at the meeting because the Members did not constitute a quorum. However, the discussion could continue because they made up one third as required by the new Rules. The low attendance was due to the meeting been held on a Tuesday and not Wednesday which is the day the Committee meets weekly. DMR had requested to interact with the Committee and brief it on the public consultations before it went to present to Cabinet. This was the reason for the meeting held today and not Wednesday. He raised concern about the Optimum Coal Mine court case against the business rescue practitioners and hoped they will see a light at the end of the tunnel soon for the mine.

Mining Charter 2017
Mr Thabo Mokoena, DMR Director General, apologised for Minister Gwede Mantashe’s absence. The Minister had wanted to be part of the meeting; that was why the meeting was requested today. However, there were flight delays at OR Tambo International Airport and he had waited for three hours, at the airport, without any success. It was a result of circumstances beyond his control that he could not be at the meeting. DMR concluded public engagements on 31 May and had started the process of drafting the Mining Charter. Thus the presentation would not be in a position to deal with the proposals or elements because DMR was only going to start the process of drafting. DMR would appreciate the opportunity to come back to the Portfolio Committee and present on the items incorporated into the final draft of the Mining Charter. After DMR had finished drafting it will go out for public comment and then a summit, that the Minister pronounced will conclude and consolidate all comments.

Mr Mthokozisi Mtshali, DMR Deputy Director General: Mineral Policy and Legislative Drafting, gave the briefing. The reviewed Mining Charter 2017 was published for implementation in June 2017 however could not be realised because of differences between DMR and Chamber of Mines and the communities. All affected parties then decided to meet and try to resolve their differences instead of proceeding to court. The undertaking was endorsed by the courts for DMR, mining companies and the communities to engage further and address concerns about the Mining Charter 2017. It is common cause that DMR is the regulator and it was still accepting applications for mining rights and monitoring the mining rights. In doing so, it is currently utilising the 2010 Mining Charter.

Extensive consultation commenced in March 2018. Two engagement teams were established; one for transformation and the other dealing with competitiveness and growth. In April 2018, DMR extended the consultation process to mine communities and labour sending areas to solicit inputs from social partners. The Minister, Deputy Minister, Director General and senior DMR officials attended all 11 community engagements with a total of 2 846 attendees as follows:
Witbank in Mpumalanga 189 attendees
Lephalale in Limpopo 473 attendees
Burgersfort in Limpopo 103 attendees
Khathu in Northern Cape 280 attendees
Rustenburg in North West 440 attendees
Saldanha Bay in Western Cape 208 attendees
Klerksdorp in North West 238 attendees
King Williams Town in Eastern Cape 184 attendees
Cartonville in Gauteng 223 attendees
Welkom in Free State 304 attendees;
Newcastle in KwaZulu Natal 204 attendees.
Consultations utilised the primary language of the particular area.

The majority of the people welcomed the Mining Charter 2017 but raised concerns about:
· Mining Transformation Development Agency (MTDA)
· Percentage of shareholding by communities and employees
· Linking of Integrated Development Plan (IDP) with Social and Labour Plan (SLP)
· Percentage allocated to people with disabilities
· Ring-fenced procurement opportunities for mine hosting communities
· Employment opportunities for local people and bursaries
· Enterprise development with a focus on women and youth.

The Minister concluded community consultations on 31 May 2018 and currently DMR is processing inputs received from the community consultations. Two technical task teams were established by the Minister on the Mining Charter and on competitiveness and inclusive growth, with a view to developing a new Charter. The task team will consolidate the inputs and DMR will publish a draft Mining Charter for public comment.

Mr Thabo Mokoena, DMR Director General, concluded by saying the brief overview showed where DMR was with the Mining Charter. It was making good progress and DMR will come back to the Committee and present the final draft.

Adv H Schmidt (DA) said he was expecting more detail on the Mining Charter. Everyone wanted the details of the Mining Charter rather than the process. When is the Summit due to be held? Is the Summit the final consultative process before it is finally gazetted? What will be the impact of the court cases on this process? He remarked that the presentation was not enough to present to Cabinet on 13 June, if that was what DMR intended to present. When does DMR expect to gazette the draft; was it still the end of June?

Mr A Pikinini (ANC) also wanted to know the date of gazetting? The Committee wants more content so it will wait for the due process to unfold and then will further engage with DMR.

Mr Andries Moatshe, Acting Deputy Director General: Mineral Policy & Promotion: DMR, answered that the process of consultations was defined in terms of the law. DMR will first publish the draft Mining Charter for public comment and then the summit, as announced by the Minister, will be part of the enhancement of the comment period. DMR was currently drafting the Mining Charter, as indicated, and the end of June is the target for completion.

Ms Setepane Mohale, Chief Director Mineral: Promotion & International Coordination: DMR, responded about the impact of the court cases on the final gazetting. The community consultations had just finished which was based on the other court judgment around consultation. That had been addressed. All other matters will be addressed before gazetting to ensure the DMR process was streamlined.

Mr Thabo Mokoena noted that DMR was mindful of the fact that there is a court case but the cooperation from all the stakeholders has been inspiring. There was the April 2018 judgment on ‘once empowered always empowered’ that the Committee would be aware of [which found that empowerment deals in the mining sector need not be perpetually topped up]. He could safely report DMR was managing the process very well and it was optimistic that matters would be resolved amicably and it would reach the target date as pronounced on by the Minister.

Mr Schmidt said he understood the Chamber of Mines court application to mean the legality of the Mining Charter is disputed, on the basis that it should not be enacted as legislation with the powers to bind the mining industry instead its purpose should be only to guide the mining industry. How was DMR dealing with the Mining Charter, as a legislative instrument or a guiding document?

Mr Thabo Mokoena said there was consensus amongst all stakeholders that the Mining Charter would be secondary legislation. It understands the government has a duty to champion transformation. There had been constructive input from stakeholders and social partners to treat it as secondary legislation to deal with transformation in the mining industry.

The Chairperson said he understood the awkwardness of the current matter on two fronts. First, in the absence of the Minister it is difficult for the Department to disclose information that would require the executive authority’s direct response. This was a disadvantage for the Committee as it would not be possible to get a sense of what would be the content of the Mining Charter. Secondly, the nature of this process has been an emotive one with a lot of interest. Until it is certain of the direction it is going, feelings were being nursed in the interim. He requested clarity on the communities consulted and attendee turnout. In Witbank, only 189 showed up? Why did Burgersfort have only 103 attendees compared with Lephalale that had 473? The matter would seem to be more pressing for Burgersfort especially considering the six mineworkers who got burnt. It had even fewer attendees than Newcastle which is a major mining area in KZN although in decline. He asked if DMR was satisfied with the way it organised the public consultations. Had there been a targeted approach in terms of who the stakeholders were in the room? What is the concern about the link between IDPs and SLPs? There was intention to develop and integrate the plans due to their proximity.

Mr Schmidt asked if DMR is going to propose some of the content to Cabinet tomorrow. There were calls for the Mining Charter to enable black industrialists and making it broad based – which would require inputs. The indication in the media is that shareholding by community employees would decrease by one percent. Are we facing a more broad based Charter? From the high level comments, it appears so. Is that the direction it is headed?

Mr Thabo Mokoena answered that DMR was excited about the number of people that attended. It intended to have manageable processes where people could make inputs instead of holding huge meetings. The stakeholders were specifically invited to attend the consultations and the attendance was satisfactory.

Ms Setepane Mohale replied that the link between IDP and SLP came up quite frequently during the public consultations. The challenges are that the agreed-to SLPs were not accessible and transparent. Mining companies were accused of consulting with different formations outside the IDP consultation process. By definition a SLP had to be based on the IDP which had been consulted on a ward-to-ward basis. It would be inappropriate for mining companies to ignore other forums such as youth forums and not engage with leadership which might raise items that lie outside the IDP. DMR was looking at integrating SLPs to have a bigger funding pool for bigger projects with which the state could also partner. The key concern about the Mining Transformation Development Agency (MTDA) had to do with agency fatigue. It was asked if it was necessary to have a new agency or use the ones that exist such as the Mining Qualification Authority to deliver the same outcomes.

Mr Mthokozisi Mtshali expanded on the MTDA. Most complained about the D account that was set up previously but they had not seen the funds from the D account. So why could they not have their own community trust instead of another agency. Most communities were of the view that the IDP was a copy-and-paste and most of the IDP programmes are not recent and not relevant and they strongly objected to it being linked to the SLP. There was an objection to the 3% allocated to people with disabilities not being enough. Procurement opportunities and jobs must be ring fenced for local people and businesses.

Mr Andries Moatshe said in all the regions the communities were requested to submit written comments in addition to the public consultations. DMR was satisfied that all sectors were represented at the public consultations from the chiefs to entry level mineworkers to community elders.

Mr Thabo Mokoena said there was a need for consolidation of the SLPs by the mining companies if operating in one area and initiating one or two massive projects to benefit the communities. This came up strongly during the public engagements.

Mr Schmidt said the availability of the SLP to the community had been raised numerous times. Some form of accountability was necessary. What has been the view of the mining industry on the SLP? Has there been a willingness by the mining companies to make the SLP available?

Mr Pikinini raised cross-boundary municipalities  and asked how DMR was dealing with this? It might be ward-to-ward or district-to-district or province-to-province. Cultures are not the same between boundaries. Public participation was mandatory and necessary for people centered and driven processes. It then becomes critical not to divorce the IDP and SLP processes. SLPs and IDPs should be intertwined during the process of development as it would be difficult to integrate the two afterwards.

The Chairperson said there must be a mechanism to account for money that goes out of the mining companies to the community. There must be an accountability mechanism so the person discharging the money can account to the mining company board should the money disappear. The community must participate in the development of both the IDP and SLP, the two must be complementary. The Committee has some duty to account for public finances and had advised DMR to interact with relevant departments on this oversight about the IDP. Is DMR looking at a different mechanism to make the SLP more transparent and inclusive? There was nothing wrong with the SLP going into the IDP but some municipalities are. SLPs must be made visible in the mining companies and in appropriate public areas.

Mr Schmidt added that the transparency of SLPs was of utmost importance, it puts everyone in a position of transparency: the mining company, municipality and the community. There has been reference made to community associations, trusts and all kinds of agencies to channel the community funds through but there should also be joint ventures between mining companies and the communities.

Ms Mohale agreed with the Committee about the transparency of the SLP. The proposal was to have them widely available in all official languages.

Mr Mokoena said that he had taken note of all matters Members had raised especially the accountability mechanism for community funds from the mining companies. Throughout its engagements, municipalities had participated and DMR was optimistic they will reach a consensus on the linkage between the IDP and SLP. The mining companies are being engaged about making the SLP public so communities can also monitor implementation.

The Chairperson requested DMR to update the Committee on the Sibanye-Stillwater’s Masakhane mine.

Mr Mokoena replied that DMR has been on site at Sibanye mine. There had been some incidents previously at the mine and it was looking into at all the challenges holistically. The Minister and DMR will be meeting with the mining company soon to see how to deal with the challenges. At this stage DMR had received a formal report that three people had been brought to the surface and had died. It was still waiting for the report on the other mine workers who are underground. It was very disappointing and DMR would do everything in its powers to ensure that there is accountability. Miners also have a legal right not to go underground if they feel it is dangerous and a threat to life.

Mr Mokoena said that DMR was still engaging with Optimum Mine and the Minister had met with the business rescue practitioners and will compile a report for the attention of the Committee.

The Chairperson recalled that the Committee had met with the Optimum Mine CEO and the business rescue practitioners and the CEO had never raised any objections about the business rescue practitioners to the Committee. The CEO confirmed that his hands were tied once the business rescue was applied for. The business rescue practitioners had presented their plans to the Committee. Later, the CEO applied to court to overthrow the business rescue practitioners because they were doing what the Minister said should be done. There was somewhat strange. It raised questions about the CEO’s willingness. They would have expected a courtesy notice from the CEO to inform the Committee of his concerns before going to court or at least informing the Committee he would be going to court.

Mr Schmidt pointed out that the business rescue practitioners at the Shiva Uranium mining company had now resigned. This questions whether business rescue is appropriate or if there are other issues to consider.

Mr Mokoena replied that DMR will provide a full report on this matter and it was currently engaging with the business rescue practitioners. He clarified that the business rescue practitioners operate independently in terms of the Companies Act and do not act upon the Minister’s direction.

The Chairperson concluded that the Committee was looking forward to the Mining Charter and was hopeful the process would be amicable and all stakeholders will agree.

The meeting was adjourned.


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