The Department of Mineral Resources briefed the Committee on their 4th Quarterly report.
The overall expenditure up to 31 March 2018 (4th quarter) amounted to R1.779 billion or 99.8% of the total allocated budget of R1.779 billion for the 2017/18 financial year resulting in an underspending of R2.8 million or 0.2% against the allocated budget. The 0.2% budget underspending was a slight improvement from same time last year where the budget saving was 0.5% of the final appropriation. The overall performance (predetermined objectives) of the Department increased to 81.3% at the end of the fourth quarter from 64% that was recorded at the end of the third quarter. This was as a result of a concerted effort by management to ensure that deliverables that had remained behind schedule at the end of the third quarter were caught up with.
The Committee members were mostly alarmed by the Bursary Programme which excluded other historically disadvantaged group such as Coloured and Indian people and males. Thus far, only African Females have been awarded bursaries. The Committee was interested to know what the criteria was for the bursary programme and how the success of the programme was tracked and whether the graduates were being employed in the Department of Mineral Resources or in the mining industry in general.
Other highlighted issues included the rehabilitation of ownerless mines and business rescue; the backlogs experienced in four provinces due to corrupt practices and the time frame for reporting for the Department.
The timing of the recess in Parliament made it difficult for the Department to do a quarterly report timeously. The Committee needed to review and understand quarterly reports and how it could be made easier for the Department to report on time.
Briefing by Department of Minerals Resources (DMR) on 4th Quarter performance
Mr Tshepo Mokoena, Director-General, DMR, reported on the Minister’s goals and commitments, and provided a strategic overview and structural overview of the Department. He also gave a summary of the financial performance. The overall expenditure up to 31 December 2017 (3rd quarter) amounted to R1.375 billion or 77.3% of the total allocated budget of R1.779 billion for the 2017/18 financial year. The projected expenditure for the period under review was R1.367 billion resulting in a variance of R7.9 million or - 0.6%. The overall expenditure up to 31 March 2018 (4th quarter) amounted to R1.779 billion or 99.8% of the total allocated budget of R1.779 billion for the 2017/18 financial year resulting in an underspending of R2.8 million or 0.2% against the allocated budget. The 0.2% budget underspending was a slight improvement from the same time last year where budget saving was 0.5% of the final appropriation (budget).
Mr Mokoena said the overall performance (predetermined objectives) of the Department increased to 81.3% at the end of the fourth quarter from 64% that was recorded at the end of the third quarter. This was as a result of a concerted effort by management to ensure that deliverables that had remained behind schedule at the end of the third quarter were caught up with. In terms Economic Overview; the South African economy experienced a declining performance in over 9 years by recording a decline of 2.2 percent in the first quarter of 2018 following an expansion of 3.1 percent in the last quarter of 2017. Mining and quarrying industry was expected to stabilize following a decrease of 4.4 percent in the fourth quarter of 2017. However, the mining industry was expected to rebound into the future spurred by growth in the platinum, nickel and chrome commodities. The mining industry was expected to grow in 2018 indicating a recovery in the industry and a foundation for good prospects.
Ms Patricia Gamede, DDG: Corporate Services, DMR, spoke to the Programme Corporate services. The Corporate Services branch achieved most of their targets. The following were the branch highlights for the last half of the financial year:
- The Chief Directorate Special Projects accounts for a remarkable increase in the number of bursary recipients and resulting to a cumulative trajectory of 109 dating from 2014/15 to 2017/18 financial year, where a marked increase was experienced last year from a targeted number of 20 to an actual of 40,
- Although the Department ended up with a vacancy rate of 10.29% at year end from 6.4 of the previous year, the Department started the process of filling critical posts in March 2018,
- The signing of a pledge by SMS members to disclose financial interests on or before the deadline of 30 April culminated in the Department achieving 100% disclosure of financial interests by departmental SMS members,
- Favorable Supreme Court of Appeal judgment in the high profile ZIZA/PAMDC v Aquila litigation,
- Successful argument presented in the Treasure the Karoo Action Group hydraulic fracturing case,
- Concluding of the Kusasalethu Mine inquiries,
- Conversion of Mponeng investigation into an inquiry, and
- The successful coordination of the extensive Mining Charter community consultations.
Ms Rofhiwa Singo, Chief Financial Officer, DMR, spoke to the programme Financial Administration. The following were the branch highlights for the last half of the financial year:
For Quarter 3: the revenue collected for the period of R32.301 million was above the projected revenue of R28.9 million. The collection on prospecting fees represents 63% of the revenue collected. This is due to efficiency in collection. The other significant contributing factor in the increase in collection is the regular meetings that were held with the companies with long outstanding fees in the regions to encourage them to pay.
For Quarter 4: the financial reporting processes were in order for year-end process and all suspense accounts were cleared and the annual financial statement preparation plan was communicated with all stakeholders. The management action plans for 2016/17 were implemented by end of 31 March 2018. The expenditure and SCM processes have significantly improved, on average suppliers are paid within 9 days.
Mr Xolile Mbonambi, Deputy CIDM Officer, DMR, spoke to Programme 2: Mine Safety and Safety Inspectorate. The following were the branch highlights for the last half of the financial year:
- Increased Audit, Inspections and regional tripartite forums due poor safety performance of the mining sector
- Audits = 133 % (396 vs 527)
- Inspections = 158% (8 000 vs 9 425)
- Regional Tripartite Forums: to promote HS (40 vs 76)
- Reduction in occupational diseases by 13% (3 531 to 3 056)
- Masiphephe Health and Safety Campaigns on national TV
- HIV and TB Day held in Welkom in March 2018 in partnership with unions and mining companies
Advocate Mmadikeledi Malebe, DDG: Mineral Regulation, DMR, spoke to Programme 3: Mineral Regulation. The following were the highlights for the last half of the financial year:
- Construction of Embonisweni school hall (Thabong) by Sibanye Gold
- Construction of roads in Refengkgotso (Deneysville) by Sasol Mining
- Construction of Sunrise view Secondary school by Impala Platinum
Ms Faith Ngcwabe and Mr Andries Moatsue, Mineral Policy and Promotion, DMR, spoke to programme 4. The following were the highlights for the last half of the financial year:
- Review of Mining Charter, 2017 – began in March 2018 with a mining social partners’ meeting held where 2 Task Teams
-Growth and Competitiveness, and
-Transformation Task Teams were formed – the work was on-going
- A Mineral Investment Promotion Strategy has been developed
- Progress on the shale gas research project
-5 boreholes drilled;
-the drilling uncovered fresh water
- DMR handed over water to the Beaufort West Municipality
-An amount of 691 200 L of water has been made available to the municipality per day and an amount of 20 736 000 L per month from one borehole.
-Pump tests are being conducted on the other boreholes as well.
In conclusion Mr Mokoena said that the Minister has come up with a new concept and has given a team name “Team DMR” to the Department’s Executive. Team DMR has made efforts to achieve the targets and moving forward the Department will make sure there is improvement in the areas where achievements were not made. The Department wants to make sure they remain committed to make sure they don’t fail their mandate. He said the Department appreciates the oversight role and support of the Portfolio Committee Members and for their constructive criticism. He spoke to team DMR on progress of government in developing a compensation system that functions to the advantage of Mineworkers. The Department has a responsibility to take care of different mining communities thus; the Department has also had robust engagements with the community during consultative engagements on the mining charter.
There was a second part to the presentation titled “Briefing by DMR on progress of government in developing a compensation system that functions to the advantage of Mineworkers”.
The Chairperson raised a concern about the second part of the presentation. As the Committee is subject to public scrutiny; the Committee is skeptical to allow another Briefing in the presentation on page 30. The Committee requests the Department to put it on hold as it was not incorporated before. It might cause a dispute with the rules and procedures of Parliament and with the Public. Some issues cut across Departments so the Committee will be seen to sideline other Committees who would like to deal with those issues. He asked the Members if they had for questions of clarity; and to group the questions programme by programme.
Mr H Schmidt (DA) asked a question relating to page 6; slide 2 of 7 ‘number of bursaries acquired for studies towards mining related qualifications. It is good to double targets but in terms of outcomes; how many of the students obtained the qualifications and how many of those students have been offered a position with DMR? Otherwise it is just a matter of figures if the outcome does not contribute to the mining sector. Also on page 9; There are still critical posts which are headed by acting positions; why is it that many people are in acting positions (refer to page 2: Department Structure Overview). Why are people not being appointed? Is it financial or is it a lack of good candidates? He also referred to the ZIZA/PAMDC versus Aquilla litigation case which was serving before the Constitutional Court; he asked when the matter was going to be heard. Lastly he asked what the abbreviation SMS meant.
The Chairperson emphasised that the Department should include a Glossary in their presentations.
Mr J Lorimier (DA) asked which quarter the presentation covered.
Mr Mokeona replied that it was for January to March.
Mr Lorimer asked why the Department is covering a report for 6 months ago. By this time the quarter 1 report is the one that the Committee should be briefed on. Moving on, he referred to slide 18 on page 9. He asked the Department to give short description of the Treasure the Karoo Action Group hydraulic fracturing case, the Kusasalethu Mine inquiries and the Mponeng investigation.
The Chairperson said in terms of the lateness of the 4th quarter report; it is an issue the Portfolio Committee must handle. It is due to the recess they took for oversight and the fact that they only came back in August. Parliament’s programme had to accommodate the time factor.
Mr I Pikini (ANC) spoke to slide 0-9. He asked how far the Department had come with gender broadly speaking in terms of women’s matters in the workplace. Secondly; he asked for clarity on the ongoing court cases and if they are looking favourable for the Department. On the issue of studies; the Mineral Sector is skewed towards men rather than women; how many females are employed? He asked for an actual number on that.
Nkosi Z Mandela (ANC) started on slide number 5 on page 3. The DG mentioned the economic growth of 4.4% but job losses were still encountered in the industry and some of which are catastrophic. He asked if the Department can explain more in depth how that happens. On page 6; corporate service slide 2/7 on the number of bursaries acquired; the target was 20 but 45 was achieved; who are the actual beneficiaries of the bursaries; can Team DMR state the percentage of men vs females? Also the demographics spread to previously disadvantaged group such as black, Coloured and Indian? What is the success rate of the bursary programme? The Bursaries were given in 2014/15 financial year; some students have graduated thus what have they qualified in? Are they getting Diplomas, Certificates or mostly Degrees? Are the young people filling in any positions in the DMR? If not where are they placed today in government or in the corporate sector? He made a comment that most young talent is being lost to the corporate service. On the same slide; how many vacancies are still vacant and when will they be filled because as the target is to fill critical posts until March. Mr Mandela lastly spoke to ZIZA/PAMDC vs Aquilla litigation; he asked what other litigation cases are before Team DMR and when will they be concluded.
Ms Gamede answered Mr Schimidt’s question on bursaries. There are a few bursars that have completed degrees. Most of the students acquired degrees in the line of mining qualifications and most of them who have completed their studies have entered into the industry. The Department has not employed any of the students and at the moment did not bring with them the figures to show where they have been employed, but some have been noted to have been absorbed by the industry. She said SMS means Senior Management Services. The Bursars are mainly female. It was requested that the female had to be reduced in order for the Department to absorb males as well. The Beneficiaries have been only African females and there has been some drop outs from the programme but these have been very minimal. The success rate is about 98 to 99%. In terms of the vacancies of the critical posts; there are 52 identified posts. Out of the 52 five posts have been filled. Three submissions have been approved and five are en route to be approved by the DG. Interviews have been done for nine of the 52 posts and there were 18 shortlisted candidates. Eleven of the 52 posts have also been advertised. Hopefully by the end of the year the 52 posts would be filled.
Mr Mokoena responded on the issue of the two cases of litigation. There was a challenge to the power of the Minister on whether the Minister is empowered to issue regulations. The court favored the Department in terms of the Karoo case.
The case on Kusasalethu has been concluded. Next time the Department will give a narrative of cases instead of a one liner. In terms of other cases only key cases has been reported on. On ZIZA, there is a dispute with regard to a mining right that Aquilla was contesting. This was taken to the Court of Appeal and the Department was favored and the matter was then taken to the Constitutional Court. The Court ruled in favour of the PAMDC. The Department was doing well vis a vis the retrenchments. The Department is working on the retrenchments together with the mining companies but it is not an easy process. There has been a declaration signed by the social partners to deal with the retrenchment matter.
The Chairperson summarised what the members were asking in terms of the bursaries. What are the criteria to receive a bursary? Any person can do a mining course but it may not be what is critically needed in the industry. Is the Department targeting what is in demand? What are the specialised criteria? Are they scarce skills? Though the Department says they have been absorbed into the industry; what is the tracking system? For example a certain number has been absorbed in the gold industry, platinum industry and coal industry etc. There are very limited specialist legal miners. He asked for clarity on the sensitive issue of gender; there has to also be a certain justification for the intake being only women. The demographic breakdown also has to be explained; why is the intake only African and it excludes Coloured and Indian people. It looks like there is a pro-Africanist intake process not a historically disadvantaged intake process. On the court cases; it might help to have a bit of synopsis to allow the Committee to know the contents of the case so that the Committee is not shocked when asked about it in public. The Department still owes the Committee a summary of the cases since 2014 so that all fatalities can be understood. Thus, the main focus of questions was on the education programme and its efficiency.
Mr Mandela said he seriously would like to gain clarity on that matter of excluding Coloureds and Indians in the bursary programme as it seems the Department is insinuating that Coloured people and Indian people did not play any role in the struggle against apartheid.
Mr Mokoena replied that the question is sensitive and emotional. In the demographics of historically disadvantaged South Africans there are many Coloured people and Indian people. The criticism from the Committee is constructive criticism that the Department had to look into. The Department values this input.
The Chairperson asked when then can the Department give the Committee the breakdown of the skills needed in the mining industry. It is better to draw a map of the industry to see what skills are in demand because bursaries meant pumping out money. The Committee does not sense that there is a deliberate programme for bursaries. Is there a commitment from the industry to absorb the graduates?
Ms H Nyambi (ANC) asked whether Team DMR is part of the funding for bursaries for the upgrading of the skills in the Department.
Ms Gamede replied that the bursary funds don’t come from the budget of the Department. Some come from mining companies and the MGA. She said vulnerable groups have been benefitting from the bursaries. There is also a departmental bursary programme through the human resources directorate, thus it is for training. The Department also has money available within the Department for officials in the Department who want to be trained and acquire degrees, diplomas or certificates. Thus there are internal and external bursaries.
Mr Mokoena asked if the Department can come back to the Committee at a later stage about the break down, and will the Department consult with some mining companies on the questions asked.
The Chairperson said he has given a scope to the Department on what to report in the Annual report.
Mr S Jafta (AIC) asked a question of clarity in terms of the internal bursaries. Are officials allowed to get funded for a qualification though it is not relevant to the Department or if it does not fall within the scarce skills category?
The Chairperson in reply asked if the Department can rather go back and reflect on how effective the Human Development Project has been and present a criteria for those who partake in it and what qualifications exactly can they acquire or should acquire. Essentially it is the same question of tracking success of the project thoroughly through demographics, qualifications etcetera.
The Chairperson emphasised that reports must be timely. He commented on the small font of the presentation. Service level agreement achieved (page 11 slide 2/4). The target was 95% and achieved was 93.2%. What does SLA mean; how do you measure that? On financial reports delivered on schedule; he mentioned knowing the public sector, some things may be beyond the scope of the Department and if the Department does not include that in the presentation it may look like everything is running smoothly. On the issue of the 30 day notice; it may not reflect what the hiccups could be. It may be that not all are complying with certain regulations; the checks and balances are not able to be tracked. In slide 24; what is the percentage implementation of an intergrade budget plan. There is an issue of the Quarter 3 budget expenditure versus the projected budget. The Mine health and Safety Inspectorate on expenditure; the budget is 145 but the actual expenditure is 157; they are on the red in terms of overspending. Why is there an over expenditure on the vacancies field?
Ms Singo replied that in terms of the SLA the Department takes the programme as a customer and enters a Service Level Agreement. On a monthly base the Department checks if they are achieving turnaround times or not. It is cumulative. Sometimes there are dependencies in submitting reports but most of the work in finance is done manually so the Department uses manual processes to monitor. It does happen that there is a slip up on the time frames and the Department ends up not complying but in Quarter 4 the Department has pushed enough to comply. In the past the Department had its own database and not the central database used by National Treasury, but now the central database is used and it has become difficult as service providers are taken from the database. With small businesses; their banking details often change and thus that causes delays in the payment processes. Sometimes there are delays; because the Department uses a system payment that is controlled at the National Treasury. If there is no access to this system then no payments are made. The Department then records what went wrong and why they could not meet the target and reports this to the National Treasury. The integrated budget is more about improving efficiencies. There are a lot of regulatory requirements and administration processes which sometimes frustrates the Department’s managers. In the past the Department would make use of the Demand Management Plan where after the Department asks for their need, thereafter it asks what is their procurement plan and expenditure; but the process becomes difficult for line managers. The Department thinks it is better to take the Demand Management plan and focus on inputs i.e. after finding out the Manager’s needs, immediately make a procurement plan; stipulate a time frame and then show how it will feed into expenditure; that way it becomes an integrated system avoiding the back and forth that are taking place at the moment. The Department is mostly in line with projections. Mine health overspent because when inspectors were taken in they were taken on a lower level waiting to pass the certificate of competencies then they were later taken to a higher level so compensation went higher as well.
Mine health and Safety Inspectorate
Mr Mandela referred to page 15 slides 30 and asked what the nature of investigations being carried out is and what the findings are so far.
Mr Pikinini asked if the mine forums are a matter of compliance.
Mr Msiza said the tripartite forums open a platform for Labour Unions to raise questions freely. Platforms have increased from 40 to 76 as the unions have called for more due to the number of fatalities and injuries on site and an improvement on engagement has indeed taken place. On the issue of investigations; during the third and fourth quarter where historically there is an increased number of fatalities and injuries; it is holiday time and it is due to places being accessible with no risk assessment and has caused related accidents. There is also an increase in a number of seismic related fatalities as well. There has been a task team set up for that to focus on the source faults of ground as a result of seismic related accidents. During investigations, the challenge is that on a monthly basis, mines are meant to plan activities they are going to do in the next month; in most accidents people divert from the plan due to other unforeseen issues which were not part of the plan. In the end proper risk assessments are not done especially in the old mines. Investigations have revealed that if plans are diverted from; there will always be problems. A Chief Director’s Inspectorate has been issued to say that in a case where there is seismic activity all workers need to be evacuated immediately to a safe area before it becomes a huge problem. Where it is found that there was negligence proper measures are taken. In general the investigations have revealed quite a number of issues.
Mr Mandela spoke to page 20 slide 39, the number SLP development projects to be completed. What is the status on the other 14 that have not been completed and what measures are being taken to ensure that they will be completed? Secondly; he spoke to slide 22 page 21; on the issue of compliance of the mining industry. The target was recorded to not have been met at all, which implies that the whole mining industry is not compliant. Is the Department insinuating that the whole mining industry was not compliant?
Mr Pikinini asked a question of clarity. He asked the Department to give reasons for backlogs in the four provinces referred to in slide 44.
Mr Schmidt had a particular problem with the targets and the actual numbers. How does the Department exercise oversight when it set a target of 100% and has an actual figure of 100% on page 21. There is no figure as to what the measurable objectives are. He referred to Page 22, and asked how it is possible that the mining industry complied 0%? Surely somewhere somehow the mining industry has complied. Secondly; Mpumalanga and Limpopo were closed but no mention was made of it in the presentation. This is meant to be an accountability oversight visit yet such important information was omitted from the presentation.
Mr Mokoena welcomed and excused the new DDG; Ms Malebe and said all comments on her presentation are valued. In terms of accountability; the Department’s reporting is in a particular framework in Quarters 3 and 4.
Ms Malebe said the SLP projects were not completed because a mining company would put projects on hold because of disputes regarding land in the community. The measure used to show that they are completed is that inspections are made to verify that they are completed so for this quarter the Department could not go on sight to verify and thus they will be verified next month. In terms of the percentage of compliance in the mining industry, it is linked to the integrated system and it does not mean the Department is not checking compliance; it is due to a specific issue of the integrated system. The Department wants an electronic tool to measure specifically in terms of the charter and this is one of the reasons the Department is in court now with the mining companies especially with the Chamber on issues on continuing consequences. In 2016 there was a compliance that was done by the mining industry and it was disputed and they went to court. The issue raised was that there is no tool to measure all the reports that the industry submitted. In essence compliance is being checked in the Department. The reasons for backlogs in some provinces being in the public eye were they were reported by the Minister; they are cases of corruption. Applications were not processed systematically according to the law. On the issue of a target of 100% and the 100% actual figure for example, if there are applications for mining rights, a mine worth programme must be submitted and the Department must evaluate it and approve it, thus for all mining rights issued, the aforementioned process was duly followed. On the closure of the offices; the Minister did tell the public and it is an oversight issue on the side of the Department not to put it in the presentation. She lastly explained why the SLP published target is 0. In the past SLPs were never published but the modalities have been finalised to publish the SLPs but they are being approved.
The Chairperson said modalities need to be found to track what comes from this quarter and what is being carried over etcetera. He does sympathise with the Department and he said he does have to speak to the Secretary to deal with the overlapping of things from the 1st quarter to the 4th quarter which makes it hard for the Department to Report. For example how can the Department be expected to finish an SLP implementation in three months and come and report on that?
Mineral Policy and Promotion
Mr Mandela referred to page 26. He mentioned that he is part of the constituency in the Eastern Cape. Have the promotions, events and workshops been held in any rural areas, particularly in the Eastern Cape which constitutes 30% of the immigrant miners. On Page 27, slide 54, there is the issue of mine sites being rehabilitated; the target is 45 but 43 is realised thus he wanted to understand what factors contribute to mines being rehabilitated. What is the Department doing to hold the mining houses accountable?
Mr Schmidt said this department is the custodian of all mineral resources and that comes with consequences. If a mine does not have funds; it is this Department’s responsibility to make sure the mine is funded and follows the regulations. In terms of business rescue; is there enough funding for rehabilitation? What is the DMR doing about that?
Mr Pikinini asked for an update on the game changer on shale gas in the industry.
Mr Mautsue said investment promotions in provinces: amongst others the Department supports SMMEs, and as part of the support to SMMEs there are also several documents that are being produced on a quarterly basis for investors. There are no specific figures at the moment as to specific areas where investment promotions have been made; in the next meeting it will be revealed. There are mini engagements with potential investors in respective provinces. Secondly on DERLELC and ownerless mine sites; the challenge that the Department faces came as a result of the Mineral and Petroleum Resources Development Act (MPDRA) legislation. This legislation did not provide for accountability in terms of mine right holders and some of the mine right owners could not be traced now so it’s a liability of the state. He said it is important to note that ownerless mine sites specifically refer to mine sites prior to the MPRDA coming into force. On the issue of rehabilitation funds and why the Department did not meet the target; it was because of Belmore shaft and the issue of subsidence. On the shale gas issue: the request from Members has been noted; the Department will make an effort to update the Committee.
The Chairperson asked if the question on rehabilitation funds can be answered next week.
Mr Mokoena gave closing remarks and said the Department appreciates the opportunity and robust engagements. There were questions they can answer when the Committee wants them to come.
The Chairperson concluded that the Committee and the Department must understand what quarterly reports are and find a better way of managing things. There is no time as next week Wednesday Parliament is closing. The Department must indicate what their projections on the second quarter are.
The 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.