High Level Panel recommendations; Bakgatla-Ba-Kgafela community missing billions from mining investments: DMR response

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Mineral and Petroleum Resources

13 February 2019
Chairperson: Mr S Luzipho (ANC)
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Meeting Summary

The Department of Mineral Resources presented its responses to the recommendations made by the High Level Panel on Assessment of Key Legislation and Acceleration of Fundamental Change. The recommendations that were a key focus of the discussion were that Section 10 of the Mineral and Petroleum Resources Development Act (MPRDA) must be amended to expressly require that directly affected communities must be invited to negotiate and seek agreement on mining applications and that Section 5A be amended to expressly require compliance with the Interim Protection of Informal Land Rights Act Interim Protection of Informal Land Rights Act (IPILRA). As a condition for the grant of a mining-related right

The Department raised its concerns about community consent and the negative impact it could have on the state’s mining sovereignty and delays it could have on processes. Whilst members raised concern community consent’s interpretation, they stressed the importance of making communities equal partners and listening to their concerns. Both the Committee and Department raised concern about representation and forums in the process of consent as the MPRDA did not make provision for who could represent communities.

The Department said it could not comment on the missing billions intended for the Bakgatla-Ba-Kgafela community from mining investments as the case was now out of its jurisdiction and the Public Protector Report was with National Treasury. It suggested that the Committee work with Standing Committee on Finance on the matter.

Meeting report

Chairperson’s opening remarks
The Chairperson acknowledged that the Committee had not had a sitting for a full two months but during that time there had been a lot of activity. There were many outstanding matters; some were not requested by the Committee but rather were on the basis of what they were told to do. Hence they had to find a way to round up some of those issues and formulate correspondence.

He reminded the Director General that they still had a crisis in Middelburg where people were trapped below ground. Whether mineworkers or illegal miners, the point was that they were human beings and those were human lives. He hoped the Committee might be able to get some relieving news on the matter as it reflected the challenge of illegal mining in South Africa. He commented on how the Department’s delegation was large and had a lot of new faces.

The Chairperson told the Director General aware that there was a similar report to the High Level Panel report that the Committee would be briefed on the SA Human Rights Commission Report on National Hearings on Underlying Socio-economic Challenges of Mining-affected Communities. Therefore the Department should not be surprised when they are called back to respond to that report, should it contain new issues.

Department of Mineral Resources (DMR) Director General remarks on High Level Panel Report
Mr Thabo Mokoena, DMR Director General, extended an apology from Minister Gwede Mantashe who could not be present due to a cabinet meeting. He then noted that the Department had enough capacity and that gender was being prioritised and introduced his delegation starting with Ms Sibongile Malie, Director of Policy; Mr Mthokozisi Mjali, responsible for policy formulation and development; Mr Gugulethu Cutshwa, responsible for registering all the mines; Mr Funwell Nkuna, Chief Inspectorate and Mr Khayalethu Matrose, Director in the Office of Director-General. The High Level Panel recommendations are responded to in the presentation by the Department which Ms Malie would present.

Mr Mokoena discussed some key issues that should be considered by the Committee before the presentation took place. The Department had a responsibility to protect mining as they had many competing interests, including ones from non-governmental organisations (NGOs) who were getting into their space and it was incumbent on the Department to step up and ensure that mining survives as a sector. This point was raised based on the High Level Panel recommendations and the Department was not against these but there were specific issues that they had identified, particularly the “question of consent versus meaningful consultation”.

During the Mineral and Petroleum Resources Development Amendment Bill discussions the issue of consent versus meaningful consultation came up strongly. The position of the Department was clear that if it was ruled that it had to follow the amended Bill, then they might as well completely abolish mining in this country. DMR was not undermining concerns that had been raised by mining communities as community consultation was a priority for it. It was engaging mining companies also in these conversations, making them aware of such concerns and now the companies were also coming on board as last week Friday they were talking about such matters.

However, the recent judgement [Maledu and Others v Itereleng Bakgatla Mineral Resources (Pty) Limited and Another (CCT265/17) [2018] ZACC 41; 2019 (1) BCLR 53 (CC) (25 October 2018)] was a concern where there was an interpretation of what was contained in the Interim Protection of Informal Land Rights Act (IPILRA) and what was contained in the MPRDA. The Department has appealed this judgement on the question of consent, but DMR was not saying that communities must not be consulted as that was a critical component that must always be considered.

According to the MPRDA, the state was the custodian of mineral rights on behalf of and for the benefit of all people in the country. DMR was waiting to hear from the court on the appeal that they had submitted. Mining has continued to be critical in contributing to the economy. Around the 1970s, mining used to contribute approximately 22% to the country’s Gross Domestic Product (GDP), now it was at 7%. DMR was currently having conversations on how to increase the GDP contribution of mining to 10% and above. However, with the developments taking place in the mining sector at the moment, DMR believed that these may undermine efforts to reach the 10% mark.

DMR was equally committed to ensuring that mining communities were not undermined when mining operations were going to take place. The Director General noted that at the end of the presentation, he was going to address the matter of the D-account.

DMR response to High Level Panel Report recommendations
Ms Sibongile Malie, DMR Director: Policy, said that when the MPRDA was formally promulgated in 2002, it recognised the state’s internationally accepted right or rather its sovereign right over its mineral resources. Therefore, the state should ensure that those resources were sustainably developed for the benefit of all South Africans. One might argue that community consent took away the state’s custodianship over its mineral resources. She gave the DMR response to each recommendation:

Report recommendation:
MPRDA must be amended to comply with IPILRA to ensure any agreement affecting communal land must include steps taken to obtain consent from those affected, including lists of those consulted and proof of their consent

DMR response:
The MPRDA provides for meaningful consultation with landowners, lawful occupiers and interested and affected parties. Community consent is not a requirement and the Xolobeni High Court judgment is being appealed to the extent that it requires consent by communities before a mining right is granted.

DMR was aware that community consultation was raised as a challenge thus they would be tightening up regulations pertaining to consultation. DMR was of the view that the principal of community consent also took away the responsibility of the state to act as a custodian.

Report recommendation:
Any action taken in terms of the MPRDA, should be compliant with IPILRA, failing which it should be declared invalid

DMR response:
The MPRDA requires that the granting of a mining right must take into account all applicable laws, including IPILRA. However, the consideration of applicable laws should not translate into consent by communities but meaningful consultation as envisaged in the MPRDA.

Report recommendation:
Laws, such as the MPRDA, that have been interpreted to enable land grabs, should be explicitly made subject to IPILRA and amended in other ways as well.

DMR response:
The MPRDA is not concerned with land grabs and any interpretation to that effect is inconsistent with the objects of the Act as stated in section 2 thereof. It was not concerned with land but rather what was beneath the land, land issues were dealt with under different regulatory bodies.

Report recommendation:
Where mining has already taken place on communal land and the directly affected community has not benefited, the MPRDA must provide for compensation for individuals, households and communities to be calculated to put affected persons in the position that they would have been in had the mining not occurred.

DMR response:
The MPRDA provides for meaningful engagement and compensation of communities as a result of loss or damage as a result of proposed mining operations, section 54.

The section 54 process is an involved process and must be complied with before a right is granted. It further includes arbitration and mediation mechanisms to arrive at sufficient redress for communities. This provision, however does not envisage retrospective compensation of communities.

Report recommendation:
The MPRDA must be amended to ensure that both revenues from mining-related activities and opportunities generated by such mining activity are shared in an equitable and transparent manner among people whose land rights are directly affected.

DMR response:
Section 3 of the MPRDA prescribes that all royalties shall be administered by the Minister of Finance (Royalties Act). The State is the custodian of mineral resources for the benefit of all South Africans and not just land right/communal land owners. The Mining Charter and Social and Labour Plans are instruments designed to benefit parties directly affected by mining operations.

Report recommendation:
The MPRDA must be amended to include clear and binding financial and administrative protocols for entities that purport to represent community interests and companies that do business with them, including accountability mechanisms that align with customary law principles of transparency and accountability.

DMR response:
Entities that purport to represent community interest are recognised in the Mining Charter as part of trusts or appropriate vehicles that may represent communities interest. The modalities for their representation can be agreed with the right holders/trusts or related vehicles.

Report recommendation:
The MPRDA must be amended to provide for a Charter to protect and promote customary and artisanal small-scale miners, and set a framework for the participation of communities in the sustainable and equitable exploitation of the resources of their communal land.

DMR response:
The Mining Charter, 2018 provides for a dispensation for junior miners. It has dedicated provisions for meaningful participation of host communities in ownership of mines and communities in general through Social and Labour Plans (SLPs). Small scale miners are regulated in terms of section 27 of the Act. Section 104 read with section 12 of the Act provides for community preference right.

Report recommendation:
Section 47 (Minister’s Power to Suspend or Cancel Rights, Permits or Permissions) must be amended to expressly provide for the suspension or cancellation of mining rights where a company has significantly failed to meet its Social and Labour Plan and B-BBEE commitments. (This power has never been used, so must be made explicit to put the matter beyond doubt.)

DMR response:
Section 47 is sufficient to deal with transgression of the MPRDA including the SLP and B-BBEE commitment and any terms and conditions of a mining right. The use or non use of this provision is a function of implementation and enforcement.

Report recommendation:
The MPRDA must also be amended to establish a mechanism to independently investigate and advise on community grievances in an efficient, democratic and transparent fashion.

DMR response:
The Section 54 process includes arbitration and mediation mechanisms where there are disagreements. Parties may resort to Courts where these other interventions fail.

Report recommendation:
Section 10 of the MPRDA must be amended to expressly require that directly affected communities must be invited to negotiate and seek agreement on any mining application.

DMR response:
Section 10 of the Act envisages meaningful consultation and not agreement/consent. The Xolobeni High Court Judgment is being appealed to the extent that it requires consent by communities before a mining right is granted.

Report recommendation:
The MPRDA must be amended to expressly require compliance with IPILRA as a condition for the grant of a mining-related right.

DMR response:
The MPRDA requires that the granting of a mining right must take into account all applicable laws, including IPILRA.

Report recommendation:
The MPRDA must be amended to specify the minimum information to be shared with community members, including full mining right applications and environmental impact assessments, prior to any decision to accept mining under IPILRA.

DMR response:
Meaningful consultation means that an applicant must make available all pertinent information to enable a community to make a decision about the proposed mining project. Regulations to the MPRDA may be expanded to clarify this requirement.

Report recommendation:
A mineral-right applicant must, at its own expense, invite the community to appoint an independent expert(s) of their own choosing to assist in the IPILRA negotiation in communal areas.

DMR response:
This may be negotiated with the applicant as part of the meaningful consultation process required by the MPRDA.

Report recommendation:
Where more than one community is affected, each shall have the right to independently decide whether to grant or refuse its consent.

DMR response:
The consent requirement is not supported, meaningful consultation as envisaged in the MPRDA may be community specific.

Report recommendation:
Where mining requires the relocation of specific community members’ homes, insert a requirement that the majority of those to be relocated must consent to the mining activity.

DMR response:
Where mining requires the relocation of specific community members’ homes, insert a requirement that the majority of those to be relocated must consent to the mining activity.

Report recommendation:
No person or community may be relocated to enable mining unless such relocation is unavoidable. Where relocation is unavoidable and consent is granted, remedies and compensation must be clearly defined.

DMR response:
Modalities of relocation will be outlined in the Mine Community Resettlement/Relocation Guidelines.

Report recommendation:
Alternative land must be the default compensation and people must be offered living conditions equal to, or better than, their conditions prior to the relocation.

DMR response:
Modalities of relocation will be outlined in the Mine Community Resettlement / Relocation Guidelines.

DMR was in the process of developing a relocation / settlement guidelines which they would consult with the Department of Rural Development and Land Reform and all other affected stakeholders. DMR would also consult with communities and their representatives on the guidelines. The guideline would ensure that the rights and interest of communities were protected and the benefits of the relocations were outlined.

Report recommendation:
Cash compensation must be based not on market value, but on real value to affected people, taking into account the effective value of resources such as ploughing and grazing land, water access and cultural value.

DMR response:
Modalities of relocation will be outlined in the Mine Community Resettlement/Relocation Guidelines.

Report recommendation:
Amend Section 5A (Prohibition relating to illegal acts) to make it illegal to mine without community consent under customary law and in compliance with IPILRA.

DMR response:
The MPRDA provides for meaningful consultation with landowners, lawful occupiers and interested and affected parties. Community consent is not a requirement and the Xolobeni High Court Judgment is being appealed to the extent that it requires consent by communities before a mining right is granted.

Report recommendation:
Should mining commence or a right be granted without the consent of the community, that community shall have the right to set aside the licence and to be paid compensation for the full damages suffered.

DMR response:
The MPRDA provides for meaningful consultation with landowners, lawful occupiers and interested and affected parties. Community consent is not a requirement and the Xolobeni High Court Judgment is being appealed to the extent that it requires consent by communities before a mining right is granted.

Report recommendation:
Communities to have a right to revoke their consent should mining activities be conducted in a manner contrary to the MPRDA and its regulations, with communities then entitled to compensation for the full damages suffered by all mining activities.

DMR response:
The MPRDA provides for meaningful consultation with landowners, lawful occupiers and interested and affected parties. Community consent is not a requirement and the Xolobeni High Court Judgment is being appealed to the extent that it requires consent by communities before a mining right is granted. Compensation is provided for in section 54 of the MPRDA.

Conclusion
Mr Mokoena noted that the MPRDA was sufficient in dealing with some of the concerns raised by the High Level Panel. There were implementation challenges, thus DMR had to ensure that they were enforced. The studying of impact of projects was something DMR was looking into. The DG emphasised the point of artisanal mining and small-scale mining as matters that DMR was exploring, specifically artisanal mining.

DMR was also concerned with the attractiveness of our country to investors. The DG urged that everyone should work together in ensuring this as some of the issues mentioned are a direct or indirect cause of the unattractiveness of South Africa to investors, especially community matters. DMR, under the direction of the Minister, was however not overlooking South African communities as the Minister was very passionate about that. Last year, DMR had visited all mining communities starting at Emalahleni around 5 April and ending in Newcastle on 31 May.

What came out of those visits was that there was a perceived distance between DMR and the communities, but also the communities with mining companies. Since those engagements, however, DMR and the mining companies were closer to the communities and engage with them much more frequently. That was why at the Mining Charter summit in July last year, they ensured that the mining executive and the ordinary masses were under one roof. DMR transported communities affected by mining to attend the summit and raise their concerns as they had made that commitment to them to them during consultations. This was a sign of commitment from the side of DMR that the MPRDA was useful and they needed to make it more useful by implementing it.

D-Account monies of Bakgatla Ba Kgafela Traditional Council
Mr Thabo Mokoena, DMR Director General, referred to the D-account [Development community trust account] monies that have been lost and cannot be accounted for. This matter has been investigated by the Public Protector and the Report was submitted to National Treasury. Therefore DMR did not have any jurisdiction over that matter. What could happen was that the Committee could raise the matter with the Finance Committee and take it from there.

Discussion
The Chairperson reported sad news that he still had to verify, but at the Sibanye Gold strike by Association of Mineworkers and Construction Union (AMCU), allegedly four people were shot and one of them may have passed away. This was a very serious matter which would probably require the guidance of the Committee. Unfortunately, the agenda had already been adopted. If the Committee wished, the matter could be discussed next time, not the shootings specifically but the fact that the strike has been going on for too long. The 2012 and 2014 events and their consequences made people cautious of entering that terrain because of what had happened.

Mr H Schmidt (DA) said that the reference to state sovereignty in terms of state custodianship was a matter of interpretation because consent or no consent, consultation or no consultation, that in itself did not define state custodianship. State custodianship works for the benefit of all people, those directly affected by mining, those indirectly affected by mining, and people elsewhere in the country who are not affected at all as it is for everybody. The attractiveness to investors argument by DMR had to note that mining communities not dealt with fairly meant communities will get upset and might take protest action which creates an impact on the attractiveness of bringing mines to communities. Part of the problem was that expectations created for mining communities could not always be realistically met by mining companies. Social and Labour Plans (SLPs) should be made available for mining communities to see what they can realistically expect and therefore transparency is present. He wanted to know if SLPs would be made available.

He was not sure that community consent impedes state sovereignty. Consent would create better relations between communities and companies instead of an unequal relationship which leads to community unhappiness. He also raised concern about communities being told about compensation only after mining rights have been granted and they have been removed from their land.

Ms Y Yako (EFF) raised concern on community consent and questioned its value if communities were not taken seriously and asked why the DMR was appealing the High Court judgement. Secondly, the unaccounted for billions for the Bakgatla-Ba-Kgafela community did not appear in the presentation. She asked if the matter would be in another presentation that was still coming or was there no presentation at all.

The Chairperson replied that the D-account matter was with the Public Protector and therefore was not being discussed in detail. The Public Protector has submitted a report which is currently with National Treasury. There was a suggestion that the Committee could engage with the Standing Committee on Finance to access the report.

Ms Malie agreed that compensation had to be discussed with communities before mining rights are granted. The SLPs will be made available going forward and will be published in different languages as well. On community consent and its effect on the state’s custodianship, she said that if the state had to depend on consent before rights were issued, it would mean the state was not really a custodian because it would be dependent on the community saying yes or no. Consent to benefits was different to consent to granting of rights as consent to rights would affect the state’s custodianship. During the consulting processes of the Mining Charter, local government was consulted as local government was responsible for local economic development and the mining companies had to complement them and not have all the responsibilities. DMR would be addressing the matter.

Mr Mokoena replied that DMR was taking the matter seriously and after the Mining Indaba there was another session with mining communities. There were efforts to get closer with communities and MR was making efforts to listen to communities. The Chief Executive Officer of Anglo-American emphasised the importance of consultation with communities and this kind of commitment from a CEO was a sign of progress.

On SLPs and mining community expectations, he replied that there had to a clear mechanism between municipalities and mining companies to deal with community expectations. Integrated Development Plans (IDPs) and SLPs between the two entities needed to reconciled to ensure there was no uncertainty about which entity would do what. As well as to ensure coordination between IDPS and SLPs.

On consent and consultation, he replied that during the MPRDA amendment processes the issue was debated quite seriously. To be frank, if the issue of consent would be addressed mining would not happen and it would be abused in certain communities. DMR faces challenges when it comes to forums and recognising forums as there is no statutory requirements for representation of mining communities. These forum related challenges could affect mining negatively as processes could be delayed.

There had to be consensus between communities and mining companies on compensation before the mining began. That was the kind of arrangement that would address the challenges, but it remained that consent would create serious challenges.

On the Xolobeni High Court judgement, DMR was appealing only the matter of consent and was not against the entire body of the document. The Department was waiting for a response from the court.

The Chairperson said his fear was that Members and the Department could be caught in a power protection cubicle. What was the problem – was it the problem of consent or the challenge of compliance? The issue seemed to be compliance with other statutory requirements. Is consent equivalent to community agreement? This needed to be clarified. He was concerned about the interpretation of the law on consent.

The Chairperson agreed with the DG, that certain forums or representative groups could claim to be representing the community and abuse the consent process. He gave the example of the dispute between traditional leadership and the Communal Property Association (CPA), where representation and consent was a challenge. What would happen if certain people were excluded from the consultation process?

He asked what retrospective compensation meant. His understanding was that if someone was granted a right, it meant they had complied with requirements and the community consultation was part of the broader requirements. The interpretations could be different.

He asked if the South African Mineral Resources Administration Database (SAMRAD) system would be adequate to give preferred rights to communities for junior miners and historically disadvantaged communities. Was there any provision in the law to overturn rights if a community was not happy?

He asked for a legal opinion on traditional land. There had not been disputes on land rights ownership yet but since laws beyond the MPRDA could change, provision had to be made for the future. The issue was not custodianship but rather authority which could be problematic when community consent was involved.

On consent, Mr Schmidt said the reality was that mining companies appointed consultants that consulted on their behalf but in general they tried but there was no attempt to reach a point of agreement. There was no perceived underlying attempt to reach consensus. What was the purpose of consultation? In his view there had to be a greater attempt by mining companies to reach consensus whether it be a broad consensus or meaningful consultation. The Act should be amended to state that there should be an attempt to reach consensus and if it has not been reached, then there had to be arbitration, but the onus had to be on the mining company to reach consensus.

On custodianship, he agreed that the state had to be responsible but it did not mean that it had full power or unlimited rights. It still had to act on the behalf and benefit of all South Africans and this meant it should strengthen mining communities and allow it to be equal partners.

Mr I Pikinini (ANC) said the High Level Panel debate on the matter was more about consultation. The public consultation process had to be linked to timelines when it came to consultation and social facilitators should have guidelines for dealing with consultations. The challenge with the MPRDA was that anyone could represent communities.

Ms M Mafolo (ANC) said the problem was consultation, compliance and implementation. She noticed mining companies mine and then do not fulfil their obligations thereafter. Compliance to SLPs had to be monitored and implementation ensured. She asked if communities that mined their own land would have to follow the same process as outside mining companies

Ms Malie welcomed the Chairperson’s comments and said that the Department was looking into enforcement. On retrospective compensation, she said it could be divided into two. Firstly, where the company committed to certain things and the Department could address it as a non-compliance issue. Secondly, was the case where the community said they did not benefit fairly where no commitments were made. This case was retrospective and would be a court matter or a matter between mining companies and communities. Such matters would not be addressed by the Department, but it could address matters of non-compliance.

On community rights, section 9 of the MPRDA allows the Minister rights to give preference irrespective of the community. The suspension of rights was based on non compliance with terms and conditions when rights were granted except for transitional processes where terms could change.

Ms Malie noted that consent about benefits, not consent about whether mining takes place, remained the challenge. She addressed consent to benefits and said that local municipalities would be best suited to address differences between communities on compensation.

On interpretation, she said consent and agreement meant that nothing could happen until agreement was reached. Consent on benefits, not on whether mining takes place, remained the challenge.

Ms Malie said the Department welcomed Mr Pikinini’s suggestion on social facilitator guidelines. On assistance to Historically Disadvantaged South Africans (HDFAs), section 12 of the MDPRA makes provision for the Minister to assist HDSAs. The process for when communities mine their own land as opposed to outside companies would be similar as they would have to create technical plans and development plans that detail how they would benefit the community.

On traditional land, Mr Mokoena replied saying that the customary law that IPILRA was concerned with were about those whose rights were not looked after in other legislation. The MPDRA had legislation to address such matters.

The Chairperson said agreement assumes there is majority consent, but consent can be interpreted as everyone had to agree. He raised concern about whether communities were educated enough to fairly engage in the process of consultation. Communities did not know about SLPs and this had to change. He asked the Committee to finalise the matter when it dealt with the SA Human Rights Commission Report on National Hearings on Underlying Socio-economic Challenges of Mining-affected Communities on 20 February.

The matter of the D-account would be discussed next. He clarified that the D-account referred to the Bakgatla-Ba-Kgafela matter Ms Yako had enquired about.

Mr Mokoena replied that the matter was no longer with the DMR but rather with National Treasury. He suggested that the Standing Committee on Finance was engaged on the matter further. At this stage it was not in the Department’s jurisdiction.

Ms Yako asked if the DMR was not obliged in terms of MPRDA requirements to consider criminal charges when granting rights to specific entities.

Mr Mokena replied that the matter was related to royalties which matter fell under National Treasury and not DMR. As for the court case and criminal charges, the Department could not comment.

Mr Schmidt asked for clarity on why the funds were put into the D-account instead of a National Treasury account.

Mr Mokena responded that the funds were paid directly into the account of the provincial administration by mining companies and when the Department had the reports, more information would be made available.

The Chairperson said the biggest problem was that the mining industry was not regulated. Community trusts had nothing do with the mining companies or the state. He suggested that the state and mining companies have mechanisms to monitor funds that communities have in their trusts. There needed to be accountability for trust accounts. Anyone could press criminal charges, not just the DMR. He advised Members to familiarise themselves with the Public Protector Report and decide on a course of action.

Ms Malie said the Mining Charter made it a requirement for mining companies to sit as trustees in a community.

The Chairperson asked why it was not the DMR instead.

Ms Malie responded that trustees have legal duties and she was not sure if Department officials could be trustees.

The Chairperson responded that he would inquire about the matter because there had to be accountability.

Speaker’s referral of a letter from Member of the Indian Parliament
The Chairperson noted a referral by the Speaker on 20 November of a letter by a Member of the Indian Parliament complaining about irregularities to do with mining activities of an Indian company in Kwa-Zulu Natal around Melmoth. The letter was read out. He suggested that the letter be sent to DMR and when it had responded the Committee could deal with it and respond to the Speaker. This was agreed to.

The Chairperson noted the committee programme before them would be subject to change.

Minutes of the 25 November 2018 meeting were adopted and the meeting adjourned.

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