Committee Budgetary Review and Recommendations Report2022; Committee Report on the oversight visit undertaken in April 2022

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Mineral Resources and Energy

20 October 2022
Chairperson: Mr S Luzipo (ANC)
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Meeting Summary

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Tabled Committee Reports

In a virtual meeting, the Portfolio Committee on Mineral Resources and Energy considered its Budgetary Review and Recommendations Report for 2021/22. It also considered its Report on its April 2022 oversight visit to the Western Cape, North West and Gauteng Provinces.

Members pointed out some concerns they had about the Report, especially with recommendation 26. The two DA Members were strongly opposed to its inclusion. They argued that it implied that only the state-owned mining company, the African Exploration, Mining and Finance Corporation, and no private companies, would be able to obtain mineral exploration or mining licenses, to the detriment of the mining sector as a whole.

The Report was adopted with Recommendation 26 as drafted. The DA voted against adoption of the Report.

The Committee report on its April 2022 oversight visit to the Western Cape, North West and Gauteng Provinces was adopted without changes.

The Committee noted that Eskom had requested a postponement of the Committee’s oversight visit to Koeberg.

Meeting report

Budgetary Review and Recommendations Report of the Portfolio Committee on Mineral Resources and Energy

Observations
Mr K Mileham (DA) recalled that Members had observed the difference in average salaries at the National Nuclear Regulator (NNR) (Observation 20).

The Chairperson acknowledged that he was correct.

Ms P Madokwe (EFF) recalled that she had acknowledged the existence of one state-owned mining company in the country, but had also suggested that its scope be expanded beyond mining coal to look at other mineral resources too (Observation 23).

A Committee Member added that both the scope and the mandate of the state-owned mining company must be expanded.

Recommendations
Ms Madokwe recalled that a recommendation to the Department had been made that it should report back on the Committee’s recommendations concerning the National Solar Water Heater Programme as a whole, not just on the outcome of the Report that was being done by KPMG (Recommendation 13).

The Chairperson recalled that the Department had also been recommended to involve the Departments of Cooperative Governance and Traditional Affairs (COGTA) and Human Settlements (DHS) as well as the South African Local Government Association (SALGA) in the Solar Water Heater Programme.

Mr Mileham said that the cost-benefit analysis mentioned in Recommendation 14 must have a clear purpose and must allow the Committee to decide whether the Solar Water Heater Programme was likely to achieve its objective in the short term.

Ms Madokwe said that Recommendation 29 should be explicit on how Mintek should be enabled to pilot projects, given that it had drawn attention to financial and legislative obstacles. She also suggested that the Committee review this legislation. There should also be a recommendation that Eskom procure the majority of its coal supply from African Exploration, Mining and Finance Corporation (AEMFC), because this was what AEMFC had been mandated to do. 

Mr Mileham said that the Committee did not have the authority to force Eskom to buy coal from AEMFC. What it could do was encourage AEMFC to forge a tight supplier-consumer relationship with Eskom.

Mr J Lorimer (DA) said that Eskom power stations were designed to burn low-value coal, while AEMFC might be mining high-value coal that was traditionally exported. The Committee should not rush into encouraging a supplier relationship between AEMFC and Eskom, as it might be more profitable for AEMFC to export the coal instead.

Ms V Malinga (ANC) understood that Eskom had been using AEMFC only as a supplier of last resort. The recommendation should be that procuring coal supplies from AEMFC must be Eskom’s standard procedure, not that it should be forced to procure from AEMFC.

The Chairperson noted that the onus was on the Department, not Eskom, to forge this relationship.

Mr Mileham noted that there was an observation about the Integrated Resource Plan being outdated but no corresponding recommendation.

Mr Lorimer noted that Recommendation 26 implied that mineral exploration licenses could be given to no company other than AEMFC. This was absurd and probably against government policy. He proposed that this recommendation be removed entirely.

Ms Malinga said that AEMFC should be given priority over other companies.

The Chairperson confirmed that there was no policy opposed to giving mining rights to private entities. He asked Mr Lorimer to clarify why he proposed that the recommendation be removed.

Mr Lorimer explained that he considered the prioritising of mining through the state-owned mining company to be a bad use of capital by the state. The state mining company’s performance was worse than the private sector mining companies. The capital being spent on it could better be spent on housing, schools, police, roads, and so on.

Ms Madokwe disagreed that the recommendation should be removed. AEMFC should be prioritised and capacitated.

Ms Malinga agreed that Recommendation 26 should be retained.

Mr Mileham argued that the main problem with Recommendation 26 was the phrase ‘by the state’. This phrase excluded the private sector entirely from all new mining operations and there would no longer be a competitive mining sector.

Mr S Kula (ANC) did not think anything was wrong with Recommendation 26. The mineral wealth beneath the soil belonged to the people of the country, and the state was its custodian. Why should the state not ensure that AEMFC flourishes? This recommendation would ensure that all entities combined to play a major role in the mining sector. The recommendation should be retained.

Mr Lorimer warned that if the recommendation was included it would discourage further private investment in the mining industry.

Mr M Mahlaule (ANC) said there was nothing wrong with deliberately capacitating and pulling together all available resources to support a state-owned entity such as AEMFC. This ensured that the revenue of the state was guaranteed. The phrase ‘by the state’ was correct because it did not give the State exclusive mineral rights. If the phrase read ‘by the state only’, it would be a problem.

The Committee voted on the Report and it was adopted with Recommendation 26 included.

The DA voted against adopting the Report.

Report of the Portfolio Committee on Mineral Resources and Energy on the Oversight visit to Western Cape, North West and Gauteng Provinces

The Report was adopted without discussion or changes.

Closing remarks
Mr Mahlaule drew attention to a letter that Members had received indicating that Eskom had requested a postponement of the oversight visit to Koeberg.

The Chairperson promised to inform the Committee about the new date for the visit.

The meeting was adjourned.

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