Glencore’s activities and mining rights in SA: Minister & DMRE input

Meeting report

Glencore’s activities and mining rights in SA

Mr Jacob Mbele, Director-General, Department of Mineral Resources and Energy (DMRE), requested Mr Tseliso Maqubela, Deputy Director-General (DDG): Minerals and Petroleum Regulation, DMRE, to lead the presentation.

The presentation to the Committee included an overview of Glencore’s operations in South Africa, mining rights issued in Limpopo, North West and Mpumalanga, and environmental compliance at the different mines.

Mr Maqubela said that in May, Glencore International A.G. entered a plea agreement with the United States' Department of Justice. In terms of the agreement, Glencore admitted to engaging in conduct that violated the Foreign Corrupt Practices Act of the United States of America. The offences admitted to, were committed with parties in the US, Brazil, Mexico, Venezuela, Cameroon, Ivory Coast, Equatorial Guinea, Nigeria and the Democratic Republic of Congo. The offences appeared to have been mainly in oil trading. Nowhere in the agreement was South Africa or subsidiaries of Glencore in this country mentioned. 

Overview of Glencore operations in RSA

Glencore Operations SA (Pty) Ltd produced coal, chrome ore, ferrochrome and vanadium.
The company produced thermal coal for export and domestic power generation from its operations in Mpumalanga. Its ferroalloys mines were located in both the Northwest and Limpopo Provinces. The vanadium mine was located in the Northwest Province. Glencore also acquired the Astron refinery and its associated service stations from Chevron. One of these refineries was located in the Western Cape. This refinery was under repair after an incident, and it was in the process of being re-started.

Mining rights issued to Glencore

In Limpopo, Glencore SA was issued with a converted mining right for chrome mining for a maximum period of 30 years on the farms Helena, Thorncliffe and Magareng. It was an underground operation and employed 12 300 employees, including contractors.

In the North West, Kroondal Mine was part of Glencore Merafe Venture and had four mining rights for a period of 30 years for chrome and platinum group metal (PGM) mining in Kroondal, Rustenburg. It was an underground operation that employed 898 employees, including 542 contractors.

Rhovan Mine had one mining right for vanadium, iron ore, silicon and calcium mining, for a maximum period of 20 years on the farms Berseba, Losperfontein, and Leeuwpan, Rustenburg. It was an opencast operation that employed 720 employees, including 273 contractors.

Boschhoek Mine had one mining right for chrome mining, issued for a maximum period of 15 years on the farms Boschhoek, Boekenhoutfontein, and Bultfontein, Rustenburg. It was an opencast operation, but this mine had no employees as it was not operational. The mine had applied for a renewal in 2022.

Waterval Mine had two mining rights for chrome and PGM mining, issued for a maximum period of 30 years on various portions of the farm Waterval, Rustenburg. It was an underground operation, and employed 14 employees and 35 contractors. The mine was placed on care and maintenance in 2019, and was now in the process of developing a new opencast mine for UG1 ore.

Rietvly Mine had three mining rights for silica mining, issued for a maximum period of 30 years on various portions of the farm Rietvly, Rustenburg. It was an opencast operation. The mine employed 19 employees, as well as 38 contractors.

In Mpumalanga, mining rights were issued for Goedgevonden (converted mining rights), Oofiesfontein (converted mining rights), Zaaiwater West, Tweefontein (converted mining rights), Zaaiwater East (converted mining rights), Impunzi (converted mining rights), Klippoortjie (converted mining rights), Zonnebloem, Vlaklaagte, Amersfoort, Paardekop, Consbrey, Middelkraal, Rietfontein, Norwesco, Umsimbithi, Argent and Springboklaagte. Glencore subsidiaries held the majority of these rights.

Mining rights for Tweefontein had lapsed, and renewal was subsequently lodged and granted. The mine had a total workforce of 1 036 employees. A Section 93 order was issued against the Goedgevonden operation mainly on employment equity grounds. They had a total workforce of 857 employees.

The Impunzi operation had implemented most of the Social and Labour Plan (SLP) commitments, but they were not compliant with housing and living conditions. The Zonnebloem operation was found to be in contravention of the provisions of Section 25 (2)(b)(f), read with regulation 41 (a-c) of the Mineral and Petroleum Resources Development Act, 28 of 2002. The company did not comply with the human resources development programme. They had failed to implement a local economic development programme, suitable housing and living conditions, a procurement progression plan, and they had not complied with the financial provisions.

Environmental Compliance

The latest environmental liability assessment at Marrafe chrome mine indicated a shortfall. This had been addressed in the form of guarantee since the assessment in March 2022.

The financial provision for Kroondal mine was regarded as sufficient for now.

Thorncliff, Magareng and Helena currently had a shortfall to the value of R30 986 603.
 
The shortfall in financial provision for Waterval mine was R1 174 123, which was due on 31 October 2022. Guarantees were received on the due date.

The Rhovan mine operation was regarded as adequately funded.

Goedgevonden mine currently carried a surplus, and the Zonnebloem operation was overfunded.

The Impunzi Complex currently had a shortfall of R192 million. The company was arranging to cover the shortfall.

[Details available in the full presentation]

Discussion

Ms P Madokwe (EFF) asked what the timelines were to bring mines that were not operational or under maintenance back into operation, as illegal mining was a spin-off of delays in these processes. She also asked what Zonnebloem mine complied with, and what not. She lastly wanted to know what action the Department should take if companies defaulted on rehabilitation costs.

Mr V Zungula (ATM) asked what process was followed for Glencore to acquire their mining rights i.e. tender process, and if President Ramaphosa had ever approached the Department regarding mineral rights.

Mr J Lorimer (DA) said he did not think the report by the DMRE was the full story. He wanted to know if the possibility of officials being bribed by Glencore had been looked into.

Mr Gwede Mantashe, Minister of Mineral Resources and Energy, responded that the report provided by the Department was a factual report on a particular mining house, and not a self-assessment by the Department. He said that the question about the President’s application was misplaced.

Mr Maqubela responded that the Department did not have any concerns at the moment about Glencore. He promised to revert back to the Committee on the timelines of mines that were not operational or under maintenance. The derelict and ownerless mines were taken over by the state and placed under concurrent rehabilitation. He explained that rehabilitation guarantees reduced as rehabilitation of a mine progressed. The Zonnebloem remedial action plan would be provided to the Committee.

The Chairperson asked if there had been any reference to Glencore during the Zondo Commission. He also asked if there had been any complaint from Glencore on record on how they had been pressured into selling Optimum and the role of Ms V Malinga (ANC) in the Department, as well as the actions of the asset forfeiture unit (AFU) of the National Prosecuting Authority (NPA).

Mr Mbele indicated that the Department would respond to the Chairperson's questions in writing.

Minister Mantashe asked the Committee to differentiate between the role of the Committee and that of the criminal justice system. He said the pressure around Optimum was a criminal matter, and not in the domain of the Department.

The Department was released before the way forward was discussed.

Ms V Malinga (ANC) proposed that the Committee should ask for a forensic investigation.

A concern was raised that, based on the presentation by the Department, there was no prima facie basis for such a request.

The Chairperson proposed that the matter was best suited to be handled by the Justice Committee, working in collaboration with the Portfolio Committee on Mineral Resources and Energy.

It was agreed that the way forward would be decided on at the next meeting as a matter arising.

Correspondence

Correspondence had been received from the National Nuclear Regulator informing the Committee that Ms Ditebogo Kgomo had been appointed as Chief Executive Officer (CEO). The Committee noted the correspondence.

Correspondence had been received from Mr Rory Tanner of Value Space. Value Space had conducted a risk assessment on the Jagersfontein dam collapse and had the following summary:
Deformation on the south-eastern wall (breach point) was detected from 2019 onwards. The threshold, outlined by industry as the trigger to conduct an immediate stability assessment to fix the dam, was passed in April 2021. The mine was sold in April 2022 to Stargems. It was unclear whether any analysis was conducted on the dam upon this sale.

The matter was referred to the House Chairperson: Committees and Oversight.

Correspondence had been received from Mr Tau Rapula (sp), of Royal Trust. He was following-up on a complaint lodged last May against Lafarge SA, which was operating in its area without discharging its legal obligations. The matter had been referred to the Department.

Correspondence was received from Mr Peter Sidego from Simapa Investment Trust, a minority black shareholder of Swartkops Sea Salt, who was requesting an urgent intervention to compel the company to rectify transgressions pointed out in 2020. The Chairperson undertook to engage with the provincial inspector and the regional office to ensure Swartkops Sea Salt complied.

Correspondence had been received from the Executive Director of the National Economic Development and Labour Council (NEDLAC) with a report on the Electricity Regulation Act (ERA) Bill. The correspondence was noted.

Correspondence was received from Mr K Mileham (DA), requesting that the Portfolio Committee on Mineral Resources and Energy consider convening a joint session with the Portfolio Committee on Public Enterprises. The objective was to summon Ministers Mantashe and Gordhan in their capacities as members of President Ramaphosa’s National Energy Crisis Committee (NECOM), as well as all other members of the NECOM, to come and account for the country’s worsening electricity crisis. It was agreed that the letter would be tabled at a joint meeting of the two committees on 2 November to ensure a coordinated response. The letter would also be referred to the Speaker and the House Chairperson: Committees and Oversight.

Correspondence was received from the Organisation Undoing Tax Abuse (OUTA). They wished to present the Committee with the OUTA report on parliamentary oversight for 2022. OUTA’s comprehensive report, Kicking the Can Down the Road, was compiled by their parliamentary engagement office, and covered the period from July 2021 to June 2022. The Committee agreed that the written report be requested. If there were urgent findings in the report, it would be taken forward.

Correspondence was received from the Anti-ZamaZama Central Committee, in which they raised issues of illegal mining due to the un-rehabilitation of mine shafts in the Welkom area. The matter would be incorporated in the consolidated report on illegal mining.

Correspondence was received from Mr Mpho Makwana, Eskom Board Chairperson, about rescheduling the oversight visit to Koeberg. A meeting was scheduled for 2 November to address the matter.

Adoption of Minutes

The minutes of the Committee's meetings on 23 September, 11 October, 13 October, 18 October and 20 October were adopted.

The Members were reminded of the meetings scheduled for 2 and 4 November respectively.

The meeting was adjourned.