Department Budget: Comments by Chamber of Mines and SA Petroleum Industry Association

Meeting report

MINERALS AND ENERGY AD HOC COMMITTEE
14 June 2004
DEPARTMENT BUDGET: COMMENTS BY CHAMBER OF MINES AND SA PETROLEUM INDUSTRY ASSOCIATION
Chairperson: Mr M Goniwe (ANC)

Documents handed out:
SA Petroleum Industry Association presentation
Chamber of Mines presentation

SUMMARY
The Committee received comments from the Chamber of Mines and the SA Petroleum Industry Association on the Department of Minerals and Energy's 2004 / 2005 budget. Both organisations welcomed the increased allocation to the Department, but raised concerns about the Department's internal capacity to retain skilled personnel. The COM raised additional concerns regarding training expenditure, the reduction of accident and fatality rates and the Department's ability to monitor the implementation of black economic empowerment in the industry. SAPIA listed managed liberalisation of the oil industry, completion of a Vehicle Emissions Strategy and the advancement of women as the Department's key challenges.
Committee Members raised concerns about the fragmented nature of the mining industry's social responsibility programmes, the need for continuous mine rehabilitation and the lack of opportunities in the oil industry for women in rural areas.

MINUTES
Chamber of Mines (COM) submission
Mr R Baxter, COM Chief Economist, supported the Department's 2004 / 2005 budget allocation. He reiterated the mining industry's continued importance to the overall SA economy and raised concerns about the DME's internal capacity to recruit and retain skilled personnel, its ability to monitor empowerment progress within the industry and the Department's misinterpretation of accident and fatality reduction rates agreed to by the Mine Health and Safety Council (MHSC)

Discussion
Mr G Oliphant (ANC) asked for more elaboration on Mr Baxter's statement that the MHSC had set the industry a ten-year target for reduction of the accident and fatality rate in line with international best practise. However, the DME's Strategic Plan had set a zero rate as a ten-year target. This, Mr Baxter had felt, was a slight misinterpretation of the agreement reached in the Council. In his response, Mr Baxter reiterated the above, but added that the ultimate target would indeed be a zero accident and fatality rate over a ten-year period. This was, perhaps, unrealistic, but the industry was committed to get on a par with its main international competitors such as Australia and Canada.
Mr Oliphant followed up by asking for an explanation of "international best practise" and also whether the industry had programmes in place to treat silicosis. Mr Baxter said that he did not know what the international benchmarks were, but that the information could be obtained from the MHSC. He confirmed that the mining industry had programmes to deal with silicosis and the problem of dust in operations. He added that the silicosis case reduction target was achievable by 2013.
The Chairperson commented that black economic empowerment in the mining industry was a massive task and wondered whether the DME had the capacity to monitor its progress throughout the value chain. He wanted to know whether the Chamber monitored the progress of its member companies in this regard and what actions could be taken against those companies that "cheated", amongst others by "fronting".
Mr Baxter said that Chamber member companies were not exempt from the transformation drive in the country as was witnessed by their commitment to the industry charter and progressive legislation. In the latter instance, a Mining Sector Preferential Procurement Forum had already been established. He agreed that the DME would have difficulty in monitoring BEE progress in such a massive industry. He added that a COM Transformation Task Team had been established that involved all member companies. He commented that member companies' empowerment initiatives had been "exemplary" and reminded the Committee that BEE progress had to be reported in their annual reports.
The Chairperson accepted the response, but enquired about specific plans for the monitoring of BEE progress. Mr Baxter responded that the industry was still getting a better understanding of the industry charter and other BEE requirements, but he felt that progress surveys would be conducted in future, perhaps in co-operation with the DME.
The Chairperson commented that the keys to the success of the Mineral and Petroleum Resources Development Act were enabling access to the industry for new entrants and increasing social responsibility programmes. He acknowledged that the mining industry spent huge amounts on social responsibility, but added that the approach appeared to be "fragmented". He asked whether consideration had been given to a targeted approach whereby resources could be pooled and problems in a specific geographical location be addressed in a comprehensive manner.
Mr Baxter responded that the industry charter provided for increased development of communities around mines and for the major labour-sending areas. He felt that this process would become more focussed in future years. He added that, currently, mining companies were doing their best, but that integrated development plans required by the charter would focus their efforts. At this point there was no central Chamber development plan, but numerous possibilities existed, he stated.
Mr Oliphant argued that mine rehabilitation should take place during the lifespan of a mine and not just after its operations had ceased. Such continuous rehabilitation, he felt, would enable the creation of employment opportunities. Mr Baxter stated that continuous rehabilitation was taking place, particularly on newer mines. He added that mine dump cleanup operations were currently underway in Gauteng in conjunction with the provincial authorities and that this project had indeed contributed to job creation.

SA Petroleum Industry Association (SAPIA) submission
Mr C McClelland, SAPIA's Chief Executive Officer, said that SAPIA supported the DME's objectives of transformation, optimum energy utilisation and human resource development. In addition, the DME's programme of managed liberalisation of the oil industry was supported. SAPIA noted that the DME faced a key challenge in recruiting and retaining personnel and applauded the department's efforts at building internal capacity. Other challenges that faced the DME in the coming year included the second Petroleum Products Amendment Bill, finalising a Vehicle Emissions Strategy, monitoring the industry's empowerment targets and encouraging the advancement of women in the industry. SAPIA felt the DME Budget represented a comprehensive plan that would result in SA having a secure supply of competitively priced transport fuels and a healthy petroleum industry.

Discussion
An ANC Member noted that she welcomed SAPIA's commitment to the advancement of women, but wanted to know whether women in rural areas would also benefit. Mr McClelland admitted that the oil industry was "not doing well on women", but that it was addressing the problem. He pointed out that the industry was mainly situated in urban areas, which exacerbated the exclusion of rural women. However, he felt that the creation of integrated energy centres in rural areas offered numerous opportunities for the advancement of rural women.
Mr S Louw (ANC) wanted to know when the DME's Evaluation Committee (EC), which monitored BEE progress in the oil industry, would report to the Minister of Minerals and Energy on its 2003 evaluation. Mr McClelland pointed out that the question should ideally be asked of the DME as the EC was a DME committee. Nevertheless, he explained that the industry had forwarded its figures to the EC in March 2004, but was still awaiting the outcome of the evaluation.
The meeting was adjourned.