Induction Workshop: DMPR and DEE mandates and entities; with Minister and Deputy Minister

Meeting report

Opening remarks

The Chairperson welcomed all Members, noting that this was the first physical meeting after the initial virtual one. He also commended the presence of both the Minister and Deputy Minister, emphasising the importance of their attendance to ensure political oversight and accountability. He said the Committee had adopted a stance that required either the Minister or the Deputy Minister to be present at meetings. Without this political representation, the meeting would not proceed, as Members wanted to engage directly with the decision-makers.

Minister’s opening remarks

Mr Gwede Mantashe, Minister of Mineral and Petroleum Resources, began by outlining the restructuring of the Department into two distinct entities: one focusing on electricity and energy, and the other on mineral resources. He said the Department was still in a transitional phase, with administrative changes expected to be finalised by March 2025. He emphasised the Department’s oversight of multiple entities, including those involved in mining health, nuclear research, petroleum exploration, and metallurgy. He proudly noted that over the past six years, none of these entities had required financial bailouts, attributing this success to strong governance structures and operational efficiency.

He referred to ongoing efforts to curb illegal mining, which he described as a criminal activity that undermined the economy and community safety. He also underscored the Department’s focus on fostering transformation in the mining sector, ensuring inclusivity, and promoting investment in renewable energy resources.

DMRE Presentation

Mr Jacob Mbele, Director-General, Department of Mineral and Petroleum Resources (DMRE), described the Department’s vision as centred on driving transformation within South Africa’s mining and energy sectors, aiming to achieve economic growth and sustainable development. It seeks to operationalise this vision by regulating, transforming, and promoting activities in the mining and energy industries. The DMRE collaborates with various entities to ensure its commitments align with government priorities and the medium-term strategic framework (MTSF). These entities play a supportive role, focusing on specific mandates that enhance the effectiveness of the Department’s operations.

He said the DMRE had a critical function in responsibly managing South Africa’s mineral resources. It was tasked with promoting investment in mining and energy infrastructure, while ensuring the transformation of these sectors to reflect the country’s broader socio-economic objectives. It oversees compliance with regulatory frameworks and fosters a balance between economic development and environmental sustainability.

The Department of Electricity and Energy (DEE) had a pivotal role in ensuring a reliable and sustainable supply of electricity in South Africa. Its responsibilities include planning and implementing energy policies, overseeing national energy programs, and working with state-owned enterprises (SOEs) and private sector stakeholders. The Department’s mandate also involves driving initiatives to enhance energy security and promote the adoption of renewable energy sources in line with global trends and national climate commitments.

The presentation also discussed the entities that operate under the DMRE and DEE, detailing their mandates and contributions. These entities were tasked with implementing various sector-specific initiatives, including managing resources, fostering innovation in energy technologies, and addressing challenges such as energy access and affordability. The roles of these entities were aligned with government policies, ensuring that the departments could deliver on their strategic objectives efficiently.

In conclusion, the briefing emphasised the interconnectedness of the DMRE and DEE in fostering sustainable economic development in South Africa. It reiterated the importance of their mandates in transforming the mining and energy sectors, driving growth, and supporting the country’s transition to a greener, more inclusive economy. It urged stakeholders to recognise the critical contributions of these departments and their entities in achieving South Africa’s long-term development goals.

See attached for full presentation

Discussion

The Chairperson reflected on his experience from five or six years ago, when his responsibility was to fight for young people to be given the opportunity to lead. He shared how, at that time, he had worked towards creating opportunities for youth leadership, and now, sitting in his current position, he realised that he had to learn to handle everything and adapt. He explained that, in preparing for this meeting, it was important not to take anything for granted, as discussions would unfold with various stakeholders. He acknowledged that those engaged in these matters every day needed to be appreciated for their dedication and effort, as understanding the complexities of these issues was a significant challenge.

He said the presentations should not only address technical aspects, but should also impress and inform those involved. Despite the scale of challenges, it was important to celebrate the achievements, such as the fact that no bailouts had been required for any of the entities under discussion. He was surprised that the narrative often focused on negative aspects, while the positive progress was sometimes overlooked. It was important to highlight clearly in the press statement that these entities did not need bailouts.

He expressed his satisfaction with the presentations, which had been carefully prepared. He acknowledged that the presentations were often guided by content advisors who helped prepare the relevant information for the Minister. He pointed out that the work was difficult, given that the credit committee handled about 14 different entities, each from a different ministry, which required a significant amount of work and coordination.

The Chairperson said that when they asked for ministries to be present, it was precisely to clarify matters that might not be agreed upon, rather than allowing the process to be dominated by one side. He expressed satisfaction with the Minister’s engagement, but stressed that any future meetings must address areas where there were differences, particularly in terms of responsibilities across ministries.

Referring to illegal mining, he raised a concern about criminal activities within mining areas. He sought clarification on how these issues were being handled, particularly from the perspective of mining health and the well-being of communities in those areas. He said the issue of illegal mining should not be taken lightly, and that action was necessary to address these criminal elements.

He also mentioned the upcoming changes in the ministry, particularly the decoupling of certain responsibilities, which was scheduled to take effect in April. He explained that while some matters currently fell under the Minister's purview, future decisions would be divided differently. He urged the Committee not to be surprised when the expected changes occurred, and said there was no reason for confusion regarding the division of responsibilities.

Finally, the Chairperson acknowledged the commitment of the Deputy Ministers, noting that they had taken time to attend the meeting and engage with the Committee. He concluded by stating that his concerns were minor, and that, overall, he was satisfied with the progress made, particularly in the context of no bailouts for the entities. He expressed confidence in the leadership, and closed by allowing others to continue the discussion.

Mr N Pienaar (DA, Limpopo) began the discussion by questioning the Department’s celebration of the absence of bailouts. He argued that this should be the standard for state-owned entities (SOEs) and not considered an extraordinary achievement. He sought clarity on the DMRE’s long-term strategy for securing gas supplies, particularly regarding reliance on Mozambique and the potential inclusion of partnerships with Russia. He also asked about delays in gas exploration along the West Coast, and what measures the Department was implementing to address these setbacks.

Ms S Boshoff (DA, Mpumalanga) raised concerns about the licensing processes within the Department. She wanted to know the average timeline for issuing mining licences and how the DMRE distinguished between the various types of licences. She also addressed the challenges surrounding derelict mines, asking what strategies were being implemented to rehabilitate these sites and prevent illegal mining. Furthermore, she questioned the Department’s decision to return surplus funds to the National Treasury instead of redirecting these resources to other pressing departmental initiatives.

Mr P Mabilo (ANC, Northern Cape) raised questions about oversight and transformation within the Department. He asked how the DMRE ensured that its entities were fulfilling their mandates effectively and efficiently, particularly in addressing illegal mining. He also sought clarity on what measures the Department was taking to improve oversight in regions where illegal mining was prevalent. He inquired about the DMRE’s efforts to promote socio-economic transformation within the mining sector and empower historically disadvantaged communities.

Ms M Kennedy (EFF, Limpopo) expressed concerns about the regulation of abandoned mines. She asked what measures could be introduced to prevent unauthorised access to these sites and whether stricter controls were feasible. She also sought clarity on how the Department ensured that communities benefited directly from nearby mining operations, particularly in regions affected by socio-economic challenges.

Mr H van den Berg (FF+, Northern Cape) posed questions regarding South Africa’s energy costs. He asked how these costs compared to global standards, and what efforts were being made to improve affordability for South African consumers. Given its declining contribution to the national economy, he also questioned the Department’s focus on the diamond sector. Lastly, he sought updates on the progress of hydrogen and ammonia production initiatives, which were key to the green energy transition.

Mr B Farmer (PA, Western Cape) raised concerns regarding the impact of oil and gas exploration along the West Coast. He asked about the plans for communities located between Port Nolloth and Saldanha Bay, particularly regarding how these communities would be affected by exploration activities. He also questioned the Department’s approach to land claims, and how they were working with indigenous groups in relation to mineral exploration in these areas.

Ms S Mokoena (MK, KwaZulu-Natal) asked whether the policies in place to address historical inequalities in the resource sector were still effective today. She questioned whether there was a need for a review of these policies, or an amendment to current laws to ensure that they were still achieving their intended goals. She asked how South Africa’s resource management strategy was positioned in the global market, and what the Department was doing to enhance the competitiveness of the country’s mineral and energy exports.

Minister’s response

Minister Mantashe began by acknowledging the importance of creating a governance structure that reduces both operational and financial risks, which he described as a key focus of the Department. He explained that running an operation, especially in government, required a balance between maintaining order and fostering progress, and that one could not simply take everything as "normal." He said a significant aspect of governance involved establishing structures that allow for effective decision-making while minimising risks, which he stressed was crucial to the Department’s operations.

He expressed his satisfaction with the fact that the DMRE had avoided any financial bailouts, commenting that the focus should not be just on the negatives, but on the progress made. Governance, rather than money, was the most important factor in ensuring the effectiveness of the Department. The leadership's attention to operational and financial risks was vital, as these elements could otherwise undermine the success of the Department’s initiatives.

The Minister also addressed the issue of illegal mining, which he described as a criminal activity. He said the Department viewed illegal mining as not just an economic issue, but a direct attack on the country’s economy, health, and the well-being of its citizens. Illegal mining operations often involve criminal negligence, sometimes leading to severe incidents, such as people stealing resources from the country. He made it clear that this type of activity undermined the legitimacy of the mining sector and damaged the economy.

He further stressed that government must ensure that communities involved in illegal mining were informed and understand that such activities were illegal and harmful. He shared his belief that illegal mining activities were a direct attack on the economy, and it was important to take action to curb them. He added that these activities were often associated with violence, theft, and exploitation of resources, which further harmed the country’s interests.

Minister Mantashe also discussed the challenges posed by gas exploration and nuclear energy. Careful consideration was required for transitioning to nuclear power, particularly the use of small modular reactors. The conversion to nuclear energy could impact various sectors, including employment, the performance of power plants, and the communities surrounding these projects.

He expressed his commitment to improving relations with African countries, such as Angola, Nigeria and Equatorial Guinea, to meet South Africa’s energy needs. He stressed the importance of securing gas resources within the region, as South Africa must not allow other countries to take advantage of opportunities that could benefit the country economically. While he was open to partnerships with countries like Russia, the ultimate goal was to ensure South Africa's energy security and avoid over-reliance on external sources.

The Minister also discussed South Africa's gas reserves, and the potential for the country to produce its own gas. He said South Africa had significant gas deposits and that exploring these resources could significantly benefit the country. However, he also mentioned the challenges involved, particularly the cost of extracting gas, which was higher than market prices in some cases. He stressed that the government had rejected proposals to purchase gas at above-market prices, underscoring the importance of maintaining fair pricing for South Africa’s energy sector.

Addressing the issue of nuclear energy, he said South Africa was allowed to enrich uranium only up to the "yellow cake" level, but it was prohibited from developing nuclear fuel beyond that stage. The country was not permitted to process uranium into usable nuclear fuel, a limitation imposed by international agreements, particularly with countries like the United States.

In addition to discussing energy and mining, the Minister highlighted the importance of addressing critical minerals, which were essential for various industries, including renewable energy. The country was working on developing its own definition of what constitutes a "critical mineral," which would help guide future mining and export strategies. He also acknowledged that the global demand for these minerals was growing, and South Africa must position itself as a key player in this sector.

Finally, the Minister concluded by discussing the progress made in empowering historically disadvantaged groups, especially women in mining. He said there had been a noticeable shift in the industry, with more women and black executives taking leadership roles. He expressed pride in the increasing number of women entering mining operations, and emphasised that this was a positive trend that would continue to grow in the future. He also pointed out that junior mining companies were growing rapidly, offering new opportunities for previously excluded groups.

DMRE's response

Mr Mbele responded to the question about the oil and gas projects along the West Coast -- specifically, how soon these projects would take off. He explained that the pace at which these projects could proceed depended largely on accepting these activities, which was still a matter of public and legal process. Several companies, including Shale Total, had been granted rights to operate in this area. However, many of these authorisations were currently undergoing appeals. He pointed out that these projects often faced delays due to various levels of appeal, and local non-governmental organisations (NGOs) frequently engaged in the process, sometimes leading to prolonged legal challenges. Even when the appeal was resolved, navigating the legal system could take additional time, depending on court procedures.

He said the Department was actively engaging with the Department of Justice to expedite the approval of developmental projects. However, he acknowledged that there were competing interests, as these companies were also looking to invest in other countries, such as Libya. As a result, the Minister often had to defend capital allocations when projects were delayed, with boards sometimes opting to move funds to more immediately viable projects in other regions.

Regarding small-scale mining, Mr Mbele responded to a question about the types of licences and their duration. He explained that small-scale miners did not always go through the traditional licensing process, as many were not following standard practices. These miners were often involved in corporatism, rather than traditional mining. He clarified that the process for these miners depended on the size of the mining area, and licences for small-scale mining typically did not remain valid for long. He further explained that the process involved consultation and environmental impact assessments, which were time-consuming and led to delays. There was also an option for these miners to appeal decisions, which could further extend the duration of the licensing process.

On the topic of funds being returned to National Treasury, he said that due to financial constraints, the Department often faced budget cuts. Most entities operated with very limited resources, making it difficult for any funds to be returned to Treasury. The only exception was the National Energy Regulator of South Africa (NERSA), which occasionally returned surplus funds collected through tariffs. However, these funds were typically used to adjust for inflation or to keep rates within the desired limits.

Mr Mbele also responded to concerns about small-scale mining's challenges. He said the Department allocated about R25 million annually to support small-scale miners, and this fund had grown to over R100 million in the last few years. He added that many miners were receiving financial assistance to help with compliance and obtaining the necessary authorisations, with the next round of funding was expected to be finalised soon.

On the issue of illegal mining and unauthorised operations, he highlighted two key challenges: the illegal extension of mining operations without proper authorisation, and environmental compliance. The Department was working closely with the relevant authorities to crack down on illegal mining operations, and they were seeing progress in dealing with those responsible. It had also engaged with consumer protection groups to ensure that those involved in illegal activities were held accountable.

He acknowledged the ongoing issue with derelict mines, commenting that approximately 6 000 mine shafts required attention. He said illegal miners often targeted these abandoned sites, reopening old shafts to access minerals. To combat this, the Department had allocated a budget of R140 million to secure and close these shafts, but the process was challenging due to the persistence of illegal miners. The Department was exploring the use of satellite imaging to monitor and track illegal mining activities in these areas.

Regarding rehabilitation, Mr Mbele indicated that a large portion of the budget was being used to address the environmental impact of mining, and there were ongoing efforts to improve the speed and efficiency of these operations. He stressed the importance of working together to tackle these issues, including the use of technological tools to help manage and monitor the rehabilitation process.

He also discussed the Department's target for zero harm and fatalities within the mining sector. Through the Mine Health and Safety Council (MHSC), it had set a goal of reducing fatalities by 10%. While the Department had seen some improvements, the number of fatalities had increased slightly due to certain incidents, but they were hopeful that, by the end of the financial year, there would be a noticeable reduction.

Responding to questions about the backlog of mining licences, Mr Mbele clarified that the backlog included not only licences but also other requests such as changes in ownership. The actual backlog related to licences was under 200, contrary to the previously reported figure of 5 000. The Department was working to separate these different types of requests, which would improve communication and make the process more transparent.

Finally, Mr Mbele discussed the Department’s efforts to position South Africa as a global leader in mining critical minerals. He said the country had the vast mineral resources necessary for the green energy transition, including minerals required for wind turbines and solar panels. The Department was working on a strategy to ensure that these critical minerals would not be exported without first extracting maximum value from them in South Africa. This strategy would also include incentives to promote local beneficiation and job creation in the mining sector.

Deputy Minister’s concluding remarks

Ms Judith Nemadzinga-Tshabalala, Deputy Minister of Mineral and Petroleum Resources, addressed the meeting by discussing the funding mechanisms for various projects. She said one of the concerns raised had been the breakdown of how funds were allocated, specifically in relation to school projects and their costs. She said this required a thoughtful process and clear understanding, with reference to cases like the development of diamond and chrome projects. These projects, along with other initiatives such as food processing, were considered essential, and the DMRP had made significant progress in including women-owned businesses in these ventures.

She further elaborated that the funding they received annually from National Treasury was critical for the sustainability of these projects. A portion of these funds had been sent back to Treasury, but it was important for this financial flow to be transparent and managed effectively. She clarified that the funds for these projects would be spent according to the agreed-upon budget and in alignment with national goals.

Regarding the broader energy sector, she talked about the ongoing studies related to fossil fuels and their role in the future. She acknowledged that there were debates within the government about whether fossil fuels should remain part of the energy conversation, particularly in light of the global push for renewable energy. She said a study was being undertaken to evaluate the viability of continued fossil fuel use, particularly in light of the green energy transition, which would shape the country's future energy strategy. She emphasised that this was a critical conversation, as it would impact the mining sector and the future of mineral extraction in South Africa.

Deputy Minister Nemadzinga-Tshabalala also highlighted the importance of educating the community about the opportunities within the mining industry. It was essential to ensure that people were aware of the opportunities available to them and were adequately prepared to take advantage of them. She shared an example of how people sometimes fail to realise the potential benefits of mining, particularly in terms of employment and local development. She expressed the need for the community to be encouraged to actively participate in these opportunities, not only to improve their own livelihoods, but also to contribute to the growth and sustainability of the mining industry.

In conclusion, she reiterated the importance of community involvement in the mining sector and ensuring that people were adequately prepared for the opportunities that arose. She encouraged continued efforts to educate and empower local communities, emphasising that this was vital for the future of the sector and the economy at large.

Chairperson’s concluding remarks

The Chairperson began by stating that Members needed to be accountable for their actions. He said everyone present should avoid taking offence, and that certain matters, such as the breakdown of tasks and responsibilities, should be handled in an orderly manner. He commented that the meeting was being tightly managed due to time constraints, as transportation arrangements had to accommodate other Members’ schedules. Because of these strict time requirements, he suggested that they defer approval of the minutes to the next meeting, which was scheduled for the following Tuesday, to avoid inconveniencing anyone.

He then spoke about the importance of being well-prepared, especially when discussing issues related to fisheries, mining, and other sectors under the Department’s purview. He said it was essential to sound informed when engaging on such matters, as without proper preparation, they would appear clumsy or uninformed. This applied to all departments, particularly those involved in key industries such as agriculture, development, and fisheries, all of which had their own specialised entities.

The Chairperson pointed out that when dealing with issues such as the licensing of community radio stations, it was crucial to understand the sector well and be able to argue the case effectively. He gave the example of how local community stations often reached far more listeners despite the size of audiences for stations like Power FM. He stressed the need to focus on communicating effectively with local communities, as this would allow for better understanding and support when dealing with complex issues like illegal mining. He acknowledged that while the Minister had addressed illegal mining, it was important to ensure that such discussions reached the people in their own communities, as they were the ones directly impacted.

He said the primary goal was to ensure that communities felt included in the conversation and were encouraged to participate in economic opportunities available to them. He stressed the importance of education and outreach, explaining that the community needed to be aware of the available opportunities in mining and other sectors. This would allow them to take advantage of those opportunities and contribute to the country’s economic growth.

The Chairperson also expressed frustration at the lack of engagement from certain government departments, pointing out that when ministries did not send representatives to meetings, it caused delays and confusion. He said it was crucial for ministers and departmental officials to attend these discussions, as they were expected to represent their departments effectively. He made it clear that if ministers were unavailable, they should notify the Committee in advance, rather than waiting until the meeting had already begun. He stressed that this would help manage expectations and avoid wasting time.

He concluded by advising that the Committee would be visiting the West Coast to engage with the fishing community, as they had expressed dissatisfaction with the lack of attention from the government. He said the Committee was committed to advocating for these communities, and encouraged his colleagues to approach their engagements with the public with the same level of commitment. He again requested that any future absences be communicated in advance to avoid confusion.

The meeting was adjourned.