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MINERALS AND ENERGY PORTFOLIO COMMITTEE MEETING
7 November 2005
MINISTER / DEPARTMENT RESPONSE TO ELECTRICITY REGULATION BILL SUBMISSIONS; MINING QUALIFICATIONS AUTHORITY; COUNCIL FOR GEOSCIENCE ANNUAL REPORTS
Chairperson: Mr E Mthethwa (ANC)
Documents handed out:
Department of Minerals and Energy’s comments on the Electricity Regulation Bill
Speech by the Minister of Minerals and Energy on the Electricity Regulation Bill
Mining Qualifications Authority presentation
Mining Qualifications Authority Annual Report 2004/05 [available shortly at www.mqa.org.za]
Council for Geoscience Annual Report 2004/05 [available shortly at www.geoscience.org.za]
Council for Geoscience presentation
The Minister and Department of Minerals and Energy briefed the Committee on their reaction to public submissions on the Electricity Regulation Bill. The Mining Qualifications Authority and the Council for Geoscience also briefed the Committee on their 2004/05 Annual Reports.
Members raised concerns about the male domination of the Board of the Authority; efforts to address shortages of scarce and crucial skills in the mining industry and the qualified audit report. They were concerned about the small budget of the Council for Geosciences; whether the Council was able to retain students it funded and the impact of water pumping mines.
Introductory remarks by Minister of Minerals and Energy on Electricity Regulation Bill submissions
The Minister of Minerals and Energy, Ms L Hendricks, said that all submissions made by interested parties on the Bill had been taken into consideration, and where possible, had been adopted by the Department. The Bill sought to empower the National Electricity Regulator (NER) and its successor, the National Energy Regulator of South Africa (NERSA), to regulate the electricity industry. The Bill would regulate the total electricity value chain from generation to transmission to distribution as well as trading of electricity.
The majority of the submissions dealt with the original Bill. The Bill did not deal with electricity distribution industry restructuring as was often reported in the media. It was a well-known fact that South Africa enjoyed the cheapest wholesale electricity prices in the world. However, domestic tariffs in most cases did not reflect these low prices.
In terms of the Bill, the Minister would remain the custodian of government policy and its monitoring. Contrary provisions in the Bill would be amended to clarify the Minister’s role. The intention was for the Regulator to be responsible for those functions. The Ministry would draft regulations and the Regulator would be responsible for the execution of such regulations. The Regulator would also be responsible for drafting rules and procedures pertaining to those regulations that have been promulgated by the Minister. The Regulator would also draft directives provided for under the regulations.
Government had adopted a strategy to introduce independent power producers (IPPs) who would be responsible for 30% of generation requirements. The introduction of IPPs had been identified as an opportunity for Black Economic Empowerment (BEE) and job creation. The competition contemplated in the Bill referred to the bidding process by IPPs for new generation capacity and not to competition in the electricity market where producers would compete for consumers. In order to address the current quality of supply of electricity, the Bill empowered the Minister to formulate regulations on the norms and standards of the level of investment in infrastructure relating to new assets creation and rehabilitation of existing infrastructure, the level of maintenance expenditure and quality of supply and other key performance indicators.
Department response to submissions
Ms N Magubane (Deputy Director General: Electricity and Nuclear and Mr O Alpane (Chief Director: Electricity) presented the Department's comments on the submissions (see document).
Mining Qualifications Authority (MQA) presentation
Mr Livhu Nengovhela, CEO since May 2005, accompanied by Mr Vusi Mabena (MQA Board), Mr Yunus Omar (MQA CFO) and Mr C Smit (COO), presented. The topics in the presentation included a strategic overview, the MQA board, employee distribution and qualifications, employment trends, scarce skills listing, deliverables, its financial statements and challenges (see document).
Mr E Lucas (IFP) wanted to know if mechanisation had anything to do with the job losses in the mining sector. He also commented that something had to be done about male domination of the board.
Mr. C Kekane (ANC) wanted to know what is being done to identify talented students in the mining sector. He commented that due to social problems, some of the youth never completed their schooling.
Mr. M Matlala (ANC) wanted to know if there was a concrete plan to address scarce skills and if there was a plan to go into rural areas to recruit there as many people did not have access to newspapers, television and radio.
Ms. N Mathibela (ANC) commented that Adult Basic Education and Training (ABET) is a good thing. She wanted to know if the language in the mining sector was going to change.
Prof Mohamed (ANC) wanted to know if training is taking place higher up in the mining sector. He wanted clarity on what was meant by scarce skills and also wanted to know how many women were involved in underground work.
The MQA Board Chairperson, Ms M Hermanus assured Members that they had searched "high and low" for female board members, but there were very few women in mining. Job losses in the gold sector were not due to mechanisation.
The biggest challenge for them was to place students who had completed learnerships in the sector. This occurred not only in the mining sector, but also in other sectors of the economy. Scarce and critical skills meant that there were not enough of the identified skills in the sector. This was crucial for the mining industry as it could not operate without them. They were looking at the language policy in the mining industry. She said that many employees had been in the industry for a long time, and the language used was not only reflective of a lack of skills but also the improvement of technology in the industry.
Mr. Mabane replied that they were also concerned about the composition of the board and were trying to improve the situation. However, the mining industry had a legacy of only employing males. It was vital to place newly-qualified trainees in employment and he reiterated that this was the biggest challenge that they faced.
The MQA Chief Financial Officer (CFO), Mr. Omar stated that the Department of Labour had given them a template to prepare their financial statements. During the course of the year, they discovered that the template was inadequate. They then completed their financial statements manually, but the Department did not accept this and they had to resubmit their statements at a later date. They were now working together with the Department to ensure that the template being used was the correct one.
Mr. Mabane replied that finding talented students to work in the industry was a big challenge. They would support initiatives that promoted interest in the mining sector. They would provide funding for initiatives in the rural areas to get children interested in mining at an early age. The mining companies employed people; not the MQA, and therefore they should provide some form of support.
Ms Hermanus replied that there were very few women in mining; less than 1% in fact. Some women did drilling, but the hand-held drills were extremely heavy. They would have to do research to improve the situation. There were also certain health issues that had to be taken into consideration for women working underground; especially pregnant women.
Council for Geosciences (CGS) presentation
Mr Thibedi Ramontja, CEO, accompanied by Ms M Kola, Mr L Matsepe and Mr G Graham, presented. The presentation covered the CGS mandate, new strategy, key programmes and identified the challenges that it faced (see document).
The Chairperson wanted to know if Members could be assured that the country would not be facing a tsunami in future. He also wanted to know if the Bushveld study had been completed and if research was being done on the other complexes.
Ms. Mathibela (ANC) wanted to know if the water extracted from mines was fit for human consumption. She asked if the Council’s training took place before or after tertiary education and if it had ground rules for the students it funded. Would the Council be able to predict when an earthquake would occur?
Prof I Mohammed (ANC) wanted to know why an account was held in Morocco and why there were no bank statements. Was Vosloosrus at risk because it was built on a dolomite site? Were sinkholes a mining problem? He commented that he was amazed at the small budget of the CGS and wanted to know if they did not need a bigger budget. He also wanted clarity on the Lesotho dam wall as there were reports that the wall was collapsing.
Mr Graham replied that there was a very small chance of South Africa experiencing a tsunami. They were doing research into this so that early warning systems could be put in place. There was very little information available about tsunamis that may have taken place in the country. Their website contained information on where earthquakes might occur. The Lesotho dam wall was the highest in the Southern Hemisphere, but a lot of water had been trapped in a small space. However, once a structure had been built it needed to settle and therefore would develop cracks. When the wall was built, it included pumps that could pump concrete back into the cracks that had formed so there was no risk of the wall collapsing.
Mr Ramomgh replied that the Bushveld complex was quite large and held various types of minerals. Had there been another site with such huge deposits of minerals it would have been found by now. There were three types of projects that could be used to find such deposits, namely Geological, Geophysical and Geomechanical. They had had discussions with the Minister on the possible extension of the Bushveld complex.
The quality of the water from the mines was being monitored. When there were problems with quality they would inform the relevant departments
They funded post-graduate students that had a minimum of an Honours Degree. They were encouraged to enrol for Masters’ Degrees. Students had to work one year for the Council for every year of study funded by it. However, many left on completion of their Masters’ Degrees as prospective employers bought them out of their contracts. There was a general shortage of geologists and they were in high demand. The Council could not always retain them due to financial constraints.
They were required to open an account in Morocco because of a project they were running there. They did not receive bank statements due to a communications error. A delegation was then sent to Morocco where they discovered that the bank where the account was held had merged with another bank. They were then required to open another account. They would in future receive monthly bank statements.
Roughly 20% of Gauteng was situated on dolomite deposits which is why there are sinkholes in the mining areas. The situation had worsened as most of the dolomite was near the surface. As water was pumped out, the dolomite became unstable and could collapse. A risk management plan had to be put together by interaction with government and other stakeholders.
The budget issue was important. Geologists could not be office-bound; they had to be in the field. The Council would have to convince government of the need for more funding which is why it had developed a ten-year strategic plan.
The meeting was adjourned.
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