Diamonds Second Amendment Bill; Electricity Regulation Bill: adoption; SA Diamond Board, Mine Health & Safety Council, Mine Heal

Meeting report

MINERALS AND ENERGY PORTFOLIO COMMITTEE
9 November 2005
DIAMONDS SECOND AMENDMENT BILL; ELECTRICITY REGULATION BILL: ADOPTION; SA DIAMOND BOARD, MINE HEALTH AND SAFETY COUNCIL, MINE HEALTH SAFETY INSPECTORATE ANNUAL REPORTS: BRIEFINGS

Chairperson: Mr. E. Mthethwa (ANC)

Documents handed out:
SA Diamond Board presentation
Auditor General's Report on SA Diamond Board
SA Diamond Board Response to the Auditor General's Report
Mine Health and Safety Inspectorate presentation
Mine Health and Safety Inspectorate Annual Report 2004 /05
Mine Health and Safety Council presentation
Mine Health and Safety Council Annual Report 2004/05
DME proposed amendments to Electricity Regulation Bill
DME proposed amendment to Diamonds Second Amendment Bill
[please email [email protected] for documents]

SUMMARY

The Committee adopted the Diamonds Second Amendment Bill. It also considered and adopted the Electricity Regulation Bill.

The Committee was also briefed by the South African Diamond Board, the Mine Health and Safety Inspectorate and the Mine Health and Safety Council on their 2004/05 Annual Reports.

Members asked questions about the Auditor General’s qualified audit of the financial statements of the Diamond Board; what the Board had done to improve internal controls and compliance with the Public Finance Management Act; the Kimberley Certification Process; the high rate of mining fatalities; the incidence of silicosis, tuberculosis and HIV/Aids in the mining industry; the reliability of databases for information supplied to the Inspectorate; its inability to fill vacancies and its inability fully comply with all the requirements of the Employment Equity Act.

MINUTES

Adoption of Diamonds Second Amendment Bill

Mr. Mthethwa moved that the Committee adopt the Diamonds Second Amendment Bill (B39 -2005) and put the Bill with the Amendments agreed upon to the Committee.

Ms. Mathibela (ANC) moved for the adoption of the Bill.

Adv. H. Schmidt (DA) stated that the Democratic Alliance objected to the Bill.

Mr. Mthethwa stated that after considering the Amendments agreed to on the Diamonds Second Amendment Bill (B39 - 2005), Section 76, the Portfolio Committee on Minerals and Energy reported the Bill with Amendments.

Mr. S. Louw (ANC) moved the adoption of the report.

Ms. Mathibela (ANC) seconded the motion.

Mr. Mthethwa stated that Adv. Schmidt (DA) objected to the Bill.

South African Diamond Board (SADB) Briefing
The SADB delegation consisted of Mr. L. Selakane, CEO; Mr. A. Luhlabo, Mr. J. Mthethwa, Ms. S. Engelbrecht and Mr.J. Lenka.

The Annual Report dealt with the operations report, profiling the local industry, world trade in rough diamonds, proposed policy changes, and a response to the Auditor General's Report. Highlights included that large-scale diamond production in 2004 was almost 14 million carats; small-scale diamond production in 2004 was 300 000 carats. The total polished diamond exports for 2004 were R 500 million; and in 2004 South Africa produced 9% of total worldwide production in carats. South Africa exported less than 5% in carats of world volume. Other statistics included employment of approximately 28 800 people from mine to retail in the diamond industry.

The major challenge identified was supporting the second economy and strengthening the first economy activity using the mineral resources available. The amendments to the Diamond Act were aimed at widening access to rough diamonds and encouraged fixed direct investment in SA beneficiation projects. The report highlighted the reasons for India being successful and what macro economic factors and government support were needed in South Africa.

The Auditor General had identified concerns with provision for bad debts, irregular expenditure and general control weaknesses. The Board had taken detailed measures to address the concerns.

Discussion

Mr. J Combrinck (ANC) stated that he hoped that the Department of Minerals and Energy (DME) had learnt from all the errors the SADB had made. He asked why there was no credit control policy and so many errors in the bank reconciliation with an amount of R 66 338 unaccounted for.

Mr. E Lucas (IFP) asked why the USA did not feature in exports by volume and said when one compared India with South Africa; the situation was serious because their government supported the Indian diamond industry.

Adv. Schmidt (DA) wanted to know what the position was with regard to the SADB having appeared before the Standing Committee on Public Accounts (SCOPA) and having been instructed to recover moneys and taking legal action in conjunction with the SA Revenue Services (SARS) and the SA Police Services (SAPS).

Mr L Greyling (ID) wanted to know what kind of control there was over diamonds in the Democratic Republic of Congo (DRC) in terms of the Kimberley Process, and how Israel compared with South Africa in terms of people employed in cutting and polishing in the diamond industry.

Mr. S. Louw (ANC) wanted to commend the Department of Minerals and Energy and the Diamond Board for the Diamond Bill and said that the increase in dollar value from income derived from diamond exports was a clear indication of the importance of the Diamond Bill.

Mr. Selekane said the USA was not a producing country but only a consumer country. In terms of the Kimberley process of certification they had done an audit of rough diamonds through all producers and traders and in terms of percentage, the USA consumed about 80-90% of the product.

In terms of the legal action and follow up from SCOPA, the Diamond Board had a discussion with the compliance officer from the DME regarding the resolution and they were informed that the Auditor General's Office would be coordinating the investigation.

South Africa was helping the DRC with compliance with the Kimberley process and all diamonds exported from the DRC were accompanied by the Kimberley Process Certificate.

Israel specialised in a niche market for cutting and polishing large stones and due to the migration of manufacturers to India; the volume in Israel was decreasing.

Mr. J. Mthethwa said they had issued a document consisting of deferments and the involved amounts. If you value those diamonds; there were about 46. 55 carats which were returned. This left a balance of 50.27 carats to be returned over 180 days as prescribed by the government. The expiry date was 26 January 2006 which meant there was still enough time to return those diamonds to the country. He said they did not know where diamonds for trading purposes came from and they believed that maybe these diamonds were used for exhibition purposes.

Mr. Mthethwa continued that there were some weaknesses in their financial programs which they had addressed and their accounting program was still new.

Mr. Combrinck (ANC) wanted to know what was going to happen to all the SADB documents when it was wound up. Would those documents be archived for the next ten years?

Ms. S. Engelbrecht stated that the Diamond Board had a system in place whereby all their documents would be archived for the next ten years.

Mr. Selakane stated that they were still waiting for the SCOPA resolution requesting the Committee consisting of the DME, SARS, SAPS and SADB, under the leadership of the Auditor General, to investigate the outstanding allegations.

Mr. Matlala (ANC) wanted to know what factors had led to the decline in diamond production.

The Chairperson said the report of the Auditor General painted a very bad picture of the finances of the Board. The Auditor General had stated that they had flouted the provisions of the Public Finance Management Act (PFMA) and their budget had been submitted late. The revised Diamonds Act tied in with the objectives of the Diamond Board.

Mr. Selekane said that he believed that 2000 more jobs was not an accurate prediction for the beneficiation process in the country and the Diamond Board’s immediate plan was to grow this to 20 000 new jobs.

Mr. Selekane said that the Auditor General wanted everything to be run according to the PFMA guidelines and he regarded this as work in progress. The Diamond Board was concentrating on a fraud prevention policy and all financial decisions were made in conjunction with the National Treasury and the Board was also limited with a very small operational budget.

Ms. S. Engelbrecht said they did have internal control systems in place but the Auditor General wanted a formal policy in place.

Mr. J Mthethwa said that budget planning was a lengthy consultation process where factors such as the fluctuation of the dollar/rand exchange rate posed problems and the budget had to be submitted to the Department of Minerals and Energy for approval which added to the delay.

Mine Health and Safety Inspectorate (MHSI) Briefing

Ms. M. Hermanus, Chief Inspector of Mines accompanied by Mr. M. Zondi, Mr. G. Mojapelo, Mr. P. Botha, Mr.T. Doyle and Mr. R. Van Rensburg, did the briefing

The legislative mandate for the MHSI was to regulate health and safety in the minerals sector, promote health and safety at mines and safeguard the health and safety of employees and communities affected by mines.

The briefing covered key developments in the sector, the performance of the sector, Occupational Health and Safety performance, a profile of the safety performance, the strategic performance and challenges for the future.

The highlights of the briefing were that large corporations dominated the industry, and water and seismicity were risks. There were an estimated 440 000 employees in the industry. Data collection and analysis was a concern for the MHSI and they were benchmarking best practices. On occupational safety, the fatality rates were improving steadily but not fast enough.

Discussion

Adv. Schmidt (DA) asked what the role of the MHSI was in the water incident following the closure of Durban Roodepoort Deep (DRD) mine.

Mr. E. Lucas (IFP) stated that the database was a serious issue and he felt that the fatality rate was still too high. Regarding platinum mines, why was compensation the same even though there had been an increase in injuries?

Mr. B Komphela (ANC) wanted to know what was being done about the effects of HIV/Aids. How long had the database been a problem and how long would it take to rectify it?

Ms. Matibela (ANC) wanted to know the number of people infected by HIV. With regards to the DRD inquiry what was happening and what were their recommendations?

Prof. I. Mohammed (ANC) said that the silicone exposure and Tuberculosis (TB) was unacceptable. What was happening with HIV was also unacceptable. On compensation, he received many complaints about compensation from mine workers. The gold mines had about 1000 claims with about R3000.00 per claim and he felt this was a very small amount.

Looking at the DRD mine, which was in his constituency, the inquiry found inaccessible escape routes. This was criminal and he wanted to know what were the penalties for such negligence.

Mr. Komphela (ANC) said that the report needed to benchmark all figures and he did not see the Employment Equity Act been observed for women and disabled people.

Mr. Matlala (ANC) wanted to know if the MHSI had a plan to address its 42 vacancies. He also wanted more clarity on the issue that inspectors faced top legal experts.

Mr. Mthethwa wanted to know what were the issues surrounding the Northam Platinum Mine Inquiry and if it had been concluded.

Ms. M Hermanus responded to the question on the DRD mine by saying they were concerned about the flooding of the mine and their role was to protect the safety of the workers. They were looking at legislation around the issue of mine flooding.

The database was a critical issue for them but they imported these services into MHSI as they did not have a support service under their wing.

Their fatality data was reliable, but their accident data was recorded from 14 days upwards and they wanted it from 1 lost day upwards. They did not have a web-designed system so the data could be imported into the system and the occupational health databases were sitting on different platforms. The MHSI followed up on data with the mines that was erroneous.

HIV / AIDS were affecting the severity of occupational health diseases and the MSHI’s input was to ensure that mines had good HIV / AIDS programs. The MSHI was specifically targeting the triangle of Silicosis, TB and AIDS. Silicon exposure made TB active; dust exposure aggravated the lacerations and they were trying to break this cycle.

She said that reducing silicon exposure in big gold mines was done through ventilation, diffusion and other technologies.

Forty-five percent of the total number of 246 fatalities was from gold mines. The employer in the mining industry was responsible for health and safety; and the MSHI’s role was to push the industry in the right direction on a daily basis. The goal was to have zero fatalities.

She said there was a 16% improvement in fatalities in the mining industry on last year. On the question of how many people were infected by HIV; these statistics were not in the public domain but they ranged from 10 – 45 % depending on the province where the mine was situated.

On the question of poor communication at DRD, she said that as a marginal mine they had lost experienced staff due to retrenchment. The managers and supervisors were aware of an increase in seismicity but they had not conveyed this to the people working in the high-risk areas.

On silica exposure, the data was taken from autopsy reports and the trend was showing that there was an improvement. In terms of the issue of compensation the figures were only for respiratory diseases. Occupational injury data came from the Department of Labour and these figures were lagging behind.

On the issue of shortfalls in planned audit inspections; this had happened because people had resigned and they no longer had enough inspectors to send out.

Ms. Hermanus referred to the issues of employment equity and the high vacancy level, stating that they had made enormous efforts to ensure candidates were coming into the graduate entry programs. She said there was a shortage of engineers, particularly females, and they needed employees with 15 – 20 years’ mining experience for the regulator.

On the issue of top legal experts, she said that the mines hired them and they continuously objected and as a result the MHSI needed top legal representation. If inquiries were not going to work there was little chance of criminal prosecutions.

Regarding the Northam investigation, the MSHI had requested a joint inquiry in which a magistrate or judge would participate and the public prosecutor had assured her that the process had already begun.

Ms. Hermanus stated that on the DRD mine the report recommended prosecution. A maximum fine of R 200 000 was prescribed in the present legislation which the MSHI felt needed to be increased.

Mine Health and Safety Council (MHSC) briefing

Ms. Hermanus, Chairperson, headed the delegation and it included Dr. F. Randera, Ms. E. Solomons, Ms. S Van Der Woulde and Mr. M. Llale.

The Mine Health and Safety Council was established in July 1997 and was composed of government, labour and employer representatives. The Mine Health and Safety Council was committed to supporting, promoting and investigating efforts to eliminate injury and occupational disease in the mining sector. The presentation covered the highlights, challenges, performance report and the financial statements.

The vision of the MHSC was a regulatory framework and climate conducive to safe and healthy working conditions for mineworkers and communities affected by mining.

On the occupational safety side, the highlights were a decrease in fatalities by 17% from 270 in 2003 to 246 in 2004, and a decrease in serious injuries by 7% from 4 301 in 2003 to 4 254 in 2004.

On the occupational health side, the prevalence of silicosis was unchanged, tuberculosis was a major challenge and was increasing, noise induced hearing loss was a significant problem, new engineering solutions were being used and the efforts to address the HIV / AIDS epidemic were ongoing.

Challenges were appropriate databases for health statistics, the mine disasters at Northam Platinum mine, Hernic Ferrochrome Maroelabult mine and Harmony Free State mine.

The issues of water and seismicity at existing mines and the transfer of research outcomes through the appropriate mechanisms were also challenges.

Discussion

The Chairperson asked if Members had any questions, but there were none.

Consideration and adoption of Electricity Regulation Bill

The DME presented its proposed amendments to the Electricity Regulation Bill. The main objective of the Bill was to establish a national regulatory framework for the electricity supply industry, to make the National Energy Regulator the custodian and enforcer of the national electricity regulatory framework, to provide for licenses and registration and the manner in which generation, transmission, distribution, trading and the import and export of electricity are regulated.

Most of the proposed amendments were related to definitions (see document). The Committee agreed to all proposed amendments. Mt C Molefe (ANC) proposed adoption; Mr H Matlala (ANC) seconded the motion and the Bill was adopted with amendments.

Adv. Schmidt (DA) abstained from voting on the proposed amendments as he did not have a mandate from his party caucus.

The meeting was adjourned.