Impact of Energy Acts From 1999 to 2006: Department briefing

ECONOMIC AFFAIRS SELECT COMMITTEE
25 October 2006
IMPACT OF ENERGY ACTS FROM 1999 TO 2006: DEPARTMENT BRIEFING

Acting Chairperson: Ms ND Ntwanambi (ANC, W Cape)

Documents handed out:
Powerpoint presentation by Department of Minerals and Energy: Legislation introduced since 1999 affecting Provinces and how it has impacted on the people of South Africa

SUMMARY
The Department of Minerals and Energy presented an overview of Energy Acts introduced since 1999. It gave details of the legislative changes effected by each Act and what impact this had had on the people of South Africa. There were a number of groundwork policies to implement the DME mandate. The most significant white papers included the Energy Policy, the Minerals and Mining Policy and the Renewable Energy Policy. Briefings included the National Nuclear Regulator Act, the National Energy Regulator Act of 2002, an explanation on mineral rights, and the Mineral and Petroleum Resources Development Act, and the Diamonds Second Amendment Act was far reaching. Questions were asked by members on the two mining accidents in Carltonville and Barberton, gas, oil and hydropower possibilities and reserves, lack of electrification in the Eastern Cape, and the community’s benefits from platinum in Limpopo. The delays in environmental impact assessments, the disputes on land with municipalities, and the composition of the boards were discussed. The monitoring systems, assistance to small scale miners, safety issues, equity stakes, and encouragement to women were also raised. Some of the questions were to be answered in writing, in view of the shortage of time.

MINUTES
Briefings by Department of Minerals and Energy
Ms Nelisiwe Magubane (Acting Director General, Department of Minerals and Energy) apologised for the late circulation of the documents for the meeting. She introduced the delegation from the Department (DME). She presented the legal history of mining in South Africa, including all the new Acts put into force since 1994. She summarised the impact that the new legislation had had on the South African population. There were a number of groundwork policies to implement the DME mandate. The most significant white papers included the Energy Policy, the Minerals and Mining Policy and the Renewable Energy Policy.

Mr Tseliso Maqubela (Chief Director for Nuclear Energy, DME) explained the National Nuclear Regulatory Act, in which safety was very important. The Act allowed for the creation of the National Energy Corporation of South Africa (NECSA) and the transfer of authority. NECSA was the third largest producer of radioisotopes in the world and they were used for nuclear medicines.

Mr Nhahla Gumede (Acting DDG: Hydrocarbons and Energy Planning, DME) presented the National Energy Regulator Act of 2002, which would have regulatory authority over the entities covered by the Electricity Act, Gas Act and Petroleum Pipelines Act. Having a single regulator saved costs and meant that all energy sectors were treated equally. He summarised how each Act impacted on the South African population and in what ways communities were involved. He also mentioned some of the challenges to enforcement.

Ms Magubane added that the Electricity Regulator Act still needed to be presented to the NCOP. There were still many houses not electrified, the Eastern Cape faring worst with only 45% electrified. The Act did not deal with all the challenges in this area.

Mr G Mfetoane (Deputy Director: Legal Compliance and Licencing, DME) presented on the mineral rights which is really a bundle of rights that are regulated. These facilitated the empowerment of historically disadvantaged individuals. Various requirements were in place to ensure the inclusion of communities and the beneficiation of resources. There must be women at all levels.

Ms D Ntombela (Chief Director: Mineral Regulation and Administration, DME) presented on the benefits of the Mineral and Petroleum Resources Development Act. Since it was only recently implemented, the benefits were not yet quantifiable. There were still various challenges that persisted. The Department did have monitoring tools. One major challenge that had been overcome was the resolution of backlogs. Applications took a very long time to complete but this was similar to other mining countries.

Mr Mfetoane added that the impact of the Diamond Amendment Act was far reaching. There was now a one-stop shop. The licences were more than a permit as they had monetary value. Implementation of the Act had not yet started.

Discussion
The Acting Chairperson asked if the Committee could be briefed on the two incidents reported in the news, both the previous day and the previous week, concerning trapped miners in an illegal mine in Barberton.

Mr J Erasmus (Acting Chief Inspector of Mines, DME) said that the mining accident the day before had occurred at an Anglo Ashanti mine in Carltonville. It was 4.1km deep and the accident occurred 2 000m underground. It was an old mine from 1961. There was a rock burst near the carbon leader pillar at 14h17. It was a magnitude 2 event and the miners withdrew immediately. As there was no damage, they returned to work. At 14h40 there was a magnitude 2.3 event 170m ahead of the work, and major damage was sustained. Seven people were reported missing. Emergency action was taken and two miners were uncovered, both of whom will recover fully. No other miners had yet been found at that time.

He added that research in mine health and safety was possible from R34 million per annum from levies. R5-R7 million per annum was spent on research on rock bursts. There was a lot of research into how to predict seismic activity. South Africa was in the near field; other countries could be kilometres away. There was ongoing research into the fluid dynamics of rock and how it responds to mining as well as pillar extraction methods. There were 30 projects on mechanical support research for gold mining.

In regard to the illegal mining accidents, Mr Erasmus said there was illegal mining in many areas where mining is done for personal gain. It was not controlled but miners often ask the Department for help to recover injured miners. The police could also assist but it was a difficult situation. In Barberton it was difficult to know where exactly the body was but it was eventually found.

The Acting Chairperson noted that two weeks ago members had been on a visit to Nigeria, examining the possibilities of mutual investment between South Africa and Nigeria. She asked for comments to assist with such a process and further information

Ms S Chen (DA, Gauteng) asked the department where the deposits of gas were.

The Acting Chairperson asked about renewable gas from land fill sites, noting that the Committee had received a briefing from Eskom the previous day. She asked whether the DME agreed with Eskom’s Annual Report, especially with regard to the non-attendance of top officials and their financial statements. She also asked for comment whether there were oil reserves on the West Coast, whether the Department would engage Eskom on research for hydropower for rural areas, and what the Department could do in terms of testing, as there were some rivers in South Africa that did not run dry.

Mr Gumede answered that there were projects to recover methane as small scale poser generators. The problem was that the gas could not be transported and must thus be used in situ. These projects were supported by the DME. Most of them were at a pilot stage. DME believed that there were deposits on the West Coast. Exploration was a challenge as most of it was offshore. The continental shelf off South Africa was far deeper than that further north. There was also no market in South Africa. Namibia had gas fields that they had known about for 30 years and had not acted on because there was no market. Gas was not as easy as oil because of the difficulty in transporting it. DME hoped to explore and small amounts were being produced but it did not meet the country’s needs. They hoped more would happen.

Hydropower was a project under renewable energy. South Africa did not have much water. Even though some dams remained full, there were no large rivers to harvest energy from. The Department had a renewable energy fund that people needed to apply for. It was not a lot of money but it would kick start a project. Communication with SMMEs about the Petrol Act has not been good. It is mainly from head office. The plan is to expand into provinces. The Road Shows from the Minister hope to address such issues. Big players had taken up most deals. It is a challenge that they are limited to locations where refineries already are.

The Acting Chairperson asked why the Eastern Cape was still lacking electrification. The Committee had been advised that the Department had set up a good programme where electricity as well as a piece job was provided.

The Acting Chairperson asked what benefits had been given to the people of Limpopo from the mining of platinum.

Ms Ntombela answered that with regard to community benefits in Limpopo, AngloPlatinum was the company with all the rights. They had not finalised their equity partners. It was not legislated that communities must participate but DME encouraged them to do so. The social and labour plan could implement this. DME did not accept the mine’s plan. Conflicts were the domain of the Department of Land Affairs. They were still waiting for AngloPlat. The community did have stakes in Impala mines but this was not enforceable by law.

The Acting Chairperson asked who could ensure the speed up of the delays from environmental impact assessments (EIAs).

Mr D Gamede (ANC, KZN) noted that the Government had tried to shorten the EIA process, and enquired whether there had been any change. He also asked on what grounds were applications rejected and refused and how were those applicants assisted to get permits.

Ms Ntombela reported that there was a catch 22 with EIA delays. They had to promote mining activity and ensure environmental rehabilitation. Mining was very destructive and this could not be overlooked. Currently the EIA must also include social impacts, especially with the mining of asbestos. DME was currently rehabilitating old mines. Up to 48% of their budget was spent on this. DME was facing it with other Departments through Memorandums of Understanding. DME would provide 60 days to DEAT or DWAF for comment, then the application was sent back to DME for improvement, back to the other Departments for confirmation and so forth. It was a long process.

The Acting Chairperson asked why were houses being given to the municipalities as this provided temptation for corruption.

Ms Ntombela explained that the land where the houses were developed was privately owned. The municipality said that they were entitled to the land according to the legislation. Houses would still belong to the owners, but the land would be transferred to the municipality.

Ms M Temba (ANC, Mpumulanga) commented that the Chairperson had asked most of the questions. She also commented that the documents provided were difficult to read.

Mrs Temba asked how the provinces were represented on the boards, and whether there were information centres in all the provinces. She asked how matters started in the North West filtered down to other provinces. She also asked for confirmation on the improvement in safety.

Mr Maqubela replied that the term of office of board members was three years according to the Act, but it could be renewed for a further three years. There were only ten board members that could be appointed. One was drawn from Organised Labour, one from organised business, one from affected communities, one from DME, one from DEAT and the others were appointed at the discretion of the Minister. Some provinces were given priority in this regard because of their mining activity. The affected community member was also from such an area and there was a caucus to elect them.

Mr Gamede commented that he had expected a comparative presentation between 1999 and the present but in his view not enough had been provided. He would have preferred that the information be broken down into provinces.

Mr Mfetoane answered that it was an oversight not to make a comparative presentation. DME took it for granted that this would not be required because historically disadvantaged individuals had not been granted licenses prior to 1999, so there was nothing to compare with.

Mr Gamede asked how the Department monitored mines to ensure that they were aligned with the development priorities. He asked whether mines understood the difference between integrated development plans and social plans. Mr Gamede asked how was beneficiation monitored. He noted that policy was supposed to come from Government but monitoring was the job of the Department.

Mr Mfetoane said that in the North West, DME was currently interacting with companies. DME assesses the integrated development plans (IDP) and social responsibility plans. If there were none or if they are inadequate, applications were sent back with feedback. Most companies accepted this and more monitoring took place after a year. The Minister was able to take licences away for non-compliance. The companies were given time to fix their social and labour plans after which, if still non-compliant, the Minister could withdraw the licence. It could also be a criminal offence punishable by fine or jail term. There was a checklist for documents that must be submitted with applications. If they were incomplete they would be rejected. If all documents were submitted and they did not comply, then the application was refused. DME, in order to assist HDIs, would allow resubmission with changes and help was provided from regional offices. Richards Bay Minerals (RBM) must include local communities and cannot choose their own black economic empowerment (BEE) partners if they were not local. RBM was still busy with this process.

Mr Gamede enquired what recourse there was for mines that did not comply with the law. He also asked how would the Department assist small scale miners for small deposits that lasted only a few years

Mr Mfetoane stated that funding was available for assisting small scale mining and there were specific offices that deal with that. There was legal resource from the Act for a lack of beneficiation. There was an African mining partnership. South Africa gave and needed help. It had lost what it knew originally and must draw lessons from the indigenous knowledge of the continent. There was an exchange of beneficiation experience between countries.

Mr Gamede asked how the Department had obtained the household figures for Kwazulu Natal, as he was not sure that the number provided was correct.

Mr Gamede asked for an update on the progress of safety at Ashanti and whether there had been any research to stop the problems

Mr Maqubela stated that there was increased safety of workers from radiation when mining. The National Regulators Act ensured that radiation exposure was not above the international norms. There had been inspections that revealed that the mines did conform. The trend was that radiation exposure decreased from improved regulation. DME still needed long term monitoring to ensure the health of workers after they retired. One impact of the legislation was that it allowed for public participation. The Government could not just put up a reactor where and when it wished.

Mr Gamede asked how were the equity stakes at RBM monitored.

Mr Gamede asked how the Department would deal with the lack of capacity in Kwazulu Natal.

Ms Temba asked what measures were taken to encourage women to take part in mining.

Ms Magubane said there was a strategy to deal with the low number of women in mining. It was difficult but DME were busy with it. DME itself was a leading Department. They had not met their 10% target. It encouraged mining companies and was looking at new projects for significant participation. Black people were also resisting.

Ms Magubane said that the presenters would have to respond to the unanswered questions in writing, due to the meeting running overtime.

The meeting was adjourned.