A summary of this committee meeting is not yet available.
MINERALS AND ENERGY PORTFOLIO COMMITTEE
29 January 2007
NUCLEAR ENERGY CORPORATION OF SA, NATIONAL NUCLEAR REGULATOR OF SA, MINTEK ANNUAL REPORTS: BRIEFINGS
Chairperson: Mr E Mthethwa(ANC)
Documents handed out:
National Energy Corporation of South Africa Annual Report 2006 Presentation
National Nuclear Regulator: Presentation on 2005/6 Financial Year
MINTEK Presentation: Part1 & Part2
National Energy Corporation of South Africa Annual Report 2006 (available www.necsa.co.za)
National Nuclear Regulator Annual Report 2006
MINTEK Annual Report 2006 (available at www.mintek.co.za)
The Nuclear Energy Corporation of South Africa aimed to develop, utilise and manage nuclear technology, pursuing nuclear technological excellence for sustainable economic development. Its strategic objectives included expansion of the financial resource base, fluorine research, renewal of infrastructure and launch of an HR development strategy. It had achieved turnaround in the last year and had an increase in the funding allocation. It had developed staff retention strategies. The core research and development projects were outlined.. There was significant international collaboration and it was regarded as a highly skilled technical centre. It was involved in nuclear expert training, technical services to industry in a number of fields and development of the Pebble Bed Modular Reactor. Global issues included the security of energy supply, greenhouse gas emissions, safety, waste management and non-proliferation, The world electricity demand had increased and there was a need to find energy sources without emissions. Nuclear safety had improved vastly, but nuclear waste was still a concern. Uranium demand and supply were key elements. The major achievements in each of its operations were outlined. Health and safety measures complied with national legislation and international standards. The retirement fund exposure figures were outlined, and the social performance indicators were tabled. The financial statements showed a net loss of R27.2 million. The Department of Minerals and Energy had made available R56.5 million. The audit report was unqualified. Questions by members addressed the strategies to address electricity shortages and 2010 requirements, the progress of the Pebble Bed Modular Reactor project, the relationship with government departments, education campaigns, gender and racial staff profiles, the future financial situation, backup systems to Koeberg Power Station and high level waste disposal. The uranium deposits and security of supply
were discussed. The matters of emphasis in the audit report were detailed.
The National Nuclear Regulator regulated the nuclear industry in order to protect persons, property and environment against nuclear damage. It exercised control over nuclear installations and vessels and ensured compliance with conditions, fulfilled obligations in terms of international treaties and ensured provisions were made for emergency situations. The Regulator concentrated on safety issues in its report. It summarised the safety assurance activities at Koeberg, enumerating the safety assessments, emergency planning, inspections and audits. A report was made on a pending Court application concerning subdivision and development of land within the emergency protective action zones. The generator failure and grid failures at Koeberg were discussed. A report was made on the process of the Pebble Bed Modular Reactor. Further reports were made on safety assessments and exposure testing in regard to mining and mineral processing facilities. Quality management systems had not been fully implemented in many cases and this was being monitored. The activities at the Pelindula and Vaalputs waste plants were discussed. The National Energy Corporation had been directed to improve physical security at a calibration facility. There had been contamination at one site, but no final safety threats as a result. The financial statements showed an unqualified report,and an increase in authorisation fee revenue and operating income. Working capital management had improved due to improved debt collection and cash flow management. Under expenditure resulted from 15 unfilled vacancies. The Regulator was satisfied on the safety records but was concerned about reliability of off site power supplies at Koeberg, the physical security at the NECSA site and some over exposure of eight workers. Questions by members addressed the failure of supply at Koeberg, the implications of the Court matter on land development in the emergency zone, the rumours and uncertainty around the Pebble Bed Modular Reactor, gender and disability staff profiles. Clarity was given on the Acacia power supply, the penalties which the Regulator could impose and the dose exposure of employees.
Mintek explained that it aimed to promote mineral technology and provide, foster and establish expertise in mineral by products. South Africa was rich in mineral resources with the potential to be a lworld resource for titanium. There had been a world increase in demand, which would probably continue for the next fifteen years. Mintek summarised its staff structure, revenues and work. It relied on state funding to maintain long term R&D Projected profitability was around 2% of turnover. In 2004 Mintek had 17 qualifications in the audit report. In the 2005 year it had two, and was aiming for none in the current year. Full reasons were given. The two qualifications in 2005 resulted from the old accounting system not complying with generally accepted accounting practice systems. This had been fully rectified. In 2006/7 Mintek aimed for a 15% increase in commercial revenue and a 7% increase in staff costs to try to retain staff. R17 million was intended for capital investment. Recovery of losses in mineral processing was a major research area. Mintek aimed to balance research and commercial operations, and increase human resource developments. All efforts were fully detailed. The Mintek Strategic Business Units were tabled, and the work of the research divisions explained. Highlights for the year were tabled. Mintek was supporting government on benefication legislation and initiatives. Its challenges related to retention and acquisition of experienced engineers and scientists.
Questions by members addressed the uses of platinum, hydro electric schemes, and the audit report qualifications.
National Energy Corporation of South Africa (NECSA): Annual Report Briefing
Dr Rob Adams, NECSA Chief Executive Officer, reported that NECSA aimed to pursue nuclear technological excellence by developing, utilising and managing nuclear technology for national and regional socio-economic development. This would include Research and Development (R&D), commercial applications, fulfilling State obligations, contributing to the national development of skills in science and technology, a commitment to health, safety and the environment and satisfaction of stakeholder expectations.
NECSA summarised its values and strategic objectives for the year, which included expanding its financial resource base, accelerating fluorine research, maintaining the infrastructure and major human resource (HR) developments. Turnaround had been achieved in the last year. It had received additional funding of R56 million from the Department of Minerals and Energy (DME), about half of the sum requested, and was therefore able to invest in retention strategies. It planned to upgrade the infrastructure. Due to shortage of funding, not all planned projects were able to be delivered.
The highlights of the R&D programme were tabled and explained. Safari 1 remained one of the most efficient research reactors. The switch to Lightly Enriched Uranium (LEU) fuel was authorised. International collaboration continued to expand. A range of training programmes was being offered for high level nuclear experts. Nuclear services to industry were detailed and explained. The Pebble Bed Modular Reactor (PBMR) was of particular importance.
Future developments would include preparation for increased activity in the nuclear sector, shaping NECSA as an R&D centre of excellence, taking examples from other organisations worldwide, nuclear fuel cycle R&D and applications of nuclear radiation, particularly in the medical field. It would continue to work on worldwide partnerships. There was heavy emphasis on human resource development as many scientific institutions lacked skilled personnel in the 30 to 50 year age group. The new structure would assist R&D, improve risk management and nuclear services and move HR to a general management level.
Dr Adam summarised the global issues in this sector as the security of supply, global warming, safety issues, waste management and non-proliferation. The demand for electricity was rising, but carbon dioxide levels were raised, resulting in rises of temperature and changes to climate, terrain and agricultural potential. Nuclear technology did not produce a carbon footprint, and insofar as safety was concerned, there had been only two major accidents in the last decades, both of which were fully contained and did not cause harm. Chernobyl's disaster had not been contained. Risk management had improved dramatically since then. Nuclear waste management was a public concern and DME had development a National Waste Management Agency which would be fully on stream by 2010. Proliferation remained a concern, but South Africa's record was impeccable and this would not impede development. Currently there was a great divergence between world uranium demand and supply, which had resulted in great increases in the price of uranium. South Africa had the fourth largest uranium resources in the world.
Dr Adam set out the key areas of technological development and a range of human capital interventions. He also tabled the organisational structure, the Board of Directors, Exco and the range of subsidiaries. He reported on the salient points in each of the structures of HTP, Pelchem, Peldev, PTS and NTP, and tabled the product portfolios and the trend in revenues. He stated that the projected sales were R230 million, stretching across 55 countries. 11.2% of suppliers were broad-based black economic empowerment (BBBEE) compliant and 30% of purchases were sourced from black suppliers. This would be increased.
Dr Adam then outlined the safety and health profile, comparing it to international standards, and was pleased to report staff exposure levels well below world averages.
Dr Adam reported that the Retirement Fund consisted of 1568 members and was valued at R311.6 million. Some bursaries were offered, although this could be improved. The workforce had decreased by 7% because of cost reduction programmes, but NECSA aimed to recruit engineers and scientists. He tabled the employment equity figures, and stated that NECSA was looking to improve gender and racial representivity and to address the brain drain. Rental income had decreased, owing to a Board decision to only allow tenants on the NECSA premises who were directly related to its business. There was a net loss for they year of R27.2 million for the Corporation and R3.3 million for the group. Staff expenses were about 54.9% of expenditure, which was usual for a scientific institution. As a result of the funding input by DME, there was a positive cash flow. The audit report was unqualified, but there were some concerns about the retirement fund, particularly the medical benefits post retirement, and certain matters remained to be discussed with DME. Although the income had risen, it was not sufficient to achieve total turnaround, as there was a need to invest heavily in people and the infrastructure, to cope with the global demand for qualified personnel.
Mr C Molefe (ANC) asked what intervention strategies NECSA had in terms of nuclear energy to alleviate electricity shortages, particularly in light of the increased demand at 2010. He asked if NECSA would be ready to assist with this.
Dr Adam stated that there would not be any new nuclear power stations before 2010, so that NECSA was not involved in any readiness assessments.
Mr Molefe asked how far the PBMR project was.
Dr Adam replied that the project proceeding and a demonstration power plant would be standing by 2012. At the technical level there was convergence of design. Licensing issues were being dealt with. The pilot fuel plants had been de-linked from the demonstration power plant and that was a significant breakthrough.
Mr Molefe enquired what relationships existed with PBMR and government departments.
Dr Adam said that NECSA, PBMR and the Ministries had a good relationship and there was convergence of purpose. There was now an agreement between NECSA and PBMR where some of the research was to be outsourced to NECSA, as part of the national mandate, and further funds would be invested in NECSA.
Mr Molefe noted that the public was generally both ignorant and fearful of nuclear power and asked whether education campaigns were in place, and whether these were linked to recruitment drives.
Dr Adam confirmed that education was crucial and NECSA did have a number of outreach programmes. A study at school levels showed ignorance about the nuclear processes and therefore NECSA proposed to create a national nuclear science centre based on a model of the Department of Science and Technology (DST). Funding was still an issue but NECSA was trying to source sufficient funds.
Mr Molefe asked whether the skills development was proceeding satisfactorily. He noted the gender and race profiles of staff, but enquired as to disability profiles.
Dr Adam confirmed that although he had not dealt with this in the presentation, NECSA employed a number of disabled staff, but would have to check whether it complied with the 2% target. There were some areas where operation of dangerous equipment might preclude disabled persons from being employed. NECSA participated actively in the Women In Nuclear SA programme. He noted that three of the last five major breakthroughs in the nuclear field had been made by women researchers. A number of female students still seemed reluctant to take up nuclear physics.
Mr L Greyling (ID) noted that NECSA still had a loss and asked what the future projections were.
Dr Adam reported that NECSA was trying to restructure to have more state funding for R&D. However, scientific institutes were generally not expected to make a profit. There was some misconception about the functions and work of NECSA. Although ideally it would like to become profitable it must be recognised that there would always be a need for significant investment in R&D.
Mr S Louw asked whether there was a backup system for Koeberg Power Station when supplies were short.
Dr Adam replied that any backup system would not be a nuclear one. Gas turbines were own line to support peak demands. Athough nuclear fuel was cheap, the capital costs were high and the installations took considerable time to build.
Mr Louw said that high level waste disposal was one of the biggest concerns. He asked whether the present disposal sites were sufficient.
Dr Adam said that waste disposal was being monitored by DME and Eskom. The current site was a low level site. Higher level sites may well need to be situated elsewhere, but this was presently under investigation. The sites would be operational by 2010, and he reminded Members that although this date might seem too far away, waste had to be kept on site in any event for a substantial period to allow for hot isotopes to decay before being disposed of finally.
Mr Louw noted that there were apparently sufficient uranium reserves, but asked whether these were brown or green fields and what was the quality. He also enquired how the price would compare with global prices.
Mr C Morkel also referred to the security of supply of uranium, and asked whether the Koeberg-type of station was satisfactory. He asked whether there was security of supply for project applications of PBMR, and whether the reserves would be sufficient to cover future roll outs of more Koeberg-type of installations.
Dr Adam replied that the security of supply was dictated by the private sector. The mining houses would sell to whoever was prepared to pay the highest price. If the reserves were deployed purely to meet South African needs, the supply would be sufficient. For instance, Koeberg utilised 2000 tons a year whereas the reserves were at 200 000 tons. However, there was no certainty how the reserves would be used. In regard to price, he said that there was a “spot price”, which would generally be higher than the contract price, agreed to some time ago, as a result of increase in costs that exceeded the predictions.
Dr Adam said that many of the uranium reserves were associated with gold on the West Vaal and Free State, and were workable with current extraction technologies. The difficulty was that when gold was no longer mined, they might not be viable. The Karoo deposits existed in a number of locations, but were not necessarily at sufficient concentrations to apply commercial extraction techniques. Mintek was working on technologies for extraction of low grade deposits. It was hoped that some high-grade deposits could also be found at these sites.
The Chairperson noted that waste management remained a challenge globally. Safety was also of prime concern. He said that despite the growing demand for the use of nuclear power, and the Kyoto Protocol, there did not seem to be sufficient steps taken to replace fossil fuels with nuclear power. He asked what NECSA would name as their strongest strategic direction in future.
Dr Adam agreed that the nuclear sector showed slow progress, due to the number of impact assessments, the stringent licensing processes and so forth. He added that until recently, it was assumed that the nuclear industry was in decline. However, there had been a sudden upswing in demand and a resulting bottleneck in the manufacturing processes, which were highly specialised. It was unlikely that more than about 100 reactors could be built internationally in the next 25 years.
The Chairperson asked NECSA to comment on the most important R&D initiatives. He enquired what level of cooperation had been reached with other developing nations.
Dr Adam said that the main developments were the fuel cycle research, encompassing a number of matters, from uranium mining to waste management. Nuclear manufacturing was of great importance. One of the challenges of PBMR had been that some of the tendering suppliers had not quite realised how difficult it was to manufacture to nuclear specifications and were unlikely to tender again. It was necessary to build national capacity in this area. Isotope research in the biomedical fields was vital. In regard to collaboration, there was an Africa Programme under the International Atomic Energy Authority (IAEA) and there were more links being established with Egypt and Algeria.
The Chairperson enquired about youth and mentoring programmes to meet the challenge of increased demand, and asked for more details on reversing the brain drain. He asked what specific steps could be taken to halt the job losses.
Dr Adam said that the DME had done some excellent work in recruiting more young students to the mining industry, having increased the number of applicants significantly over the past five years. Maths and science students needed to be encouraged and assisted to enter universities, which should offer exciting programmes in the nuclear field. NECSA had succeeded in attracting some graduates back to South Africa; although the numbers were small at present. It was necessary to develop innovative and serious research programmes to attract graduates. Dr Adam added that the depletion of the workforce had resulted from a re-alignment of resources and right-sizing. Recruitment would concentrate on engineers and scientists and it was necessary to develop exciting programmes to attract the right staff. It was notable that the IAEA had expressly indicated that many NECSA staff were considered international experts.
The Chairperson referred to the matters of emphasis that were raised by the Auditor General, and asked which were seen as the most pressing.
Dr Adam said that the post-retirement medical aid liability was a major issue that needed to be addressed. The problems were historic, resulting from the increase in the number of employees and the fact that many were now pensioners. Treasury had been asked to assist, and it might be possible to have the fund managed by a financial institution so that it could be removed from the balance sheet.
National Nuclear Regulator (NNR): Briefing on Annual Report
Mr Maurice Magugumela, NNR Chief Executive Officer, reported that the NNR was formed in 2000 under the National Nuclear Regulator Act, and took over the regulatory functions of the previous Council for Nuclear Safety. It was responsible for oversight, whereas promotion issues were dealt with under the Nuclear Energy Act. Its mandate was to protect persons, property and the environment through a number of activities, including the setting of standards for industry, the exercise of regulatory control over installations and nuclear powered vessels, checking compliance with conditions of nuclear authorisations through inspections and the fulfilling of national and international obligations, and ensuring that plans were in place for emergencies. The Board composition and the divisions of NNR were tabled and explained.
Mr Magugumela stated that the areas regulated by NNR included the nuclear power reactors at Koeberg and the PBMR, for which licensing was in progress. It also regulated nuclear technology and natural sources at the PBMR Manufacturing plant, and once again no license had yet been issued. NECSA operations were regulated at Pelindaba Site and Vaalputs. There were currently over 118 authorisations for mining and minerals processing, 28 authorisations for use of small quantities of radioactive material, and oversight of vessels powered by nuclear power or carrying radioactive material. The NNR did not regulate exposure to cosmic radiation, any radioactive material not able to be controlled and certain substances covered by the Hazardous Substances Act.
Mr Magugumela stated that his report would focus on safety issues. He indicated that the current Koeberg license was subject to 16 conditions. Safety assessments were a major component, both for personnel on site, and in relation to public exposure. A nuclear emergency exercise in February 2006 had indicated satisfactory responses although some aspects of the late phase plan had been identified for improvement. Mr Magugumela explained that occurrences had to be reported, and were assessed by NNR as to whether they fell within the categories of “incidents” or “accidents” defined in the Act.
An interdict had been obtained by NNR to halt approval for development of certain sites which fell within the
emergency protective action zones. The matter was set down for decision in May 2007.
NNR reported the findings on the generator failure in December 2005. Eskom's investigation failed to conclusively determine the root cause of failure, except that some of the clean conditions were inadequate. Corrective action was taken. NNR was satisfied with the actions and would continue to monitor the situation. It had no reason to conclude that there were breaches of security nor that there were challenges to security protection measures. In regard to other events of grid failure between December 2005 and June 2006 NNR had requested reports from Eskom and, having reviewed them, was satisfied with the measures and corrective actions taken. NNR continued to review the nuclear application licenses for PBMR. Inspections had been carried out on some potential suppliers. No licenses had yet been issued.
NNR regulated mining and mineral processing facilities and had authorised 118 facilities.
NNR undertook safety assessments of occupational and public exposure to radiation. There were no concerns on public exposure and radioactive waste was controlled in line with requirements. There was a general decrease in occupational exposure although eight workers were exposed above the dose limit. This was being monitored.
Mr Magugumela tabled and summarised the activities of NNR in relation to NECSA. At Pelindaba some areas for improvement of the Emergency Plan had been identified, and were being monitored. NNR had performed 153 compliance inspections. Although 114 occurrences were reported, none fell within the definitions contemplated in the NNR Act. The calibration facility had been strengthened in terms of physical security, following reports of loss of equipment. A contamination occurrence was investigated and NNR was satisfied that there were no safety concerns. Coordination of regulatory oversight needed to be improved. A similar report was given for Vaalputs.
In regard to the financial statements, Mr Magugumela said that NNR had generated revenue from authorisation fees of R47.6 million, an increase of 7% on the previous year. There was an increase in operational income to R53.2 million. There was under expenditure resulting from 15 vacancies being unfilled. Working capital management had improved with improved debt collection and better cash flow management.
The post retirement medical liability was R27.9 million, an increase from the previous year.
Mr Morkel asked for further details on the failure of supply in December 2005 at Koeberg. He asked whether the sixteen licence conditions were public knowledge and asked for confirmation that the power was lost from the national grid, resulting in a switch over to gas fired generators to keep the cooling system operational. Those apparently had not fired and Koeberg was then reliant on diesel generators. He asked if this had contravened any of the licence conditions, and what sanction had been imposed, and how it would be communicated to the public.
Mr Guy Clapison, Senior Manager, Power Reactors, NNR replied that the licensing conditions were public, and the processes were detailed. He confirmed that the sequence of events described was correct, but indicated that this was precisely how the plant was designed to work. It would, however, have been expected that the gas generators would run first, and the diesel only operate as a last resort. NNR had examined whether there had been a risk to the public. NNR was concerned that the licensee was to maintain the equipment and update the assessment. The question was whether the failure of the gas generators was excusable. NNR had concluded that there was no significant increase in the safety risk but it had raised concerns how the system could be improved so that this did not recur. It ruled that reliability of the gas turbines and washing of the isolators should be improved. Koeberg did monitor grid demands according to a certain formula to try to obviate interruption to the power supply. NNR monitored this by inspections of the processes, and was satisfied that the steps by Eskom were adequate. He mentioned that during the Gauteng blackouts there had been a tripping of power at Koeberg, but this was not related to the Gauteng situation, but rather to an internal turbine fault at Koeberg. There had been no disturbance of the grid to Koeberg.
The Chairperson asked for further indications of the implications of the High Court action in respect of the land development around Koeberg.
Mr Magugumela stated that the nuclear installation licence required a viable emergency plan for the area. Eleven thousand stands had been identified for development in the five kilometre radius, which impinged on the Emergency Plan.
Mr W Spies (FF+) said that there were rumours in Pretoria among PBMR employees about the uncertainty of their future employment. Apparently a helium plant was scheduled for activation in November 2006, but this had not happened because some suppliers had not been prepared to deliver the material needed. Another rumour suggested that the employment prospects in future were uncertain. He asked for comment on these rumours and for clarification whether these might be linked to the possibility that the R&D portion of PBMR work would be transferred to NECSA.
Mr Magugumela was not aware of these rumours and could not comment on them.
Mr Molefe noted that there had been certain recommendations made to NECSA by NNR in regard to security. He asked if those shortcomings could have been identified by NECSA themselves.
Mr Louw asked whether NNR could comment conclusively on the safety aspects of NECSA's site at Pelindaba, since safety concerns had been raised two years ago. He noted that no time frames had been indicated for rectification and asked if these existed.
Dr Adam, CEO of NECSA replied that it had been difficult, because of funding constraints, to maintain the core infrastructure adequately in the past few years. He noted that NECSA had indeed identified the areas needing work before the report of NNR. DME had already ordered NECSA to upgrade its security and had approached Treasury to release funds for this purpose. The upgrading was being implemented.
Mr Magugumela confirmed that time frames for responses, plans and assessments.were given in directives from NNR
Mr Louw referred to media reports of radioactive sicknesses of NECSA employees and asked for comment.
Dr Adam stated that there was well developed national legislation on occupational injury, including the Occupational Health and Safety Act, the NNR Act, the Hazardous Substances Act and compensation legislation. These prescribed the actions to be taken when a person believed he was injured at work, and the obligations of the employer, who should have a medical practitioner examine the employee prior to referring the case to the Compensation Commission. In this matter, which had been reported in the media, Earthlife Africa had actually advertised for “sick people who had worked at NECSA”, and had then requested employee files. In accordance with the Promotion of Access to Information Act, those files that existed were delivered. Earthlife Africa advised those employees not to agree to an examination, which meant that many cases reached a stalemate. About 50 of the 205 claimants had been examined and the report would be made available in due course. Although some of the employees did present with symptoms of occupational injuries, none presented with abnormalities resulting from exposure to radiation. Those with other symptoms (such as hearing loss) would be referred to the Compensation Commissioner. Unfortunately the situation had been bedevilled by political exploitation of the hopes of the poor people.
Mr Molefe enquired as to gender and disability ratios at NNR.
Mr Magugumela apologised that the team making the presentation was not gender representative, but assured the Committee that the issues were taken seriously. 39% of employees were black males, 15% white females, 17% black females and two of the 75 total employees were disabled. He acknowledged that further work needed to be done on this.
Mr Molefe indicated that he would have preferred to know the spread of these employees, and whether management was more representative. He asked for this to be borne in mind.
Ms E Ngaleka suggested that when filling the fifteen vacancies, emphasis should be placed on trying to appoint skilled women.
Mr Molefe asked if NNR could comment on Eskom's statements in the media, which appeared to indicate that Eskom was challenging the authority of NNR. He had considered the responses inappropriate, and they had only heightened the confusion around the issues. He asked how these had impacted on the attempts to increase and improve public awareness of the industry.
Mr Magugumela stated that NNR was not involved in this issue, which related to Eskom and the National Energy Regulator of South Africa (NERSA).
Mr Molefe asked for clarity on the Acacia situation. He had understood that Acacia should not have been used for peak power supply, as it was intended as a backup facility for Koeberg. He enquired what monitoring was done by NNR.
Mr Guy Clapison stated that Acacia was authorised to operate not only as a standby dedicated to Koeberg, but also in respect of power correction during peak demand. If Acacia was being used for this purpose, and Koeberg required backup, there was an auto-start facility which would mean that Acacia would disconnect immediately from the 133 grid and switch to the dedicated Koeberg line. The recent problem had resulted from a problem in the switching.
Mr Molefe enquired as to the penalties that could be imposed in the event of breach of conditions. Mr Morkel also enquired what the monitoring process entailed and whether there was real-time monitoring.
Mr Clapison stated that there was a possibility that NNR could obtain online access to monitoring, but not from its own offices. NNR could exercise the sanctions set out in the Act, which included the imposition of fines. If however there was serious concern about public or employee safety, NNR could shut down the installation until corrective action was taken.
The Chairperson asked for the practical implications of the declining exposure rate for workers, and enquired whether any comparative statistics were available. He asked how this was measured.
Mr Magugumela stated that the exposure was measured in the mining areas, and there had been an improvement over the last five years. In 2002, 7 931 people had been exposed to unacceptably high doses, but this number had declined year by year to 1133 , 424 , and 8. The aim was to reduce this to nil for the forthcoming year. The dose was measured by full blood tests.
Mintek: Annual Report and Financial Statements briefing
Dr Paul Jourdan, Mintek CEO, gave a short presentation on the history of mining in Southern Africa. Mintek had been established in 1934, but its mandate had changed in 1984 as new policies developed for use of resources. South Africa was a land of “geological superlatives”, including the potential of being a world resource for titanium. Gold was in decline, but high grade manganese, iron, coal and other minerals were sustainable and would outlive mining. There had been a world increase in demand, due to the upsurge of China and India. Intensity of use by individuals peaked at around $16 000 per capita. China was still to rise to that level, so it was anticipated the current demand cycle would last a further fifteen or twenty years.
Mintek had a permanent staff of 524, and a further 150 outsourced workers. Its annual revenue was around R300 million. It was governed by the Mintek Act, and its work revolved around that Act, the DME's strategic plan and other national policies, initiatives and programmes. It aimed to promote mineral technology and provide, foster and establish expertise in mineral by-products. It had been assessed by international peers as being in the highest group of expertise and in promotion of technology, industrial growth and development and human development. It was a major supplier of skilled people to the broad mining industry.
Mintek was now around 30% state financed. It needed this funding to maintain long term R&D and to keep research at the forefront. During the financial year it had shown a small profit of R286 million. It had budgeted for a low profit as its primary purpose was not to generate funding but to grow and service the industry. Projected profitability was around 2% of turnover.
Dr Jourdan reported that in 2004 Mintek had 17 qualifications in the audit report. In the 2005 year it had two, and was aiming for none in the current year. He explained that the whole system had crashed, meaning that Mintek had only three months to attempt to rectify the 2004 qualifications. The two qualifications related to compliance with the Generally Accepted Accounting Practices (GAAP) principles in relation to fixed asset revaluation and recordal of revenue earned but not yet paid. The old SAP system used prior to 2005 had not been compliant with GAAP in these respects. The new system was compliant. A number of other steps were detailed, including rebuilding of the internal audit section.
The business plan for 2006/7 was tabled. This aimed at a 15% increase in commercial revenue and a 7% increase in staff costs to try to retain staff. R17 million was intended for capital investment. Funds had been ring-fenced around projects which met national strategies. These generally involved long term research which would not attract private investors, who would be more interested in quick returns. The largest area for research was irecovery of losses in mineral processing. Mintek further aimed to optimise the balance between commercial activities and R&D, to emphasise quality research, to grow its contribution to South Africa policies and to strengthen control and compliance. It was already fully compliant with ISO standards and was accredited by NNR. Its human resource development covered the range from post-doctoral training to basic literacy and craft skills, many of which targeted women. Pilot projects started in Limpopo had been rolled out to other provinces. Science was being promoted in schools, and bursaries and technical training provided.
The bursaries aimed to bring better demographics in terms of race and gender into the industry. 60% of Mintek management were black. There was still a low female representation, and this was of concern, particularly in certain craft and machinery skills. The largest challenge worldwide was the boom in minerals, and multinational corporations were head-hunting engineers to China. Mintek had a 20% staff turnover in the past year and had to improve salaries and widen recruitment to try to address this.
Dr Jourdan tabled and discussed the Mintek Strategic Business Units within the management teams. He outlined the various research divisions and their work. He mentioned the highlights as being the New Uses for Gold (Autek) project, which studied gold catalysts for conversion of harmful to harmless gases, biomedical compounds, and nano-science. An acid mine drainage scheme would be important both locally and overseas. The Mintek Cyanide Code had made it an international centre for specialisation and expertise. It was developing processes for better uranium recovery and recovery of minor metals. New technologies had been developed for the platinum group metals to eliminate environment impacts and allow for better recovery. Virtually all new mining projects were tested by Mintek. Ferrous and non-ferrous metals were included in the research, including heap bio-leach technologies for mine dumps. Mintek was involved in industrial minerals, particularly kimberlite ores and dolomites. It ran a school and had trained 800 small scale miners. New processes had been developed to eliminate the use of mercury. Agro-geo projects aimed to improve farming by using local rocks and minerals as fertilisers. Traditional glass, ceramic and weaving crafts were being enhanced in local communities, building on and strengthening the indigenous knowledge systems. Mintek was also supporting government on benefication legislation and initiatives, including spatial development initiatives in Southern African countries and development corridors.
Challenges facing Mintek included the retention and acquisition of experienced engineers and scientists, as a result of the Asia boom. Metallurgy had not been a major focus areas over the last few years and metallurgists were at a premium.
Mr C Kekana (ANC) was pleased to note the new phase of benefication in South Africa, which would not only seek to extract the ores but develop other uses and further employment.
Dr Jourdan cautioned that there was still a major problem in monopoly pricing. He said that single producers would be able to charge higher prices and lamented that it was possible to purchase South African steel more cheaply in Hong Kong than in South Africa, with hardships for manufacturers of steel products, who were the major labour providers.
Mr Kekana asked what platinum was used for.
Dr Jourdan replied that most platinum was used in auto-catalytic converters. South Africa exported around 14 million converters per year, although it only produced around half a million cars each year. Platinum was also used for industrial catalysts, including the petrochemical and IT industries. It was also used for jewellery. Mintek and the platinum producers were involved in fostering downstream industries that would also create jobs.
Mr Kekana noted the hydro-electric schemes on the Congo River and asked whether the Victoria Falls had been tapped for similar schemes.
Dr Jourdan explained that Victoria Falls lay high up the Zambezi River system and therefore the amount of water falling was in fact very small in comparison to Inga, which was near the mouth of the Congo River, which was in an inter-tropical convergence zone, and had a steep drop. There was the Livingstone Power Station in Zambia, but it could not be enlarged without diverting water from the Falls, which would affect downstream activity. The potential was not nearly as great as the Congo potential.
The Chairperson noted the two qualified reports and asked for some further clarity, and an indication of what specific areas were to be focused on.
Dr Jourdan explained that the accounting difficulties had arisen through loss of the internal audit function. Mintek had unexpectedly been required to take financial control of Alexcor in 2004, and had been forced to transfer its own internal auditor to that office. It had outsourced the Mintek internal audit function, and this went into decline. Unfortunately there were no warning signals. The SAP system had crashed three months short of the year end, when the inadequacies came to light, leaving inadequate time to sort the matter out. All matters had now been rectified. Mintek had a new internal auditor and was currently undertaking a trial examination, with the involvement of the Auditor General, to try to flush out any outstanding issues and address them before the year's formal audit.
The meeting adjourned.
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