Minerals and Energy Department Budget & Strategic Plan 2007/8

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Mineral Resources and Energy

06 June 2007
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

6 JUNE 2007

Acting Chairperson:
Ms S Mabe (ANC, Free State)

Documents handed out:

Strategic Plan for 2007/8 of Department of Minerals and Energy (DME)
Presentation of 2007/8 MTEF Strategic Plan

After a briefing on the Department of Minerals and Energy strategic plan and budget, the issues that enjoyed emphasis in the meeting included: The Impact that Bio-fuels have on Food Availability, Derelict Mines, Sub-Station Construction, Free Basic Electricity, Participation in the Petroleum Industry, Time Scale of the Nuclear Project, PBMR, Rising Petrol Prices, Investment in the Mining Sector and Alliances to the Poor

Briefing by Department of Minerals and Energy
Ms Thandeka Nam Zungu (Deputy Director-General: Corporate Services, DME) presented the strategic plan of the DME for the year 2007-2008 to the committee. Key issues discussed in regards to the energy sector were: Planning 2007/08 MTEF, The Implementing of our Strategy, Integrated National Electrification Program (INEP), Electricity Distribution, Nuclear and Petroleum Licensing.

In referring to the Mining Sector the following key issues were highlighted: Mineral Regulation, Monitoring, Mineral Policy & Promotion, Mine Health and Safety, Corporate Services, DME Budget 2007/08, Departmental Receipts, Bills to be Tabled 2007/08 and The Monitoring of State Owned Entities.

The Committee elected Ms S Mabe (ANC, Free State) as acting Chairperson as Ms N Ntwanambi (ANC, Western Cape) was unable to attend the meeting due to having to attend a press conference at the time of the meeting.

Ms B Mathoahela (ID) posed the question of how the production of Bio-fuels will impact on the availability of food supplies and if this would not cause already high food prices to increase even more. The poorest of the poor would suffer in the face of rising food prices as a result of the production of bio-fuels. She asked for clarity on the issue of electricity not being supplied to communities where there was not at least an 80% occupancy in a building. To what extent was the DME involved in the monitoring of assessments and noted that there seem to be slight problems in this regard? Referring to the presentation, she asked what the status was of mines in the Northern Cape. She also asked about the rehabilitation of derelict mines

Mr D Gamede (ANC, Kwazulu-Natal) asked in which areas the building of the ten sub-stations, as mentioned in the presentation, would take place. He asked if South Africa in reality has the capacity, given the skills needed, to build these structures. He also asked for a breakdown of the electrification of 150 000 houses, as mentioned in the report, per province. Referring to "free basic electricity for all", he said that the majority of South Africans still do not have this and asked how this would monitored and implemented. He also asked how the DME was planning to implement the transformation of the petroleum industry and how it plans on levelling the playing field in the industry, given that it is run mostly by the rich. He also asked what the DME was doing about derelict mines such as the New Castle and Dundee coal mines.

Mr N Hendricks (UIF, Western Cape) wanted to know what the estimated time scale of the efforts in providing more nuclear power were. He asked for an update on the building and funding of the planned Pebble Bed Modular Reactor (PBMR). He asked what could be done about stabilising the fluctuation of petrol price.

Mr Ompi Aphane (Chief Director: Electricity, DME) commented that all the locations for the substation projects has been gazetted and that the information was thus publicly available. Mostly the planned building sites are in areas with no backbone infrastructure. In as far as the skills required for the project, there had been conscientious efforts to employ more staff and he was confident that the DME could succeed in this.

He pointed out that the 80% occupancy rate in a building before electricity would be connected was primarily an operational matter. It also differs from municipality to municipality. The rationale behind this was to safeguard investment from poor people squatting and taking over the houses. The issue of free basic electricity would be best addressed by regulation and the DME now had the ability to monitor and exercise authority in this regard.

Mr Tseliso Maqubela (Chief Director: Nuclear, DME) pointed out that in his response to the questions posed to him, he would be taking into account that the Minister would be presenting her budget with full details to the National Council of Provinces (NCOP) on 7 June 2007. Work on the nuclear program has already begun. In Phase Two the plan was to build 3000-4000 Megawatts of nuclear energy. The first of the units, however, would only be operational by 2016 due to constraints on availability of equipment internationally. Five sites had been pre-selected and a site for Phase One would soon be announced. It was planned to generate in the region of 20 000 megawatt by 2025 and this would be around 10 times the capacity available today. The bulk of electricity would come from conventional nuclear energy and the balance will come from the PBMR but the contribution that the PBMR would make in percentage terms was still in the research phase. He could provide no more details about the PBMR as the project was now managed by the Department of Public Enterprises.

Mr Nhlanhla Gumede (Deputy Director General: Hydrocarbons and Energy Planning, DME) pointed out that a Draft Strategy was approved by Cabinet in 2005 and also publicised. There had already been some comment on this and the comments still needs to be investigated and incorporated. Only after all comments and issues regarding food security had been investigated, would a final draft be compiled for adoption.

He commented that the Liquid Fuel Charter was one of the first adopted but it was a voluntary charter and although the companies involved had good intentions, they did not really seriously implement it. On the matter of the petrol price, there was currently a lot of disruption globally and the supply and demand margins were very tight. Issues such as geo-politics affected the price immensely. South Africa was in the unfortunate position of being a major importer and thus largely reliant on other countries for its oil. The two major factors influencing the fuel price were the Rand –Dollar exchange rate and crude prices. He concluded that although little can be done to bring down the price, South Africans can control the volume of consumption.

Ms Debbie Ntombela (Deputy Director General: Mineral Policy, DME) highlighted that the DME was currently involved in rehabilitating asbestos that had been left at derelict mines in Kalahari and Kuruman area. In the last financial year the DME had issued 13 tenders for rehabilitation and that towards the end of the year they had also appointed contractors to do re-visitation. She emphasized that mostly the contractors had been local contractors. It was impossible for the DME to rehabilitate all the mines but that they always first tried to trace the owners of a mine and once found requested them to rehabilitate the mines. Most of the owners of the mines in the Newcastle area had been identified and the DME is compelling them to rehabilitate the mines. She added that one of the mines belonged to community and that in this case the DME themselves would be conducting the rehabilitation. There were currently two acts, the Diamond Amendment Act and the Precious Metals Act, in place that enforce beneficiation.

Ms Mathoahela commented that a very sustainable community project that mines could implement in assisting surrounding communities, would be to build factories but she also warned that this would require adequate research. She asked about the development of new thermal appliances as she was worried how this would impact on the poorest of the poor. She asked whether there were plans from the DME to subsidize this. She asked why the mining sector was not attracting new investment and whether the DME has a commodity strategy in place.

Mr Gamede was satisfied with the responses to his questions but expressed his dissatisfaction about the transformation of the petroleum industry. He urged government to develop strategies to assist black people to enter this industry.

Mr Hendricks expressed his disappointment as to the time scale for the building of the nuclear reactors and pointed out that in the time it would take to build the reactors, the country would have suffered greatly because of the shortage of electricity. He also expressed his disbelief as to the difficulty and time it was taking to get the materials for the building of the reactors.

Mr Gumede replied that it is the intention of the DME in future to initiate a process of supplying thermal appliances to the poorest of the poor but added that it would be prudent to first establish which appliance would be best for use. The DME has secured new investments and a new mine would soon be opening in the North West area. The DME tried in many ways to grant more people access to the industry but he acknowledged that still more needed to be done, adding that the DME was open to suggestions regarding this matter.

Ms Ntombela added that the DME is encouraging mines to identify and build factories and projects that would be sustainable and benefit the community and that token-only projects would not be tolerated.

Mr Maqubela explained that the current constraints experienced in the building of nuclear power was as a result of the DME requiring that only the latest technology be used. The reason for this was to ensure safety and efficiency. There were currently only three countries in the world that had the capability to produce the new technology. Seeing that there are other countries also building nuclear plants, most of the factory space had already been taken. There was a particular process that needed to be followed all over the world and the process was rigorous and took time. Even in the timeframe currently given, according to experts, it would be a tight fit. He concluded by saying that there were currently projects such as strengthening the power-grid as well as coal and gas fire plants in place to meet demand in the interim.

The meeting was adjourned.


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