Richtersveld Land Claim Settlement & Alexander Bay Township Establishment: Department of Public Enterprises briefing

NCOP Public Enterprises and Communication

23 June 2008
Chairperson: Ms M Themba (ANC, Mpumalanga)
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Meeting Summary

The Department of Public Enterprises (DPE) briefed the Committee on the Richtersveld Land Claim Settlement, and the Alexander Bay Township Establishment. The history and outcomes of the Richtersveld Community (RVC) land restitution claim in respect of Alexander Bay was detailed. The details of the initial claim and the Deed of Settlement that was finally made an Order of Court in October 2007 were set out and explained. It was noted that the final settlement comprised a number of requirements. There would be transfer and restoration of portions of land to the RVC. The land mining rights of Alexkor would be transferred to the Community. There would be the setting up of a Pooling and Sharing Joint Venture, into which Alexkor would pay R200 million, via a capitalization from the State. The mariculture and agriculture assets of Alexkor would be transferred to the Community. A sum of R190 million would be paid as reparation over three years to the Investment Holding Company, there would be payment of a R50 million development grant, and R45 million was to be paid as compensation for Alexkor’s occupation on transferred residential properties for ten years. A township would be established at Alexander Bay and there must be environmental rehabilitation. Alexkor would retain the marine mining rights, but these would be under the control of the Joint Board of the Joint Venture, as would the land mining rights of Richtersveld Mining. The composition and work of the Board was described.

The Department then gave a short briefing to the Committee on the Alexander Bay Township Establishment, to be established by the Department. The project’s success would depend largely on the upgrading of municipal services. An engineering services assessment and draft layout had been designed, and the Development Bank of South Africa was to implement the project. There was a Steering Committee, whose work was described. A township application had been submitted. The existing designs were expected to cost R80 million to construct, over an 18 month period, but there might have to be revision of designs. Alexkor, the Namakwa District Municipality and Development Bank were still to undertake some work.

The Department finally briefed the Committee on the Alexkor Restructuring.
Alexkor was currently focusing on restructuring, with emphasis on the people affected by the settlement. The financial consequences of restructuring were that Alexkor mining operations were not profitable and funds were limited. However, it wanted to ensure that the restructuring was holistic and integrated, involving full stakeholder engagement. The original and final financial offers to employees were set out, and it was explained that retrenchment would in some cases have been the better option for employees. The package process should be completed at the end of June. The principles and formulas were set out. The same package would be offered to both farm and mine employees. Alexkor must develop a social and labour plan, encompassing development programmes, processes to manage downscaling, promotion of economic development and minimizing impact on individuals, the region and the local economy. The political obligations, social challenges and employee impact, together with the proposed training and development initiatives, the social and labour plans and the stakeholder engagement were described. Challenges included the poor regional and local economies and the lack of local support providers.

Members raised queries on the training that would be given, what portions of the property had been handed over, whether the community had been consulted, and the issue of the Joint Venture and the percentage split. Further questions addressed the legal costs, and by whom these would be paid. Members sought clarification on who exactly was to benefit, and the structure of the Mining Company and the Board was queried. Members also asked about the marine mining rights, the royalties and income from that, the calculation of the financial packages and the history of Alexkor.

Meeting report

Richtersveld Land Claim Settlement and Alexander Bay Township Establishment:
Briefing by the Department of Public Enterprises
Mr Anthony Kamungoma, Director of Financial Analysis, Department of Public Enterprises, briefed the Committee on the Richtersveld Land Claim Settlement. He stated that the Richtersveld Community (RVC) had lodged a claim for land restitution of certain land in Alexander Bay. The first claim was rejected by the Land Claims Court (LCC) in 2001. However, the RVC had thereafter appealed to the Supreme Court of Appeal, and had won this case in March 2003. Thereafter Alexkor and Government took the decision to the Constitutional Court. In October 2003, the Constitutional Court had conferred Alexkor’s land and mineral rights on the RVC and referred the exact determination of the restitution back to the Land Claims Court.

The initial claim from the RVC covered not only restitution of land occupied by Alexkor, but also restitution of the mineral rights of the claimed land, R1.5 billion compensation for diamonds extracted since 1928, environmental reparation or R1.2 billion compensation for environmental disturbance, and compensation of R10 million for the dispossession of land and mineral rights.

In light of that claim, the Department of Public Enterprises (DPE) and RVC had entered into negotiations and a Memorandum of Understanding (MOU) between the two was signed in October 2006. A binding Deed of Settlement came into effect in April 2007 and was finally made an Order of Court in October 2007.

In terms of the Order the Richtersveld Land Claim Settlement comprised the following:
a) Transferral and restoration of portions of land by the State and Alexkor to the RVC
b) The transfer of Alexkor’s land mining rights to the RVC, and the setting up of a Pooling and Sharing Joint Venture (PSJV). The State would capitalise Alexkor to contribute R200 million to the PSJV to set up a sustainable mining venture.
c) The transfer of Alexkor’s mariculture and agricultural assets to the RVC
d) A sum of R190 million to be paid as reparation to the RVC’s Investment Holding Company over three years.
e) R50 million development grant to be paid as a lump sum development grant to the RVC’s Investment Holding Company for agriculture and mariculture
f) R45 million to be paid to the RVC’s Property Holding Company as compensation for Alexkor’s occupation on transferred residential properties for ten years
g) The establishment of a township at Alexander Bay
h) Environmental rehabilitation.

Alexkor would remain the holder of its marine mining rights. The Richtersveld Mining Company (RMC) would be the holder of the land mining rights. Alexkor and RMC would respectively put their marine and land mining rights under the full control of Joint Board of PSJV. Alexkor would put its land and marine mining assets under the control of the Joint Board. Alexkor would have 51% interest in PSJV and  RMC would have a 49% interest. Each would have three members on the Joint Board. That Joint Board would appoint an Executive Committee, who was to oversee the conduct of day-to-day operations and put a development plan in place for a viable mining venture.

The PSJV further provided for a preliminary establishment phase, during which the PSJV Joint Board would be a committee of the Board of Alexkor, with Alexkor effecting the necessary delegations of powers and functions. Exco was to identify assets to be pooled, identify personnel for the mining activities, and draft an interim mining plan.

Alexander Bay Township Establishment: Briefing by DPE
Mr Kamungoma then briefed the Committee on the Alexander Bay Township Establishment.
He said that the DPE was obliged to establish a formal township in the village of Alexander Bay. He stated that the success of the project depended largely on the upgrading of municipal services. The Richtersveld Municipality would in time take over and be responsible for those engineering and other public services.

 Mr Kamungoma added that an engineering services assessment had already been conducted and that it had identified the infrastructures that needed upgrading. He said that a draft layout had also been designed. He tabled the work to be done in the various phases of the project.

An MOU between the DPE and the Development Bank of Southern Africa (DBSA) had been signed. The MOU was necessary for the DBSA to implement the project under its Sustainable Communities Programme. The MOU had also made provision for a Steering Committee, which was constituted by members of the DPE, DBSA, RVC, Namakwa Municipality, Alexkor, the Northern Cape DPLG and Housing, the Richtersveld Municipality and other stakeholders.

 Mr Kamungoma outlined the functions of the Steering Committee, which encompassed a range of activities from determining the scope of work and conducting the spatial reviews through to monitoring of progress, evaluation and performance (see attached presentation for full details). 

A township application, with a general plan based on existing civil engineering, mechanical and electrical designs has been submitted. The existing designs were expected to cost R80 million to construct, over an 18 month period. The Steering Committee would like to determine whether it was possible to revise these designs at this stage, and whether proposed sustainable approach principles could be incorporated into the work already undertaken, and at what cost.


It was noted that Alexkor had still to prepare a comprehensive report on all work that had been undertaken to date. The Namakwa District Municipality was to provide statutory requirements for township establishment. The Development Bank was to provide some infrastructure options for sanitation, energy and water provision. These would all be used to determine whether it was possible to revise the existing designs and whether proposed sustainable approach principles could be incorporated into the work already undertaken, and the cost of such revisions.


Alexkor Restructuring: Briefing by the Department of Public Enterprises
Mr Kamungoma briefed the Committee on the Alexkor Restructuring Programme. He discussed mine restructuring, the structure of financial separation packages for employees as well as the progress made thus far. He noted that the transfer of agricultural and maricultural assets took place at the end of January 2008. The current restructuring focus was on the people affected by restructuring initiatives. This would have to ensure fairness and dignity of treatment, financial packages, support initiatives such as training and transition support, engagement with key stakeholders and ensuring legal compliance at every stage of restructuring.

The financial consequences of restructuring were that Alexkor mining operations were not profitable and funds were limited. However, it wanted to ensure that the restructuring was holistic and integrated, involving full stakeholder engagement.

Charts of the employee numbers were given, together with diagrammatic representations of the development paths. It was explained that a Voluntary Separation Package (VSP) was then structured, firstly for the farms, and then to include the mines. After negotiation, organized labour had requested that the original retrenchment process be resuscitated, to enable employees to claim their Unemployment Insurance Fund money and tax reprieve. The aim was to try to run the consultation process alongside with Voluntary Severance packages and Voluntary Separation packages. The process was aimed for completion at end of June. The principles governing the package, and the formula, were set out. The current approach was that the same package would be offered to both farms and mines employees.

The restructuring was being conducted in two stages: the first involving immediate transfer or exit of farm employees, and the employees affected by downscaling of the mines, and the second involving the exit of employees prior to the PSJV taking over operations.

It was noted that Alexkor must develop a social and labour plan, encompassing development programmes, processes to manage downscaling, promotion of economic development and minimizing impact on individuals, the region and the local economy. The political obligations, social challenges and employee impact were set out, together with the plans for easing employee impact. The proposed training and development initiatives were described. The social and labour plan was also described, and it was noted that challenges included the fact that the region and local economies were weak, that provincial opportunities were poor and there were limited social support providers. Stakeholder engagement would be critical to overall sustainability. The attached presentation set out full details under each of these points.

Discussion
The Chairperson said that she needed more time to mull over the presentation as the Committee had received the presentation only on that morning.

Mr D Gamede (ANC- KwaZulu-Natal) said that the presentation did not specify the actual training of the community in the industry.

Mr J Sibiya (ANC- Limpopo Province) asked why the term “township” was used. He added that the term “residential areas” should be used instead. He added that the report did not stipulate if the property referred to was going to be handed over. He said that the agreement noted that Alexkor was under an obligation to consult with the community, and he wanted to know if it was not useful to talk about community based organisations.

Ms B Ntembe (ID – Northern Cape) was outspoken about the RVC’s right to swiftly benefit from the settlement. She displayed concern on what would have become of the people living in the RVC if the claim had not been finalised in this way, as they would never have received their rightful land.

She was concerned about the training of the people living in the RVC and added that the majority of the RVC were marginalized, with an overt lack of skills and training. She asked the DPE if there was a plan put into place for the training of mining to the youth in the Richtersveld area.

Ms Ntembe wanted to know, in relation to the townships, if communities were going to be built, or just houses. She enquired if the RVC had been consulted.

Mr Gamede asked the DPE to clarify the issue of the 51% and 49% PSJV structure. He added that the report had stipulated that “portions” of land were transferred, and asked if that implied that only part of the rightful land would be received by the RVC. He asked if Alexkor would take the best land. He also wanted to know what the cost of the legal action was, and who would be accountable for those costs.

The Chairperson displayed concern and confusion regarding the PSJV. She said that if Alexkor remained the holder of its mining rights, what would happen to the community who owned the land. She wanted to know if the Richtersveld Mining Company (RMC) would remain the holders of its land mining rights. She said that she was no sure if the RVC would enjoy the benefits of the land that had been given back to them. She wanted to know who formed the membership of the Richtersveld Mining Company. She asked if the Joint Board was in existence already and, if so, wanted to know how it had been constituted.

The Chairperson asked who represented the RVC and how many members were from the RVC.

Mr Sibiya referred to the retention of the sea mining rights. He wanted to know if Alexkor would be obliged to pay royalties.

The Chairperson questioned the DPE on how they had derived a figure of R20 000 with regard to the employee financial packages She said that R20 000 was very little.

The Chairperson commented that it was a pity the DPE had made the presentation after and not before the Budget Vote.

Mr Gamede wanted to know who Alexkor was. He also wanted to know who the Alexkor beneficiaries were.

Mr Kamungoma responded collectively to the Committee. He said that initially the community had not been identified as a community in terms of the Land Restitution Act of 1994. It had been called a Community Property Association (CPA). He said that there were in fact no negative connotations attached to the word “township”. He added that currently, in terms of legislation, Alexander Bay was referred to as a “village”.

He added that there was an obligation for Alexkor to pay R45 million to secure accommodation on the land for 10 years. Mr Kamungoma noted that the transfer process was in progress and that the hospital owned by Alexkor would be transferred to the Department of Health, church buildings to religious organisations and the school buildings owned by Alexkor would be transferred to the Department of Education. He added that all residential and commercial properties would be transferred to the Richtersveld Property Holding Company.

In answer to the questions around the PSJV, Mr Kamungoma went on to explain the Community Trust Structure Proposal to the Committee. . The structure comprised the Community Property Association (CPA) with registered CPA members. The registered members of the CPA were beneficiaries of the Richtersveld Community Trust. The Trust comprised seven trustees, four from the community and three independent trustees. They were all 100% shareholders in the Richtersveld Development Company (Pty) The development company comprised 12 directors and five separate companies: the Richtersveld Agricultural Company, Mariculture Company, Environmental Rehabilitation Company, the Property Company and the Mining Company. He noted that the way that this was structured would explain also the question about the royalties.

There would be an equal share to Alexkor and the RVC of the royalties from both sea and land mining activities, through the PSJV. Therefore, even though the community did not have any sea mining rights, they could receive income derived from sea mining.

Mr Kamungoma added that the settlement claim only pertained to the land and did not extend to the marine areas. He said that the sea mining rights were never part of the claim. He explained that the land mining rights were to be transferred to the Richtersveld Mining Company (RMC) and that Alexkor would retain the marine mining rights. The land mining rights would be ceded to the RVC.

Mr Kamungoma added that existing legislation provided that it was not possible to effect transfers to any person who did not have the technical ability to mine. He added that the right to mine minerals would be transferred to the Richtersveld Mining Company, rather than to individuals.

Mr Kamungoma went on to discuss training and development initiatives. He said that older employers could select a proxy, to have their sons trained instead, and that this would be supportive of the extended family. He added that the joint venture had an exit clause after 4 to 5 years if a party wanted to leave.

With regards to the land claim, Mr Kamungoma explained that the term “portion” was used because some of the land had been degraded and needed to first be restored. The State had then offered alternative land to that which had been in the claim. In answer to Mr Sibiya’s question whether degraded land which was to be rehabilitated would still be part of the RVC, Mr Kamungoma confirmed that it would.

Mr Kamungoma added that all legal costs had been included in the Land Claims Settlement as well as the Order of the Court.

Mr Kamungoma went on to explain that Alexkor came into existence in 1928. Alexkor was founded as a company under the Alexkor Act of 1991 and that the State was the shareholder.

The Chairperson added that she wanted the Committee to engage with the RVC and Alexkor. She added that it must be ensured that the daughters, not only the sons, or elderly employees could benefit from training, and that disabled persons also needed to benefit.

The Chairperson introduced the intern from DPE, Mr F Tiyandisizwe, to the Committee and hope that he could be absorbed into the DPE when his internship ended.

The public portion of the meeting was adjourned.

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