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

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Public Enterprises

25 June 2008
Chairperson: Mr L Gololo (ANC)
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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. Questions by Members related to the timeframes for the different parts of the settlement, and the profit distribution from the Joint Venture.

The Committee adopted its report on the Oversight Visit to the Pebble Bed Modular Reactor.

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) Transferal 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.


Discussion
Mr P Hendrickse (ANC) commented that he was happy that the DPE had reached a settlement as the DPE had initially been tardy in doing so. He was elated that the Richtersveld community (RVC) was finally going to benefit.

Mr S Kholwane (ANC) said that proceedings by the Executive Committee and the DPE were taking place, but that no time frames were indicated in the DPE’s presentation to the Committee.

The Acting Chairperson also expressed concern regarding the time frames and questioned how many houses were going to be built. He also had concerns over the procurement process, asking if the construction services of local contractors were going to be utilised or whether the contractors were going to be outsourced.

Mr Kamungoma responded, in respect of the timeframes for the compensation,  that the payment of the R190 million for reparation to the RVC was supposed to be some time ago, but the RVC had then discovered that the structure of the Investment Holding Company was not tax-efficient. It had therefore requested the Department of Land Affairs to hold back on payment of the R190 million. However, the issue had been resolved and that Department was to make payment by the end of June 2008. It was not the State’s fault that the money had been withheld.

Mr Kamungoma added that the payment of R50 million had been made by the Department of Land Affairs in September 2007.

The payment of the R45 million would only be due once the Surveyor General had given his approval. That claim would be transferred to the RVC, then Alexkor would transfer the payment to the Richtersveld Property Holding Company.

Mr Kamungoma added that there were existing houses in Alexander Bay that would be transferred to the Richtersveld Property Holding Company. The issue was not about building additional houses but rather upgrading of the sanitation structures of existing homes to municipal level. He added that currently there were 450 houses that would in turn be transferred to the RVC.

Mr Kamungoma noted that the procurement approach would be to use as many local contractors as possible, as it was one of the key principles of the DBSA’s sustainable community approach.

With regard to the time frames for conversion of the existing mining rights to the new order mining rights, Mr Kamungoma said that these should be completed by March 2009. He confirmed that by March 2009, the land mining rights would be transferred to the RVC. The Joint Board was currently in the process of appointing the Executive Committee (Exco) and that the Exco would do the all the preparatory work for the PSJV, who would come in as the land mining rights were transferred to the RVC.

The Chairperson voiced concerns around the building of the Alexander Bay Township Establishment. He wanted to know if it was part of the settlement to pay the RVC.

Mr Kamungoma replied that it was indeed part of the settlement to pay the RVC.

Mr Z Kotwal (ANC) was concerned how the profits made by the PSJV would be distributed. He wanted to know if the 49% would be put into a trust fund.

Mr Hendrickse shared Mr Kotwal’s concern.

Mr Kamungoma responded that all income from the mining of diamonds would be split: 51% to Alexkor and 49% to the Richtersveld Mining Company (RMC). He then explained the overview of 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) Ltd. The development company comprised 12 directors and five separate companies. These were the Richtersveld Agricultural Company, Mariculture Company, Environmental Rehabilitation Company, the Property Company and the Mining Company. 

Third Draft of Committee’s Oversight Report on Pebble Bed Modular Reactor (PBMR)
The Committee read through the draft report and noted the changes that had been highlighted. The Committee adopted the report.

The meeting was adjourned.

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