Hansard: Debate on Marikana Lonmin Mine Tragedy
House: National Assembly
Date of Meeting: 21 Aug 2012
Summary
No summary available.
Minutes
TUESDAY, 21 AUGUST 2012
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PROCEEDINGS OF THE NATIONAL ASSEMBLY
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The House met at 14:07.
The Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS – see col 000.
MOTION OF CONDOLENCE FOR LONMIN MINE TRAGEDY
(Draft Resolution)
The CHIEF WHIP OF THE MAJORITY PARTY: Speaker, hon Deputy President, and hon members of this august House, I move the draft resolution printed in my name on the Order Paper as follows:
That the House —
(1) notes with great sadness and deep regret the violence that erupted last week near South Africa’s third-largest platinum producer, Lonmin’s Marikana mine;
(2) further notes that over 34 people were killed and scores injured in clashes between police and the striking miners;
(3) acknowledges that another 10 people, including two police officers and two security guards, were killed in separate incidents since the start of an illegal strike on Friday, 10 August 2012;
(4) welcomes the President’s intention to appoint a Judicial Commission of Inquiry to thoroughly investigate and determine the cause and circumstances of all the deaths, including those of the police, security guards and miners;
(5) further welcomes the appointment of a Ministerial Task Team to assist the Marikana tragedy deceased’s families with funeral arrangements, including identification of bodies, transportation and counselling services for all those affected;
(6) calls on all parties involved in the conflict at the mine to work towards a peaceful resolution;
(7) observes that the President has declared this week one of mourning where our national flag will be flown at half-mast in acknowledgment of this national tragedy; and
(8) conveys its condolences to the families, friends and colleagues of those who lost their lives, and wishes those who sustained injuries a speedy recovery.
WELCOMING OF TIBETAN MINISTER OF FOREIGN AFFAIRS
The SPEAKER: Before we proceed, I would like to recognise and welcome all the distinguished guests in the gallery, including the Minister of Foreign Affairs from Tibet: A warm welcome to you all. [Applause.]
The MINISTER OF POLICE: Speaker, Ministers and Deputy Ministers, hon members, members of the media, comrades, and friends, today we have convened this esteemed House to mourn the tragic events of Thursday, 16 August 2012. Our country has been in mourning because of the incidents that took place in Marikana, Rustenburg, in the North West province. Remembering this day should teach us, as members of this House and as a nation as a whole, to work doubly hard to prevent a repeat of such events. It is our responsibility, both as individuals and as a nation, to ensure that it does not happen again.
The events of Thursday are tragic, because many people lost their lives in a manner that could have been avoided if all of us had adhered to the noble principles of our Constitution. As government and fellow citizens, we offer our sincere condolences to all families who have lost their loved ones, both on Thursday and in the days preceding Thursday’s events. Our thoughts are also with those who are recovering in hospitals and clinics. Our thoughts are also with our police officers, who are at times called upon to intervene in difficult situations.
Painful moments like these force us to trace our steps back and recall the founding principles of our democratic order. The Constitution of the Republic, as adopted in 1996, is our lodestar in the execution of our duties. The Constitution guarantees rights and imposes responsibilities on the citizens of the Republic. Section 17 of the Constitution assures the citizens of the Republic “the right, peacefully and unarmed, to assemble, to demonstrate, to picket and to present petitions”.
Section 205 of the Constitution speaks specifically to the South African Police Service and enjoins the members of the service to the following: to prevent, combat and investigate crime; to maintain public order; to protect and secure the inhabitants of the Republic and their property; and to uphold and enforce the law.
We have quoted from the Constitution so that we can remind the hon members of this august House and the public in general about the philosophical underpinning of our conduct. The police, as part of our security services, are expected at all material times to work guided by the Constitution of the Republic. The events of Thursday, 16 August 2012, were not a sudden eruption but a culmination of events that were building over months and months. The South African Police Service is saddened by the events that unfolded on that fateful day. The police did all in their power to avert such a situation. The loss of life among workers and members of our Police Service is tragic and regrettable.
Addressing the media on Friday evening, President Jacob Zuma said the following words, and I quote:
These events are not what we want to see or want to become accustomed to in a democracy that is bound by the rule of law and where we are creating a better life for all our people. We do not expect such incidents, particularly in a country where there is a high level of organisation within the labour movement. We have trade unions with many years of experience in organising workers within the framework of the labour laws of the country.
The President has subsequently announced that he will be appointing a judicial commission of inquiry, and we sincerely hope that this commission of inquiry will get to the bottom of what we are faced with as a nation. Furthermore, the President has also appointed an interministerial committee that will focus on the humanitarian aspects of the Marikana tragedy. The interministerial committee met yesterday and, in elaborating on the mandate given by President Zuma, decided upon a number of critical interventions as part of government’s contribution to assist the families of those who lost their loved ones, as well as those injured and recuperating in hospitals.
Noting that President Zuma had already visited those injured in hospitals, the interministerial committee decided upon the following measures for immediate implementation: to visit the mortuary and give support to bereaved families; to meet various stakeholders, including traditional leaders, trade unions, mine management, religious leaders and community leaders. During the interaction with the mine management, the committee asked the management to act with restraint during this period of mourning.
In addition, the committee pledged that government will provide the affected communities with the following: the provision of state pathology to work with provincial authorities in finalising postmortem processes; the mobilisation of a contingent of health personnel, comprising military, municipal, provincial and national personnel, to provide any emergency services required during this period and beyond; the identification of the remaining six deceased persons; the provision of death certificates through dedicated counters established in the local Rustenburg Home Affairs offices; the provision of psychosocial support to members of the bereaved families and the injured through a dedicated team of social workers who will be stationed in the area while providing alternative care for orphans and children; the facilitation of the payment of necessary benefits to affected families; the provision of disaster management services in all major gatherings related to this tragedy; and co-ordination with other provinces from which some of the deceased originated.
Government Ministries and departments are on the ground, assisting families in identifying the deceased, organising funerals, and the like. The interministerial committee will brief the public on a daily basis around the unfolding events relating to this tragedy. Memorial services will be organised throughout the country on Thursday, led by the religious community of our country. These will take the shape of prayer meetings. The main service that will take place in Marikana will be organised by government, working together with the religious community.
As we indicated above, the Constitution of the Republic guarantees us the right to strike, to protest in a peaceful, orderly manner, and to express our dissatisfaction with anything. While all South Africans enjoy these rights, rights always come with responsibilities. However, the esteemed President of the Republic, President Zuma, said when addressing the media on Friday, and I quote:
We assure the South African people in particular that we remain fully committed to ensuring that this country remains a peaceful, stable, productive and thriving nation that is focused on improving the quality of life of all, especially the poor and the working class.
I further reiterate the call on leaders of all sectors of our society, including religious leaders, business leaders, labour leaders, traditional leaders, civic leaders, leaders of political parties and women and youth, to join the government in its efforts to unite the people in prayer and thoughts around this national tragedy and beyond. This is not a time for finger-pointing. All of us have a responsibility. We reiterate, our firm belief is that only by working together can we help the nation in the process of healing. I thank you. [Applause.]
The CHIEF WHIP OF THE MAJORITY PARTY: Hon Speaker, hon Deputy President, hon members of this House, we demean our common humanity when we resort to violence. We debase our Constitution when we turn on one another in deadly clashes and we devalue human life when we snuff it out with such ease.
The past weeks have brought home the horrors of what we believed we had left behind with our apartheid past. The violent and dreadful crisis at the Lonmin Marikana mine in Rustenburg stirred in all of us memories of our traumatic past where black life and, in particular, African life, was so cheap and easily discarded.
The Lonmin tragedy speaks to the many ills which continue to plague mineworkers in the mining industry. In 1987 South Africa’s longest and biggest strike took place where approximately 300 000 black miners in the gold and coal mines went on strike over wage and working conditions. The strike lasted for three weeks, costing the Chamber of Mines close to R250 million. In an attempt to break the strike, the Chamber of Mines retrenched approximately 50 000 workers. The mineworkers’ strike was violent as 11 people died, 500 were injured and over 400 workers were arrested. The mineworkers’ strike finally came to an end after an agreement was negotiated with the Chamber of Mines, outlining new working conditions and wage increases for mineworkers.
The early 1990s was an equally volatile period, with mine violence during the strikes and loss of lives. The first ever nationwide mining strike occurred in 2007 in protest against working conditions and safety in the country’s mining industry. The strike impacted on over 240 000 workers in 60 of the nation’s mines and the strike was spurred on by a rise in worker fatalities from 2006 to 2007, despite a government plan in October to reduce the fatalities.
Thus, the Lonmin tragedy must be seen in the context that the mainstay of the mines was and still is cheap labour, cheap black labour.
A typical day of a miner at Lonmin mine can be characterised as follows, and I quote Sipho Hlongwane from the Daily Maverick of 18 August 2012:
Every single day, the drill operators are expected to drill through 30 metres of rock. His allocation is 10 metres every shift. The tunnel is only about 1,3 metres tall, and so he has to squat and point the heavy drill into the rock and hold it as steady as he can as it thumps away. He does this for eight hours per shift in stifling heat, surrounded only by the din of the drill and the occasional presence of a shovel boy who shifts the broken rocks that pile at his feet.
The work takes a huge toll on the body and on the ears as well, for those who were there before hearing protection was introduced in 2008.
A study conducted by the Bench Marks Foundation culminated in a report titled “Communities in the Platinum Minefields”, which was released last week, and which highlights the many challenges facing such mines. The foundation is an independent, nongovernmental organisation mandated by the churches to monitor the practices of multinational corporations to ensure that they respect human rights; that they operate in a way that protects the environment and do not externalise costs; that profit-making is not done at the expense of other interest groups; and that those negatively impacted upon are heard, protected and accommodated.
Regarding Lonmin’s operations, some of the key problems highlighted by the report include: a high level of fatalities; very poor living conditions for workers; community demands for employment opportunities; and the impact of mining on commercial farming in the area. Almost a third of Lonmin’s workforce is contracted labour and community demands for employment have led to protests and unrest. The company was also in a union dispute after which Lonmin dismissed 9 000 workers at the Marikana operations.
It is necessary to contextualise the situation of Lonmin, especially in light of the impending commission of inquiry instituted by hon President Zuma. It would be necessary and extremely important to examine all underlying socioeconomic reasons for the scale and depth of this tragedy and it should be broad enough to encompass all the variables that played such important roles in the escalation of the violence.
As a nation we have seen and heard many media reports, heard many voices, felt many emotions, and we require resolutions that are not a quick fix or merely a superficial bandaging of wounds. This inquiry must be able to give us a comprehensive understanding of how we descended into such anarchy and how we move forward.
Ours is not to apportion blame to the parties involved. But we should be worried that 18 years after achieving democracy and laying to rest the ghost of apartheid, we could so easily regress into possibly the worst tragedy since the end of apartheid. There have been local and global media reports trying to understand and make sense of this heartbreak. There have been the usual doomsayers, ready to write South Africa off as another statistic, and I quote one British journalist, Lindsay Johns, in the Daily Mail, who says:
South Africa is a nation in turmoil, perennially bedevilled by the psychological scars of its past and beset with a plethora of pressing socioeconomic problems which those in power have spectacularly failed to rectify. On balance, things do not augur well for the rainbow nation. The fears of a descent into internecine violence and even more bloodshed which plagued South Africa in its transitional, postapartheid phase were to some degree allayed, but now all of a sudden seem very real once again.
There are many others positing similar views. Here at home, the hon Wilmot James of the DA has already made a ruling on the situation just by his visit to Lonmin. He states, and I quote from Politicsweb, 20 August 2012:
Favours for the politically well-connected members of the National Union of Mineworkers, NUM, as well as the gruesome nature of the 10 murders earlier in the week, appear to have played a significant part in instigating the atrocities experienced at the mine last week.
Surely, we need a deeper analysis and a better informed diagnosis than his politically opportunistic comment. A party that does not understand the collective bargaining dispensation, calls for a more flexible labour market, defends labour brokering and demonises Cosatu, is too ill-informed to offer constructive solutions.
As South Africans, we acknowledge that the decades of apartheid divisiveness, the untold suffering, and the deprivation it wreaked upon the majority of our people, are still prevalent. We saw the evidence of its legacy in this past week’s shocking and disturbing events at Marikana.
We are a country in mourning this week, as we remember the lives lost in this tragedy. What was a fight for a better wage in order to live a better life, took a desperate and catastrophic turn, resulting in 44 deaths. In an instant our country was plunged back into the dark years of our past and we saw the rainbow nation fast disappearing in the wake of such brutality.
If our history has taught us anything, it is that we are a people of negotiators, a people of forgiveness and a resilient people of peace.
Apartheid categorised us as a country with a violent and horrific past, which the whole world believed would descend into civil war. But we proved them wrong. They did not count on our leaders, skilled negotiators who believed that peace was the only way to achieve our goals. They did not count on the South African nation, a people - though fractured and wounded from decades-long discrimination, racism, downtrodden and broken in having every aspect of their lives degraded and dismissed - that rose to the challenge of compromise, accommodation and negotiating with the enemy to forge a new South Africa. That is who we are, survivors and peacemakers!
We are a generation that experienced at first hand the effects of peace, negotiation and forgiveness. No elected national leader has better reflected his influence than Nelson Mandela, the prototype of the leader whose influence comes not from military or economic might but from the power of ideals and the ability to capture the minds and hearts of people of all corners and colours of the universe.
In a speech in New Delhi in 2004, he stated that “peace and development are indivisible”. He added, and I quote:
South Africa, the country that inspired the Mahatma and that was inspired by the Mahatma, chose a path of peace in the face of all the prophets of doom. We chose his path, the route of negotiation and compromise. And we hope that we honoured his memory. And in remembrance of that great tradition, others will follow. Human beings will always be able to find arguments for confrontation and no compromise. We humans are, however, the beings capable of reason, compassion and change.
There is no doubt that we are a violent society. The crime against humanity that was apartheid, which was inflicted on the masses for decades, has contributed to a certain numbness when we are confronted with the horrors of violence. We have tried to heal as a nation, but there are triggers which conceal how volatile certain aspects are. Despite this, we know that, just as our liberation was in our hands, so too is our democracy.
Our Constitution embodies the values of a just and caring society, including reconciliation and the creation of a society based on democratic values, social justice and fundamental human rights; a democratic and open society in which government is based on the will of all the people and a society in which all citizens are protected by the law; and improvement of the quality of life of all citizens and freeing the potential of each person.
What we have witnessed during the past week points to the fact that the process of social cohesion, nation-building and reconciliation remains under threat of the very real disparities between the rich and poor, black and white, women and men, rural and urban. These widening gaps between the haves and have-nots continue to undermine our reconciliation efforts and pose a great threat to nation-building.
As I conclude, I want to say that the National Planning Commission Report has identified many fault lines which are triggers derailing unity and stability in the country. They include inequality and unemployment. By addressing these fault lines, Archbishop Emeritus Desmond Tutu declared, and I quote:
For unless houses replace the hovels and shacks in which most blacks continue to live, unless blacks gain access to clean water, electricity, affordable health care, decent education, good jobs and a safe environment things which the vast majority of whites have taken for granted for so long - we can just as well kiss reconciliation goodbye.
In this period of national mourning, we need to be able to call for cool heads, calm and national dialogue to prevail and to commit to ensuring that we never witness another Marikana tragedy again. We extend our deepest sympathies to the families, friends and colleagues of those who lost their lives.
Hon Minister of Justice and Constitutional Development, we are pleased to hear that the National Interfaith Council of South Africa, Nicsa, adopted a resolution to establish a National Interfaith Relief Fund and to fast during this week of mourning, and to put the savings from this fast into the relief fund to support the good efforts that you are making to deal with the situation. We thank you very much for the good work done. [Applause.]
The LEADER OF THE OPPOSITION: Mr Speaker, hon members, we have come together united in sorrow by the terrible events of the past weeks. We are united in grieving for those who lost their lives. These are dark and harrowing times for the families and friends of those who are left behind. The DA wishes to associate itself with the condolences of the government and all the other parties in this House.
Sithi sengathi abalele bangalala ngokuthula. [We are saying, may the souls of the departed rest in peace.]
Our thoughts and prayers are with all those who have been affected by this tragedy. More simply put, we have all been affected and moved. Amidst the grief, this great nation will draw upon the resilience and determination which have guided us through many tragedies and difficult times before.
While this is not the hour for recriminations, it is the time for difficult and painful questions. The DA welcomes the President’s promise to establish an independent judicial commission of inquiry into the Marikana tragedy. This tragedy could have and should have been prevented. Its escalation speaks of a lack of top-level leadership and of ministerial accountability. The judicial commission must therefore be established immediately, with precise terms of reference. It must not at any point be downgraded to an internal inquiry.
The commission must specifically establish who authorised the use of live ammunition on the striking workers, within the context of how the South African Police Service manages violent strikes. Whoever authorised the use of live ammunition must be held accountable. It must also be revealed on what intelligence, if any, the planning was conducted and if the National Police Commissioner, Riah Phiyega, exercised appropriate judgment and leadership. At what point did she intervene?
The commission must also carefully examine the conduct and the role of the Minister of Police, the hon Nathi Mthethwa. At what point did he intervene? In most democracies, a crisis of this magnitude would have immediately precipitated the resignation of the Minister, and in many cases, the fall of the government. The DA is concerned that no one in this government seems to be assuming political responsibility for this massacre.
We need accountability now. The Minister of Police, the secretaries-general of the Association of Mineworkers and Construction Union, Amcu, and the National Union of Mineworkers, NUM, and the chief executive officer of Lonmin should carefully consider their positions, and in our view, offer their resignations. Their position is untenable.
The commission must uncover every factor and decision which led to this incident. Its work must be data-driven and not subject to political interference, sentiment or a misguided desire to make the findings appear more acceptable. The role of every actor - from the mineworker to the trade union leader, from the police officer to the board member of Lonmin and from the responsible government Minister to the President himself - must face fair and impartial scrutiny.
Although the searing images of this tragedy will remind us of Sharpeville and Boipatong, let us not forget that South Africa today is a different country. We are a constitutional democracy, guided not by terror but by the majesty of the rule of law. The rule of law must now be allowed to take its course unhindered.
This massacre did not take place in a vacuum. It was a long time in the making, and its many causes are well known. As a Parliament, we must face up to our own failure to hold the government and the safety and security agencies to account. We must ensure that a tragedy of this magnitude never happens again. I thank you. [Applause.]
Mr M G P LEKOTA: Mr Speaker, Deputy President, fellow members of the House, I hope that in future the immensity of the responsibility we all carry in this House will never weigh as heavily as it does on my own shoulders today. Death is final and nothing can reverse it. Those who have been shot and killed are gone forever. As far as we are concerned in Cope, this was something that was avoidable, if only we had stuck to the provisions of our national Constitution and ensured daily that we didn’t do what we thought we liked, but only did what was prescribed and agreed to when we wrote the Constitution.
Our Constitution clearly prescribes that there shall only be one police service, not a police force, in this country. The decision taken by the authors of our Constitution was guided by a long history of the experience of the majority of the people of this country, especially the ones with gutter skills.
In 1960, the police force of apartheid mowed down and destroyed the lives of 69 people in Sharpeville, and slaughtered other adults here in Langa, in Cape Town. Later on, in 1976, it also happened in Uitenhage, where babies, children, were slaughtered by the police force of apartheid, and so on and so on. So, when the authors of our Constitution declared that there will be a police service to deal with the citizens of the country, it was educated by that long experience of what it means to live with a police force amongst citizens. Yet, I cannot overlook the fact that the Constitution has been adopted.
On 1 April 2010, the present head of state introduced new ranks when he said that the police must become a police force and no longer be a police service. He did not amend the Constitution, but those words were pronounced and ranks of general and colonel - military ranks - were introduced.
I do not know what training was given to these people who did these things. Yet, I can recall now again with vivid clarity how these people, who are now in a police force with military ranks in Ficksburg, when protesters were only asking for water and electricity, shot point blank at Andries Tatane, whose life is gone now. I said at that time as well that it was the beginning and, that there was more to come. I am not proud that I said that but I could see the pattern of development.
So, what happened at Marikana last week? This police force had been interacting with the people there for days on end. Where was the executive? I did not see the Minister, labour or the police going there to intervene in a way one would have expected from men and women who have the responsibility to protect the lives of the ordinary citizens. What I saw next was a large number of mainly young black South Africans clad in bulletproof vests and armed with automatic machine rifles.
They were standing there, holding these things and facing the citizens. Irrespective of the number of the workers that were on strike and the weapons they were carrying, they could never have been a threat to those militarily armed people. Of course, I must ask a question, even if you are making a noise. [Interjections.]
The SPEAKER: Order, hon members. Order!
Mr M G P LEKOTA: What authority, in this country in which the Constitution does not allow the death sentence, has the right to tell the police to shoot with live ammunition that was definitely going to take lives? Who is this authority? Was it the President, the Minister of Police or the commander? Who was this person who was above the Constitution, who had the authority to decide that the right to life would be suspended for a day and for a moment - and therefore, shoot? I didn’t see water cannons, teargas or rubber bullets, but live ammunition was unleashed on the people.
So, this question must be answered: Who had the authority to waive the right to life and to mow down the number of people that were slaughtered on that day in Marikana? Where did we get the authority to change the titles of people to prepare these young people in a manner that could only have resulted in this outcome? So, we must also ask the question: How many of the striking workers had machine guns and how many even had handguns? How many live guns were used to shoot at these people?
Many of us have gone through those situations times without number and we thought that this Constitution that we have would prevent this from happening again, but now it has happened. And then the leadership says it is shocking. But who was leading? Who gave the orders? Where was the leadership to manage those things? What intelligence reports did the police have? When you arm those young people with machine guns, you must have knowledge of machine guns and that there are other things in there. What reports did the intelligence services provide before this command was given for these people to be shot and killed?
Of course, we have to go beyond that. One of the issues about that situation is the fact that there was clearly another violation of the Constitution, where the ruling party is allied to some of the trade unions that were involved there. The Police and Prisons Civil Rights Union, Popcru, is affiliated to Cosatu and therefore allied to the ruling party. The National Union of Mineworkers, NUM, is affiliated to Cosatu. Therefore, it is allied to the ruling party.
Why should the tax money of citizens who do not support the ruling party be used to pay the salaries of your members? Members of the Public Service in this country must cease to be allied to any political party. They can vote for any party they want to vote for, but they cannot formally or in that way be allies to you. And don’t pay them with our tax money because we don’t support you. Only those who support you must give their money to you and others must give it to us. You must accept that the teachers who are paid with the salaries of all of us, whether they support you or not, cannot be allied to you. You are breaking the Constitution.
Public servants are there for all of us. They are paid by all of us. Please let them serve all of us evenly because the question will arise, as it did yesterday when we were there: How can we be sure that this police force, allied to the NUM or affiliated to Cosatu, treats us with the same fairness as that with which it treats other workers? Go to any democracy in the world today. Where do you find public servants who are allied to a political party and paid with the tax money of all of the citizens of the country? We must look at ourselves again. The lives of our people have been lost here today. As we speak now, they will never come back to life.
So, we must say this: Was it by accident that Minister Shabangu, when she visited there – the Minister of all of us – decided that she would only meet with the NUM, but not with other unions, particularly the Association of Mineworkers and Construction Union, Amcu, which is heavily involved? Where is the Minister of the Amcu people? We saw the Minister of the NUM meet with NUM. But where is the Minister of Amcu? [Laughter.] So, how then can the workers believe that they are given fair and even-handed treatment by you? I thank you. [Time expired.] [Applause.]
Mr V B NDLOVU: Hon Speaker, while we condemn what has happened at Marikana, let us step back a bit and see what should have been done. The triangle, which is made up of the employer, employee and employee representative, does not work in this mine.
Firstly, the employer should have detected that a crisis was looming and instituted a programme to counter the problem before the workers went on strike. This is the reason that the mine employs human resource management. Therefore, the employers have failed the workers. The employer should have had a plan to engage and to continue to engage with workers while they had been on an unprotected strike for over two weeks. Why was this not done? This could have prevented the workers from resorting to violence.
Secondly, where were the employees’ representatives when the employees were furious about their conditions of employment? Why did they not engage their members in order to establish what the workers were concerned about, if they were truly representatives of the workers? They have sold out the workers.
The last leg, Mr Speaker, of this triangle is the workers themselves.
Uma ngabe abasebenzi bebengabathembi abantu ababamele, babengalithathi ngani ithuba lokuthi bakhombe abantu abambalwa abangakwazi ukuyoxoxisana nabaqashi babo ukuze kuvinjelwe ukufa kwabantu kanye nenhlekelele engase yenzeke?
Uma abasebenzi babebona ukuthi le nhlekelele iyaqhubeka futhi ababathembi laba bantu ababakhetha njengezinyunyana zabo, babengayenzi ngani imizamo yokuthi bakuvimbele ukufa kwabantu? Babengenzi ngani ngayo yonke indlela abangakuvimbela ngayo? Umuntu uma esefile akasho lutho noma ningakhokha isigidi esisodwa ngomuntu oyedwa akusho lutho lokho ngoba usuke esehambile emhlabeni. (Translation of isiZulu paragraphs follows.)
[If the employees did not trust their representatives, why didn’t they take the opportunity to appoint a few people who could negotiate with their employers on their behalf, thus avoiding the death of people and the tragedy that might happen?
If the employees realised that this tragedy was continuing, and that they did not trust these people whom they had elected as their union representatives, why didn’t they do anything to avoid the death of these people? Why didn’t they use every preventative measure at their disposal? It does not matter anymore to somebody who has died if you offer a payout of R1 million to each person.]
The IFP therefore finds these three groups at fault: the employer, the employee representatives – that is the trade unions – and the workers themselves. But the saddest part of this was when they called in the police - to do what? The workers who were not at work did not attack any of the management or disrupt their workplace except by withholding their labour.
Why were the police called to disperse the crowd? Is it not the duty of the employers to negotiate with employees at the workplace? It is not the duty of the police to negotiate on behalf of the management. Management knew full well that the police are trained to do a certain job. Why did management involve the police under these circumstances? On the other hand, why did the police agree to act on behalf of the employers instead of management doing their own job, doing their own dirty work?
Did the police who were sent to Marikana have the skills to negotiate on behalf of management? If not, what was expected of them in a volatile situation like that? Who gave the instructions for the police to kill, and why? Workers were not at their workplace; they were on a hill outside the mine. They were not a threat to this mine’s management.
This is a tragedy, Mr Speaker. This was not supposed to happen and, out of the triangle drawn before, it seems that everybody has failed. People have died, including some members of the police. The IFP does not know how this country will learn to avoid these types of massacres, which happened in 1960, in 1976 and now in Marikana. Everyone involved in a massacre is a victim of this tragedy.
Mine management must take most of the blame for this tragedy. They failed to realise that the workers wanted them to deal with issues that affected them every minute of their day, and they failed to engage workers fully. How dare the employer give an ultimatum to the workers that they should return to work when there are people still mourning their losses, when there are others still in hospital, and when there are others still in custody? The police are at fault, because they were used by the mine management to solve their problems instead of protecting both sides. I hope that the workers have now learned that negotiation is the key to success.
It is unfortunate that this culture of violence was brought to us by the armed struggle which, among other things, brought in the idea of making South Africa ungovernable. Whenever there have been ructions in municipalities, there is violence and destruction of property, like libraries and other facilities. It is a tragedy that we are not talking about it. This culture seems to be entrenched in our nation’s psyche. We must do something to change that and remove this culture of violence from our psyche. We do not expect to be confronted with tragedies like Marikana.
On behalf of the IFP and my leader, we would like to convey our condolences to the families of all those who have lost their loved ones in the massacre and wish those who sustained injuries a speedy recovery. We hope that they will be consoled by the grace of God. Thank you, Speaker. [Applause.]
Mr J J MCGLUWA: Hon Speaker, this is indeed a tragic time in our country’s history. I think every South African is trying to come to terms with what happened.
It is difficult to make sense of what is a complex issue. There were a multitude of failures on all sides. As a result, 44 people sacrificed their lives as a culmination of these failures. Hopefully, the commission of inquiry will precisely reveal each actor’s culpability in this disaster, from the police to the unions, to the lack of leadership in government, to a mining company that shows no remorse and has proven to be completely incapable of containing the rising tensions at the mine.
There are so many dimensions to this tragedy, but I am only concerned with one dimension, and that is the human dimension. I am still haunted by the image of that woman with the baby on her back, searching desperately for her husband who never returned home. She explained that her husband’s wages supported not only her but his brother, his grandmother and a number of children. Many lives have been shattered by this tragedy, and we as a nation need to hang our heads in shame, as this is not only a national disaster but a national embarrassment to our new democratic order.
Baie lewens is verpletter deur hierdie tragedie, en ons as ’n nasie moet ons hoofde in skaamte laat sak, want dit is nie net ’n nasionale ramp nie, maar ’n nasionale verleentheid vir ons nuwe demokrasie. (Translation of Afrikaans paragraph follows.)
[Many lives have been shattered by this tragedy, and we as a nation need to hang our heads in shame, for this is not only a national disaster, but a national embarrassment to our new democratic order.]
Our collective psyche has been wounded and we must use this as an opportunity to ask some hard questions about our society as a whole. Some of those questions include whether the police are fully trained in methods to deal with situations where big crowds are involved, by using – and I would like to emphasise – water cannons, shields or rubber bullets, instead of live ammunition. Is it necessary to go on strike with knives, guns and pangas? Should it have reached the point where the police had to open fire and use strong-arm tactics, in line with the dangerous shoot-to-kill mentality? Do the unions in South Africa have too much power? Maybe they must stop trying to display power through membership. As a result, this happened.
As a nation, how do we respond to future strikes in our country, and will we ever learn from this? We need to recommit ourselves to the principles of nonviolence and the right to life and human dignity, as the incident has taught us how fragile life can be. We need to question our political systems. We need to question the police. We need to question our unions. We need to question our labour relations systems that could clearly not respond properly to this escalation in tensions.
I would also like to pass on my condolences to the families who have lost their loved ones. I thank you. [Applause.]
Mr B H HOLOMISA: Mr Speaker, hon Deputy President, and hon members ...
Uyimamele le nkosi inguTerror mkhuluwa, iyabetha, iyabetha, iyabetha! Iyayivusa ingxongxo, itsho nale Ndlu yaphila. [Kwahlekwa.] (Translation of isiXhosa paragraph follows.)
[Are you listening to the hon Terror, my big brother? He is really, really doing this thing! He is enlivening the debate and as such this House is now more attentive.] [Laughter.]
May the souls of the mineworkers who lost their lives last week in the Marikana massacre, rest in peace. To their families and friends, our hearts and prayers are with you during this time of grief.
Hon Minister Mthethwa, I disagree completely with the tactics that the SAPS used to disarm and disperse striking Lonmin mineworkers. Firstly, the police surrounded the place that the mineworkers had occupied with razor wire, and left only one exit. Interestingly, this one and only available exit point was where the heavily armed contingent of police had gathered to oversee what was supposed to be a peaceful dispersal of the gathering.
Secondly, the SAPS members then fired teargas at the workers, forcing them to run all over the place looking for an exit point. However, we are told that the police fired on them with live ammunition as some were running towards the exit. The police accused the workers of advancing towards them with intentions of attacking them, when it appears that the workers were only seeking a place of safety. According to the workers’ version of events, this is what led to the brutal murder of 34 mineworkers last week in Marikana.
With these mistakes, one wonders whether a plan to ambush the workers had not been carefully crafted because, by running towards the exit, the workers seemed to have walked right into a police trap.
Sadly, however, Marikana massacre-type incidents are here to stay, unless we do away with the deployment of people with no professional police backgrounds to senior SAPS levels, to command juniors with military training. [Applause.] Perhaps it is time this House reviewed the mechanism of civilian oversight in the SAPS. Should we not confine civilian oversight to the office of the Minister, and let the experienced police personnel run the SAPS?
Another area of concern is the proximity of certain trade unions to the ruling party, and the deployment of ruling party senior individuals to the private sector, which compromised the Lonmin workers. For example, just a few hours before the Marikana shoot-out, the National Union of Mineworkers, NUM, the police and Lonmin reportedly held a meeting to discuss the situation, without involving the other union, the Association of Mineworkers and Construction Union, Amcu. We should not lose sight of the fact that both NUM and Amcu workers have one thing in common – they demand a salary adjustment. Therefore, this House should closely monitor these salary negotiations, given the questionable involvement of the police in this labour dispute.
During the visit of parliamentary opposition parties yesterday to Marikana, what was more shocking was the extent of poverty in which the mineworkers live. It is ironic to see that the people responsible for extracting our country’s mineral wealth live in conditions of squalor. We call on Lonmin mine’s black economic empowerment, BEE, partners to approach their partners in the United Kingdom to do something about the plight of their mineworkers. What we saw there yesterday is completely unacceptable, especially when considering the fact that some of these BEE partners have impeccable struggle credentials.
In conclusion, the UDM supports President Zuma’s decision to institute a commission of inquiry into the Marikana massacre. However, we believe that it should be a judicial commission of inquiry. The terms of reference for the commission should be broad enough to allow for investigation into investment schemes that trade unions offer mineworkers, among other things. Workers complain about monthly deductions from their salaries, to pay for investment schemes that never yield results for them. The question is: Who really benefits from them?
Finally, we also need to investigate the extent of the involvement of some trade union investment arms in the ownership and control of the same mine, which compromises the workers’ struggles, as alleged by the workers.
Akuhlanga lungehlanga, thuthwini. Enkosi. [Please accept what has happened as fate; may you be consoled. Thank you.] [Time expired.] [Applause.]
The MINISTER OF MINERAL RESOURCES: Deputy Speaker, hon Deputy President, hon members, visitors in the gallery, we gather today in this House in a spirit of deep sadness and in an outpouring of condolences.
We are revisited, at least in some ways, with the same feelings of wretchedness that marked events in our many years of struggle. Such memories and emotions we could confidently have believed were confined to the past. But, no, even though we are nearly two decades into our freedom, they are with us today. We must deal with them. We must finally rid this land of them. Our freedom won makes us care deeply.
We weep together as we pause in the everyday course of our lives to solemnly remember those who died in such appalling scenes of tragedy as witnessed during the past few days.
The tragic events at Lonmin’s Marikana mine, which reverberated through every corner of our country, shame us all. They drive us on to make amends, to review in utmost depth the happenings in our sector, to check any further outbreaks - indeed, to ensure that these things never happen again.
The events should refocus the collective mind of our nation on answers, not recriminations, on rationality, not rhetoric. We should refuse to be cowed into a state of mind where we accept the notion - popular in certain circles abroad - that we are nothing but a country at war with itself; far from it.
The African National Congress, the party to which I belong, has consistently and throughout its one hundred years stood on the side of natural justice and for the rights of those who, through the sweat of their brow, contribute to the wellbeing of us all.
Having spent countless hours either in meetings or consultations with the affected parties, I have come to understand the events that started from a wildcat strike by approximately 3 000 rock drillers on 10 August, a day after we celebrated National Women’s Day. That day is a bittersweet reminder that mothers lost sons, wives lost husbands and the whole nation lost some of the cream of our legendary endeavours underground.
We have met with all stakeholders in the industry and it is clear that we will have to work together to tackle the many socioeconomic challenges in the mining industry. The action taken by the President to cut short his working visit to Maputo and return to the country, my observations on a visit to the mine on Friday, and the decision to set up the interministerial committee which spent the whole day at the mine yesterday, are testimony to the fact that government cares. It is because the government does care immensely about the plight of the affected families, including those of workers who are in hospital, that they were visited by the President, who clearly showed that he was gravely concerned.
We agree sincerely with the President’s assertion that this tragedy should be a lesson to all of us. As a department, we furthermore support the commission of inquiry that the President announced and will fully co-operate with it.
So we boldly say in this House today, notwithstanding the shocking events, that we firmly remain a constitutional democracy underpinned by a stoical commitment to upholding the rule of law and protecting the rights enshrined in the Bill of Rights. As a mining jurisdiction we have maintained those principles and built mechanisms into our legislation that ensure the transformation and sustainable growth of the country.
We did this in 2004 when we introduced the Mineral and Petroleum Resources Development Act. For the first time in the history of our country, we saw the recognition of the country’s minerals as belonging to its people and the vesting of the custodianship of mineral resources in the state instead of individual ownership, as had been the case before. Those changes were introduced against the backdrop of ensuring that all South Africans benefit from the mineral resources of the country.
The new mineral dispensation also introduced socioeconomic responsibility to all holders of mining concessions through the introduction of the Mining Charter. Into this policy, a document with which all mining companies must comply, a social – referring to the communities – and labour plan has been incorporated. All mining companies who are holders of mining rights are required to develop and implement this plan as they engage in their respective mining ventures.
Essential undertakings have been prescribed for stakeholders to comply with in order to ensure an enabling environment for the transformation of the sector. These include human resources development, employment equity, mine community and rural development, housing and living conditions, procurement and ownership and joint ventures.
As part of the implementation of Mining Charter commitments, mining companies are expected to address housing and living conditions of mineworkers. Furthermore, single-sex hostels should be eradicated and informal settlements in mining communities should be addressed. These are some of the issues we as government and the ANC managed to put in place.
I must also say that it is the ANC that led the process of transformation in the mining industry and the leadership of the ANC was there. We have been there all the time. The difference between us and some of you is that we don’t do it in public. We engage. That is not new to us; we do it all the time.
As a department, we are working to ensure that companies do comply and implement their transformation commitments. In this regard, the department is addressing, amongst others, the strengthening of compliance inspections in respect of the Mining Charter; strengthening capacity around social and labour plans project selection; and better integration of social and labour plans by numerous companies operating in the same area, for maximum impact.
It surely cannot be correct that mining communities such as those at Marikana and in other mining areas should see prosperity and conspicuous consumption by companies and mine bosses whilst they continue to experience poverty. The mines must redouble their efforts in the cause of good social and labour programmes to ensure that these happen.
We call on the entire mining industry to go beyond dealing with us as a mere regulator towards a situation where they themselves take the initiative to be highly visible and innovative in addressing the socioeconomic issues in the mines and surrounding communities. Transparency should be the order of the day. These communities can be the ones who do the actual peer review of the situation. If they are unhappy, the industry is equally so.
So, if we can all really work together, in a spirit of collaboration and fairness with minimum recrimination, we can use this tragedy to undo many of the wrong practices that still mark the mining sector. That will be a monument to the fallen at Marikana. We shall be able, in time, to look back with sad but steadfast memories, committed to bringing about harmony in the industry instead of strife.
So, we now need to reflect on what we are doing to ensure that these events do not happen again. The mining industry must work on developing practices which ensure that collective bargaining happens routinely in conditions of peaceful co-existence, but also informed by the current Labour Relations Act. I want to say that this country has a Labour Relations Act. We follow unions which we know are registered. We deal with everyone without excluding anyone.
Hon Lekota, we have never met with the Association of Mineworkers and Construction Union, Amcu. We were not aware of Amcu until the incidents which we saw recently. [Interjections.]
An HON MEMBER: But you are the Minister!
The MINISTER OF MINERAL RESOURCES: Yes, if you are their representatives, you can do that. I am indeed the Minister of mining. We have been working with all stakeholders to make sure that we bring change to the mining industry. [Interjections.]
I must indicate that we will continue to interact with those who abide by the law. I must also indicate, Mr Lekota, that this government never calls soldiers to attack communities. During your era as the Minister of Defence, in Khutsong, you called soldiers to attack. You are the one who is more brutal than the ANC. [Applause.]
With the Minister of Labour we will closely look at the situation and continue to monitor in a way... [Interjections.] Shut up! [Interjections.] We will continue...
Mrs S V KALYAN: Madam Deputy Speaker, I rise on a point of order: I submit that the use of the words “shut up” is unparliamentary and I ask you to ask the Minister to withdraw them.
The DEPUTY SPEAKER: It is unparliamentary, hon Minister.
The MINISTER OF MINERAL RESOURCES: I withdraw, but also, hon Deputy Speaker ... [Interjections.]
Mrs J D KILIAN: Madam Deputy Speaker, I rise on a point of order: Will you please ask the hon Minister to also withdraw the reference to hon Lekota who, she said, sent his soldiers to attack people. That never happened. [Interjections.]
The MINISTER OF MINERAL RESOURCES: Hon Deputy Speaker, it was in this country. It is public knowledge. During his term as the Minister of Defence he went to the West Rand. It is public knowledge.
An HON MEMBER: As an ANC Minister!
Mr M G P LEKOTA: Madam Deputy Speaker, I rise on a point of order: This is unfounded. I never sent soldiers to Khutsong to kill people. It never happened. Otherwise, it means that the ANC government instructed me to do so, and that is not true. [Interjections.]
The MINISTER OF WATER AND ENVIRONMENTAL AFFAIRS: Hon Deputy Speaker, I would just like to enlighten the House: I am a living witness to the events to which the hon Minister has referred. [Applause.] Former Minister Lekota did that; I was there with him. [Interjections.] [Applause.]
The DEPUTY SPEAKER: Hon members ...
Mr M G P LEKOTA: Madam Deputy Speaker, on a point of order: I do just want to say, if that is what the member says, then it is the African National Congress that did that. [Interjections.] If she says that – and I won’t say it didn’t– then I want to say that the ANC is the party in power, not the individual.
Ms M T KUBAYI: Hon Deputy Speaker, may I rise on a point of order?
The DEPUTY SPEAKER: No. I want us to continue with the debate of today, which is very important. Please! Can we allow the hon Minister to proceed? I am sure the other matter will be considered later.
The MINISTER OF MINERAL RESOURCES: Thank you, Deputy Speaker. As I have indicated, we will work closely with the Minister of Labour to deal with the issues of the trade unions that are organised in this sector, but also which are responsible and can also take responsibility for their actions.
A task team is being established to deal with issues such as ensuring that stakeholders have a common understanding of collective bargaining and other events; the importance of leadership on all sides in the industry; the need for security; the elimination of loopholes; and ensuring improved social and living conditions in mining areas as articulated in the Mining Charter. These are the essentials as we move forward.
Finally, I would like to make an appeal to this House: Let us share in our nation’s collective grief, and not use this event as a way to score points. All members need to be ready to exercise restraint when it comes to rushing into judgment. Let’s allow the President and the commission of inquiry to go out and ensure that it makes all the necessary findings. We must not try to mislead the nation. As we stand here today, we need to make sure that we bow our heads in recognition of all those who passed on, including the police officers who were unfortunately killed in this event.
No one wishes anyone to hold back on sincerely held views and factual and constructive criticism. We welcome that. But, with at least one formerly buoyant part of our mining industry facing onerous new challenges, it can be hoped that the net effect of comment will be to allow the inquiry to run its course without prejudgement, and to help secure and not damage our common future.
Once more, we welcome and we will support and co-operate with the commission of inquiry that has been called for by the President. I must also indicate that, as we deal with the House, we will continue to take leadership without fear, and lead from the front, and we will not, as the Department of Mineral Resources, on behalf of government, continue to heckle. We will find solutions that contribute towards creating a stable South Africa. We are committed to that. As we speak today, we will go back to the ground and work on the ground and not go there to score points and pose for TV cameras. We will do the actual work. Thank you.
Mrs J D KILIAN: Hon Deputy Speaker, can I just ask you... We wanted the Minister to complete her speech. Will you please look at the Hansard and then see exactly what the Minister alleged and then rule on that? If she has any information about Khutsong as to who were killed and whether there was an investigation, then we need all of that. If not, then she must withdraw it and apologise to this body. Thank you.
Dr W G JAMES: Deputy Speaker, the people of Marikana are bewildered in their anguish. Ten individuals were brutally murdered and thirty-four shot in cold blood. They need support so that they may heal. The people in Marikana live in fear. There are people there capable of great brutality.
The police, who should bring safety to all, are distrusted and even hated. Workers of Marikana labour in a broken environment. The system of labour relations needs reform so that everyone is included. There should no longer be two classes of workers – first-class and second-class workers.
Workers of Marikana live in an artificial environment. They are still migrant workers. We are defined by ubuntu’s sociality and not by the cold alienation of male isolation.
Communities of Marikana live in division. The now nonracial bourgeoisie and the labour aristocracy are the new insiders. The migrant workers from the Eastern Cape, from KwaZulu-Natal and from Mozambique are the outsiders.
People of Marikana don’t need your platitudes, hon Motshekga, they desire justice. They wish to live in safety. They ask merely for fairness and they want to be heard. Yesterday, over 12 000 people joined us for three hours, sitting in the unforgiving sun of the Highveld because they merely wanted to be understood and heard. They also wanted to be comforted.
We were told that workers were shot in the back. We went to visit a mine hospital and saw for ourselves that four workers had indeed been shot in the back. How do you shoot somebody in the back? That is the act of cowards. That is what happened at Sharpeville, where people were running away and were shot in the back. So, I want the Minister of Police to please explain how it is that the workers were shot in the back. Thank you.
The DEPUTY MINISTER OF AGRICULTURE, FORESTRY AND FISHERIES: Chairperson, in the normal power struggle between unions on the one side and employers, no one is supposed to die. When one person dies, it is abnormal and a crisis. When more than 40 people die, it is a massacre of unthinkable proportions, a catastrophe. Because of what happened at Lonmin’s mine on 16 August, the name Marikana is echoing throughout the world and will be for many years to come.
As leader of the FF Plus, I want to convey my sympathy and condolences to the families of the miners who were killed, but also to the families of the security guards and policemen who were brutally murdered.
The question in a situation like this is: At what stage should maximum force be used, and when minimum? In my experience, the better the police force is trained, the less force is necessary to contain a difficult situation like this.
Volgens die huidige feite wat ons het, het die stakers met wapens op die polisie afgestorm. So ’n gewapende stormloop moes onafwendbaar eindig met óf ’n slagting van die polisie óf van die stakers. Die polisie het hulle Donderdagmiddag in ’n posisie bevind waar hulle min ander opsies gehad het.
Die dilemma is dat dié drie minute se slagting nie in isolasie beoordeel kan word nie. Die vraag is: Hoe het die polisie en stakers, nadat die staking vir ’n week aan die gang was, in so ’n skaakmatposisie beland? Was die polisieonderhandelaars goed genoeg opgelei? Was die polisie se intelligensie goed genoeg? Wat was die rol en verskuilde agendas van die leiers en opstokers van die stakers? Was alle ander vreedsame metodes reeds uitgeput? (Translation of Afrikaans paragraphs follows.)
[According to the latest facts at our disposal, the strikers stormed the police with weapons. Such an armed charge inevitably had to end with a massacre of either the police or the strikers. On Thursday, the police found themselves in a position where they had few other options.
The dilemma is that this massacre that lasted for three minutes cannot be judged in isolation. The question is: How did the police and the strikers arrive at this checkmate position after a week of ongoing strikes? Were the negotiators for the police sufficiently trained? Was the police intelligence good enough? What were the role and hidden agendas of those who were leading and instigating the strikers? Had all other peaceful methods already been exhausted?]
The final question: Who is to blame for what happened?
I believe no role-player can be singled out. All the role-players share the guilt: firstly, the unions for the way in which they conducted their power struggle; secondly, the employers who colluded with the established unions, like the National Union of Mineworkers, NUM, to keep the Association of Mineworkers and Construction Union, Amcu, out and leave minority unions with no rights; thirdly, the police for allowing the situation to develop into such an uncontrollable state; fourthly, the union leaders for the violence they incited and allowed as part of this strike, similar to major strikes elsewhere in the past where they never forcefully condemned violence; and lastly, the government for their failure to keep unions accountable and to demand that unions exercise their power without the language of intimidation and without violence as a bargaining tool.
Let me give you examples. In 2006, the three-month security guards’ strike, led by the South African Transport and Allied Workers’ Union, ended with about 40 nonstriking workers killed during that strike. In Soweto, two guards who chose to defy the call to strike were kidnapped, beaten and flung from a moving train. The union leadership weakly condemned this, with no further action against union members.
Remember the public sector strike of 2010, when workers attacked patients and nurses in hospitals? And yearly, when municipal workers strike in Johannesburg or Cape Town, most people flee the city centre. Why? Because they know what is coming, a marauding and angry mob of workers with hostility and aggression, who destroy everything in front of them. In the end, the city centre resembles a wasteland of rotting food, trash and broken glass.
This violent theme has been present in every major strike during the last decade. As deaths and injuries mounted, the union leadership and government were mostly passive.
It is estimated that this year alone there have been about 400 violent protests around South Africa. Think about the attacks on foreign business people operating in poor neighbourhoods. These communities take out their frustrations on foreigners. They beat them. They stab them. They shoot them.
Violence has become the norm in South Africa. How does a society become as broken as this? Redi Tlhabi asks in the Sunday Times of 19 August 2012, and I quote:
How did we become such a brutal people? Our excuse cannot simply be that we have a violent past, when there are many other societies whose histories are littered with atrocities. Have we accepted that our violent history will also permeate our present and future?
Hoekom gebruik mense geweld? Omdat hulle glo dat hulle met geweld hulle eie posisie gaan verbeter en hulle opponent s’n gaan verswak. Wat is die feite? Eers later volg die verrassing dat almal na geweld in ’n slegter posisie is. Dit is wat by Marikana gebeur het. (Translation of Afrikaans paragraph follows.)
[Why do people resort to violence? Because they believe that through violence they will be able to improve their own position and weaken that of their opponents. What are the facts? Only afterwards does the surprise set in that everybody’s position is actually worsened by the use of violence. This is what happened at Marikana.]
During the turbulent violence between Inkatha and the ANC in the 1990s, former President Mandela said, “Take your weapons, your knives and pangas, and throw them into the sea.” Surely, sir, that should now be the message, 18 years into the new South Africa, in regard to labour disputes and how we handle these things. It cannot be done through violence as it is done at the moment. It was asking for a tragedy.
Once the reports are released, the unions, the police, the employers and government must act to ensure that this never, ever happens again. I thank you.
Rev K R J MESHOE: Deputy Speaker, Deputy President, hon members, yesterday I joined political leaders and representatives of other parties who visited Marikana to get a first-hand account from striking workers, members of the community, union bosses, the police and the Lonmin management of what really happened on Thursday last week, when 34 striking miners were killed by the police with semiautomatic rifles.
Before I give an account of what we saw and heard, I want to start by expressing, on behalf of the ACDP, our heartfelt condolences to the families of the 34 miners who died in the hail of bullets, the families of the two SAPS members who were hacked to death and the two mine security officers who were burnt in their patrol car. We also wish a speedy recovery to the 78 miners who were wounded during the violent confrontation with the police.
I have heard what the Chief Whip of the Majority Party said at the memorial service about two hours ago. He said we should not try to find out who was to blame for what happened. But I am going to do so for the purpose of our all learning from this tragedy and also ensuring that we do not repeat the mistakes that were made.
I believe the first group of people to share the blame should be the Lonmin management that has been very insensitive to the plight of its workers. The Association of Mineworkers and Construction Union, Amcu, leadership made allegations that management refused to meet with them to discuss their grievances after initially promising to do so. When we met with the management, later in the day, Amcu’s allegations were confirmed when the executive vice president of Lonmin, responsible for human capital and external affairs, told our delegation that he wanted to talk to his workers and not to Amcu’s President, Joseph Mathunjwa, because he said Mathunjwa was not working at the mine. The fact remains that Mathunjwa is Amcu’s President and was mandated by his union to represent them in their talks with the management. Unfortunately, the management refused to talk to him.
This refusal, obviously, exacerbated the volatile situation and angered workers even more. I believe that if he and his delegation had been given a hearing, then the situation would either have been amicably resolved or prevented from ending in the massacre of 34 miners. I believe that it was also insensitive of management to give grieving workers who needed counselling an ultimatum.
The second to share the blame should be the Amcu leadership, who must plead guilty for allowing their members to carry dangerous weapons during the strike and also for allowing them to charge at the police. We can ask the question whether they did not anticipate that the police would not just sit back and watch while armed striking protesters were charging at them with pangas, spears and other dangerous weapons. Obviously, the police had to do something to protect themselves, even though we do not condone their method.
The third person is the sangoma that allegedly performed rituals with the miners; he should also take the blame for misleading angry workers into believing that his muthi [medicine.] could make them both invisible and invincible. [Applause.] Gullible miners lost their lives and 78 others were injured while the sangoma, who cashed in on their misplaced beliefs and vulnerability, is richer today. South Africans must be warned against sangomas that exploit their fears and make money out of their ignorance while promising them impossible things.
The fourth to share the blame should be the police. Their action on that day was also wrong and inappropriate. We want to know why the police were allowed to use live ammunition when they were ordered, by way of a memorandum in December last year, not to shoot at protesters with live ammunition. Before we left Marikana, we visited the wounded in the mine hospital. Of the protesters that were shot by the police on Thursday, three of them, that I personally saw, were shot in the back as they tried to escape. The question is: Why did the police shoot at protesters who were trying to run away from the bloody confrontation? We wonder how many of those who died were shot in the back. Only the commission of inquiry that the President spoke about will give us answers.
Finally, our prayer is that the Marikana incident will not polarise our nation, but will bring us closer to one another as we pray for the healing of broken hearts and all those who were injured during last week’s tragic events. I thank you. [Applause.]
Ms D KOHLER-BARNARD: Madam Deputy Speaker, as a nation, we are in shock and still are unable to fully comprehend the horror of what we watched on television on Thursday. In a matter of moments, we were taken back to that dark time of our history no sane South African could ever wish to repeat. It was incomprehensible and inexcusable.
So we stand here today, in the aftermath, looking for answers. Thankfully, the President agreed to our request for a judicial commission of inquiry. This commission will find the answers the families and country need for closure. While this commission will find out where to apportion blame and eventual culpability, some issues are clear. Nothing justifies the excessive and tragic bloodshed, but nobody in all of this is innocent, especially not the police and definitely not the Minister of Police, who has for three years presided over and politically controlled the Police Service, which is gradually being militarised and is increasingly being turned into a force for state-sponsored and sanctioned violence against civilians.
The Minister must be held accountable for the Cele shoot-to-kill era, which he did nothing to stop and which we now had to see play out so graphically with, at last count, 44 dead. The Minister must be held accountable for the Mdluli era of crime intelligence, which has crippled the division and hollowed it out, rendering it ineffective to not only pre-empt but also properly respond to the events that transpired at Marikana last week. The Minister must be held accountable for sitting back like a lame duck whilst Cele reintroduced military ranks into the SAPS and, along with them, the culture of brute strength, strong men tactics and deadly force.
What happened last week speaks to two issues: the training of our SAPS and this militarisation of the service. Were the actions leading up to that fateful Thursday, when 34 men died, the actions of a well-trained police service? On Monday last week, possibly as the result of following orders, two officers died the most terrible deaths. Another colleague still fights for his life in hospital. And while they died, eight miners died - 10 dead - but the signs were not heeded.
The chaos that the whole world subsequently saw on Thursday was, the DA believes, a direct result of the pseudo-militarisation of the SAPS. The ANC now plans to demilitarise the SAPS again. It says this in the New National Development Plan. The sooner this happens the better.
This decision was supposed to bring back discipline to the ranks, yet what we witnessed was chaos. We saw police running in every direction, firing indiscriminately, and lines breaking down. They were police treating citizens as the enemy. This means we have, as a nation and under the leadership of this current Minister of Police, travelled full circle back to the militarised police who would shoot indiscriminately at a crowd of protesters, armed or not.
Those protesters may have been attempting to charge against impossible odds or they may have been running blindly away from the smoke of stun grenades which the SAPS had just fired into their midst. Where is the updated Public Order Policing Policy, Minister?
The next stage after our national grief will be anger and the search for a reason for all of this. We were shocked, grief-stricken and then angry when we watched Andries Tatane murdered in front of our eyes, shot with rubber bullets. Now we watched 34 people die in front of our eyes, shot with live bullets. It is against regulations to use live ammunition.
Unfortunately, on the same day as the President declared a week of national mourning, the new National Police Commissioner, Riah Phiyega, said that the police officers should not be sorry for the deaths of the protesters. She showed a gross lack of empathy at a time when the SAPS members needed a leader with an ironclad moral compass to assist them to make sense of this tragedy. One can only wonder what possessed her to make such a reckless comment as this when tensions were high, officers were dead, and the police were being referred to as serial killers by protesters. These comments should never have been allowed. The Minister, of course, said nothing.
No one should attempt to predetermine the outcome of the judicial commission of inquiry and above all else, and for the sake of our nation, all sides must express regret and apologies where due, and recognise the role they have played in the loss of life that occurred last week.
We have yet to experience the ramifications of this tragedy, which will come as surely as night follows day. Our reputation as a nation which could hold a peaceful Fifa World Cup is in tatters. Our economy will suffer. Our attraction to tourists fell the moment the first body hit the floor.
All of this because the Minister has for so long had his eyes and interests elsewhere. He is nothing but an empty suit. He must be held accountable because, instead of providing visionary leadership in a country in which society has seemingly normalised excessive violence, he has sat back, allowing populists to trample on our Constitution.
Mrs M T KUBAYI: Speaker, on a point of order: I apologise because I would really love to honour this moment but I cannot sit back and listen to hon Kohler-Barnard calling hon Minister Mthethwa ``an empty suit’’. I would like you to look at Hansard and respond because I do not think that is the correct way of referring to an hon Member of Parliament.
The SPEAKER: I will study Hansard, hon member, and come back to that issue.
Ms D KOHLER-BARNARD: The Minister is duty-bound to ensure that the Police Service does exactly that - serves and protects those who reside within our borders. Instead, the Minister’s tenure has been marked by the return of an apartheid-era militarised and ranked police force which not only shoots to kill at the slightest provocation but is increasingly marked by a systemic and endemic culture of criminality and corruption.
The Minister has clearly failed, through his three-year-long track record of inaction and his political responsibility for casting our country into the depths of one of the greatest national crises of postapartheid South Africa. This Minister must go. He must resign, failing which the President must relieve him of his duties. Never again, Marikana! [Time expired.] [Applause.]
Mr I S MFUNDISI: Hon Speaker, hon members, first and foremost, the UCDP conveys its deepest condolences to the families and friends of the 44 people who were killed since the beginning of the Lonmin tragedy. What has happened is indeed tragic. Many had sacrificed and denied themselves to go to work at Lonmin.
Working in a mine has its own risks, but they took up the challenge for themselves and for their families. They understood the risks attached to mining but surely, neither the deceased men nor their families would have thought that they would meet their end at the hand of the police, who were supposed to be their protectors. This, of course, is neither the time for pointing fingers and allocating blame, nor the time to be defensive.
The nation is mourning. In our African culture, when a person dies, the family appoints a speaker who will relate the events that led to the death. The speaker must be painstakingly honest about the events that led to the death. As much as we must allocate blame, we must not do so in a negative manner, but we must be painstakingly honest about the events that led to this tragedy.
We must be painstakingly honest when addressing those whom we hold responsible for the killings. The Lonmin tragedy is not a natural disaster. There are a number of actions that could have been taken to prevent it, and whoever fell short in dispensing their responsibility leading to this, is responsible for the massacre. There are many questions to be asked, and we hope that the mooted judicial commission of inquiry will ask and find answers to the questions. Similarly, there are many observations and innuendos to be made.
Relying on news reports, we hear defensive statements that police had no other choice but to shoot as the crowd started shooting first. Two guns were reportedly confiscated from the dead miners. The question is whether trained police officers can ever be justified for killing 35 miners because two amongst them had guns.
Surely, we can do better than condoning this. There are more efficient ways of controlling crowds through the use of better protective equipment like barbed wire, tear gas and multiple water cannons, and so on.
We cannot accept that the police had no option but to shoot with live ammunition at protesters. The real reason that the police returned fire is because of the culture of violence in South Africa that is exacerbated by the police’s attitude of protecting themselves before trying to protect civilians. This is a result of many things, including the shoot-to-kill call by the former Police Commissioner. It is in this light that we hold the Minister of Police responsible. His police force is ill-equipped for dealing with crowd control, yet we have seen many protests turning violent in South Africa.
If shooting with live ammunition at protesters is how they were trained to handle these situations, then we shall see more massacres at the hands of the police. South Africans are still reeling to come to terms with the Andries Tatane issue, and now this! Our Constitution, in section 92(2), states clearly that:
Members of the Cabinet are accountable collectively and individually to Parliament for the exercise of their powers and the performance of their functions.
If South Africa were the democracy it is said to be, the Minister of Police would have resigned last week. In real democracies, if officials fail, Ministers resign. We have seen this in Great Britain when Ellen Morris, the then Secretary of Education, resigned because examinations of A-level exam papers were not properly marked.
Certainly, the miners are not innocent in this tragedy. The UCDP believes that miners had every right to protest against the meagre income they receive. Four thousand rand a month is an insult compared to the difficult conditions under which they work. However, what right did they have to carry weapons, traditional or otherwise, while striking? Obviously, when they put their tools down, the mine bosses would have had time to listen to them.
Against whom did they intend using the weapons they carried? What gives striking workers the right to undermine the rule of law? This has been going on for a while, but the ruling party turns a blind eye to it because they nurse their tripartite relations more than they nurse constitutional obligations and the rule of law.
I am not a fan of the SACP, hon Ndzimande, but on the question of indecisiveness by the leadership in government, we in the UCDP could not agree more with their North West Secretary when he said, and I quote:
As the SACP we want to state categorically that it should not have been allowed until when death rises for law enforcement agencies and the nation’s leadership ...
... to take action.
For that, I salute the SACP. We regret the loss of lives and hope all parties have learnt a lesson from this unfortunate situation. We plead that we should all march forward in unison as we observe the period of mourning as announced by the President. Thank you. [Applause.]
Mr S C MOTAU: Hon Speaker, I stand here today with a very heavy heart, as I contemplate how our hard-won freedom from oppression could have dealt this young democracy such a cruel blow. I would like to join my fellow hon members in extending my deepest condolences to the families of those who lost their lives at Marikana.
Ga ba robale ka kgotso! [May their souls rest in preace.]
Thirty-four dead, 78 injured and 275 jailed mineworkers represent a tragedy of a magnitude never seen before in our new democracy. In the aftermath of this tragedy, we must try to understand how it is that such a seismic event could occur, and we should take active steps to ensure that it never happens again.
We urge the leadership of the key parties – the National Union of Mineworkers, NUM, the Association of Mineworkers and Construction Union, Amcu, the company, the Ministries of Mining and of Labour, and the Chamber of Mines - to work together to speedily find a mutually beneficial resolution to the conflict at the mine without any further loss of life.
As we mourn the tragic loss of life, the Labour Relations Amendment Bill sits before the Portfolio Committee on Labour. In the wake of Marikana, the end product of our efforts in amending the Labour Relations Act, LRA, must be good law that will enhance labour relations in the country.
As matters stand, it is our belief that the regulatory framework governing labour relations on mines such as the one at Marikana is fundamentally flawed.
Skewed labour legislation has granted perverse powers to the majority share labour unions in collective bargaining agreements. The Labour Relations Act essentially provides incentives for closed-shop agreements. This effectively turns the marketplace for labour unions into a zero-sum game whereby members of representative unions get better jobs, as well as easier access to decision-making mechanisms, and, in the case of Lonmin, the ear of management.
The representative union in the case of Lonmin stands to gain at the very least R7,9 million per annum from members’ fees collected across the three mines. Being a representative union is clearly a lucrative business.
The tragedy at Marikana has revealed the ugly consequences of such legislation, as widespread intimidation and violence have become a way of life on mines.
The reality on the ground is that the minority union interests are marginalised, as representative unions dominate proceedings and take all the spoils, to boot. The fact that violent protests have emerged as a result of competition between rival labour unions should come as no surprise. The playing fields were anything but level, to start with. In the case of Lonmin Mines, the NUM was holding all the cards.
If we are serious about putting an end to violent protests, then we simply have to change the labour relations landscape, as the current law has no institutional capacity to deal with these union rivalry challenges.
The recent Constitutional Court ruling, which holds unions liable for damages incurred during strikes, is a good first step. Unions must be held accountable for their actions. The rest will, of course, require strong leadership. Not the leadership, of course, that instructs the police to shoot-to-kill because, as I recall, Minister Shabangu, who was then the Deputy Minister of Police, was the first one to use that expression.
If it were in government, the DA would have the political will to make changes, and these changes would include the following: abandoning efforts to establish centralised bargaining in the platinum sector, instead opting for a mine-level promotional representation model; putting an end to closed-shop agreements; immediately including non-NUM unions with any representation in collective bargaining negotiations and other significant talks; instituting an amendment to section 64 of the LRA which requires unionised workers to complete a secret ballot to approve a strike before the union can go ahead with a strike; and supporting the amendment of section 69(1) of the LRA which states that only union members should be allowed to join a supporting picket.
If we are to have any hope of banishing violent protests such as those that we have witnessed at Marikana, this government will need to show strong leadership.
Political patronage is a luxury that we can no longer afford. Let this House commit today to tearing down the violence-inducing labour regulations that have set the stage for the death of so many workers. Regrettably, that will continue to happen until this... [Time expired.]
Ga ba robale ka khutšo! [May their souls rest in peace!]
Mr L M MPHAHLELE: Hon Speaker, hon Deputy President, hon Ministers and Deputy Ministers, hon members and hon guests, the PAC joins the nation in mourning the tragedy which has befallen our motherland. The temptation is high to blame others for this tragedy. Honestly speaking, we are all to blame for the Marikana massacre.
Abe Mokoena is writing from Polokwane in The Star newspaper of today and he is telling the truth as it is. He said, and I quote: “Everybody in South Africa failed the martyrs of Marikana.”
We are a nation united in mourning. Without mudslinging and blaming anyone, the PAC contends that there are four lessons to be drawn from the Marikana massacre. They are as follows: The first lesson is that the negotiated political settlement hailed locally and internationally as a miracle is fundamentally flawed. It delivered an empty shell of political power to the indigenous African people. The ownership of wealth is skewed in favour of the multinationals. Marikana is a sad reminder that economic justice cannot co-exist with democracy. This nation needs another round of negotiation on how to share the wealth of the country in a fair and just manner. Otherwise, we must brace ourselves for many more and bloodier Marikanas to come.
The second lesson is “violence begets violence.” Marikana has exposed how violent our society is. Poverty, as we all know, is a form of violence against the poor. It is a structural violence that gives birth to violence by the poor people. The poor are not professionally trained to mete out violence.
What the police did in Marikana exposed them as untrained or ill-trained in dealing with volatile situations. Surely the police need some history lessons in their training manuals. They must know that the people they killed in Marikana are the legitimate owners of platinum. Yet, they don’t enjoy the benefits thereof. The police must be taught that in the majority of cases, the people they call squatters and trespassers are the rightful owners of this land.
The third lesson, which is about the collusion between some labour movement leaders and the mining bosses, was clearly exposed by Marikana. This web of greed, double standards and double talk has let down the working men and women.
In present-day South Africa, we are witnessing the bourgeoisification of the trade union’s leadership. These class traitors are secretly plotting with the mine bosses against the exploited workers.
When the sun of truth finally rises in this troubled land, we will know who cheated the workers and who benefitted from that cheating because those who benefit from theft are as guilty as the thieves themselves.
The fourth lesson is that as representatives of the people, members of this House were passive as the clouds of discontent were threateningly gathering over Marikana. Yes, we are passive. We call ourselves an activist Parliament. I am afraid this is just cheap posturing. An activist Parliament has its finger on the pulse of the nation. We react to events instead of acting in time to avoid a disaster. We are fast becoming a reactionary Parliament. No wonder that when citizens have problems, they go to the Public Protector. No one thinks of going to Parliament when they are in trouble.
The onus rests on us all to restore the integrity of Parliament. Marikana could have been avoided if this Parliament was living up to its calling.
Ke tla ruma polelo ya ka ka le le rego: Mahloko meloko le metswalle ya bagologolo ba Marikana. Meokgo ya lena e tla phumolwa ke letsogo la nako. Mahloko magagešo! Ga di lebogwe. (Translation of Sepedi paragraph follows.)
[Let me conclude my speech by saying: We are conveying our condolences to the family and friends of those who lost their lives in Marikana. Your wounds will heal with time. We are saddened by this.]
Mr R B BHOOLA: Mr Speaker, the MF conveys its heartfelt condolences and messages of strength, courage and fortitude to all families and friends that lost their loved ones in the Marikana tragedy. May peace be upon all the deceased and, through the grace of God Almighty, may their souls rest in peace.
The MF welcomes the judicial commission of inquiry and we support the President. Today, indeed, I am reminded of the profound words of Madiba, who said:
There must never be any form of oppression ever again in our beautiful land, South Africa, and there must be peace and jobs for all.
Mahatma Gandhi once said:
Those who embark on a journey of goals with vengeance will make the whole world go blind.
The MF urges all not to deviate from this cause and the teachings of our iconic leaders. We condemn any form of violence. We must indeed restore peace in our land and must ensure that the gap between the rich and the poor is undoubtedly addressed.
The days of how we operated in the past are over. There must be dispute resolutions put in place to resolve disputes and grievances. We must also ask the question: Why was the dispute resolution grievance not invoked? Who were the leaders that failed to invoke grievance procedures that resulted in the tragic loss of so many workers’ lives? Everyone has the right to life. Those officials who took irresponsible decisions and made people engage in unlawful protest have to be dealt with in terms of the law.
The MF is concerned. Why do our police become trigger-happy when the interests of business are at stake? Are the lives of our people still being controlled by capitalism?
I also want to pledge as the MF that all those responsible for irresponsible decisions be thoroughly investigated. We distance ourselves from any insinuation and allegation that we are operating in the predemocracy and deny such allegation. Government has the right and responsibility to protect lives.
The honour of true leaders must be derived from fighting for the good of society and not from advancing a political or manipulative agenda.
When dealing with the poor and destitute it’s better to let the mind work before the tongue, rather than letting the tongue work before the mind, making empty promises.
The MF cherishes the hope that there would never ever again be a tragedy like the Marikana massacre - ever again. Let the spirit of humility and brotherhood prevail against the evil forces.
We pray that God Almighty will look over all of us with His protective shield as we continue to pray for the souls of the deceased to rest in peace.
Leaders need to seriously take heed of challenges to ensure that the violation of the rights of workers and citizens never be practised, so that the sociopolitical development and freedom of our country can be guaranteed. The challenge that we currently face in our country is the only fight that we fight for peace. And peace will always prevail over evil. I thank you.
Mr K J DIKOBO: Hon Speaker, hon Deputy President Motlanthe, hon members, guests in the gallery, the bereaved families and a nation in mourning, we watched in disbelief pictures of what happened in Marikana. The television pictures resemble a horror movie that should not be watched by people younger than 18 years or by sensitive viewers.
To say that we were shocked by what happened at Marikana would be the understatement of the decade. In our media release we characterised it as the mowing down of people by the police and we stand by what we said.
We have noted the intention by President Zuma to establish a judicial commission of inquiry and we hope that it will help the nation to know and understand what really happened. We hope the judicial commission will dig deep and help us understand the real causes of the tragedy.
The nation may want to understand relations that exist between the management of Lonmin and the different unions that exist and operate at Lonmin, including allegations that unions are treated differently and the perception that there are those that are favoured and those that are marginalised and victimised. I was part of the delegation of leaders of political parties that visited Marikana yesterday, and some of the allegations that were made by workers in this regard are shocking.
Hon Speaker, I must say that I take exception to insinuations that we had gone there to pose for pictures.
South Africa may also want to know why the police carried and used live ammunition on the day. Azapo is not insensitive to the dangers that the police face on a daily basis. They work under difficult conditions, and some of them work every day literally “in the valley of the shadow of death” in their work.
We acknowledge their right to protect themselves when they are under attack, and we understand the concept of proportionate force in dealing with different situations. Our initial reaction is that the force used was disproportionate to the danger that was faced on the day. What we saw reminded us of Sharpeville and 16 June 1976. If the police had used rubber bullets, for example, we would have had miners with sore buttocks, legs and thighs, instead of having 34 dead bodies.
I know that some may take exception to and offence at the comparison between Sharpeville and Marikana. We visited some of the injured workers in hospital, and the majority of those that we saw were clearly shot at from the back. So, it is reasonable to believe that they were shot while running away.
We want to know whether it is the duty of the police to drive workers to work. The information that we have is that the workers were congregating at a koppie, which is some distance from the plant. What would have happened if the police had kept their distance just to ensure that they did not cause any harm? We met with the management of Lonmin yesterday, and nowhere did they make allegations that the workers posed a danger to anybody.
We have made a call to the workers to come forward and repeat some of the allegations they made, including the allegations that some of the workers were shot while laying down with their hands up, pleading for mercy. [Interjections.] They also made startling allegations that some injured workers were fetched from the hospital, and they were later found dead in the bushes.
We have also noted that the President has established a task team to deal with the humanitarian situation in Marikana. We want to understand why the hon Minister Shabangu held meetings with other stakeholders, but excluded the Association of Mineworkers and Construction Union, Amcu. Information from management is that Amcu is a recognised union with organisational rights although they do not meet the threshold to participate in collective bargaining. Azapo’s view is that the Minister should have included them in her meeting, unless she had gone there for collective bargaining.
We have also pleaded with the management of Lonmin to extend a hand towards those leaders whose authority and influence are respected by the striking workers. We have cautioned against dogmatic and orthodox stances in dealing with this sensitive matter.
We are encouraged by the involvement of the churches there and we hope they will help in alleviating the problem.
Azapo passes a motion of condolence to the families and communities that lost their loved ones. We believe that the killing of the 10 people was barbaric, and so was the killing of the 34 people. And we also say, God bless Africa, God bless South Africa, bless her children and give her peace. We also wish the injured people a speedy recovery. I thank you.
Mr N T GODI: Mr Speaker, Comrade Deputy President of the country, comrades and hon members, I stand on behalf of the APC to pay tribute as well as to express our great sadness and deep regret over the disturbances in Marikana that led to the unnecessary death of about 44 people and the injury of many more.
This tragedy calls on us to honestly face up to our challenges as a nation. The illusion that the co-option of a few amongst us into the vampirish system will buy everlasting peace must be laid to rest. In the violence and deaths at Marikana, a mirror has been put in front of us as a country.
Only last week we were on this rostrum, each proclaiming our support for the National Development Plan, NDP. You see, the central plan or trajectory of the NDP is fighting poverty and inequality. Marikana exploded before the echo of our voices could fade. Marikana is the face of the theorised poverty and inequality.
The police officers, security guards and miners who died are all children of the working class, who should be in the same trenches fighting the system that exploits, brutalises and dehumanises them and their communities. What drives men with wives and children to act in such a desperate and anarchic manner, if not that life had become barely livable?
The mine bosses and their greed have seen the superexploitation of mineworkers from the advent of mining in our country to date. This injustice is also visible in communities around which these mines operate. We have seen sporadic protest and violence from poor communities, especially around the North West.
The APC therefore calls for this tragedy to be a wake-up call. It can’t be business as usual if we want to see these deaths not being in vain.
I would like to take this opportunity to lay a few ghosts to rest: Firstly, the APC had nothing to do with the occurrences at Marikana, directly or indirectly; secondly, the APC has no relationship with Amcu, not that we would mind to give them political leadership or guidance under our umbrella; thirdly, yes, the APC has members in the Lonmin mine, Impala Platinum, and elsewhere, in Amcu, the NUM, and in Numsa; fourthly, yes, the APC has organised a mining summit for the marginalised communities with mines and mineworkers in the North West this coming Sunday.
We have planned this after extensive work and seeing the need to unite the wretched of the earth, to fight this tripartite alliance of traditional leaders, corrupt leaders and mine bosses, at least in the North West. May the souls of the dear departed rest in peace. Thank you.
Mr J R B LORIMER: Speaker, how terrible! How terrible that in a democracy, we have to stand here and talk about the violent killing of 44 of our countrymen. It is incumbent on us to look into why this happened and to ensure that it never happens again!
I am sure I am not alone in wondering why we do not seem to have progressed as a country. When I heard the news of these shootings, I was catapulted back to 1985 when, as a young journalist, I first heard the news of the shootings at Langa, near Uitenhage. The police opened fire on a crowd of protesters. I still remember the shock in the voice of the first eyewitness who called through to Capital Radio News to report this event. Why is it that 27 years later we still seem to be repeating history?
Some have blamed Lonmin. Questions must be put to the mine management. The CEO was ill, and it seems nobody with sufficient authority or skills had been nominated to replace him. An already poisonous situation was made worse.
Hon Chief Whip of the Majority Party, of course, we must look at the socioeconomic circumstances. However, we must not use them as an excuse to duck the immediate and proximate causes. Amid the litany of failures last week, two stand out. One is a failure of our policing, and the second is the failure of our system of industrial relations.
Why are the police operating without a proper doctrine for crowd control? There have been at least 113 service delivery protests up until the end of July this year. How can we have police management that has not put proper crowd control doctrines in place? The answer, of course, is that when the ANC picks police chiefs, it does not choose them because they are good at policing, it chooses them because they are good at saying yes to the ANC. Any ability to understand policing is purely co-incidental.
One can feel for the police officers on the spot. They were underequipped, undertrained, badly led, and faced by a large number of people who seem to have been out for blood. Already two officers had been horribly killed. We can only imagine the mindset of their colleagues - nervous, perhaps, or vengeful. What, I wonder, was the mood of the police at Marikana? I hope the judicial inquiry will help us find out.
The DA understands the current labour dispensation only too well, hon Chief Whip of the Majority Party, which is why we pose the following question: Eighteen years after the advent of democracy, why are our industrial relations so violent? And this was not an isolated case! It is rather part of a pattern of violence that seems built into the system, particularly where the Congress of South African Trade Unions, Cosatu, unions are involved. But despite the violence, unions have never been accountable for the actions of their members. If we want different results, this must change.
Six years ago, for example, the strike by the Cosatu-affiliated South African Transport and Allied Workers Union, Satawu, led not to 40, but 69 deaths. To my knowledge, nobody has been prosecuted, much less convicted for those killings. The truth is that the violent template of our industrial relations system has been established by Cosatu. It has merely been replicated by the Association of Mineworkers and Construction Union, Amcu.
One of the big lessons that had to be learned by government in our stormy past was that, when it comes to industrial relations, you cannot just talk to your friends. So why has this government been so reluctant to talk to Amcu? How can the Minister not be aware of Amcu? The Minister should read the papers, or she should fire her advisors, because she is wasting our money by paying them. Anyway, I think she proves my point.
Perhaps she can tell us why she cancelled the scheduled meeting with Amcu last week. Was that on the advice of the Minister of Labour? Can the Minister assure this House that it was not as a result of instruction or advice from Cosatu?
When I suggested to the Portfolio Committee on Mineral Resources that we hear from Amcu some months ago, there was a metaphorical shrieking and jumping onto chairs. We were told that we could not meet them because they were not recognised. That reminded me of the previous regime. We have to change the way we do things, because if we do not, we will be back here again talking about more shootings, similar to the ones that happened at Marikana. [Applause.]
Ms A VAN WYK: Hon Speaker, hon Deputy President, Ministers and members of the House, on Thursday 16 August 2012 South Africa was confronted by the images of the police and striking mineworkers in a bloody confrontation and was staggered by shock and sadness; a sadness further compounded by the news that 34 mineworkers were killed and 78 injured, bringing the total loss of life since the strike began to 44. This number also includes the two police officers who were killed.
Today we gather here to mourn all those deaths - the mineworkers, the police, the National Union of Mineworkers, NUM, shop stewards and mine security members. We want to convey our sincerest condolences to the families and loved ones of the deceased. We wish those who are still in hospital a speedy recovery.
Indeed, the country is in mourning. In a democratic South Africa, images of this nature are not the ones we would want and expect to see on our screens and broadcast throughout the world. In a democratic South Africa, there are mechanisms that were put in place to prevent such events from happening.
This is not the time for finger-pointing and for scoring political points written in the blood of those that lost their lives, as some are trying to do here today. It is a time when, as a nation, we need to seek the answers together. In this House, across party-political lines, we have a joint responsibility to ensure that we address shortcomings where they exist. Nobody can leave this situation without properly examining the reasons that led up to this tragic event. As a nation, we need to draw lessons from this tragedy. Collectively, as a nation, we must ensure that we never again witness such senseless loss of life.
We welcome the judicial commission of inquiry that was announced by the President. As a nation, we need the commission to provide us with the answers and an understanding of what exactly led to this situation. We need to fully understand what happened and why it happened. We would humbly request the President to ensure that the commission not only looks at what happened on the day, but also goes back in time to determine how we got into a situation so bad that the intervention of the SAPS was needed.
The commission needs to provide us with the answers to the difficult questions we are currently struggling with as a nation. Not only must the commission determine whether anybody should be held accountable for the loss of lives, but it should in fact assist us in determining why the democratic mechanisms that are in place to deal with issues like these did not work in this instance.
It is clear that this was not a normal protest. The underlying reasons why it was not a normal protest need to be established. If this becomes only about the police and their actions on that day, like some here today are trying to make it, it would be wrong and negligent. Yes, the commission needs to determine whether the SAPS acted within the confines of the law and whether they were justified in using deadly force. But we cannot and should not look at this in a one-dimensional manner. We need to look at all aspects.
It is about much more than just what happened on that day. We must remind ourselves that prior to that day, 10 people, including 2 police officers, security staff of the mine and the NUM shop stewards, were killed in the most brutal manner possible. We must determine whether enticement to violence took place. We need to find and bring to book those who were responsible for the death of others at the mine. The commission will have to direct us in such a way that we can learn from this tragedy, so that we never again, as a nation, see a repetition of what happened on that tragic Thursday.
We all need to give the judicial commission of inquiry the opportunity and the space to do its work and not prejudge its outcomes, as we saw here today. All parties involved should co-operate with the commission and provide the commission with evidence and information. We call on all media houses that have footage to submit it to the commission. The trade unions have already pledged their co-operation in the work of the commission and we are expecting the same from all role-players, including the South African Police Service, the mine management and any other body that might be called to provide information and evidence.
Once the commission’s report is made public, as Parliament we will also have the responsibility to scrutinise that report. As portfolio committees, where it speaks about relevant departments and entities, we will have to engage in proper oversight on those aspects. As a Portfolio Committee on Police, we engaged with the SAPS on public order policing at the end of last year. We will do so again, at the opportune time.
We need to acknowledge that the increasingly violent nature of some of the protests throughout the country that the SAPS are confronted with, raises certain concerns. Amongst those concerns are whether we have enough SAPS officers adequately trained in public order policing, dealing with violent situations, as we have seen them.
Given the increasingly violent nature of some of these protests, is the equipment that they are currently using adequate, and can it stand up to the test? Is there enough equipment? Are there clear national instructions around public order policing? In the light of the violent nature of such protests, how do we deploy SAPS members throughout these incidents? There are also many other questions. Similarly, I am sure that other portfolio committees will have other issues that they want to interrogate; issues that can prevent situations like these from reoccurring.
Maybe this is a good time to remind Members of Parliament that six years ago in this Parliament we had a debate, following public hearings, on the conditions and wages of mineworkers. On that occasion, Parliament agreed to appoint a commission to further investigate the matter. Now, six years later, where do we stand in terms of the decision that was taken? We also need to do our oversight.
The investigation of the Independent Police Investigative Directorate, Ipid, is also supported. The Ipid is legally obliged to investigate all deaths as a result of police action, in terms of section 28 of the Independent Police Investigative Directorate. According to the directorate, this investigation will seek to determine whether or not the action taken by the police was proportionate to the threat posed by the striking miners.
As part of its oversight function, the portfolio committee will keep a close eye on this investigation and will receive a report on the outcome of the investigation, on its completion. We welcome the interministerial committee that was sent to Marikana by the President. We welcome the work that they are doing there and the role they are fulfilling on the ground in providing assistance to the families of the deceased.
We would like to ask the Minister of Police to ensure that trauma counselling and support are also given to the police members who were involved in the shooting. Let us not forget, like so many of us here today do, that they are human beings as well, and that the tragedy had a traumatic impact on them. We need to address that trauma through professional assistance.
This day and this debate will most probably go down in history as the one day where the media dealt with the issue before us in a more responsible manner than some members of this Parliament. Hon Lekota, maybe it is because the media was there as the situation developed. Hon Lekota, water cannons, teargas and rubber bullets were used. Why don’t you wait for the commission of inquiry to conduct its work? Why is it that somebody who knows so much about this situation does not know what was said in the briefing and what was done before they started using live ammunition? It is the same hon Lekota who was quiet when his political allies in the Western Cape called for the South African Defence Force to be deployed in our residential areas on the Cape Flats. [Applause.]
Hon Ndlovu, you have touched on some of the important issues that need to be looked at by the commission. It is also important to remind you that just last week, in this House, the hon Ambrosini effectively called for labour unions to be crushed.
One thing that we can always do in this House is to rely on the hon Kohler-Barnard to try and score - I can’t say cheap political points because at this stage they come at the cost of lives - political points, even on a solemn occasion like today.
On the one hand, they call for a commission of inquiry; they say it is a judicial commission of inquiry. They say we must wait for the outcome, but today in this House they have played investigator, pathologist, judge and executioner. [Applause.] It is sad that the bloodhound of the DA could not find five seconds in her speech to convey condolences to those people who lost their lives. [Interjections.]
Mrs S V KALYAN: Hon Speaker, on a point of order: The hon member referred to our hon member as a ``black hound’’. I think that is unparliamentary and I ask her to withdraw it.
Ms A VAN WYK: It was a ``bloodhound’’. [Interjections.]
Mrs S V KALYAN: Speaker, ``bloodhound’’ is still unparliamentary.
The SPEAKER: I will study the Hansard and come back with the ruling. Hon member, continue.
Ms A VAN WYK: Crowd control and crowd control policies are in place. There is always room for improvement, and we need to look at that. We easily forget that the same police that dealt with the 2010 Soccer World Cup did crowd control there. However, we cannot ignore the fact that the police are confronted with protests which are not conducted within the confines of the law. I thank you. [Applause.]
The MINISTER OF POLICE: Speaker, I think it would be important to remind one another that we are meeting here in this week, which has been declared a mourning week. Maybe some of us should have known that others would take this opportunity for very cheap politicking. [Interjections.] There is a serious matter here before us.
The first thing which we all need to say is that we condemn violence wholly, not partially. Whatever quarter it comes from, it has to be condemned. I think the Chief Whip of the Majority Party has raised an important issue on what to do going forward. We should all welcome the interfaith fund which he mentioned – the relief fund from the various religious bodies – because it clearly states that there are people in our society who are thinking about the future and what needs to be done going forward as a nation.
It has to be said to the Leader of the Opposition that, prior to Thursday, 16 August 2012, 10 people had been killed. Some were hacked and others were burnt in a gruesome manner. Some of their body parts were removed or interfered with. It has to be said, in this instance, that the role which was played by the two people who are referred to as izangoma should be condemned because they had lied to people and had said all sorts of things which did not exist. I hope that these things will be uncovered during the inquiry process.
I listened to the Leader of the Opposition, the hon Lindiwe Mazibuko. You were actually writing the terms of reference; perhaps what you were saying here would be a good suggestion to the judicial commission of inquiry.
To hon Lekota, who says that he didn’t see water cannons, teargas, and rubber bullets, I really wonder what you saw, sir! For your own information, all these things you were enumerating here were there and were used. After you stood here, you were immediately contradicted by the hon Holomisa, who actually saw those things. They were there, sir. I mean, we can help to ensure that you really see them even after the event.
We know very well the difference between the police and the army, which is why – even though the hon Kohler-Barnard is economical with the truth – we and nobody else said that the methods that we are using have to change and, indeed, we had to amend the law which governed that. It was we who said that it was not advisable to deal with the socioeconomic issues of the people of Khayelitsha, Gugulethu, and Lavender Hills here in this province by bringing in the army because we knew what the consequences of such action would be.
Honestly speaking, you astounded me with your ignorance about how membership of trade unions works. Basically, people who work for trade unions get their salaries from the subscriptions of the membership, not from government. It surprises me, because you have been part of government. It’s very important that we talk about these things.
To hon Holomisa, there was no plan from the police to ambush people. Policemen and women are workers like any other worker. They wake up in the morning and go to work; they don’t plan to go to work and kill people. The hon Kohler-Barnard says that it was their decision that made the President suggest the commission of inquiry. That’s not true and she knows it. When they made that suggestion, it had already been requested – first by the ANC and then the Ministry – that the President do that. Otherwise, what is outstanding in everything else she said is the fact that she is already giving evidence before the commission has sat! [Interjections.] She sees people who are wrong and says nothing about the role of the employer in this instance. Other people have commented on it, and it’s very interesting. But otherwise, what she spoke were empty sounds of fury that really signify nothing. I don’t think we need to go down that path.
Hon Lorimer, it’s not true, sir, that Cosatu created violence in the labour situation in South Africa. This is the union that was established in response to the violent, undemocratic government of the time. Your ignorance of the historical evolution of our labour and capital relations in South Africa really needs to be assisted. It shows a lack of understanding of the relations in a capitalist mode of production and its effect on society. Some of the things which members have been raising are related directly to that. Ever since there was a question here, the Labour department did – even before the strike had started – offer itself to mediate in the process. You must do your own research on what happened then and who said no. It’s the very people whom you think had nothing to do with this.
But most of the people have not been talking about the issue at hand. I think we all have to say that we have to regard this as one event on a learning curve. As a nation we must say that we are going forward and ask what it is that we have to offer in this regard. The Marikana people and people everywhere else in our country would want those answers – not cheap shots of a political nature. Thank you. [Applause.]
Debate concluded.
Motion agreed to, all members standing.
The SPEAKER: The condolences of the House will be conveyed to the affected families. We wish those who have sustained injuries a speedy recovery.
The House adjourned at 16:39.
__________
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
FRIDAY, 17 AUGUST 2012
ANNOUNCEMENTS
National Assembly and National Council of Provinces
The Speaker and the Chairperson
1. Draft Bill submitted in terms of Joint Rule 159
- Criminal Procedure Amendment Bill, 2012, submitted by the Minister of Justice and Constitutional Development.
Referred to the Portfolio Committee on Justice and Constitutional Development and the Select Committee on Security and Constitutional Development.
National Assembly
The Speaker
1. Introduction of Bill
(1) The Minister of Justice and Constitutional Development
- Criminal Procedure Amendment Bill [B 26 – 2012] (National Assembly – proposed sec 75) [Explanatory summary of Bill and prior notice of its introduction published in Government Gazette No 35500 of 13 July 2012.]
Introduction and referral to the Portfolio Committee on Justice and Constitutional Development of the National Assembly, as well as referral to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160.
In terms of Joint Rule 154 written views on the classification of the Bill may be submitted to the JTM within three parliamentary working days.
TABLINGS
National Assembly and National Council of Provinces
- The Minister of Justice and Constitutional Development
(a) Draft Rules made in terms of section 25(1) of the Judicial Service Commission Act 1994, (Act No 9 of 1994), to regulate procedures before Judicial Conduct Tribunals, tabled in terms of section 25(1)(c) of the Act.
COMMITTEE REPORTS
National Assembly
1. Report of the Portfolio Committee on Public Enterprises on the Annual Reports of the Department of Public Enterprises and state-owned companies, dated 25 January 2012
- INTRODUCTION
The Portfolio Committee on Public Enterprises, having considered the 2010/11 Annual Reports of the Department of Public Enterprises and its state-owned companies (Alexkor, Denel, Eskom, Infrastructure Company, Safcol, South African Airways (SAA), South African Express (SAX) and Transnet), reports as follows:
The Committee considered the 2010/11 Annual Reports of the Department and those of the state-owned companies (SOCs) as follows: Department of Public Enterprises (DPE) on 12 October, Eskom on 11 October 2011, Denel on 19 October 2011, Infrastructure Company (Infraco) and Alexkor on 8 Nov 2011, South African Airways (SAA) on 25 October 2011, South African Express and Safcol on 1 November 2011, and Transnet on 13 September 2011.
The report seeks to give a summary of what the entities presented to the Portfolio Committee, the findings of the Committee and recommendations on what action needed to be taken to rectify the observations of the Committee.
The Committee’s major concerns in considering the Annual Reports for 2010 included the following:
- An update on the work of the Inter-Ministerial Committee on state-owned enterprises.
- The appointment of Board members and their mandates and how these corresponded to the government’s notion of a developmental state.
- Workers’ representation on Boards of SOCs.
- The remuneration of Chief Executive Officers and Board members.
- The security of electricity supply.
- How the Departments of Public Enterprises and of Energy worked together to deal with policy issues, for example the Integrated Resource Plan.
- Were targets achieved? If not, what were the reasons or challenges?
- What lessons have been drawn from the failure to achieve targets and how has this impacted on the performance of the SOE for the year under review?
- What were the financial results? Did SOEs receive qualified audit reports?
- The growing concern regarding underperforming entities and the financial sustainability of entities.
The focus of the Committee was informed by the priorities set aside by Government in terms of job creation and skills development.
2. ANNUAL REPORT OF THE DEPARTMENT OF PUBLIC ENTERPRISES
The Department of Public Enterprises (DPE) was represented by the Mr T Matona (Director-General), Mr C Forlee (Deputy Director-General: Energy), Ms R Lepule (Deputy Director-General: Transport), Mr A Kamungoma (Acting Deputy Director-General: Chief Investment Portfolio), Ms M Mokholo (Deputy Director-General: Legal and Governance), Mr E Ritchken (Strategic Project Adviser) and Ms S Crosson (Head: Corporate Services)
2.1 Annual Report presentation
The Director-General highlighted the key matters that would be covered in the presentation and informed the Committee that the mandate of the Department emanated from the economic challenges faced by the country. In order for state-owned companies (SOCs) to effectively contribute to the industrial policy there was a need for rigorous shareholder oversight, a coherent policy and regulatory environment, and well co-ordinated government programmes to support targeted SOC initiatives. He identified these as the elements of the Department’s strategic thrust. He further reported how the different programmes had performed against predetermined objectives.
2.2 Performance of the different programmes
The Department reported the following regarding the performance of the different programmes:
2.2.1 Administration
• Standardisation of financial and risk reporting templates and dashboard with enhanced analytical functionality had been developed for all SOCs.
• Quarterly shareholder reports submitted on SOCs performance assessments, detection, monitoring and mitigation of cost-cutting shareholder risks.
• Capital structure assessment completed for Safcol, Denel, Eskom, Infraco, SAX, SAA and Transnet. A study has been undertaken of the different possibilities for facilitating infrastructure funding required by SOCs.
• A five-year review of SOCs has not been completed due to lack of capacity.
2.2.2 Energy and Broadband Enterprises
• Shareholder compacts concluded in June 2010.
• Monthly, quarterly and annual monitoring completed as planned for the financial year under review.
• The Pebble Bed Modular Reactor has been granted exemption and was no longer required to submit corporate plans, shareholder compacts and quarterly reports due to the company’s transition to “care and maintenance.”
• A collaborative joint venture between Broadband Infraco and Sentech at an infrastructure level was being established.
2.2.3 Legal, Governance and Transactions
A panel was established to review the 2007 and 2009 DPE guidelines on the remuneration of board members and the executives of SOCs. The panel’s report was submitted to the Minister in 2010, but Cabinet mandated the department to engage on a new remuneration model prior to returning to Cabinet with a final decision.
2.2.4 Manufacturing Enterprises
The process was underway to align Denel’s capabilities with the Department of Defence and Military Veterans’ strategic requirements. This was dependent upon the said Department finalising its defence strategy.
• There was an ongoing process between the Department of Public Enterprises, National Treasury, the Department of Defence and Military Veterans and the Department of Trade and Industry to review Denel’s new mandate.
• A position paper on Denel Saab-Aerostructures’ turnaround strategy had been developed.
• A five-year review of Denel’s performance had not been completed.
• The transfer of minority shares to communities by SAFCOL was underway as the Department of Rural Development and Land Reform (DRDLR) was finalising an alternative model for share transfer to ensure that communities did benefit.
• The future role of SAFCOL post land claims had commenced.
2.2.5 Transport Enterprises
• Financial modelling of Transnet’s pipelines tariff application and scenarios of tariff increases were completed and first instalment of levy disbursement to Transnet.
• The review of SAA and SAX route network as part of the Corporate Plan review.
• Business plans for South African Airways Technical (SAAT) and Voyager were completed and submitted.
2.2.6 Joint Project Facility
• The skills dashboard had been revised and SOCs’ capacity and dashboard were operational. SOC reports were submitted, monitored and evaluated.
• Trainee artisans, technicians and engineers were supported by SOCs in various programmes, eg bursaries, internships, learnerships and apprenticeships.
2.3 Financial Performance of the Department
The decrease of R3.435 billion in the annual appropriation from R3.991 billion in 2009/10 to R555.549 million in 2010/11 was mainly as a result of a decrease in transfer payments to SOCs.
Under-spending in the Department amounting to R15.548 million was recorded in the current financial year. The amount was made up of current expenditure in the operational budget mainly under Compensation of Employees as a result of some posts that were not filled due to scarcity of specialist skills in the market, as well as under-spending under goods and services which arose due to some projects that were delayed until very late in the year. The Department had requested rollovers from National Treasury for two projects in the sum of R3.378 million in order for them to be completed in the new financial year. The Department did not achieve its 2% under-spending target, which was exceeded by 0,8% in the year under review. There was no substantive impact on delivery within programmes as a result of this under-spending.
2.4 Human Resources
The Department had a challenge of shortage of critical skills which was reported in the previous financial year. The challenge continued to affect the Department, especially when sourcing the requisite skills and experience required for highly specialised functions or projects. In some instances the Department managed to attract the required skills but again struggled as these employees became more experienced and were recruited by SOCs and the private sector.
The Department had a problem with the public sector’s remuneration policy which limited the Department’s flexibility in offering attractive salary packages, including bonuses, which negated any viable retention strategies. The Department was in the process of reviewing its organisational structure to align it with the mandate and priorities of the Department.
2.5 Committee’s observations
The Committee raised concerns regarding the following:
- The inability of the Department to pick up irregular and fruitless expenditure timeously in SOCs, such as the R8.5 billion fruitless expenditure reported by Transnet.
- The slow pace of finalising the executive remuneration review report and the lack of consistency in remuneration across SOCs.
- The adverse effects of decisions taken by policy departments and the lack of policy decisions that were hampering the Department.
- The escalating costs of power stations and the slow pace of introducing renewables.
- The Committee acknowledged the shortage of skills and the inability of the Department to recruit due to competitive market-related packages offered by the private sector.
2.6 Conclusions and recommendations
The Committee resolved that the Department should urgently finalise the executive remuneration report and a report on the recommendations should be submitted to the Committee as soon as it became a public document. The Department should fill the vacancies urgently. The Director-General and CFO should share strategies with other government departments on how to achieve clean audits.
3. ANNUAL REPORT OF DENEL
Denel was represented by the following delegation: Mr Z Kunene (Chairperson of Board), Mr T Sadik (Group CEO), Mr F Mhlontlo (Chief Financial Officer), Ms P Mushungwa (Group Executive: Corporate Affairs), Mr A Kamungoma (Acting Deputy Director-General: Investment Portfolio).
3.1 Performance of the entity
The Chief Executive Officer informed the Committee that the entity had achieved eight of the twelve performance targets as agreed to in the shareholder compact. The entity failed to improve in the following areas: profitability management, reduction of debt and gearing, optimisation of operating expenditure and productivity improvement. He informed the Committee that Denel had a debt of R1.85 billion which posed a threat to the entity. The global economic conditions and the decline in export orders had a negative effect on Denel Saab-Aerostructures (DSA). The entity would be placing more focus on the areas that did not perform well. Furthermore, it would require constant funding from customers in order to strengthen the balance sheet.
The CEO informed the Committee that the company that made an offer to buy a stake of DSA could not satisfy the conditions and the deal could not go through.
3.1.1 Financial performance
The Committee was informed that Denel continued to show progress towards self sustainability. The entity made a profit of R111 million, and generated positive cash of R178 million, an improvement of R522 million from R344 million in 2010. The Defence, Security and Certification clusters generated earnings before interest and tax of R130 million and cash of R278 million. Furthermore, there were positive results as a result of the aerostructures turnaround plan, in terms of reduced operational expenditure.
3.2 Challenges facing the entity
The Committee was informed that the major challenge remained the loss making DSA. The debt was at R1.85 billion at end of March 2011 and the entity required recapitalisation of ± R2 billion. The solvency of R400 million was too low for an organisation the size of Denel and the entity was experiencing low funding levels. Recapitalisation discussions were underway with the Department to strengthen the balance sheet. Denel had presented to the Defence Review Committee to ensure that there was certainty with regard to orders and defence needs of the country. Denel needed political and diplomatic support in order to secure bi-lateral defence cooperation agreements and proactive promotion of Denel business.
3.3 Human Resources and Transformation
Employee wellness and human capital were central to the success of the entity, and Denel had programmes to ensure the production and development of requisite skills. These are some of the interventions and programmes:
- Artisan training - the Denel Training Academy enrolled approximately 300
apprentices per annum, but with additional funding the number could increase.
- Denel Youth Foundation Training Programme – this maths and science
programme enrolled 50 learners per annum. It cost Denel R5.2 million per
year. The entity also had programmes such as Women In Engineering,
outreach programme to schools, learnerships, bursaries and partnerships with
universities. All these were aimed at developing young people and women in
maths and science and to address the challenge of employment equity in the
technical fields.
3.4 Committee observations
The Committee made the following comments:
The Committee welcomed the efforts and improvements that were reported regarding the turnaround strategy of the Denel group. However, it was concerned that the group was still in a loss-making position and Denel Saab-Aerostructures (DSA) was still a risk for the group.
- Concern was expressed regarding the lack of accountability on the part of the CEO due to his absence during the oversight and strategic plan of the Committee.
- The Committee raised concern at the continued lack of orders from the Department of Defence and Military Veterans, and noted that the proposed solutions were not in Denel’s control but depended on decisions from policy departments.
- What were the prospects of building a competitive aerospace industry in South Africa?
- Clarity was sought on claims and payments to Saab, and the R1.2 billion contracts and assurance was sought that there will be no comebacks in those contracts.
- How would Denel emerge from the loss making post-2012?
- Clarity was sought whether training that was done was voluntary or mandatory, and whether it was assisting to achieve employment equity targets.
- Clarity was sought on how the non-executive director’s remuneration was calculated and concern was expressed on the low meeting attendance of some board members.
- Clarity was sought whether the CEO would be getting a golden handshake and on the reasons for his departure.
- Clarity was sought on the JSE-listed subsidiary of Denel and where the patent of Denel was.
- Concern was expressed at the manner in which the annual report was presented as it was silent on the achievements of the entity against pre-determined objectives.
- From where were all the beneficiaries of the bursaries sourced in terms of province and cities? What strategies were in place to recruit from rural areas?
- Information was needed on all the countries that Denel did business with (exports).
- Where have all the skills gone to that were retrenched from the DSA?
- Clarity was sought on the money that Denel had not received from government and how it had affected the performance of the entity.
- There was a proposal for Denel to partner with Eskom and Transnet on developing surveillance technologies to protect copper cables.
- What sort of products was Denel providing to the South African National Defence Force (SANDF)?
3.5 Responses
In his response, Mr Sadik indicated to the Committee that he had sincerely apologised to the Chairperson for all the instances he was unable to honour invitations of the Committee. He responded as follows to questions:
- It was the first time that Denel achieved positive financial results. For the entity to be sustainable, there was a need for recapitalisation. Furthermore, there was a need for certainty on the future role of Denel in relation to the SANDF.
- There had been efforts to market the DSA and solicit deals from international markets. However, discussions were ongoing.
- There was an opportunity and market for South Africa to play a key role in the aerospace industry.
- Denel had to pay DSA as it was bound by a contract, and it had never said that the Saab exit would not have financial consequences.
- Denel did not sell products to countries in conflict, and complied with all local and international conventions. It was bound by contracts not to disclose to the Committee the countries with which it did business and what it exported. Denel did business with more than 30 countries in Africa.
- Denel had no subsidiary that was listed on the JSE and there were no patent listed under Denel.
- Denel requested R5.2 billion for recapitalisation and only received R3.5 billion. The entity was inundated with the repayment of the interest of the debt.
- The mandate of Denel was to ensure that the SANDF delivered on it constitutional mandate by producing the apparatus needed for that purpose.
- The reason Saab exited the contract with DSA was because the contract allowed them to do so. The net asset value of Denel was R654 million.
- India was an important partner, and the entity hoped the litigation would be resolved in court.
- Assurance was given that the Rooivalk and the Hoefyster were world class and competitive and put South Africa on the map. Some components of the Rooivalk were imported and the countries that supplied the components were uncomfortable with it competing in their local markets.
- The morale of staff was improving and the management had regular meetings with trade unions who were consulted thoroughly on issues affecting workers.
3.6 Conclusions
The Committee resolved that Denel should send quarterly progress reports on the turnaround strategy and the restructuring of Denel Saab-Aerostructures. Furthermore it would have a meeting with the Portfolio Committee on Defence and Military Veterans to discuss the orders from the South African National Defence Force.
4. ANNUAL REPORT OF ESKOM
The delegation from Eskom was represented by Mr Zola Tsotsi (Chairperson of Board), Mr Brain Dames (Group CEO), Ms Tsholofelo Molefe (Group Executive: Marketing and Stakeholder Relations), Mr Dan Marokane (Chief Commercial Officer), Mr Kannan Lakmaharan (Group Executive: Strategy and Planning), Mr Chose Choeu (Divisional Executive: Corporate Affairs), Ms Hillary Joffe (Divisional Head: Distributions), Ms Carin de Villiers (Parliamentary Adviser) and Dr Chris Forlee (Deputy Director-General: Energy, Department of Public Enterprises).
4.1 Performance of the entity
The Group CEO gave an overview of the financial year and highlighted the achievements and challenges that the entity had encountered. The annual report was presented as follows:
4.1.1 Financial performance
Tariff increases and the renegotiated Special Pricing Agreements (SPAs) with smelters and mining customers had improved Eskom’s financial performance for the financial year under review. The utility made a profit of R8.3 billion for the financial year under review. The renegotiation of the Skorpion SPA relating to commodity-linked revenue had been finalised. The negotiation of the remaining SPAs (Hillside and Bayside) was expected to be concluded in the medium term.
The revenue of Eskom increased from R71.2 billion in 2010 to R91 billion in 2011 as a result of an environmental levy charged to customers which contributed R4.3 billion, as well as the sale of electricity that increased by 2,7% and below the 4,2% target. The budget shortfall was attributed to redistributions to municipalities, industrial customers (smelters and mining customers) and prepaid customers due to the slower-than-anticipated recovery of the economy. Primary energy costs for the year amounted to R35.8 billion, increasing by 19,8% compared to the previous financial year. Overall, the increase in primary energy cost was made up of coal handling, coal-fired start-ups, gas-fired start-ups and nuclear fuel costs.
In the previous financial year Eskom’s key focus was the ‘Path to recovery’ strategy, which was to bring the Group back to financial stability, and this seemed to have paid off as the Group posted a substantial profit compared to the R3.6 billion reported in the 2010 financial year. This was as a result of tariff increases and the renegotiated special pricing agreements (with smelters and mining customers). The utility will, however, need to sustain this performance by improving on efficiency and embarking on further cost-saving measures.
4.2 Eskom funding challenges
Eskom has a funding plan in place to address its funding shortfall of R300 billion needed to complete its six-year infrastructure build programme. The utility has issued a bond directly from its balance sheet, generating bids to the value of $3.9 billion of which $1.75 billion went to Eskom. To date Eskom has secured about 71% of its funding requirements with the support of government.
4.3 Human resources
Eskom had a total workforce of 41 778 compared to 39 222 the previous financial year. Eskom’s top and senior management level was dominated by white males with a low representation of women in general. In the 2010 financial year there were about 97 females at Eskom, occupying both top and senior positions compared to 312 males in the same positions. The Group has implemented an Employment Equity Plan that was supported by a long-term target setting strategy (Equity 2020) to drive the transformational agenda for the next three financial years until 2012/13. The Group prided itself on having achieved its target of people with disabilities with about 1 012 people with disabilities within its fold. Costs on employees increased by 14.1% to an amount of R20.4 billion compared to R17.9 billion in 2010. In terms of numbers, Eskom’s employees increased by 2 556 from 39 222 to 41 778.
4.4 Comments and questions
The Committee raised the following questions and concerns:
- Concern was raised at whether the funding that had been secured for seven years, would be sufficient and what would happen beyond that time.
- Why was the introduction of independent power producers occurring at such a slow pace and what progress had been made?
- What contract did Eskom have with municipalities and why could Eskom not distribute to the end user?
- The Committee made a plea to Eskom not to list household consumers with the credit bureau for failing to pay, but rather to look at other remedial actions.
- Clarity was sought on the circumstances surrounding the protest actions in Soweto. What difficulties was Eskom experiencing with municipalities that were not paying their accounts? Which provinces and municipalities were defaulting?
- Clarity was sought on the impact of the high tarrifs on the construction of the Medupi power station and concern was raised regarding the costs of the construction being more expensive than other countries.
- Which category of the 4.5 million customers was supplied directly by Eskom and what benefits did they have?
- Clarity was sought on the problem of the quality of coal and the reasons why contractors could not meet their deadlines.
- Concern was raised regarding the impact of the high cost of electricity on the poor and clarity sought on who the biggest culprits of electricity theft were.
- How visible was the top leadership of Eskom to the local branches, customers and communities and how would that improve going forward?
- How did Eskom incur fruitless expenditure of R17 million and what steps were taken to recover the loss?
- Eskom was commended for having concluded negotiations to end special pricing contracts. Clarity was sought on whether there were any contracts outstanding?
- How far was Eskom with rural electrification, and what problems were experienced with farmers and municipalities in advancing this project?
- Clarity was sought on the number of offenders prosecuted for stealing electricity.
- Until when would the citizenry pay for Eskom’s debts? Was the debt strategy the best strategy going forward?
4.5 Responses from Eskom
In response, the Group CEO responded as follows:
- The financial support received from the state was sufficient and the entity would be able to raise the remaining funds through loans. Eskom had not planned what needed to be built beyond Kusile, hence it would be unable to determine the funding requirement beyond seven years.
- The shareholder had stressed that Eskom should not be rigid with the balance sheet, but should be flexible to enter into equity partnerships in order to alleviate the pressure on government on future build projects.
- Eskom could not be solely responsible for the introduction of Independent Power Producers (IPPs). They charged Eskom 80c per unit, and Eskom sold electricity at 40c per unit. There were programmes that had been initiated by the Department of Energy to introduce IPPs. Four of the six projects in regard to IPPs were operational.
- Eskom supplied half the residential customers directly. The challenge was with regard to the backlog of infrastructure in the municipalities.
- The Free State had one municipality that had not paid Eskom, and arrangements have been made to settle the debt. The problem with repayments by municipalities was cyclical and was due to the inability of municipalities to collect revenue.
- Eskom conceded that the prices of electricity had adverse effects on local industries, but comparatively India and China were very competitive markets, hence the cost of power stations were lower than Medupi.
- There were no special prices for customers who were receiving electricity directly from Eskom.
- Poor quality coal caused damage to the plant and resulted in high maintenance costs. Eskom has tightened coal specifications with suppliers, and coal that did not satisfy specifications would not be loaded. There was a need for more investment in coal mines.
- There was a problem with the boiler contractor not achieving targets as expected, but Eskom was working with the contractors to ensure that the targets were met timeously.
- Big companies stole the highest volumes of electricity.
- In terms of visibility, Eskom’s leadership had visited and met with premiers, mayors, communities and NGOs. Eskom had a programme that made management accessible to employees at branch level.
- Eskom had concluded negotiations on special priced contractors, and the only one outstanding was the Bayside contract.
- Eskom was not funding the rural electrification programme. The Department of Energy was the one that decided which areas needed to be electrified, while Eskom was only an agent.
- Eskom had no intention of approaching international financial markets in the short term.
4.6 Conclusions and Recommendations
The Committee resolved that Eskom should not send the names of household defaulters to the credit bureau and should explore other remedial interventions. It should employ strategies to sustain good relations with communities to minimise conflict and improve accessibility. The Committee would engage with relevant public office-bearers to assist in educating the public on the adverse effects of the non-payment of services. Eskom should send full details to the Committee regarding the list of municipalities that are default customers and the list of electricity/cable theft cases that have been successfully prosecuted. The Committee further resolved that the Department of Public Enterprises should ensure that the process of criminalising copper theft and illegal connections was speedily concluded.
5. ANNUAL REPORT OF SAA
The SAA delegation comprised the following persons: Ms C Carolous (Chairperson of the Board), Ms S Mzimela (CEO), Mr W Meyer (CFO), Ms S Coetzee (General Manager: Legal and Compliance), Ms T Mpshe (General Manager: Human Resources) and Ms R Lepule (Deputy Director-General: Transport, DPE).
5.1 Performance of entity
The Chairperson of the Board gave an overview of the performance of the entity, challenges facing the entity and the industry as a whole and the focus of the entity moving forward. She highlighted the following in her input:
- SAA had exceeded most of its key performance indicators (KPIs). The ones that were not met were due to global pressures.
- Unlike its competitors, SAA had not received recapitalisation and performed better comparatively.
- SAA had made progress in the civil and criminal proceedings for crimes identified in the KPMG report, and governance and compliance measures had been sharpened in the organisation. Progress was also made on litigation matters against SAA in South Africa and globally.
5.1.1 Financial performance
SAA made a profit of R795 million before tax and the subsidiaries had the following achievements:
- Mango made a profit of R500 000 and obtained its fifth aircraft.
- SAA Technical made a profit of R63.5 million and had started a major business improvement programme.
- Air Chef made a profit of R2 million and instituted a turnaround plan focusing on increasing third-party business.
- SA Travel Centre renewed focus on providing greater sales support for SAA.
5.1.2 Employment and Skills Development
SAA trained its employees to improve productivity and compliance within the entity in the following areas:
- Functional training: trained 2 243 employees;
- Legislated and licensing training: trained 5 574 employees;
- Corporate skills, leadership and management development: trained 3 794 employees;
- Skills development for external parties: 101 delegates trained on short courses, eg painting techniques, welding, electronics, mechanics, electro-plating, turners and machinists, avionics.
The entity made progress in terms of employment equity, but the challenge was the recruitment of people with disabilities and Black pilots.
5.1.3 Governance and Compliance
There were governance improvements across the entity, which included the following:
- SAA made significant progress towards compliance, in particular Public Finance Management Act (PFMA) compliance.
- Legacy tender procedures, where timely contract extensions and signing of contracts by both parties were not in place, resulted in irregular expenditure of R85 million, but none of the individual irregular expenditure items were of amounts that reached the materiality threshold in terms of section 55(2) of the PFMA. The payment of fines and penalties resulted in fruitless and wasteful expenditure of R2 million.
- Legacy competition law non-compliance cases were reduced, but some cases were still open.
- A manual system for detecting and reporting irregular, fruitless and wasteful expenditure was introduced.
- Delegation of Authority and Supply Chain Management Policy was reviewed.
- Bid Adjudication Committee (BAC) terms of reference were reviewed and the BAC was reconstituted.
- The Legal and Regulatory Universe was updated.
- Consumer Protection Act compliance training for all relevant officials was conducted.
- Two foreign criminal cases were successfully defended, with prosecution discontinued and one foreign civil claim for damages successfully struck from court proceedings.
5.2 Economic contributions by SAA
SAA played a key role in the economy, and the contribution included the following:
- SAA contributed R23.4 billion to GDP (in addition to the R50.9 billion in other sectors).
- SAA created 116 000 tourism jobs (in addition to the 227 000 created in other sectors).
- SAA carried approximately 50% of inbound passengers, and as a result made a contribution to GDP of R11.7 billion and supported 58 000 South African jobs.
5.3 Challenges facing SAA
The global economic climate had an adverse effect on the aviation industry, which included the following:
- Low GDP growth meant static passenger and cargo demands
- Economy traffic had still not fully recovered from the global financial crisis
- Further downward pressure on average fares
- Oil prices steadily moved above USD 100 per barrel
- Rapidly increasing competition from Middle Eastern airlines
- SAA had not grown its business or fleet for a long period.
5.4 Committee’s observations
- The Committee commended SAA for the success with its turnaround of SAA Technical and for launching the pilot programme.
- Clarity was sought on the number of aircraft that SAA owned, what its relationship was with pilots and where SAA sourced its pilots.
- Concern was raised at the prevalence of baggage pilferage. What was being done to curb it?
- Would Santaco have any adverse impact on the Mango routes? What kind of support did SAA give to Mango and was Mango sustainable?
- How was Mango performing on the Durban to Cape Town route and did it not lose out to competitors?
- What legacy issues were still outstanding, including Com-Air, and what were the challenges facing the board?
- Would the entity be able to clear its debt completely? What did SAA do with the profits and did it have problems with hedging?
- Did the entity enjoy any support from embassies for marketing?
- Did SAA explore international routes such as Cape Town to Rio de Janeiro?
- Concern was raised about securing the air service licence as reported in the annual report. A progress report was sought on the KPMG report.
- How did the remuneration of SAA staff compare with other airlines?
- How visible and accessible was the leadership of SAA, and how would that improve going forward?
5.5 Responses
In response, the Committee was informed that:
- SAA’s management had worked very hard to improve staff morale. The CEO and the Chairperson of the board had visited all units to build good relationships with staff.
- There was a service level agreement with Airports Company South Africa to tackle the problem of baggage pilferage.
- SAA had managed to recover millions of rand through the Asset Forfeiture Unit from those implicated in corruption cases. Criminal and civil cases were underway.
- Mango was 100% SAA owned, but was managed independently. The entity was profitable and sustainable. SAA negotiated and purchased fuel on behalf of Mango.
- Santaco was not a threat to Mango as it did not operate on the same routes as Mango.
- There was a joint forum with Armscor, SA Airforce, SA Express and Denel to respond to the new growth path and produce scarce technical skills.
- There was co-operation between state-owned companies (SOCs) in terms of using facilities for training for the industry.
- The SAA board had subcommittees that were functional. One of the subcommittees dealt specifically with compliance.
- SAA leased 44 aircraft and owned seven aircraft for which it was still paying. It had a net asset value of R2.9 billion.
- Baggage pilferage had a negative effect on the financial performance of the entity. Baggage pilferage had declined by 59% on domestic flights but had increased on regional flights at OR Tambo. A campaign called Project Zero, involving ACSA, law enforcement agencies and employees, was launched to deal with baggage pilferage.
- Profits of the entity were used to strengthen the balance sheet and repay debts.
- Since the release of the annual report, SAA had since secured the air service licence.
- Each board member chaired a subcommittee and spent at least one day a week at the SAA office.
- SAA paid better salaries with benefits compared to other airlines and regarded itself as the best paying airline in the industry.
- The only civil claim outstanding was the Com-Air litigation case.
- The R85 million irregular expenditure reported was due to a lack of timeous conclusion of valid contracts and did not relate to misconduct. Furthermore, the fruitless and wasteful expenditure of R2 million was due to late payments.
5.6 Conclusions
The Committee commended SAA for the swift manner in which it dealt with fraud and corruption cases and vowed to work with SAA to ensure the financial sustainability of the entity.
6. ANNUAL REPORT OF INFRACO
The delegation of Infraco comprised the following persons: Mr M Ngcobo (Chairperson), Dr A Shaw (Acting CEO), Ms R Magoele (CFO), Mr A Kamungoma (Acting DDG: Investment Portfolio, DPE), Ms M Mokholo (DDG: Legal and Governance, DPE).
6.1 Performance of the entity
The entity had managed to achieve a number of successes in 2010/11, which included the following:
6.1.1 Achievements
- Launched to the broader telecoms market in November 2010
- Five new open access long-distance Points of Presence (PoP) in KwaZulu-Natal, Western Cape and Gauteng
- Three customers signed on and piloting was at the time being conducted by all major telecom providers
- Expanded fibre optic cable footprint to 13 250km
- Establishment of an in-house maintenance and operations department
- International connectivity: continued participation in West Africa Cable System WACS with a 5.12 terabit capacity
- Staff complement increased from 67 to 156.
6.1.2 Financial performance
For the year under review Broadband Infraco posted a loss of R206.9 million. Revenue decreased from R306.4 million in 2010 to R297 million in the financial year under review. The company’s total equity and liabilities remained at R1.7 billion. Operating expenditure decreased from R102.3 million in 2010 to R26 million in 2011, whilst investment expenditure increased from R245.3 million in 2010 to R536 million in 2011. Financing activities decreased from R281 million in 2010 to R187.2 million in 2011. Internal control weaknesses were identified, with the majority of these now addressed.
6.1.3 Human resources and skills development
The entity had a staff complement of 156 permanent employees by end of March 2011. The company, through its recruitment policies and procedures, promoted employment equity. Its racial and gender equity appointments equalled 87% Black and 35% women respectively by the end of the financial year. Permanent appointments were made in areas of sales, network engineering, capital projects, human resources and enterprises risk management. Strides were made in human capital development in the reporting period with regard to informal training. The entity spent 3% on skills development, exceeding the minimum 1% required by the Skills Development Act.
6.2 Actions taken to address governance shortcomings
- Disciplinary action against six implicated staff for irregularities as identified by internal audit reports in respect of ‘irregular procurement practices relating to fibre optic installation contracts’ presented to the company in November 2010.
- As a consequence of various audits, procurement systems, processes and document control have been substantially strengthened, new supply chain policies and procedures have been developed and a framework agreement for compliance with the Construction Industry Board (CIBD) has been implemented.
- Contract management processes have been strengthened and further improvements were underway to meet the capital project implementation recommendations made by the internal auditors.
- All contractor payments within finance were now based on the three-way matching principle which includes purchase orders, invoices and goods receipt notes together with documented proof of investment decisions based on improved delegations of authority. The issuing of purchase orders is now also effectively regulated.
- All Declarations of Interest within the company, including those of the board, the executive and managers, have been updated.
- As a result of the qualification to the 2010/11 audit, no bonuses had been paid to any staff member.
- A new corporate plan was developed and submitted at the end of June 2011. The shareholder had subsequently approved the new plan, which identified a number of actions to turn the company around and ensure future sustainability. These included a new set of market-related value propositions, a re-assessment of the future product portfolio and an re-aligned organisation structure.
- HR PAYE payment procedures have been improved to avoid the previous payment of penalties to SARS.
- A proper payroll claims process had been set in motion. New leave from processes were in place and there was proper access control to the building.
- Procurement tracking and reporting tools have been created.
- An IT system review procedure has been developed, effective back-ups were available and were also stored off site. IT security has been substantially improved.
- Four new executive managers have been appointed, namely a new Chief Financial Manager, a Chief Technical Officer, an executive responsible for Governance and a head of the Capital Investment Programme.
6.3 Primary focus areas going forward
The entity had identified three focus areas which related to services, financials and internal processes to improve the company, which comprised the following:
- Retain existing customers and attract new clients through enhanced service.
- Improve Earnings Before Interest, Taxes, Depreciation and Amortization EBITDA margin by focussing on improving operational efficiencies.
- Enhance capital programme roll out and manage capital expenditure to revenue.
- Expand network, improve services and collaborate with customers in order to improve value proposition.
- Pilot projects: micro telecoms model for underserviced areas.
- Achieve enhanced Southern African regional connectivity.
- Alignment and collaboration with Sentech.
- Introduce international services when WACS goes live in 2012.
- Improve compliance with the PFMA and National Treasury regulations.
- Continued focus on human capital development.
- Strategically re-align the organisation to the changing needs of the market.
6.4 Committee’s observations
The Committee made the following observations:
- Commended the leadership for the swift action taken against those implicated, and sought clarity whether the entity had recovered any of the stolen money.
- Whether there were employees among those who had resigned or had been dismissed who still benefited from contracts with the entity?
- What was the role of the board in dealing with corruption? Was the board not aware of such acts in the entity?
- What was the Department of Public Enterprises doing to ensure that entities were conscious of the PFMA obligations and complied with such oblications?
- Concern raised about poor attendance at board meetings and the procurement committee not having convened a meeting for the year under review.
- Clarity sought on the impact of the absence of the electronic communication services licence.
- Clarity sought on the findings of the Auditor-General on fruitless and wasteful expenditure, and audit queries.
- How did the Department not pick up the absence and non-compliance of policies at Infraco?
6.5 Responses
In response the acting CEO informed the Committee that he would not be able to give a full account of the events as he was working in the Department at the time mismanagement occurred. However he responded as follows to questions raised:
- He had a difficult time initiating disciplinary disciplinary action against offenders, but had support from the new leadership. The disciplinary hearings were PFMA and governance compliance related. A change management process was instituted to improve the morale of staff.
- It would take the entity four to five years to return to profitability. A forensic investigation had been instituted and Delloite & Touche would report to the entity at the end of December 2011.
- No staff member had received a performance bonus, and this affected their morale but there was a need to reward innocent and loyal staff members.
- In January 2012, Infraco would enter into a commercial relationship with Neotel.
- The ECS licence was vital in enabling the entity to supply connectivity to schools, hospitals, clinics and impoverished communities.
- The Auditor-General could not find sufficient documentation to verify whether all procurement procedures had been followed.
- The entity constantly received calls from suppliers claiming outstanding payments, and there was no supporting documents to verify debts.
Dr C Forlee (DPE) informed the Committee that the Department would be training all Infraco employees on regulatory frameworks. Most of the policies at Infraco were imported from Eskom and had loopholes. An inter-ministerial forum had been established to focus on Broadband and the role of Infraco. Furthermore an investigation was underway on the possibilities of merging with Sentech.
6.6 Conclusions
The Committee commended the employees of Infraco who were hard working and loyal, and pledged its support to the management of the entity to ensure a successful turnaround of the entity. It resolved that it would have quarterly interactions with Infraco and would undertake an oversight visit to the entity at the end of November 2011. It further resolved to have quarterly interactions with the entity to monitor the financial control systems.
7. ANNUAL REPORT OF ALEXKOR
The delegation of Alexkor comprised the following persons: Mr R Muzariri (Chairperson), Mr R Paul (Non-Executive Director), Mr B Lategan (Acting CEO), Ms N Mxunyelwa (Acting Company Secretary) and Mr W Diergaadt (Pooling and Sharing Joint Venture (PSJV)).
7.1 Performance of the entity
For the period under review, the entity registered the following successes:
7.1.1 Financial performance
- Alexkor posted a net profit of R84.2 million and an operating profit of R11.3 million - the first operating profit since 2006.
- Production rose by 20% (this should be seen in the context of curtailed land mining as a result of the anticipated pooling and sharing joint venture (PSJV) with the Richtersveld community.
- The increased production, coupled with better diamond prices, helped Alexkor achieve a gross revenue of R195.9 million from diamond sales, compared to R163.9 million in 2010.
- Diamond sales for the year equalled R195.9m (2010: R163.9 million). The increase of 19.5%, was due to the increase in carat production of 37 794 carats, compared to a budgeted production of 31 425 carats.
7.1.2 Human resources
Alexkor had a total workforce of 975 employees of whome 106 were on Alexkor’s payroll whilst 869 were on contractors’ payrolls. With a small staff complement of 106 Alexkor’s employment profile showed a highly male-dominated workforce profile. Almost 93% (95) of Alexkor’s staff were males whereas women constituted only about 7% (11).
7.1.3 Implementation of deeds of settlement with Richtersveld community
- All the suspensive conditions of the Pooling and Sharing Joint Venture (PSJV) were met.
- The Deed of Settlement (DoS) signed between Alexkor, the state and the Richtersveld community in 2007 envisaged the establishment of the PSJV with the community, in which the land mining rights would be ceded to the community, while Alexkor would continue to hold the marine mining rights.
- The DoS required the conversion of old order land and marine mining rights. On 28 January 2010, the application for conversion of old order land mining rights was granted and subsequently executed on 19 May 2010.
- The conversion of the marine mining rights was also granted and executed on 2 July 2010.
- Land mining rights were ceded to the community on 28 March 2011 and registered on 6 April 2011.
- The PSJV with the Richtersveld community was established on 7 April 2011.
7.1.4 Progress on the township upgrade
- Phase one of the township upgrade project, consisting of a water network, sewerage network, storm water control network, solid waste disposal and road works, was 75% complete by the financial year end.
- The tender for phase two, namely the electrical reticulation upgrade project, was awarded in December 2010, with the contractor establishing the site in March 2011.
- The phase three tender for the mechanical and electrical pumping equipment was awarded in February 2011.
- Phase four relating to the waste water treatment works was at the environmental impact assessment (EIA) stage at financial year end because of some delays due to intersecting of bedrock.
- The final estimated completion date for the entire project was 30 June 2012.
- The total project expenditure at project completion was estimated at R110 million.
- To boost production in December 2009, and following consultations with the Richtersveld community, Alexkor decided to invite suitable, interested parties to express an interest as contractors in mining the deep sea, middle sea, shallow water, beach and the curtailed areas of land mining. This was done through a rigorous tender process.
7.2 Committee’s observations
The Committee made the following observations:
- Concern was raised at the high number of acting executives. Why was there a steep increase in executive remuneration?
- What plans were in place to replace ageing fleet and machinery?
- Were there any plans to explore mining in the Orange River and neighbouring countries?
- What action would be taken to address the queries raised by the Auditor-General?
- Clarity was sought on why the cost of royalties had decreased, and why was the salary of the Mine Manager reflected under deeds of settlement?
- Concern was expressed about the emphasis of matter raised by the Auditor-General. What would be done to address those matters?
7.3 Responses
In response, the Chairperson of the board stated the following:
- Mr Mike Mpanza was appointed in April 2010 as the new Mine Manager, hence there was an increase in salary. There were processes underway to fill the other vacant posts. Mr Wiaan Basson, General Manager for operations was a contractor reporting to the board of the PSJV.
- The PSJV was focused on developing a new diamond mining strategy, and work was underway to see how the new state-owned mining company could work with Alexkor.
- There was one doctor on site for occupational health and safety reasons.
- The Northern Cape provincial government had not yet taken over the schools, hospital and services.
- Higher-grade diamonds had been exhausted and the production had decreased from 1 000 000 carats in 1960s to 35 000 in 2011.
- The PSJV would begin exploration in June 2012. It would take six months in order to identify land to mine. In the last financial year Alexkor used to charge 4% royalties on diamonds, but now charged 0.4% as per the new formula developed by National Treasury.
- Alexkor was facing insolvency after effecting transfers to the Community and was in need of recapitalisation.
7.4 Conclusions
The Committee resolved that information be submitted to it on diamond theft cases, investigations and the rate of prosecution.
8. ANNUAL REPORT OF SAFCOL
The delegation of Safcol comprised the following persons: Ms N Magwentsu (Chairperson), Ms M Manyama-Matome (Acting CEO) and Hon BAD Martins (Deputy Minister of Public Enterprises)
8.1 Performance of the entity
The main focus of Safcol was on the management of state–owned commercial plantations and performance of Komatiland Forests (Pty) Ltd, Floma, Mountains to Oceans, Kamhlabane Timber and Temba Timber. The major subsidiary was Komatiland Forests (Pty) Ltd (KLF) which consisted of a forests business unit, research centre, nursery, and processing plants.
8.1.1 Financial and commercial sustainability
Safcol received an unqualified audit opinion. It reported an increase in sales levels but a loss before tax of R101 million, a reduction on the previous year’s loss of R588.9 million. Return on equity was -5% for the year, an improvement on the previous year’s -18.5% return on equity. Negative year-end cash flows were reported for the year.
8.1.2 Human resources
Both Safcol and Komatiland Forests (Pty) Ltd (KLF) were awarded Level 2 Broad-Based Black Economic Empowerment (BBBEE) contributor status for the year. Safcol improved on its employment equity status, particularly with regard to disabled employees and the number of black managers at senior and middle management levels. The Safcol board was reconstituted and subcommittees were restructured during the financial year. Safcol’s terms of reference had also been reviewed and updated to fall in line with Marvin King report on governence.
8.1.3 Challenges facing the entity
There were some major risks facing Safcol. The first related to the potential land claims on 61% of the land on which Safcol operated, which could have a significant effect on its operations after the land claims were finalised. There was also a damages claim against Safcol and government of R3.2 billion, which had been lodged after the decision taken by government to put the privatisation process on hold in 2009. Key individuals who dealt with the case were no longer working at Safcol.
8.2 Committee’s observations
The Committee made the following observations:
- Whether the land claims had any effect with the relationship with the community.
- Concern was expressed regarding the low representivity of women in the entity.
- The entity should explore expanding the range of products and finding new markets.
- Were there any strategies to co-partner with communities in order to minimise land claims?
- Why was Safcol not partnering with the Department of Human Settlements to supply wood for wooden houses?
- Why was the pace so slow in the resolution of land claims?
- Clarity was sought on the former CEO’s departure?
8.3 Responses
In response, the CEO informed the Committee that social compacts had been signed with the community to improve relations. There were joint community forums that met regularly to identify projects for the community.
She further responded as follows:
- The decision not to privatise had impacted the entity negatively because it created uncertainty on the future of the entity.
- The cost structure of Safcol was too high for the revenue of Safcol.
- Cabinet was yet to approve a policy on the participation in commercial projects.
- The former CEO had a negotiated settlement due to a breakdown in relationship. He was paid an annual salary and had since challenged the entity for a bonus and benefits. The matter was in the roll call for arbitration.
- There were no increases and bonuses for exco members for 2010/11.
- Safcol had constructed timber frames structures for schools, clinics and other developmental projects.
The Department of Public Enterprises (DPE) informed the Committee that it was engaging the Department of Rural Development and Land Reform, which had proposed the appointment of a private company to manage the shares on behalf of the community. DPE was playing a coordination role to ensure that the land claims were resolved swiftly.
8.4 Conclusions
The Committee resolved that the Department of Public Enterprises would need to brief the Committee on the future of Safcol, and on progress regarding the land claims cases. The Committee further resolved to undertake an oversight visit to Safcol at the end of November 2011.
9. ANNUAL REPORT OF TRANSNET
Transnet signed a performance agreement with the shareholder regarding the entity’s targets for the 2010/11 financial year. The entity had not met some of its targets due to the three week-long industrial strike actions that took place May 2010.
9.1 Performance of the entity
Below is a summary of the performance of the entity per different divisions:
9.1.1 Freight Rail
On operational efficiency, Transnet’s general freight business could not achieve its targets, especially on coal and iron ore exports. On safety, the divisions on both employee fatalities and public fatalities did not achieve their target of zero tolerance as eight employee fatalities and 138 public fatalities were recorded.
9.1.2 Rail Engineering
The division had met most of its targets on operational efficiency, infrastructure and human capital. The division had, however, failed to meet its targets on Broad-Based Black Economic Empowerment (reaching 44 instead of the targeted 80 on BBBEE procurement) as well as on employment equity as it managed to reach 74,4% out of a target of 78.0%. On safety, the division recorded 128 safety incidents out of a target of 114 with one employee fatality.
9.1.3 National Ports Authority
The division’s overall performance showed improvement compared to the previous financial year, and almost all the targets were met except for the expenditure on capital investment of about R2 billion, which was less than the R3.4 billion target agreed upon with the shareholder. There were no employee or public fatalities and only 32 recorded disabling injuries – this was an achievement as the entity was expected to record no more than 40 in terms of targets.
9.1.4 Ports Terminals
Performance by the National Ports Authority increased due to the division meeting most of its targets. Similar to the National Ports Authority division, the Port Terminals division on capital investment (infrastructure) spent R866 million, which was less than the targeted R1.3 billion. On safety, there were 1 436 reported incidents of safety and one employee fatality. Safety seemed to have been a challenge for almost all the Transnet divisions.
9.1.5 Pipelines
The pipeline division met all of its targets except slight production interruption, which might have had a negative impact on the division’s overall performance. There were no reported employee and public fatalities. There were, however, 76 reported safety incidents and in terms of the target this was an achievement as safety incidents were not expected to be more than 86. On electricity consumption, the Group failed to meet its target of 218 719 Giga-Watts but instead recorded 236 117 GWatts of electricity consumption.
9.2 Financial performance
Transnet’s revenue for the year ended 31 March 2011 had increased from R35.6 billion to R37.9 billion. The increase in revenue was attributed to an increase in volumes during the year and an effective yield and mix management programme, despite a protracted industrial strike action during May 2010. Performance improved for four divisions compared to the previous financial year except for the pipeline division whose revenue decreased by 3,6% to R1.13 billion from R1.17 billion. The Group made a profit of R4.1 billion, and in the same year government had guaranteed certain borrowings for Transnet to the amount of R9.5 billion.
The auditing firm, however, drew attention to the following three aspects, namely procurement, contract and expenditure, that were in contravention of the laws and regulations (Public Finance Management Act 1 of 1999) of state companies and institutions, which were as follows:
(1) Fruitless and wasteful expenditure of R36 million on the procurement of a pneumatic ship unloader.
(2) Irregular expenditure of R8.5 billion relating to four contracts for:
- The provision of Engineering, Procurement and Contract Management (EPCM) services on capital projects;
- The supply of 32 Rubber Tyred Gantry (RTG) cranes;
- The accommodation of staff; and
- The supply of rails.
9.3 Human Resources
Transnet had a total workforce of 49 078 employees consisting of 47 763 permanent employees and 1 315 fixed-term contract employees. In terms of employment equity, African employees represented 62% of Transnet’s workforce, while Indians and Coloureds represented 4% and 10% respectively. Whites in the company represented 24% of Transnet’s workforce. In terms of gender, male representation at Transnet stood at 80% and females at 20%. The Group recognised the under-representation of females and its poor performance on people with disabilities (0,8% representation) as a challenge, which has been taken up as part of the entity’s Employment Equity Plan.
9.4 Committee’s observations
The Committee made the following observations:
- Concern was raised at the high prevalence of corruption, and clarity was sought on where it was more prevalent.
- Clarity was sought on the bonuses paid to Mr Gama and other executives.
- Serious concern was raised about the irregular expenditure of R8.5 billion and clarity was sought on the action taken.
- Why was Transnet not adhering to the report of the Committee on the Transnet Second Defined Benefit Fund?
- When would the new multipurpose pipeline be completed? Concern was raised regarding the escalating costs.
- When did Transnet pay out bonuses, and what formula was used in relation to performance targets?
- What progress was made to remove trucks from the roads and what plans were in place?
- Were disciplinary actions initiated against employees who had been implicated in irregular, fruitless and wasteful expenditure?
- Concern was expressed at the performance regarding on-time arrival and departure of frieght trains and the money it had cost the entity. What measures were taken to rectify the situation?
- What was done to address the shortage of train drivers and to fill vacancies within the entity, especially the CFO?
- Concern was raised about internal and external auditors being unable to pick up irregularities.
- Clarity was sought on the debt that the Passenger Rail Agency of South Africa owed Transnet.
9.5 Responses
In response, the CEO accounted as follows:
- Transnet hoped to report an improvement on mid-term results regarding moving trucks to rail.
- There was a fraud working committee in every division that was managed by Delloite & Touche.
- The R8.5 billion irregular expenditure related to four project management and construction contracts that were entered into in 2004/5, where there was an absence of internal control systems and the PFMA. Action taken included a provision where only the Group CEO could sign condonements as of March 2011.
- Regarding bonus payments, when the remuneration committee recommended a bonus, the company reserved the money for three years and paid out a lump sum at the end of the third year. The amount that was paid to Mr Gama was for the years he worked before he was suspended.
- The trustees of the TSDBF were the only people who could change the rules of the fund; the trustees have been tasked to present a way forward on the fund.
- Transnet was in the process of training 1 125 train drivers.
- Discussions were underway to fill the position of CFO.
- Transnet contemplated having scanners for all containers leaving the country to detect copper that had been stolen.
- The board of Transnet was reviewing the incentive scheme to ensure transparency and consistency.
9.6 Conclusion and recommendation
The Committee resolved that Transnet should provide the Committee with the incentive review report. It further resolved that Standing Committee on Public Accounts (Scopa) should investigate the R8.5 billion irregular expenditure reported at Transnet.
10. ANNUAL REPORT OF SOUTH AFRICAN EXPRESS AIRWAYS (SAX)
The delegation of SAX comprised Ms L Boyle (Chairperson), Mr I Ntshanga (CEO), Mr V Matsotso (Non-Executive Director), Ms A Ntsho (Company Secretary) and Ms R Lepule (DDG: Transport, DPE).
10.1 Performance of the entity
The performance of the entity was presented as follows:
10.1.1 Financial performance
The airline’s revenue for the financial year under review was R1.642 billion, marginally up by 2% compared to the previous financial year where revenue was R1.612 billion. The impairment of debt extended to Congo Express, amounting to R35 million, had a material impact on the final results of the company, and other major impacts related to the unavailability of two aircraft and the loss of market share on regional routes such as Gaborone. The airline’s reported profit for the year was R51.3 million and was down by more than 70% compared to the R250 million profit reported in the previous financial year.
The airline managed to make a profit of R250 million in the 2009/10 financial year during the global downturn but this went down to R51,3 million in the 2010/11 financial year despite the returns from hosting the 2010 World Cup. It might have been reasonable for the shareholder (Government) to expect more profit due to the hosting of the 2010 World Cup. The reduction in profit needed to be explained. Importantly also SAX failed to provide the auditor with evidence of the evaluation of the company’s share of unrecognised losses in its associate and whether such ‘unrecognised losses’ had a material impact on the airline’s overall results for the year under review need some clarification.
10.1.2 Human resources
SAX had a total of 1 026 employees compared to 931 employees the previous financial year. A breakdown of the airline’s staff profile in terms of employment equity revealed an amount of 43% (40% in 2010) white employees compared to 57% (60% in 2010) black employees, with a gender profile of 36% (38% in 2010) female and 62% (64% in 2010) male. A breakdown of group statistics (e.g African, Coloureds. Indians, etc) in terms of gender had not been provided and made it difficult to assess gender equity between and within groups. The auditor was unable to obtain sufficient and appropriate audit evidence as to the evaluation of the company’s share of unrecognised losses, hence the entity received a qualified audit report.
10.1.3 Forensic investigation
The Committee was informed that SAX’s Ethics Hotline had received an anonymous call with allegations of irregularities in its annual financial statements. The allegations were material and, if substantiated, could negatively impact SAX’s audited financial statements. The allegations included R42 million of VAT shown as a debtor by SAX but which may not be fully recoverable from the South African Revenue Service (SARS). SAX undertook to keep the Committee informed of the forensic audit outcomes. In addition, an amount of R16 million had been reported in trade receivables despite indications that the amount may not be recoverable. The findings of the forensic audit investigation would be reported to the board, and SAX would keep the Committee informed of developments.
10.2 Committee’s observations
The Committee made the following observations:
- Concern was expressed at how the entity would recover money lost in the DRC. Was a risk assessment conducted before the entity explored that market? Has the entity proceeded with legal processes in that regard?
- Clarity was sought on when the forensic investigation began, and whether there were internal control measures in place.
- A proposal was made that the entity should consider a coding system in order to track lost baggage and improve baggage safety.
- Concern was raised regarding the non-achievement of key performance indicators.
- Concern was raised about the low job targets achieved and the low representation of people with disabilities.
10.3 Responses
Ms Boyle informed the Committee that the forensic investigation started in September 2011, as it was only discovered and reported then. She further stated the following in response to questions asked:
- The corruption was reported by a whistleblower. Internal auditors reported that there was no irregularity in the finances. The Committee was informed that the board would take action against those who were implicated and that the report will be out in three weeks.
- SAX was using lawyers from the DRC to recover the costs, and the process was underway.
- Recruitment of people with disabilities was a challenge, but employment increased by 6% in the first six months.
- Internal audit functions were outsourced to KPMG, which reported quarterly and could not determine the quantum of the losses incurred in the Congo Express deal, but that it was not due to internal control deficiencies.
- No performance bonuses were paid in 2010/11, and the assurance was given that there were no disturbances due to the fuel shortage.
The Deputy Minister informed the Committee that there was a need for the Department to come back and brief the Committee on issues that emanated from the annual reports and actions that the Department had taken.
The DDG for Transport informed the Committee that the Department would await the forensic report and would act on the findings. She expressed concern that SAX would not be able to support the fleet renewal programme. The Department would have monthly meetings with the entity to improve the oversight work.
10.4 Conclusion and recommendation
The Committee resolved that SA Express Airways should send a report on the forensic investigation into irregular expenditure to the Committee by 30 November 2011. It further resolved to have quarterly interactions with the entity to monitor the financial control systems.
Report to be considered.
TUESDAY, 21 AUGUST 2012
TABLINGS
National Assembly and National Council of Provinces
1. The Minister of Trade and Industry
(a) General Notice No 576 published in Government Gazette No 35529 dated 19 July 2012: Department of Trade and Industry: Final prohibition on the use of Construction Industry Development Board Logo, in terms of the Merchandise Marks Act, 1941 (Act No 17 of 1941).
(b) General Notice No 578 published in Government Gazette No 35531 dated 19 July 2012: Department of Trade and Industry: Final prohibition on the use of Fais Ombud Logo, in terms of the Merchandise Marks Act, 1941 (Act No 17 of 1941).
COMMITTEE REPORTS
National Assembly
1. REPORT OF THE PORTFOLIO COMMITTEE ON MINERAL RESOURCES ON AN INTERNATIONAL STUDY TOUR TO CHILE AND BOLIVIA ON THE 17-26 JANUARY 2011, DATED 14 JUNE 2012
The Portfolio Committee on Mineral Resources, having undertaken an international study tour to Chile and Bolivia, reports as follows:
1. Background
Bolivia and Chile are confronted with socio-economic challenges that are similar to those faced by South Africa but have used the state-owned mining companies to tackle issues of poverty and unemployment. Currently, the South African mining industry is largely privately-owned with Alexkor and African Exploration, Mining and Finance Corporation (AEMFC) as the only state-owned mining company. South Africa is exploring various possibilities that will contribute positively towards achieving the United Nations’ Millennium Development Goals (MDGs) of halving poverty and unemployment by 2015. The Committee believes therefore that an international perspective is critical, particularly because of high poverty level that is juxtaposed with the country’s endowment in mineral resources.
2. Introduction
The Portfolio Committee on Mineral Resources (the Committee) decided to undertake a study tour to Chile and Bolivia because these are two countries with a long history of state involvement in mine ownership. The Committee therefore thought that South Africa could learn a lot from them on consolidation of their shares in the mining industry and be able to conduct an information gathering pertaining to the establishment, operations and disbursement of revenue from the State Owned Mining Companies and relate it to the South African context in order to make sound recommendations to the National Assembly on these matters.
This report contains a chronological account of the journey of the Committee to Chile and then Bolivia. It provides a summary of the meetings that were held with different stakeholders such as the Mining Councils and the relevant ministries in the host countries. The report also documents important issues regarding the visited countries’ mining priorities, legislative framework, challenges and strides made to ensure profitability and sustainability in the mining industry.
3. Section 1
3.1. Purpose of the study tour
The Committee’s aims for embarking on an international study tour included the following:
- To continue with the work of the committee on the feasibility of establishing a state owned mining company, a process which started with the public hearings in 2010;
- To learn more about the establishment, legislative framework and management of the state owned mining companies;
- To learn more about the management of natural resources in general and mineral resources in particular; and
- To elicit the views of the Chilean and Bolivian civil societies on the management of the state owned mining companies.
3.2. Composition of Delegation
3.2.1. Parliamentary Delegation
The delegation comprised of the following:
Members of the Committee
- Chairperson and Leader of the delegation, Mr MF Gona (ANC)
- Mr C Gololo (ANC)
- Mr VV Magagula (ANC)
- Ms DH Mathebe (ANC)
- Ms LN Mjobo (ANC)
- Ms NF Mathibela (ANC)
- Ms NJ Ngele (ANC)
- Mr MR Sonto (ANC)
- B Tinto(ANC)
- Mr E J Marais (DA)
- Adv HC Schmidt (DA).
Support staff
- Ms N Skaka (committee secretary)
- Ms A Boss (committee assistant)
- Mr S Ngcobo (committee researcher).
3.2.2. Accompanying delegation
The Delegation also comprised of the following:
- Ms K McClain: Alexkor
- Mr M Moloi: SAMDA
- Mr P Temane: SAMDA
- Mr M Sambatha: NUM
- Mr P Shiburi: NUMSA
- Mr W Aroun: NUMSA
- Appreciation of stakeholders that met with the Committee during the study tour
The Committee appreciates the assistance of the South African Embassies both in Chile and Lima; the South African Ambassadors, Her Excellency, Dr Moerane-Khoza and His Excellency, Mr Lesley Manley; the Chilean and Bolivian Parliaments; Honourable Ministers of both countries; Mining Companies; and also organisations. The hospitality and courtesy the delegation received from both countries was greatly appreciated.
4. Section 2
- Chilean study tour
The study tour to Chile took place from Monday, 17 to Friday,, 21 January 2011. There, the Committee met with the following key stakeholders: the Mining Council, Central Unitaria de Trabajadores de Chile (Cut), Minister of Women Affairs, the Mining ministry, Corporación Nacional del Cobre de Chile (COLDECO), Commission on Minerals and Energy, Anglo American, and Empresa Nacional de Mineria (ENAMI).
4.1.1. Meeting with the Mining Council (Consejo Minero)
The delegation was informed that Consejo Minero is an association that groups public and private, national and international large-size mining companies that produce copper, gold and silver. The large-scale mining sector, represented by the Consejo Minero, is physically, economically and socially important at national and international levels. The members of the Consejo Minero account for over 60 per cent of Chile’s total exports, making large-scale mining the most important industry in the country. At an international level, Chile’s large-scale mining produces 40 per cent of the world’s copper, and output has more than quadrupled since 1990. Chile has tripled reserves since 1990 and now holds 39 per cent of the world’s known copper reserves. The purpose of the Consejo Minero is to promote world class public policy and operational practices for an industry that understands that policies and practices held in the past are not sustainable for future opportunities and seeks to generate and facilitate a favorable environment for mining companies to carry out their business. In summary, the Consejo Minero seeks to be the reference of large-scale mining, well known and appreciated for its economic, social and environmental leadership and performance that generates value for society. Consejo Minero comprises of 16 large privately owned mining companies, one state owned mining company, national and multi-national companies. The Council was established in 1998 and its associate members include, amongst others:
- Anglo-American;
- Codelco;
- Xstrata,; and
- BHP Billiton.
Key factors that attract investors into Chile include:
- Mining potential;
- Political, economic and social stability;
- Stable legal conditions;
- Infrastructure; and
- Talent and skills.
Mining Potential: Chile has a population of approximately 17 million people with an unemployment rate of approximately 8.5 percent in 2010. It contributes about 33 percent of the world’s copper production, which comprise about 60 percent of the total exports of the country. The country has experienced a substantial increase in mining production and the significant portion of it is accounted for by the private companies.
Political, Economic and Social Stability: The country has a stable taxation system that includes corporate tax at 17 percent, royalty tax at between four and nine percent and the tax of approximately 18 percent for remitted profits. The tax burden of the country amounts to a total of 40 to 42 percent. The country has experienced political stability since the 1990s. It was ruled by the centre-left coalition until March 2010, when it was replaced by a conservative coalition. The country is economically stable with a low inflation rate and also socially stable with only 13.7 percent of the population reported to live below the poverty line in 2006. The companies in the country are moving towards spending one percent of profits on developing the mining communities.
Stable legal conditions: The country has a stable legal system evidenced by numerous free trade agreements with a variety of countries.
Infrastructure: Chile has an effective transport and communication services and a world-class sea-port.
Talented and well qualified work-force: The country is characterized by good development indicators, which include the literacy rate of 96 percent, life expectancy of 77.5 years and infant mortality rate of 7.8 per 1000 births. The workforce in Chile comprises 7 million people. Mining employs about 110 000 workers and has suffered only 1.1 percent labour incidents. The minimum wage for the industry is US$350 and most workers are earning above the set rate. Women participation in the mining industry is estimated at 7 percent. The Council is working with universities and technical colleges to address the mining related skills shortages.
4.1.2. Meeting with the Central Unitaria De Trabajadores De Chile (Cut)
The South African delegation was addressed by the President of the Central Unitaria De Trabajadores De Chile (CUT) who provided the information on the composition of the membership, which includes the following:
- 80 percent of the members are from services sector.
- 20 percent of the members are from the industrial sector.
- Workers are organized by companies as opposed to South Africa where they are organized by industry.
- Not more than 50 percent of Chilean workers are unionized.
- The majority of Chilean workers are contract workers.
- Only 6.7 percent of labour bargains collectively, the rest depend on the goodwill of employers.
- Codelco has 15 000 permanent workers and 32 000 workers on contract. The permanent workers have good salary packages and conditions of employment but the same cannot be said about the contract workers. Coldeco surrenders all profits to the State for social programs and it has a good safety record.
- CUT feels that the Mining Council is not interested in contributing towards ratifying international labour agreements that determine labour standards.
- CUT is of the view that the country is focusing on copper exports to the possible detriment of the economy, as it happened in the 19th century when the focus was on nitrate export until Germany invented the synthetic nitrate resulting to the economic crisis in Chile. CUT therefore recommends diversification in trade.
- On the well publicized accident of 33 miners that were trapped underground, CUT commented that the workers were employed by a medium sized private company that employed 400 workers in a very high risk operation but with higher than average salaries.
- Meeting with the Minister of Women Affairs
The Minister informed the delegation that the participation of women in the labour force stood at 45.3 percent in 2010, which is an improvement from the previous 42 percent participation rate. The women participation is mostly in the services sector and participation in the mining industry stands at six percent. The ministry has identified barriers to women participation in the mining industry, which include the nature of work and the working environment.
The ministry has proposed the following steps to remove barriers to women participation in the mining industry:
- To focus on the competitive advantage of women in the industry e.g. safety in mining operations;
- To get women into decision making level jobs. Currently only five percent of women are in decision making level jobs; and
- To create incentives for companies to promote women to decision making jobs.
On maternity benefits, the Minister informed the delegation that the government offers generous benefits that include five days paternity leave. However, the Chilean law compels the companies that employ more than 20 women to provide child care facilities and that has an unintended consequence of discouraging companies from employing more that the stated number of women. The Ministry is proposing the amendment of this law.
The Minister informed the delegation that government does not have employment equity legislation as it believes that the employment quotas are counter-productive and unsustainable. The Chilean government believes in incentivizing employers to employ more women e.g. by bringing to the employers’ attention the benefits of mixed working groups like increased productivity.
4.1.4. Meeting with the Ministry of Mining
The Minister of the Ministry of Mining is Hon Mr Laurence Golborne Riveros. The mission of the Ministry is to generate, encourage, spread, and assess regulations and policies that optimizes Chile’s sustainability on mining development, maximizes its contribution toward socio-economic development, and to consolidate international leadership.
The strategic objectives of the Ministry are as follows:
- Encourage sustainability on domestic mining development;
- Generate joint participation between public and private sectors in order to stimulate growth in the sector and for the country;
- Give assistance to small mining;
- Modernize regulations in the mining sector;
- Modernize public sector institution;
- Consolidate Chile's international mining leadership; and
- Manage effectively and efficiently the resources of the Ministry of Mining in order to comply with its specific objectives.
According to the Chilian Government's principles, these objectives are progressively reached through the creation of public policies on mining development by research and round table discussions. Among the policies is the creation of a Public Policy encouraging small and medium sized mining sectors, which is the National Mining Enterprise (Empresa Nacional de Minería, ENAMI). The objectives are also reached by improving statutory regulations. This is done by controlling domestic mining activity, being facilitators on the development sector, by stable laws related to Tax Evasion, Avoidance Law as well as Mining Security Regulations. These objectives are also obtained by creating links between the public and private sectors in order to encourage sector growth, with the large scale mining sector.
The delegation was addressed by the representative of the Ministry of Mining. He spoke about the issue of economic focus on copper exports. He allayed concerns over copper substitution by stating that it is less likely to be replaced since copper has various applications, which include technology. Unlike commodities that are used in infrastructure development, the demand for copper does not follow the pattern where it increases until it reaches climax and then decline, he asserted. Demand for copper increases with efficiency improvements in the ever developing technology. He also pointed out that copper is not the only commodity where Chile has a competitive advantage but its high demand makes it an obvious choice for production focus. He informed the delegation that Chile is moving away from state ownership in the mining industry towards private-public partnership for the obvious reason that it is difficult for the state owned mining company to grow compared to a private company. This is evidenced by the fact that Codelco used to produce approximately 95 per cent of total national copper production but it currently produces less than 50 per cent. He also alluded to inefficiencies associated with state ownership.
The presenter outlined the economic profile of Chile as well as the history of the establishment of the state owned mining company as follows:
- Chile’s Gross Domestic Product (GDP) is at US$170 billion.
- Chile’s Human Development Index was at 0.878 in 2009 (1st in Latin America).
- The country is ranked 49th in the Doing Business rankings (Highest in Latin America).
- In 1976 all government stakes in mining were merged into one company now called Codelco.
Legal Framework: The legal framework of the mining industry is based on the following:
- The Constitution of Chile (1980) and the Organic Law (1982)
- Compensation for expropriation based on current value
- Codelco’s New Corporate Law (November 2009)
- ENAMI-Responsible for the development of the small mining companies
The greater portion of investment in mining is by the private sector because of difficulties that the state owned mining company experience in accessing credit for project development in open markets. This, according to the presenter, therefore militates for engagement in joint ventures.
Priorities: The following priorities were identified:
- Increase in exploration; and
- Development of medium scale mining.
Why Chile is attractive to investors: The following were identified as among the reasons for attractiveness of Chile to foreign investors:
- The country’s favourable geological potential; and
- Political stability.
- Meeting with Corporación Nacional del Cobre de Chile
Corporación Nacional del Cobre de Chile (CODELCO) is the Chilean state owned copper mining company formed in 1976 from the foreign owned copper companies that were nationalised in 1971. It is currently the largest copper producing company in the world. It owns the world's largest known copper reserves and resources. CODELCO's principal product is cathode copper and is a large producer of rhenium, of which Chile is the world's largest producer. It also produces small amounts of gold and silver from refinery anode slimes, and the residue from electro refining of copper. The so-called CODELCO Law of April 1992 authorized CODELCO for the first time to form joint ventures with the private sector to work unexploited deposits. Thus, in a major step for CODELCO, in 1992, it invited domestic and foreign mining firms to participate in four joint explorations in northern Chile. Foreign owned private firms were to become increasingly important as new investment projects got underway.
CODELCO has more than US$ 16.039 billion in assets, and in 2009, its equity totaled US$ 5.309 billion. In 2009, CODELCO produced 1.78 million metric tons of refined copper (including its interest in El Abra mine). This figure is equivalent to 11 per cent of the world copper production. Its key commercial product is Grade A copper cathodes. CODELCO has an ambitious investment plan for the next five years evaluated in US$ 15 thousand million. Only in 2011 the company was planning to invest approximately US$ 3.000 million. The Company also has ownership interests in several important mining companies, such as in Minera Gaby S.A., where it holds 100 per cent, and El Abra, with a 49 per cent stake; and other mining partnerships in geological operations both in Chile and abroad.
The delegation was addressed by the Chief Executive Officer (CEO) of Codelco. The delegation was informed that Chile contributes to one third of the world’s copper production and Codelco produces one third of Chilean copper. The remaining two thirds is produced by private mining companies. That means Codelco competes with private companies in copper production. Chile is a mining country as mining production comprises more than 10 percent of the national GDP. The major portion of copper that is produced by Codelco is exported to China. Codelco’s contribution to national treasury is more than 10 percent of the national budget.
Codelco’s mission and vision: Codelco’s vision is to be the world’s largest copper producer and the largest single corporate contributor to the Chilean economy. Its mission is to responsibly and effectively develop all its mining and related business capacity both in Chile and worldwide, in order to maximize, in the long term, its economic value and contribution to the Chilean State. The Company will undertake its mission, focusing on a high performance organization that promotes participation, creative innovation, knowledge and ongoing development of each individual. Investment in production is needed to sustain maximum contribution to the Chilean economy.
Codelco’s Board before and after the Corporate Governance Law (CGL): The Board of Directors is the highest authority in the Company. The Corporate Governance Law No. 20,392, enacted on 4 November 2009 introduced changes that included an increase in the number of directors from seven to nine and the term of five years for the board of directors as opposed to the presidential term during the Decree Law 1350. The Board is appointed as follows: three directors directly appointed by the President of the Republic; four directors appointed from a shortlist selected by the Council of Senior Public Management; one director selected from a shortlist presented by the Federation of Copper Workers (FTC), and one director chosen from a shortlist presented by both the Federation of Copper Supervisors (FESUC) and the National Association of Copper Supervisors (ANSCO). Roles and responsibilities of directors under the new law include:
- To approve and dismiss the CEO;
- To approve the 3 year business plan;
- To plan and approve investments; and
- To be civil and criminally responsible for their actions.
Annual Budget and Fiscal Transfers: Codelco presents its annual budget (operational, investment and amortization payments), including a monthly disaggregation, to both the Mining and Finance Ministries for their approval, by September 1st of the year prior to execution. By December 15th, Ministries of Mining and Finance are required to approve the final budget. There are monthly Transfers of Dividends to the Treasury (advances). If dividends exceed budget, the difference is delivered within 45 days (monthly closure figures confirmation) and if dividends are below budget, the budget is rewritten. Income Tax payments are done quarterly, i.e. March, June, September and December. The Central Bank withholds 10 per cent of as a special tax.
By March 30th of each year, the Board of Directors must approve the Company's Triennial Business and Development Plan. This includes Investment and Financing (including capitalization proposal) and surplus. By June 30th of each year, the Mining and Finance Ministries, taking into consideration the Company's Business and Development Plan, as well as the previous year's balance, determine the amount to be allocated to Capitalization and Reserve Funds in the current year.
Reasons for nationalization: The reasons for nationalization in 1971 were provided as follows:
- Copper price was not transparent at the time and that created mistrust;
- The country did not have capital to operate the mines; and
- There was no belief in domestic capacity to run the mines.
However the above-mentioned reasons are not applicable anymore and therefore the mining industry is now based on the following 3 pillars:
- Codelco;
- International mining companies, which are significant contributors through royalties; and
- Local private companies, which are currently the weakest pillar.
The delegation was informed that Coldeco is currently run as a private company and it contributes funds to the fiscus, but keeps some for recapitalization. It has a good credit record with the financial markets. In the past, government was not willing to invest in Codelco and did not allow the company to go to financial markets and this created a precarious situation for Codelco. However, government now supports applications for loans by Codelco.
Health and Safety: Six fatalities were reported in 2010. The health and safety standards that apply to the private sector also apply to Codelco.
Labour: In Chile, 10-12 percent of workers are unionized. In the mining industry, approximately 92 percent of workers are unionized. The salary levels of Codelco are similar to those in the private companies. Codelco has a mining charter approved by the Board of Directors. The proposal of the CEO was that Codelco should be kept as a state owned mining company and be allowed to invest abroad.
4.1.6. Meeting of the Commission on Minerals and Energy
The South African delegation was briefed by the President of the Commission who informed the delegation that Chile has a problem of poverty. The elimination of extreme poverty is a priority for Congress (Parliament). Education has been identified as one of the measures of addressing poverty. In pursuance of this objective, an education bill was soon going to be voted by the Congress. The other measure to address poverty is the use of copper resources. The Royalty tax is to be increased from four to nine percent of companies’ profits.
- Meeting with Anglo-American: Copper Business Unit
The Chief Executive Officer (CEO) of Copper Business Unit made a presentation on Anglo American operations in Chile.
On further engagement with the members of the delegation, the following information was provided:
All Anglo American Chilean operations are fully unionized. There are 13 unions across operations. Collective bargaining is decentralized to plant level. The relations with organized labour are reported to be constructive. The total establishment comprises 9 000 employees with 5 000 full time and 4 000 contract employees. The contract employees are involved in non-core work. The green-field projects employ 15 000 contract workers. The minimum wage was reported to be relatively high compared to other industries due to the high demand for copper. The contrast in low poverty levels among the mining communities in Chile as opposed to high levels in South Africa was explained as probably the result of copper boom and declining gold production.
Anglo American does not perceive Codelco to be a threat since the copper boom allows for a greater number of operators to meet the high world demand. There is currently no mine closure legislation in Chile and the government is working on it. However, Anglo has closure plans for all its mines.
The industry agreed to pay high royalty fees in exchange for stability in 2005. Nevertheless, the government raised royalties in 2010 in order to reconstruct the country after the February earthquake that caused damages amounting to US$20 billion. Anglo views this as damaging to the perception of stability. On the mine that collapsed trapping 33 miners underground, it was reported that the mine had been closed but reopened two years ago. A small private company was operating the mine. The previous operator of the mine had left high grade ore to support the mining structure from collapsing. The new operator removed supporting structure resulting in the collapse of the mine. On the lessons from the experience of Codelco, the presenter stated that the State took over the operating mines and skilled personnel and continued to develop the skills of personnel. The South African situation is different to that of Chile. A lot of factors will determine the success of the state owned mining company, including but not limited to.-
- The management of the company;
- The commodity or commodities that the company will be involved in;
- Available deposits of the commodity; and
- The international demand and price of the commodity.
4.1.8. Meeting with Empresa Nacional De Mineria
Empresa Nacional de Minería (ENAMI) was founded on the 5th of April, 1960, inheriting a long tradition of small and medium size mining promotion that started in 1927 when the Mining Credit Fund (“Caja de Crédito Minero”) was created. ENAMI´s incentives and services enable small and medium size mining firms to access international metal markets, and thus to benefit from the better position of ENAMI to attain competitive “economies of scale” and “economies of scope”. A central principle of ENAMI´s management is to balance developing promotion activities with self-financing restrictions, since the Company should not be a net burden for the Central Government Budget. In fact, Government benefits from a special 40 per cent tax, applied only to public sector companies’ gross income, and net profits withdrawals (100% dividend withdrawal) which, certainly, tend to more than balance annual Government Budget contributions to ENAMI´s expenditure on promotion activities.
ENAMI participates as a partner in the large scale copper mining operations of two private sector companies, Quebrada Blanca and Carmen de Andacollo, and is developing at present, the medium size Delta Mine project, located close to Ovalle in the IVth Region. ENAMI provides loans, especially to small size producers, allowing them to explore and identify new ore reserves, develop and enhance their mining facilities, buy equipment, and reach adequate levels of working capital. ENAMI purchases ores and concentrates from small and medium scale producers, process them in the concentrating and SX-EW plants, and the smelter, and exports the proceeds as mainly cathodes and refined copper to international markets.
The South African delegation was briefed by the executive team of ENAMI on the company’s activities. The delegation was informed that ENAMI’s mission is to promote small and medium size private sector mining in Chile, by providing incentives aimed at correcting market failures, and supplying technical, financial, metallurgical production and trading services required in order to be competitive. The objective of ENAMI is to buy minerals from the small mining companies including copper, gold and silver.
On further engagement, the delegation was informed that ENAMI assists the poor people through supporting small mining companies. The success of the companies supported by ENAMI depends on the price of the commodity in which they are involved. ENAMI buys ores and concentrates from small and medium scale producers. ENAMI processes and exports the proceeds as mainly cathodes and refined copper to international markets. The quantity of minerals mined is used as the criterion to determine the size of the mining companies. ENAMI uses the London Metal Exchange tariff to determine the buying price. Normally ENAMI pays the market commodity price but when the price goes down, it pays a price that is higher than the market price as loans, which are recovered when the price goes up again.
In terms of the relation between Codelco and ENAMI, the former transfers small businesses to the latter. Government receives money from mining companies in the form of taxes and royalties. The total receipts from the private mining companies are more than those from Codelco. The domestic, foreign and public corporations are taxed at different rates of 17 per cent; 50 per cent and 17 plus 40 per cent respectively. Royalties depend on the quantities of minerals produced.
- Bolivian study tour
The tour of Bolivia took place from the 24 – 26 January 2011.There, the Committee met with the following key stakeholders, the Parliamentary Committee on Mining and Metallurgy, the National Chamber of Commerce, Ministry of Minerals and Metallurgy, the Bolivian Mining Corporation and the Senate.
4.2.1. Visit to Coro-Coro Hydro-Metallurgical Project
The parliamentary delegation was briefed as follows:
- The Bolivian Mining Corporation (Comibol) is owned by the State and is responsible among other things, for the Coro-Coro Hydro-Metallurgical project.
- Coro-Coro project is responsible for mining and processing of copper, which is done on-site.
- It was reported that Comibol does not currently pay royalties for the project but would do so as soon as the project becomes productive. Royalties are expected to be 15 percent of the profits.
- Comibol is not involved in any rehabilitation project and it was not clear whether Bolivia has a legislation governing rehabilitation.
- It was also not clear whether Bolivia has an equivalent of Social and Labour Plans.
- The Coro-coro project has three mining pits and currently produces approximately 75 tons of copper per month.
- It was reported that 30 per cent of the copper is extracted from the full processing cycle.
- The open cast mine that was visited by the delegation is about 5 meters deep.
4.2.2. Meeting with the Parliamentary Committee on Mining and Metallurgy
The delegation was briefed on the process of change in which Bolivia is involved. The process entailed, among other things, the following:
- The election of an indigenous person in the name of President Morales as the President of the country; and
- The promulgation of a new law that confers autonomy to departments (provinces).
However, Members of Congress acknowledged that the Bolivian mining industry is not yet fully developed and consequentially can only extract 60 per cent of the minerals.
When engaging with the presentation, the following information was provided to the delegation:
- The delegation was informed that the unemployment rate has been reduced from 8.5 to 6.5 per cent.
- Bolivia is open to joint ventures but partners must comply with the mining legislation of the country.
- The country did not benefit when the mines were privatized but benefits are starting to be realized since the renationalization of the mines. Therefore there is a plan to nationalize more mines but a study to identify mines to be nationalized is underway.
- The cooperatives are self-managed and their purpose is to work in an organized manner. The government is supporting them by providing the required machinery for them to get involved in mining.
- Comibol is structured as follows: at the top there is management that is followed by directors and the third tier is the internal organization that is involved in production.
- The mining legislation applies to all involved in mining, including the State-owned Company, private companies, cooperatives and small miners.
- Income from royalties is distributed as follows: 85 per cent goes to departments (provinces) and the remaining 15 per cent goes to municipalities.
- Bolivia is currently at a stage of producing and exporting raw materials. The next stage is going to be the exportation of beneficiated goods.
- The majority of members of the commission have a union background and in accordance with the law, unionists cannot be prosecuted for carrying out their duties.
- Women participation in mining is minimal because of the nature of work and is limited to administrative work.
- Royalties and taxes are determined by the mining laws of the country, which established percentages.
- The current revision of the mining laws is going to include environmental management.
The commission was in return briefed by the South African delegation on the environment related mining laws which are designed to mitigate the environmental damage caused by mining.
4.2.3. Meeting with the National Chamber of Commerce
The delegation was briefed as follows:
- The National Chamber of Commerce in Bolivia is not directly involved in mining but has a general interest in the economy of the country and its presentation had to be viewed in that context.
- Bolivia is a mining country with the greater stake of the industry owned by the State but there are small private mining companies.
- The economy of the country is based on natural resources including hydrocarbons (gas) and mineral resources.
- Before 1995, the country’s mining industry was predominantly privately owned with a few state owned companies but this was reversed when the Morale’s administration took over and embarked on a renationalization drive that led to the establishment of Comibol.
- Comibol is in charge of exploiting most minerals of the country.
- The structure of the country’s mining industry comprises the State, cooperatives and the private companies. Cooperatives were established by the former mine workers.
- The mining activity in the country is currently high as a result of the high demand for commodities from countries such as China and the institutions such as the World Bank and the International Monetary Fund (IMF) forecast that commodity prices are going to remain high for a long time. This augurs well for the prospects of the country but the Chamber believes that Bolivia is not poised to take full advantage of this favourable economic climate.
- The Chamber is pessimistic about mining being predominantly owned by the State. It sited an example of Comibol that had the workforce of 3 000 but had hired 5 000 workers based on political reasons without increasing production.
- However, the Chamber believes in the benefits of cooperation with the State and as a result has proposed a public-private alliance to the Morales’ administration.
- The Chamber believes that the gains realized in the mining industry were not based on good policies but high commodity prices.
The Chamber was asked if there was any involvement of the private sector in the hydrocarbons and lithium extraction projects. To this, the response was affirmative with regard to hydrocarbons. Regarding lithium extraction, the delegation was informed that the government’s efforts to attract private sector investment are thwarted by the business unfriendly legislation including the Constitutional amendment of 2010 that stated that the natural resources of the country belong to the indigenous people of Bolivia and all profits made must be reinvested in the country. The Chamber asserted that this militated against private sector investments. However, it was not clarified why the private sector was investing in hydrocarbon extraction despite the unfriendly legislative framework.
On further engagements, the delegation was briefed as follows:
- The Chamber is not involved in the training of cooperatives.
- There has been a significant decrease in investments since the current administration introduced nationalization policies. The decrease was from US$1.5 billion ten years ago to US$500 million currently.
- Most of the companies owned by the State were not started by it from the scratch but were nationalized. There are two companies that were established by the State, one is involved in iron ore and the other in lithium.
- The foreign direct investments (FDI) constituted 17 per cent of GDP in the past but it currently stands at five percent.
When asked about the mitigating measures against fluctuations in commodity prices, the Chamber reported that there are no such measures but has proposed the establishment of the stabilization fund to the government.
4.2.4. Meeting with the National Chamber of Industries
The delegation was addressed by the chairman of the chamber. He informed the delegation that the chamber is involved in production and have little to do with mining. The chamber does not consider Bolivia’s nationalization a success. It believes that Peru’s and Chile’s successes can be attributed to creating an attractive environment for investors. The chamber stated that it does not believe in mixing politics with economics.
The Chamber outlined the history of ownership in the mining industry commencing from 1952 to date. It believes that the State is crowding out the private sector in the mining industry. The Chamber informed the delegation that ownership in mining can be categorized into private, cooperatives and state owned. In 2007, mining represented three per cent of GDP. Private companies account for 80 per cent of mineral exports.
When the delegation engaged with the presentation, they were informed as follows:
- The Chamber of Industry is not interested in beneficiating copper.
- There is a table provided in the mining law, which stipulates percentages of tax and royalties.
- The Bolivian people can benefit from mining if there can be stability in legislation that could instil confidence of investors. As of present, mining and poverty are co-related.
- With regard to local content and procurement, machinery and mechanical supplies are imported while labour and logistics are procured locally.
4.2.5. Meeting with the Ministry Of Minerals and Metallurgy
The delegation was addressed by the Deputy Minister of Minerals and Metallurgy. He outlined the mining history of the country, which dates back to pre-colonial times. The colonialisation of the country resulted in workers being brought from Africa to work in the Bolivian mines. Bolivia declared its independence from Spain on 6 August 1825 but the State started to intervene in the mining industry through nationalization in 1952. The tin, lead and silver mines were nationalized. The ownership and management of the mines by the State continued until it was interrupted in 1995 when neo-liberal policies were introduced. The private mining companies are reported to have extracted and taken the best minerals out of the country during this period. The former state mine workers left mining and had to find work in other industries. There was no transfer of skills to indigenous population during this period. The exploitation of workers was rife during the neo-liberal period. Since his inauguration in January 2006, President Morales has forced a number of companies to hand back majority control of privatized assets to the state. When recapturing the privatized mines, the ruling alliance discovered the following:
- There was a shortage of qualified mining personnel.
- There was no exploration conducted during the period of neo-liberalism.
- Mine workers formed themselves into cooperatives and worked under self exploitative conditions with no support from the State.
The main tin producing company and the tin smelting facility have since been recaptured. The state encountered a problem when the cooperatives took over a nationalized mine that employed 800 mine workers. The conflict that erupted between the mine workers and the cooperatives resulted in 16 lives being lost. The State intervened by hiring all 4 000 cooperatives’ workers as an attempt to permanently resolve the conflict. The workforce was increased from 800 to 4 800 without any increase in production levels. The state decided to open a new plant with the capacity of 3 000 tons per day to accommodate the increased workforce. Fortunately the international price of tin has been high and therefore, the State has not suffered the adverse effects of an over-sized workforce. The melting facility relating to the afore-mentioned plant is currently being modernized. The new furnace has the facility to smelt all tin produced in the country.
The Bolivian government began exploiting lithium two years ago. The policy is to exploit until the country gets lithium carbonate and then it can bring in partners. The country’s scientists are conducting research on how to get lithium carbonate from the mines. The goal is to produce 40 000 tons of lithium per year over three years. There are several countries interested in lithium production including Korea, Japan and China but the policy has already decided that Bolivia must do on its own.
Good copper deposits have been discovered in Bolivia and an agreement concluded with the Korean company to exploit these deposits. Bolivia has a lot of other minerals including gold. There are primary and secondary deposits and the plan is to start by exploiting the secondary deposits. The state has also built a smelter to avoid exporting lead, zinc and copper as concentrates. The government policy is to export value added goods and in consultation with the indigenous communities.
On labour, the delegation was informed that organized labour has lost “proletarian vanguardism” and now the peasants have taken over as the leaders of the social forces.
When engaging with the presentation, the delegation was briefed as follows:
- The government is offering scholarships for students to study for mining related qualifications abroad. The government is also establishing mining and industrial safety schools to address the shortage of mining personnel.
- The following revenue was collected in 2010:
- Royalties – US$200 million.
- Taxes – US$180 million.
- The government is considering working with South Africa in the exploitation of iron ore and gold.
- The government is trying to make the nationalized mining companies understand that they have already been compensated by working under favourable conditions. However, it acknowledged that there are some cases where compensation should be considered.
- Mining companies are by law required to comply with social responsibility laws.
- A joint venture between India and Bolivia is structured such that Bolivia provides minerals and infrastructure and India provides technology.
- The delegation was informed that the government believes in participating throughout the mining value chain in order to exercise control over the industry. However, it is aware of its capacity constraints hence the necessity for the joint ventures.
- The state ensures legal protection to private investors.
4.2.6. Meeting with the Bolivia Mining Corporation - Comibol
The delegation was addressed by the Technical Manager who provided a brief history of mining in Bolivia as well as that of Comibol. The salient points in the manager’s presentation included the following:
- The first silver coin was made in Bolivia.
- Comibol was only an administrative office and did not participate in production between 1982 and 2005.
- Comibol is currently exporting tin.
- Comibol has a copper project in Coro-Coro, which produces laminated copper.
- The corporation has two processing facilities which process 50 000 tons of copper per year.
- There is a silver smelting facility that was built in 1982 but was not operated because of insufficient production levels. The corporation is currently operating the facility after a Canadian company left it idle for five years following the conclusion of a partnership agreement. The company that built the facility has been contracted to assist in operating it.
- It is estimated that 70 per cent of Bolivian territory is still unexplored.
The delegation engaged with the presentation and further information was provided as follows:
- The delegation was informed that no operation has been undertaken with a Chinese company, yet.
- The total establishment of Comibol currently stands at 6 000 workers. All workers are permanently employed and all have social benefits but some of them work part-time.
- The corporation has its own resources and excess funds are transferred to the State. It funds small projects from its resources and bigger projects are financed by the State.
- The Board of Directors is made up of six members appointed by the stake holders.
4.2.7 Meeting with the Senate
The South African delegation was addressed by the Chairman of the Committee on Energy, Hydrocarbons, Mining and Metallurgy. The Chairman provided the delegation with the following information:
- The pillars of the Bolivian economy are mining, the production of hydrocarbons and the agricultural sector.
- Bolivia has 75 per cent of the world’s lithium reserves.
- The country is in the process of change.
- All nationalities of Bolivia are equal under the New Plurination State of Bolivia as opposed to the former Republic of Bolivia.
- The nationalized private companies were compensated after pressure the United States exerted by threatening to impose sanctions against the country. However, the companies were consulted before nationalization was implemented.
The meeting was concluded with a commitment by both parties to further the engagements.
5. Key findings
The following factors were identified as the determinants of success in the establishment of the state-owned-mining company.
- Management of the company
It is crucial that the company employs skilled and well qualified personnel in order to compete effectively in globalised commodities’ markets. Codelco has the advantage of inheriting the skilled and well qualified work-force while Comibol is in the process of training its personnel.
- Commodity or commodities that the company will be involved in
The company needs to identify strategic commodities in which to get involved. The successes of both Codelco and Comibol can be attributed to their involvement in copper. The discovery of lithium deposits in Bolivia, which has a greater percentage of the world reserves, is expected to benefit the country as the demand for the commodity is expected to increase in the long term.
- Available deposits of the commodity
The success of the company will depend on the amount of identified minerals and the period over which they can be exploited. South Africa is well endowed with mineral resources and most of them are exploitable over a long term.
- International demand and the price of the commodity
The price of a commodity will be determined by demand, and the higher the price of the commodity or commodities that the company will be involved in, the better the chances of success for the company. The high price of copper is responsible for the success of both Codelco and Comibol.
- Stable legal conditions
A stable legal framework will attract investors to partner with the State-owned-mining company. The lesson from Chile is that foreign companies are willing to absorb increased royalties in exchange for stable legal conditions. On the other hand, Bolivia is reported to be struggling to attract foreign investors as a result of unstable legal conditions, e.g. recent constitutional amendments.
6. Recommendations
The Portfolio Committee on Mineral Resources recommends that the Minister of Mineral Resources should do the following:
6.1 consider establishing a State-owned mining company through a constitutional Act of Parliament;
6.2 consider establishing a competent board that should run or control a State-owned mining company which should directly account to Parliament;
6.3 consider establishing a State-owned mining company through consolidation of all State investments in the mining sector and be wholly owned by the State;
6.4 consider that State-owned mining company cooperates with domestic and foreign investors in exploration of new minerals with terms favourable to State-owned mining company and by ensuring majority ownership;
6.5 consider that State-owned mining company plays a pivotal role on beneficiating our minerals as this will place South Africa in line with other mineral producing countries;
6.6 consider that a State-owned mining company takes charge or control of strategic minerals, classified into four groups, as follows:
(a) Infrastructure Minerals
- Agri-minerals like phosphate
- Industrial mineral like cement, iron-ore, manganese, chrome and nickel.
(b) Energy Minerals
- Coal, uranium, PGM’s, oil and natural gas.
(c) Hi-tech Minerals
- Titanium, Zircon, Rutile, Tantalum and Magnesium.
(d) Platinum
- Platinum Group Metals
6.7 The proceeds from a State-owned mining company should legislatively be distributed as follows:
- 40% be reinvested to State-owned mining company;
- 20% be allocated to fund Health Systems;
- 20% to the funding of free education; and
- 20% to fund Rural Development.
7. Adoption
Ms B. Tinto, seconded by Mr PD Mbhele, moved that the report be adopted. The report was duly adopted. Advocate HC Schmidt registered an objection on behalf of the Democratic Alliance.
Report to be considered.
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