The Portfolio Committee on Mineral Resources, having considered the performance and submission to National Treasury for the medium term period of the Department of Mineral Resources reports as follows:

  1. Introduction
  2. Mandate of Committee                                                                                               

In terms of the Constitution of the Republic of South Africa, 1996 (the Constitution), Portfolio Committees have a mandate to legislate, conduct oversight over the Executive and facilitate public participation. The Portfolio Committee on Mineral Resources mandate is governed by Parliament’s mission and vision statements, the rules of Parliament and its Constitutional obligations.

The mission of the Portfolio Committee is to contribute to the realisation of a developmental state and ensure effective service delivery through discharging its responsibility as a Portfolio Committee of Parliament. Its vision includes enhancing and developing the capacity of Committee Members in the exercise of effective oversight over the Executive Authority. One of the Committee’s core objectives is to oversee, scrutinise and influence the action of the Executive and its agencies. This implies holding the Executive and related entities accountable through oversight of objectives of its programmes, scrutinising its budget and expenditure (annually), and recommending through Parliament actions it should take in order to attain its strategic goals and contribute to service delivery.


The stakeholders in the mining sector confront a highly challenged industry. The necessity for transformation away from the discriminatory past is made much more difficult by the volatility commodity prices, weaker export markets, expensive electrical energy and deep mines where the ‘zero harm’ principle is costly and elusive.

The labour market is unsettled by job insecurity arising from the reactions to the threats of mine closures from the mining companies. The relationship between the mining sector and the DMR is at a low point that has never been seen before. The future life of the industry will be bleak unless all the parties can face up to the economic, social and environmental realities and negotiate a sustainable way forward. Government needs to support the industry through this demanding adjustment process.

  1. The Mandate of the Department, and its five entities

The Department

The aim of the Department of Mineral Resources (DMR) is to “Promote and regulate the minerals and mining sector for transformation, growth, development” and to “Ensure that all South Africans derive sustainable benefits from the country’s mineral wealth.”

The mining industry employed 457,292 people in 2016, a reduction from 481,723 in 2015, and some 70,000 fewer than the 525,000 employees in the sector in 2012.

Further severe job losses are an ongoing threat, as the industry faces variable commodity prices, mounting costs and logistics issues.  The minerals sector is a key contributor to the South African economy because of the half million men and women it employs directly and because of the minerals used in value chains from energy to manufacturing. It is also responsible for more than a quarter of South Africa’s earnings from exports and is critical to the ability of the economy to earn foreign exchange. The good stewardship of the DMR over the minerals sector is of exceptional importance.

The strategic outcome-oriented goals of the Department were revised in 2014 as follows:

STRATEGIC GOAL I Increased investment in the minerals, mining and petroleum sectors.

Promote and facilitate an increase in minerals, mining and petroleum activity including value addition to mineral resources extracted in the Republic of South Africa.         

STRATEGIC GOAL 2  Transformed minerals sector.

 Implement transformation policies to redress past imbalances through broader participation in the mineral sector.

Provide a framework to manage health and safety risks, enforce compliance and promote best practice in the mineral sector.

STRATEGIC GOAL 3 Equitable and sustainable benefit from mineral resources.

Promote sustainable resource management; contribute to skills development and the creation of sustainable jobs.

Contribute to the reduction of adverse impacts of mining on the environment.

STRATEGIC GOAL 4 Efficient, effective and development-oriented department.

  • Optimise internal processes.
  • Attract, develop and retain appropriate skills and ensure optimal utilisation of resources
  • Implement risk management strategies and promoting corporate governance.

In framing the revised set of goals in 2014, the DMR took account of the National Development Plan (NDP) and the priorities outlined in the Medium Term Strategic Framework (MTSF). The 2016/17 Annual Report includes a page that relates the initiatives of the DMR to the MTSF, citing particularly outcome 4 (decent employment through inclusive growth), outcome 6 (an efficient, competitive and responsive economic infrastructure network) and outcome 10 (protect and enhance our environmental assets and natural resources).

The goals of the Department are supported by five entities:


The Council for Mineral Technology Research (MINTEK), also a science council, is mandated to provide research, development and technology that foster the development of businesses in the mineral and mineral products industries.

Mine Health and Safety Council

The Mine Health and Safety Council (MHSC) provides a research and advisory function to the Minister in terms of mine health and safety, as well as promoting a culture of health and safety in the mining industry.

State Diamond Trader

The State Diamond Trader (SDT) promotes equitable access to, and beneficiation of, diamond resources, addresses distortions in the diamond industry and corrects historical market failures to develop and grow South Africa’s diamond cutting and polishing industry.

South African Diamond and Precious Metals Regulator

The South African Diamond and Precious Metals Regulator (SADPMR) regulate business development and trade in diamonds, platinum and gold.

  1. Purpose of the BRR Report


Section 77(3) of the Constitution stipulates that an Act of Parliament must provide for a procedure to amend money bills before Parliament. This constitutional provision gave birth to the Money Bills Amendment Procedure and Related Matters Act, No. 9 of 2009 (the Act), which sets out the process that allows Parliament to make recommendations to the Minister of Finance to amend the budget of a national department.


Section 5 of the Act, states that the National Assembly, through its Committees, must annually assess the performance of each national department with reference to the following:

  • The medium term estimates of expenditure of each national department, its strategic priorities and measurable objectives, as tabled in the National Assembly with the national budget;
  • Prevailing strategic plans;
  • The expenditure report relating to such department published by the National Treasury in terms of section 32 reports of the Public Finance Management Act, No 1 of 1999 (PFMA), as amended in 2009;
  • The financial statements and annual report of such department;
  • The report of the Committee on Public Accounts relating to the department; and
  • Any other information requested by or presented to a House or Parliament.

Committees must submit the Budgetary Review and Recommendation Report (BRRR) annually to the National Assembly. The BRRR assesses the effectiveness and efficiency of a department’s use and forward allocation of available resources and may include recommendation on the use of resources in the medium term.


Committees must submit the BRRR after the adoption of the budget and before the adoption of the reports on the Medium Term Budget Policy Statement (MTBPS) by the respective Houses in November of each year.

The Act therefore makes it obligatory for Parliament to assess the Department’s budgetary needs and shortfalls vis-à-vis the Department’s operational efficiency and performance. This is done taking into consideration the fact that the Department has oversight responsibilities over five entities.

  1. Method followed by the Committee in writing the BRR Report

The Committee has scrutinised and interrogated all available documents as outlined in Section 5 of the Act. The Committee has assessed the performance of the Department in the 2016/17 financial year, as well as performance in the first quarter and second quarter of the 2017/18 financial year where information was available.

The Portfolio Committee on Mineral Resources held a meeting on the 2016/2017 Annual Report of the Department of Mineral Resources and its entities on 03 and 04 October 2017, which was addressed by the senior leadership of the DMR.

The office of the Auditor General gave input during the budget review and recommendation report process. Moreover, the Committee undertook visits to the Mpumalanga, Limpopo, North Western, Gauteng and Western Cape Provinces, to look at issues pertaining to the role played by the Department of Mineral Resources in regulating the mining industry in areas such as community consultation, the environment, illegal mining and mine health and safety.

The Committee, in undertaking this process, used a number of source documents, including the 2014-2019 Strategic Plan of the DMR, Annual Performance Plans, Annual Reports, Financial Statements, 2016/17 and the 2016 Estimates of the National Expenditure (ENE). It also reviewed briefings by the Department and its entities during the course of the year, as well as the State of the Nation Address. The Committee also used the Constitution as a reference point.

  1. Outline of the contents of the Report.
  • An overview and analysis of the Department’s strategic priorities and measurable objectives;
  • An assessment of the overall financial performance for 2016/17 and the first half of 2017/18;
  • An assessment of the overall service delivery performance for 2016/17 and the first half of 2017/18;
  • Consideration of the Auditor-General’s findings in relation to the Department;
  • Consideration of oversight reports and other engagements held with the Department;
  • Committee observations on overall performance of the Department; and
  • Recommendations.


  1. Overview of the key relevant policy focus areas


Key priorities identified for the 2016/17 Financial Year

The DMR’s priorities for 2016/17 were set out in the 2014/19 Strategic Plan and Annual Performance Plan 2016/17.

At the highest level, the priority is to align the activities of the Department with the vision of the National Development Plan (NDP) through the implementation of the New Growth Path (NGP), the Industrial Policy Action Plan (IPAP) and the National Infrastructure Plan.

The aim, in the light of the NDP, is “to create a globally competitive mining industry that reflects a non-racial South Africa and draws on the human and financial resources of, and offers real benefit to, all South Africans by stimulating local economic development”.

In the period to 2019, the Department’s planned policy initiatives are to:

  • Review the Minerals and Petroleum Resources Development Act (MPRDA), including its regulations.*
  • Review and amend the Precious Metals Act.
  • Review and amend the Diamond Act.
  • Review the Mine Health and Safety Act, including its regulations. *
  • Develop the Geoscience Amendment Act Regulations.
  • Ensure compliance with the Broad-based Socio-economic Empowerment Charter, 2005, as amended.
  • Conduct the regulatory impact assessment of identified legislation.*
  • Review and implement the Broad-based Socio-economic Empowerment Charter and update the scorecard with a detailed explanatory memorandum.*
  • Review the Mineral Technology Act (Act No. 30 of 1989).

Only the four items marked with an asterisk (“ * ”) above were listed in the Annual Performance Plan for 2016/17. This implies that the intended revisions to the Precious Metals Act, the Diamond Act, the Mintek Act and the regulations to the Geoscience Amendment Act are not intended to be addressed until later in the term of the Fifth Parliament.


Two additional policy priorities have since been added to the list presented in the strategic plan 2014-2019. These are the “legislative establishment of the AEMFC” (the state owned mining company – also called MinCoSA) and the development of “the PASA Bill”. The Petroleum Agency of South Africa is the agency designated in the MPRDA to regulate the oil and gas sector.


Other policy priorities explicitly noted by the Minister and Deputy Minister in the APP were the need to promote, grow and transform the sector, to advance beneficiation and catalyse job creation and to create a climate that is conducive to investment. Also mentioned was the need to combat illegal mining, to promote skills development and to launch more One Stop Service Centres for ex-mineworkers.




The achievements of the DMR for the 2016/17 financial year include:

  • The achievement of a clean audit following three years of unqualified audit opinions (with findings) from the Auditor General of South Africa (AGSA). This signifies that the financial and performance issues raised in the qualified audit report four years ago (2012/13) have been successfully addressed by the DMR.
  • The annual report indicates that the Department met 85 per cent of its performance targets, i.e. 84 out of 99 set targets. This continues a trend of commendable management performance, far better than most government departments.
  • 2016 was the safest year ever for the mining industry in terms of fatalities, which continued to decline to 73 for the year. The number of injuries reported fell by 9 per cent and there was also an encouraging reduction in the number of occupational diseases reported.
  • In November 2016, mining sector stakeholders convened at the Mine Health and Safety Tripartite Summit that endorsed targets and actions to achieve the goal of zero harm.
  • 124 officials have now completed the Environmental Mineral Resource Inspector (EMRI) training which was needed to ensure proper implementation of National Environmental Management Act, No. 107 of 1998 (NEMA). The DMR has different and increased environmental responsibilities in terms of the One Environmental System for mining, which came effect on 8 December 2014, jointly with the departments of Environmental Affairs, and Water Affairs and Sanitation.  This is in terms of the Mineral and Petroleum Resources Development Amendment Act, No. 49 of 2008, which came into effect in stages since 2013, in parallel with other environmental legislation amendments.
  • 23 staff have been employed in an Enforcement Unit to enforce mining legislation


Note on Overall performance of the DMR


There is a continued improvement in the presentation of the detailed performance measures in the 2016/17 DMR Annual Report. The Research Unit’s annual report analyses before 2014/15 highlighted numerous problems in this regard. There are now fewer complex indicators and, in most cases, measures are within the control of the DMR. While it is now easier to compare performance across years, the appropriateness and scope of the indicators themselves is a matter for interrogation. There is no indicator for the performance of the SA Mineral Resource Administration Database (SAMRAD), for instance, and the monitoring of environment inspection performance does not compare with the comprehensive details provided on mine health and safety.


National Treasury advises that Annual Reports should be evaluated strictly against undertakings made to Parliament in Annual Performance Plans and Strategic Plans. That is the approach taken forward in this analysis brief.


However, the almost stellar achievement against management performance measures has to be balanced against the many challenges that confront the Department in its regulation of the mining sector.


The mining industry remains in deep crisis, shedding jobs instead of maintaining employment – or increasing it as envisaged by the NDP. It clear that this is not only a reflection of the economic climate.


The question is whether high performance against the targets – with indicators approved by the Auditor General as meeting Treasury guidelines – means that the DMR is doing all that possibly could be done in its role as the custodian of the nation’s mineral wealth.


One main reservation arises from a close reading of the Annual Reports for 2015/16 and 2016/17.


There are perpetual delays in implementing many initiatives to address problems that have been diagnosed in the sector.


  • The need for important, additional amendments to the mining law were acknowledged in 2010 – even before the first (2008) amendment to the MPRDA had been promulgated – yet no mining legislation has been successfully passed into law since 2008.


  • The MPRDA remains with Parliament, and the process to review the Mining Charter, which ended its reporting phase in 2014, had not been completed by year-end. This has major implications for investor confidence and for community concerns.


  • There is no clear report on the status of the revised draft bill to amend the mine health and safety legislation. This concludes the process within the National Economic Development and Labour Council (NEDLAC) in 2016.


  • Problems with the legislation that governs the State Diamond Trader (and, to an extent) the Regulator, have been acknowledged for many years – even at the highest levels. Yet there is no legislative proposal for change.


  • Mining Phakisa was promoted in 2015 as a deal-making intervention to save the mining sector. A huge amount of time and effort was devoted to the laboratory process and to stakeholder consultations, but Mining Phakisa has not been launched and, after an 18-month interval, this bold initiative for “fast results” has lost momentum.


  • Illegal mining is a serious and growing problem. In 2009, the PCMR of the fourth Parliament recommended changes to the mining law to tighten controls on illegal mining. This was supplemented in 2014 when a judge called on Parliament to pass a law against illegal mining. The DMR has told the PCMR that is agrees that an amendment to the MPRDA is called for, but no wording has yet been proposed.


  • No progress has been reported on the long-standing undertakings for co-operative action with the Departments of Health and Labour to harmonise the compensation laws for mineworkers who contract lung diseases at work.


A second reservation relates to the deteriorating and hostile atmosphere that has developed between the DMR and the mining companies.


This is seen, for example, in the almost unprecedented appeals to the courts by mining companies who are aggrieved by Section 54 notices issued by the inspectorate. So far, all of the cases have been decided in favour of the companies, with harsh criticisms directed at the DMR and the inspectorate by the judiciary.


Since the end of the 2016/17 financial year, the DMR’s relationship with the Chamber of Mines has broken down over the process to develop Mining Charter 3. Issues that were previously decided, if in robust debate and negotiation in forums such as the Mining Industry Growth Development and Employment Task team (MIGDETT) – are now the subject of insults in the media (from both sides) and a cascade of court applications.





The DMR APP specified 100 measures by which to assess the performance of the Department in the 2016/17 period.  One indicator was dropped as ‘not applicable’ for the Annual Report, reducing the total number of indicators reported on to 99.


85 per cent of the measures were achieved i.e. 84 out of 99 set targets. This is an improvement on the score of 82 per cent achieved the previous year. If not as high as the 90 per cent achieved in 2014/15 it compares favourably with the 77 per cent of targets that were met in 2013/14, and 79 per cent in 2012/13.  The DMR is consistent in meeting an acceptable proportion of performance targets every year.


Comparability with past results is limited by the fact that the DMR reduced the number of targets by over 50 in 2014/15 – from 160 targets or more in the past reporting periods – and the content of some indicators have been altered.


The 85 per cent level of achievement for performance targets is commendable. The DMR consistently achieves its targets at rates far above the reports of most government departments.


The average result in 2016/17 was, however, influenced by the improvements in the Administration programme balancing out deterioration in the performance of Mine Safety and Health and Mineral Regulation, compared to the previous year.



Table 4.1: Summary of 2016/17 Performance Measures



Total count of measures per programme


Not achieved


Achievement comparison with 2014/15



39 (100%)

37 (95%)

2 (5%)




Promotion of Mine Safety and Health

20 (100%)

14 (70%)

6 (30%)




Mineral Regulation

22 (100%)

17 (77%)

5 (23%)




Mineral Policy and Promotion

18 (100%)

16 (89%)

2 (11%)




Total all Programmes 2017/17

99 (100%)

84 (85%)

15 (15%)




Number of indicators used






Source: Research Unit analysis of the DMR Annual Reports


4.1.      Programme 1: Administration (Corporate Services and Financial Administration)


The purpose of this programme is to enable the Department to deliver on its mandate by providing strategic support management services and administrative support to the Ministry and the DMR.


The DMR achieved 95 per cent of the performance measures set for Programme 1 (37 measures achieved out of 39). This is an improvement from 74 per cent in 2015/16, when 28 measures were achieved out of 38.


One measure (out of 25) was partially achieved by the Corporate Services Branch. This was a 94 per cent achievement of a target for implementing risk management plans. The members of the Transport Advisory Committee were only nominated in the first quarter of 2017/18 and were therefore unable to contribute to the actions planned for the period covered by the Annual Report.


The DMR has struggled for many years to deal with its high vacancy rate, which was consistently above the ten percent target was set for government as a whole by the Department of Public Service and Administration (DPSA). Now the vacancy rate has fallen to an acceptable 6.4 per cent. This improvement in the figure, however, was achieved by abolishing some of the posts. This administrative sleight of hand has removed an area of long-term under-performance, frequently noted by the PCMR. Financial constraints were the reason that previous posts were vacant.


A “Women in Mining Strategy” was a performance target set in the DMR Strategic Plan for 2011/14. In May 2015, the PCMR recommended, “The DMR should include the Women in Mining Strategy in the APP until it has actually been completed. This suggestion was not attended to. The completion (or status) of the Women in Mining (WIM) Strategy has not been reported on in the 2016/17 or the 2015/16 Annual Reports. The DMR describes a “pilot implementation workshop [that] was held at Klerksdorp in the North West Region on the Personal Protective Equipment promulgated guidelines for women in mining, and raising awareness on sexual harassment to empower women in mining to deal with harassment in the workplace”. The formal completion of the WIM Strategy has not been achieved, but this does not have to be recorded because it was not in the APP.


The 2016 BRRR further recommended that the DMR should include the finalization and implementation of the Women in Mining Strategy in its 2017/18 Annual Performance Plan, “with the necessary budgetary provisions after consultation with National Treasury”. In this context, the PCMR noted that the Women in Mining Strategy needs to be finalized and implemented urgently and gave 30 September 2017 as a target date.


Just one performance measure out of 14 was not achieved by the Financial Administration branch (three less than in the previous year):


The one and only unachieved target was that the branch scored below the target level required in a Customer Satisfaction Index. The level of 2.1 out of 5 shows a deterioration from 3.2 in 2015/16 and 3.4 in 2014/15 when the target of 4 was missed in both years. For 2016/17, the target was reduced to 3.5 (which was missed). The dissatisfaction of DMR internal customers here is due to the slowness of the computer network and its lack of integration. This impact on the ability of DMR staff to deliver services to the industry.


4.2.      Programme 2: Mine Health and Safety Promotion

The purpose of the Promotion of Mine Safety and Health programme is “to ensure the safe mining of minerals under healthy mining conditions”


The DMR achieved 70 per cent of the performance measures set for Programme 2 (14 out of 20). This marks deterioration compared with 2015/16 where 80 per cent (16/20) targets were met and also with 2014/15 where 86 per cent (19/22) targets were met.


Four of the six targets that were not met are not within the direct control of the inspectorate, and are thus questionable as performance indicators for the MHSI. Two indicators measure fatality and injury rates. In both cases, rates came down (by 3 per cent and 6 per cent respectively) but this was below the ambitious 20 per cent target, which is better as an industry target rather than an inspectorate target. The performance target of a 20 per cent reduction in occupational injuries occurrences has not been met in any of the past six financial years – i.e. since 2011/2. Two time-framed indicators were not met due to the unavailability of witnesses for enquiries and the unavailability for inspection of applicants who had made applications under the MPRDA.


The inspectors over-achieved on their targets for inspections and audits, despite understaffing by an impressive 18 per cent. This was a quarter more than in the previous year. The extra inspections were carried out specifically to reduce accidents. This is a robust indicator of inspectorate activity. The outcomes are, however, not within the direct control of the inspectorate as they depend upon the management and workers on the mines.


The management of the MHSI failed to achieve two out of four of the corporate governance targets. Five of eleven findings of the internal audit team requiring management action were not implemented, apparently because of tardiness in the regional offices. This target area was also missed in the previous year. One target (out of four) related to the implementation of risk management plans was not achieved because the training unit of the inspectorate was unable to prepare any candidates to meet the requirements for a rock engineering training course.


Unlike in the years before 2014/15, the DMR Annual Reports no longer reveal how many Section 54 and Section 55 instructions were issued as a result of the health and safety inspections that were conducted in terms of the Mine Health and Safety Act, No. 29 of 1996 (MHSA)


Instructions are issued by the inspectorate in terms of enforcement guidelines to protect the health and safety of mineworkers against unsafe conditions, practices or acts. Section 54 allows the DMR to close shafts or entire mines in the event of a safety breach to allow remedial action to take place. Section 55 provides for instructions to be issued, but without closing the mine.


It is useful to know the total number of notices issued, as well as the percentage analysis of whether a total or partial closure of a mine was ordered. The number of administrative fines imposed during the year in terms of the MHSA, another useful index of law enforcement, is also no longer indicated. (There were 9 reported in the DMR 2013/14 Annual Report).


Section 54 and Section 55 instructions are part of an ongoing and highly controversial debate in the industry and in the media. The DMR is accused of stopping mine operations for minor infractions that can be corrected without closing the mine. The mines are said to be resistant to enforcement of the law, even taking the Department and individual inspectors to court to challenge the Section 54 notices. The DMR reports a decrease in the number of appeals to the Chief Inspector of Mines (CIOM) against inspectors’ decisions. Only one percent of Section 54 instructions issued in 2016 resulted in the total closure of a mine.


4.3.      Programme 3: Mineral Regulation

The purpose of the Mineral Regulation Programme is to “regulate the minerals and mining sector to achieve transformation and sustainable development”


The DMR achieved 77 per cent (17 out of 22) of the performance measures set for Programme 3. This is deterioration from 2014/15 when 90 per cent (19 out of 21) measures were achieved.

Five indicators were not achieved

  • The target for indirect jobs created through SLPs is 7,000 per year. 6,511 such jobs were created in 2015/16, a similar figure to the 6,528 jobs created in 2015/16. Mines have to carry through with their job-creation commitments - which are legal commitments made to the DMR – but it seems that they are allowed considerable flexibility on the timing of delivery. A five-year term is set for the achievement of the commitment made in each SLP. A fixed target of 7,000 is strange, the target should emerge from the SLP commitments themselves, which vary over time.
  • DMR has committed to the Department of Performance Monitoring and Evaluation that it will process applications within specified timeframes. The target is 70 percent, achievement was 49 per cent (a deterioration from 72 per cent in the previous year.) The reason for the deviation was that some applications had to be referred back to the regional offices to include “the itemisation of SLP projects and rehabilitation”. If the problem is in the regions, it is unclear how the proposed remedial action - of monthly meetings of the Licensing Committee - will assist.
  • 60 percent is set as the target for the proportion of environmental complaints received that are “documented for effective compliance and enforcement” within the regulatory framework. This is a low required threshold, but the branch only managed a 56 per cent score for this new indicator. No specific strategy for improving performance is stated.
  • To comply with the obligation of the MPRDA and the provisions of the PFMA, the DMR collects prospecting fees. The indicator covers the enforcement actions of the Department in collecting fees that are outstanding. 100 per cent of actions to collect arrears were taken in 2015/16 (against the 95 per cent target) but only 23 per cent of required enforcement tasks were completed in 2016/17. This is a significant and concerning deterioration, for which no understandable explanation is provided. This is not a new performance measure.
  •  50 per cent of management action plans (internal audit) were implemented, far below the 100 per cent target and the 98 per cent partial achievement in 2015/16. No specific strategy for improving performance in future is given.


Two areas of the Annual Report reflect ongoing public concern with aspects of the responsibilities of the branch:


  1. Over-achievement is reported by Mineral Regulation in the number of environmental verification inspections.  This is because there were 1,465 inspections against the target of 1,275. But this is 20 percent below the 1,889 inspections that were conducted in 2015/16 (and in the two years before that) compared with a previous, higher target of 1,700. Site inspections depend on complaints from members of the public. 124 officials have now been trained as Environmental Management Inspectors (EMRI).


  1. The number of engagements with communities and the mining industry was reported at 342 (compared with a similar number of 341 for the previous year), double the planned target of 150. 263 engagements were recorded in 2014/15 and 260 in 2013/14.


The extent of state liability for the environmental consequences of mining remains an area of extreme concern. The Mineral Regulation branch has ensured that every single mine closure certificate was issued in line with the regulatory framework and that statutory notices were issued in every case where financial provision (to cover environmental damage) was inadequate. The Annual Report does not, however, give the numbers of closure certificates and financial provision notices issued. These would be useful statistics to monitor as indicators of the health of the mining sector and trends.


Similarly, with regard to licences, the target is for 70 per cent to be processed within the prescribed time-frames. In 2016/17, as in the previous two years, the percentage target achievement is given but the numbers of licenses are not indicated. This useful indicator for the mining sector was given in previous years – for example, 687 out of 921 licence applications (75 per cent) were processed in line with the prescribed timeframes in 2013/14 and 571 out of 800 rights to minerals (71 per cent) were registered within the prescribed timeframes. This detailed performance picture is provided by the department dealing with mines in Western Australia, so that the efficiency of the officials can be monitored by the industry.


The performance of the SA Mineral Resources Administration Database (SAMRAD) is not reflected upon in the Annual Report. Consultants were paid a total of R1.3-million to support the SAMRAD and “Substance Abuse and Mental Health Services Administration (SAMSHA) online system” for a period of 21 months.


The ability of Parliament (and the mining industry) to monitor the performance of the branch – which is critical for growth and sustainability – is limited by the lack of consistent information

4.4.      Programme 4: Mineral Policy and Promotion


The purpose of the Mineral Policy and Promotion programme is to “formulate mineral related policies and promote the mining and minerals industry of South Africa to make it attractive to investors.”


The DMR achieved 89 per cent of the performance measures reported on for Programme 4 (16 out of 18) in 2016/17. This high rate was also achieved in 2015/16, when 22 out of 25 measures were achieved (88 per cent) and in 2014/15 (90 per cent).


One performance measure in the 2016/17 APP was not reported upon. This was the “Percentage implementation of shale gas investment promotion activities”. The omission of this indicator from the Annual Report is not explained.


An additional, new performance indicator was introduced, described as: “Percentage implementation of ocean economy Operation Phakisa plans”. (100 per cent achievement).


One performance measure, related to the initiatives from mining Operation Phakisa, was not reported upon because of external factors. The slow implementation of decisions from the Mining Phakisa laboratory in 2015 is due to delays by the Department of Performance Monitoring and Evaluation in the Presidency. The DMR can only implement mining Operation Phakisa after it has been formally launched by the President.


Two performance measures were not achieved, both because “most of the legislative instruments have to go through Parliament for approvals where delays may be experienced”


  • The revised Mining Charter was not completed as planned during the financial year.


  • Two out of nine planned risk management plans were not implemented “due to a re-prioritisation of projects”.


The Mineral Policy and Promotion programme is the key lever within the DMR for plotting policy and reform to shape the mining industry in the future. Three issues (at least) remain outstanding from past commitments that the Branch has made in the APPs:


  • The “Revised Mining Strategy for sustainable growth and meaningful transformation” was scheduled for completion in 2014/15. This was not done, and no explanation was given in the 2014/15 Annual Report. The Strategy was also not completed in 2015/16 and was deferred to 2016/17. The DMR states that the revision of the strategy was dependent upon the outcome of the still-delayed Mining Phakisa.


  • The planned report on strategic minerals has not been completed. This is dependent on the approval of the MPRDA Bill (B15D-2013) by Parliament. The regulations on strategic minerals will be framed under Section 26 of the proposed law.


  • The Coal Policy, due for completion in 2015/16 has again been deferred – now to the 2017/18 period (although it is not included in the 2017/18 APP). This is because of the prioritisation of the resources required to finalise the MPRDA and the Mining Charter.


Mineral Policy and Promotion is the largest programme of the 2017 MTEF allocation. It absorbs over half of the budget of the DMR and includes transfers to Mintek and the Council for Geoscience. The Programme encompasses the DMR’s strategies to address the huge problems caused by ownerless and derelict mines and mine dumps. The estimated cost to government of rehabilitation is a staggering R47.1 billion.




The Auditor General of South African appeared before the Committee on 03 October 2017.

The DMR financial statements received a clean audit in 2016/17. This in a notable improvement on the unqualified audit opinions (with findings) in both 2015/16 and in 2014/15. The Department has now fully dealt with the concerns and criticisms raised in the qualified audit opinion four years ago, in the 2012/13 financial year.


The Auditor General found there were no material misstatements in the submitted financial statements. As a result, the financial statements received an unqualified audit opinion without findings, also referred to as a clean audit.


There were also no material misstatements in the reported performance information (as set out in pages 15 to 50 of the Annual Report).


The performance of the DMR is measured strictly against what is committed to in the APP. The problem noted below does not count as an example of inadequate performance because it is not in the APP.


The Coal Policy, due for completion in 2015/16 was deferred to 2016/17 as stakeholder consultation had still to be completed. It has still not been published and did not feature as a target in the 2017/18 APP. While it is necessary for the DMR continually to review its performance measures, unachieved performance targets in one year are regularly dropped from inclusion in the next. There is an argument to be made that once a target is set, it should not be retired from the APP without a full explanation. No such explanation was given with respect to the coal policy, which is an element of the service delivery responsibilities of the DMR specified in the MTSF 2014-2019. The coal policy has been deferred to 2017/18 according to the Annual Report for 2016/17, but it is has ceased to be a performance indicator, because it is not in the APP for 2017/18.




The following can be observed from the financial statements:

The DMR customarily spends its entire budget each year. This full spending of budgets, across all programmes has been described by the Financial and Fiscal commission (FFC) as an indicator of fiscal discipline. In its last analysis of the spending profile of the DMR, the FFC found that “the Department has an efficient cash flow system in place and spending disbursements to public entities are well planned to smooth out cash outflows during the year.”


The Department’s entities and agencies have all obtained unqualified audits since 2011/12. These are the Council for Minerals Technology (Mintek), the Council for Geoscience, the Mine Health and Safety Council, the South African Diamond and Precious Metals Regulator and the State Diamond Trader. The entities are spending efficiently and effectively and meeting goals and objectives. The FFC has found that the Department plays an effective monitoring role over the entities and agencies.



Table 6.1          Comparison appropriations for the DMR entities 2015/16


Name of Entity

Amount Transferred (and spent) 2016/17


Audit Outcome




R 356 416


SA Diamond & Precious Metals Regulator (SADPMR)

R 53 205

Unqualified (was clean in previous year)

Mine Health and Safety Council (MHSC)

R 0

Clean (improvement)

Council for Geoscience (GCS)

R 378 598


The State Diamond Trader (SDT)

R 200

Clean (improvement)


The MHSC reported a deficit of R23-million. The MHSC is, correctly, drawing on its considerable surplus funds for the purposes for which they are intended. Research expenditure, which has declined and languished in recent years, increased to R40-m from R32-m in 2015/16. The MHSC reported a continued decline in its accumulated surplus, which fell to R176-m from its record 2014/15 level of R207-m.


It is however, concerning that the expenditure of the MHSC was considerably less than the R137.8-m planned, as indicated in the budget information tabled in 2016. The Council only spent R113.4-m. The under-expenditure is said to be due to unexpected delays in providing seed funding for the primary research providers to the Centre of Excellence. These projects generate research that is used to support the industry in the common effort on the journey to zero harm.


The measures and targets reported upon by the CGS differed materially from those in the CGS Annual Performance Plan for 2016/17 tabled in Parliament on 10 March 2016 and presented to the PCMR at the meeting on 6 April 2016. The Annual Report misstates at least 15 targets and omits at least three programme performance indicators. The description of two indicators differs entirely with the APP. This is due to a change in the performance targets during the year which the CGS has told the Committee was undertaken in a process approved by the Auditor General.


The Percentage of CGS scientific staff with MSc and PhD degrees was 43 per cent in 2015/16, but dripped precipitously to 28.57 per cent in 2016/17. The target here is stated as 50 per cent (so the target was not achieved). The 2016/17 result is not comparable with previous years because the reference base for the calculation of the performance target was changed.


Note on the State Diamond Trader: Perfect performance with a broken business model.


The State Diamond Trader marks its tenth anniversary with its 2016/17 Annual Report. SDT generates its own revenue from selling diamonds and does not receive transfers from the DMR. Trading conditions improved in 2016/17 compared to the previous six financial years. The SDT purchased R694 million of diamonds (below only the 2010/11 record figure) and returned to making a modest profit of R7.1-m (after sustaining a small loss of R3-milllion in 2015/16).


This may appear to be a successful record, particularly when accompanied by a clean audit and internal control and assurance providers that are rated as “good” by the Auditor General in all three areas of leadership, governance and financial and performance management. The AG also found that the SDT had complied with all aspects of key legislation.


The information presented in the SDT annual report highlights the urgency of long-promised measures by the DMR to review and adjust the business model of the SDT. The SDT began operation in 2007 with a mandate to support local beneficiation. It is permitted to purchase up to 10% of South African diamond production for this purpose. But the SDT was able to purchase only 2 per cent of production by volume (carats) and 4 per cent by value, of the rough diamonds it inspected under the terms of the Diamond Act. Only 7 per cent of SDT sales are made to Historically Disadvantaged South African buyers, who are grouped in “Growth & Transformation” and “Equitable Access” categories.


The example of the SDT highlights the limitations of using the reports of the Auditor General and the approved APP indicators as the only benchmarks against which performance is measured. From a policy perspective, the SDT has been an unmitigated failure. It has failed to grow the local diamond beneficiation sector – which has declined during the last decade. The SDT sold to 60 clients in total (large and small) in its peak year of 2010/11 and 46 in 2016/17 – a mere 24 of which were HDSA’s. This is the same number as in 2014/15.









  1.  2015/16 BRRR recommendations and responses


The Committee made the following recommendations to the Department in the 2016 Budgetary Review and Recommendation Report:


2016 BRRR Recommendations


Should re-motivate with National Treasury for the budget allocation to the Council for Geoscience to be increased so that the Council can fulfil the mandates given to it by legislation.


On-going the DMR continue to engage Treasury on the issue

Report on the achievements of the task team on illegal mining. Illegal mining is not just about gold, it also involves chrome, coal and sand, all of which can have severe environmental consequences and which deserve more attention from DMR inspectors.


Still work in progress, due to the complex, and multi stakeholder nature of the issue

Come up with a strategy to deal with the unintended consequence of the One Environmental System for Mining whereby new entrants to the mining sector are discouraged from making applications for rights to minerals because of the very high fees for environmental reports that are required by NEMA and other compliance costs. The effect is to limit access to mineral resources by Historically Disadvantaged South Africans, against the expressed objects of the MPRDA.


On-going – the problem was re-iterated by the DMR, but no solution has been proposed

Give a continuous update on the disaster at Lily mine and present to the Committee a short, medium and long term plan in resolving the issue.


On-going, waiting for the report of the inquiry

Present the governance framework and guidelines of its entities with special reference to the relationship between the board and executive management.


Accomplished – all the entities gave detailed organograms and explanations.

Provide a roadmap and timetable to illustrate the plan for achieving the legislative goals contained in the Strategic Plan of the Department by 2019.



Treasury should come up with a funding framework, that encourages the Department and its entities to perform optimally, in their financial stewardship, continued trimming of the budget for a well-managed state organ, punishes rather than reward prudent financial management


On-going – Treasury has further trimmed the budget and staff of the Department, affecting mineral regulation, health and safety and environment inspections capacity

  1. Should include the following issues in its 2017/18 Annual Performance Plan, with the necessary budgetary provisions after consultation with National Treasury:
    1. The development of an annual report for the new Environmental Mineral Resource Inspectorate (EMRI).
    2. Appropriate performance measures that reflect on the role of the SA Mineral Resource Administrative Database (SAMRAD).
    3. The finalization and implementation of the Women in Mining Strategy.


Policy development on two critical issues is a matter for co-ordination across government


  • Mine closure


There is a need for better legislation and intergovernmental co-operation to deal properly with the closure of mines. The DMR should research sustainable mine closure, that considers both the environment and community issues. Closed gold mines encourage illegal miners. The gaps between companies, mineral, insolvency and environmental laws in effect encourage fraud and asset stripping. This leads to poor custodianship over mineral resources in practice. Closure is part of the life cycle of mines and is presently not regulated in an integrated manner.


  • Ex-mineworkers


DMR needs to co-ordinate inter-governmental action on developing a comprehensive strategy on ex mineworkers. This must include harmonising compensation laws to remove the bias against mineworkers. The one stop service centres are a welcome innovation, but the planned expansion to Kuruman and Burgersfort has not happened and there is a lack of policy on how the one stop shops should be sustainably resourced. Their services will be needed by ex-miners up to 2028 at least. Retirement fund managers and regulators need to act to pay the (reported) R5-billion in unclaimed benefits to the beneficiaries in the mining sector.



  • Address lack of standardisation on how it deals with community structures, e.g. Bapo Ba Mogale situation, furthermore brief the committee on how it is dealing with issues pertaining to the above case.


On-going – the Committee was briefed on general policy measures, but not on the maladministration of mining royalties paid to the Bapo ba Mogale. The DMR authorised the payment of the royalties by Lonmin.


 8.        2016/17 Budget Vote Recommendations


The Committee made the following recommendations for the 2016/17 financial year, after considering the Annual Performance Plan and the Budget of the DMR:

  • The Presidency through DMR is requested to fast-track the finalisation of the agreements and projects that have emerged out of Mining Phakisa and present such to the Committee.
  • As soon as this has been completed, DPME should brief the Committee on the steps to be taken to ensure that the state’s commitments will be resourced.
  • The National Treasury should report to the Committee on the insufficient allocation of funding to the CGS in accordance with the mandate as approved by Parliament.
  • The National Treasury should review the extent of government expenditure to support the mining sector given its growth and transformation objective. The above should take into account the considerable tax and non-tax revenue contributed to the fiscus by the mining industry.
  • MHSC to produce an expenditure plan detailing how it is going to utilize the surplus.
  • DMR to present to the Committee the strategies which are outstanding from the previous financial year’s commitments, namely the Woman in Mining and Coal Strategy etc.
  • The DMR should present a plan to the Committee clearly demonstrating how it is going to address the backlog on the MTSF goal for rehabilitation of ownerless and derelict mines.
  • The DMR should report to the Committee on their mineral beneficiation strategy and coordination with other relevant departments and entities or agencies.
  • The DMR and DPME to present to the Committee an overarching strategy to improve the sector’s role on economic growth and job creation.
  • To request the DMR to brief the Committee on legislative challenges and regulatory framework in order to ensure certainty and address issues of investment growth and job creation.




The Portfolio Committee of Mineral Resources having assessed the performance of the Department of Minerals Resources and its five entities made the following findings and observations:


  • Several substantial research reports reflecting on the performance of the DMR were released in 2016/17. These cover the DMR’s governance responsibilities over the integrity of mine rehabilitation funds, approval of the sale of mines and the monitoring of the royalties paid to communities by mines, as well as concerns related to the enforcement of environmental laws and principles.
  • Safety performance in the mining industry continue to improve, however more needs to be done in order to attain the goal of zero harm
  • Financial performance of the DMR as well as its entities is also showing impressive improvement with three out of five entities in addition to the DMR receiving clean audits, while the other two attained unqualified audits
  • Operational performance of the Department and its entities against the set targets continues to be exceptional, achieving above 85 %, this is a continuation of an exemplary trend that has been persistent in the last four years
  • The issue of illegal mining continues to pose a substantial risk to the sustainability of operating mines as well as the durability of rehabilitation efforts
  • The CGS has motivated for a ten year programme of geological mapping. This is essential for promoting mineral prospecting and also for planning national infrastructure and food and water security. The cost is R20-billion over 10 years and an additional R1.8-billion over the MTEF.

The working relationship between major stakeholders in the mining industry continue to deteriorate, negatively affecting investments



The Committee recommends that the Department of Mineral Resources


2017 BRRR Recommendations

Motivation for Inclusion

Time Frames 

The DMR should fully respond to previous BRR Reports recommendations and provide explanation where a response is not available

Ensure compliance

3 Months

The DMR should devise a strategy to deal with the reopening of closed parts of operations, in order to address safety issues associated with unused old shafts becoming operational

Improve safety

11 Months

The DMR should provide the Committee with a full legislative agenda between now and the end of the 5th parliament as to enable the committee to finalize its programme for the remainder of the term.


Enable planning

4 Months

The South African Diamond and Precious Metal Regulator (SADPMR) should brief the Committee on the decline in local beneficiation of diamonds and precious metals as well as on access to funding challenges for the Historically Disadvantaged South Africans (HDSA)


Facilitate Transformation

6 Months

The SADPMR should provide the Committee with the interpretation of section 74, as well as the frequency of its application and the identity of the companies that have been given exemptions by the Minister


Brief the Committee


The State Diamond Trader should identify legislative constraints to fully realize transformation objectives as stated in the Diamond Act of 1986 and present the above to the Committee


Facilitate Transformation

10 Months

The Council for Geoscience (CGS) should consult with other professional organisations on the baseline definition of a scientist, and devise a clear retention strategy

Enable Benchmarking

10 Months




The CGS should have processes in place that ensure protection of intellectual property gained by the institution in the execution of its duties.


Protection of Intellectual Property

6 Months

MHSC to produce an expenditure plan detailing how it is going to utilize the surplus

Enabling planning

10 Months


Summary of recommendations with financial implications


  • The CGS has motivated for a ten year programme of geological mapping. This is essential for promoting mineral prospecting and also for planning national infrastructure and food and water security. The cost is R20-billion over 10 years and an additional R1.8-billion over the MTEF.
  • The DMR has indicated that it cannot fulfil its mandate if the current cuts implemented by National Treasury continue. Treasury should ensure that DMR has the financial resources available to carry out its wide and essential responsibilities as the custodian of the nation’s mineral resources for present and future generations.




The Committee would like to express its appreciation to the Department under the leadership of the Minister, the Auditor- General of South Africa and the all the entities.  The unreserved word of appreciation and gratitude goes to the support staff of the Committee who works diligently during the entire process including going beyond normal hours of work. This is what is expected from selfless public servants who are committed to see this country moving forward.   


Report to be considered.