ATC100514: Report Joint Oversight Visit wiith Select Committee on Economic Development to Kwazulu-Natal - Mtubatuba & Umhlautuze Municipalities

NCOP Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour

REPORT OF THE SELECT COMMITTEE ON TRADE AND INTERNATIONAL RELATIONS ON THE JOINT OVERSIGHT VISIT WITH THE SELECT COMMITTEE ON ECONOMIC DEVELOPMENT TO KWAZULU-NATAL - MTUBATUBA AND UMHLAUTUZE MUNICIPALITIES, 02 – 06 NOVEMBER 2009

 

1. DELEGATION

 

The delegation comprised the following: Mr F Adams (ANC), Chairperson of the SC on Economic Development; Mr DD Gamede (ANC), Chairperson of the SC on Trade and International Relations; Ms EC van Lingen (DA); Mr BAMnguni (ANC); Ms MC Dikgale (ANC); Mr AJ Nyambi (ANC); Mr MC Maine (ANC); Mr KA Sinclair (COPE); Ms SS Chen (DA); Mr RA Lees (DA); The delegation was also accompanied by the following staff members: Ms NGDinizulu and Mr H Mtileni  (Committee Secretaries); Mr L Ngqameni (Committee Assistant).

 

The following Government Departments, municipalities and representatives of the private sector were also in attendance:

 

·                     Department of Mineral Resources: B Dinga, N Njoko-Regional Manager: KZN; S Jivhuho- Principal Inspector KZN; T Mbinda-Regional Energisation Manager; K Mhlongo- Administrative Assistant.

 

·                     Exxaro KZN Sands:  N Oosterhuis-General Manager; S Mkhwanazi-Head of OH&S; E Scholtz -Technical Serv.  Manager; A Fouche-Manager SD; N Oosterhuis-General Manager ; Gumbi-Acting HR Manager; SMkhwanazi-Head of Safety and Health; R Otto-Manager Finance; N Keagan- Acting Communication Manager; K Datel-Leasing Superintendent;

 

·                     Richards Bay Minerals: C McRae-Managing DirectorJ Kubheka-General Manager; J Chawapiwa-Pama-Vice President Communications; F Dlamini-Transformation and Sustainable Development; B Uys-Manager, J Kubheka-General Manager, A Denton-General Manager, B Gumbi-General Manager.

 

·                     Department of Economic Development and Tourism: Mr M Mabuyakhulu- MEC; Dr R Ngcobo-Deputy Director-General; V Tharage-Chief-Director: National Department of Tourism.

 

·                     Umhlathuze Municipality: L Khoza-Senior Manager-city development; NJ Sibeko- Senior Manager –Community Services; G Readman-Mevamhlope Communications: Umhlathuze news; Dr CQ Madlopha-Deputy Mayor; M Lourens-Exco Councillor; N Mzimela-Councillor; G Mbanjwa-Chief Whip; Mr M Kunene-Chief Financial Officer; MTB Ndlovu-Senior Manager Corporate Services; N Khumalo-Assistant Chief Financial Officer; ZMnqayi- Mayor; E Mbatha- Speaker; NP Nhleko- Deputy City Manager

 

·                     Department of Environmental Affairs: D Shoyisa-Assistant Director; B De Klerk, Mr D Van Der Merwe from Business and Tourism, T Chifupa- Deputy Director-General: Department of Trade and Industry.

 

·                     Engen Refinery: W Oosthuizen-General Manager; M Stead-Engen Government Liaison; P Munsamy –Personal Assistant; T Cele-Public Affairs Manager; X Mtwa-Regional Energy Director and M Mngomezulu-Regional Inspector: Department of Energy.

 

·                     ME Mthethwa- Mayor Mbonambi municipality, Inkosi Mbuyazi: Mbuyazi community, MH Nkosi-Manager:Mbonambi Municipality, JM Zulu-Speaker: Mbonambi Municipality

 

2.  BACKGROUND

 

In strengthening its oversight work over the Executive, the Select Committee on Trade and International Relations, in conjunction with the Select Committee on Economic Development undertook a joint oversight visit to KwaZulu–Natal. The aim of the visit was to assess the level of South Africa’s readiness to host the 2010 Soccer World Cup and the projects that are central to economic development. In this regard, the Committee focused on the following key areas: 

 

·                     Ascertaining the readiness of the tourism industry for the forthcoming FIFA 2010 World Cup;

·                     Interrogating the Local Economic Development (LED) strategies of the Mtubatuba and uMhlautuze municipalities in ascertaining their alignment to the service delivery goals;

·                     Looking at the progress and status of the Richards Bay Industrial Development Zone (IDZ);

·                     Determining the socio-economic and social responsibility commitment of Richards Bay Mineral and Exxaro Sands;

·                     Establishing the readiness of the Engen refinery to supply fuel during the 2010 FIFA World Cup.

 

3.   BRIEFING BY MTUBATUBA LOCAL MUNICIPALITY ON LOCAL ECONOMIC DEVELOPMENT

 

The Mtubatuba Municipality, represented by the Mayor and Councilor CG Swart, outlined the Municipality’s local development strategy to the Committee. Councilor Swart highlighted to the Committee that the Municipality has an LED (Local Economic Development?) strategy even though it had never been implemented according to the plan. While faced with certain constraints regarding the implementation of the comprehensive LED strategy, the municipality shared with the Committee some projects that were implemented that aim to enhance local economic development in the area. Through the funding from the Municipal Infrastructure Grant (MIG), the construction of a Taxi Rank is underway at Kwa Msane, a commercial site has been set aside for the development of Mtubatuba Town and some investors were attracted to the area including chain supermarket Pick ‘n Pay. These initiatives are seen as central in contributing to socio-economic development and job creation.

 

With regard to tourism, the municipality requested the Committee’s assistance in overcoming and solving some challenges that threatens the LED. These issues include both infrastructure development and limited resources, and were identified as follows:

 

(I)       Lack of bulk water supply;

(II)     Insufficient bulk electricity supply;

(III)    Scarcity of sufficient land for development, as the available land is privately owned;

(IV)  Low equitable share from Government.

 

 

 

 

4.         BRIEFING BY THE KZN TOURISM ON THE PROGRESS REPORT ON THE          IMPLEMENTATION OF THE TOURISM PLAN FOR FIFA 2010 SOCCER WORLD CUP

 

Mr Ndaba Khoza, Chief Executive Officer (CEO) of KZN Tourism provided a progress report on the work done on the core tourism focus areas for the 2010 FIFA Soccer World Cup. The following areas were identified as key focus areas:

 

(I)       Stimulation of greater awareness to the Zulu Kingdom brand

(II)     Length of stay and spread of 2010 spectators in the Zulu Kingdom

(III)    Accommodation facilities

(IV)  Tourism-friendly transport system

(V)    Tourist safety and security

(VI)  Information and transaction

(VII) Events and attractions

(VIII)                       Skills and service levels

(IX)   Air access

 

4.1        Stimulation of greater awareness to the Zulu Kingdom Brand

 

The province is utilizing the Zulu Kingdom brand as its international marketing strategy for 2010.

 

4.2        Length of stay and spread of 2010 spectators in the Zulu Kingdom

 

The province seeks to convince tourists to stay for longer than the 2010 World Cup in order to boost tourism in the province. As part of the plan, the KZN Tourism will among other things, engage with FIFA accredited tour operators to include KZN in their packages. They will embark on mega educational sessions with tour operators during the FIFA 2010 World Cup draw in December 2009.

 

4.3        Accommodation facilities

 

In terms of accommodation, the following milestones were highlighted:

 

·                     6 440 rooms have been contracted by MATCH 58% of which are largely SMME establishments.

·                     Five establishments have been contracted for the purposes of team base camps.

·                     KZN Tourism has managed to facilitate one-on-one workshops for MATCH to contract with accommodation establishments to ensure that various key parts of the province become accommodation satellites.

 

4.4        Tourism-friendly transport system

 

The first phase of the tourism signage erection had been completed and was funded by the Social Responsibility Fund from the National Department of Tourism. All tourism routes in the province have been identified for upgrading. Negotiations with the provincial Department of Transport continues in terms of  the repair and upgrade of these routes.

 

4.5        Tourist safety and security

 

In line with the national tourism safety plan, the provincial tourism safety initiative has been finalised and implemented. 

 

4.6        Information and transaction fulfillment

 

In order to assist foreign tourists during the 2010 FIFA World Cup, the province outlined the following strategies to ensure access and dissemination of information to tourists:

 

·                     Foreign language training courses for tour guides, and a number of tour guides has also been enlisted for similar training;

·                     The installation of electronic translators in all information/tourist centers.

 

4.7        Events and attractions

 

In order to boost tourism, the provincial department has engaged FIFA accredited tour operators to include local attractions in their itineraries. Furthermore, engagements with District Municipalities are underway to upgrade existing attractions to cater for increased visitors for 2010.

 

4.8        Skills and service

 

In enhancing the skills and improving service levels in the hospitality sector, KZN Tourism has placed emphasis on training of BEE tour operators and BEE Hotel Managers.

 

4.9        Air Access

 

It was indicated that the opening of the new King Shaka International Airport in May 2010 will significantly contribute to dealing with the expected air traffic volume.

 

5.         NATIONAL DEPARTMENT OF TOURISM

 

In his briefing to the Committee the Chief Director, Mr Victor Tharage highlighted the role of tourism in local economic development. The Department of Tourism indicated that tourism can be used as a vehicle for socio-economic development to alleviate poverty, for sustainable job creation, for infrastructure development, skills development and social cohesion. The Department supports aspirant tourism entrepreneurs who make a living through tourism by funding an intervention package as a Social Responsibility Programme. This programme is linked to the Expanded Public Works Programme (EPWP), which gives support for tourism product development and tourism infrastructure.  To access funding from the Social Responsibility Programme, the following criteria should be fulfilled:

 

·                     Projects should be within the tourism sector.

·                     The projects should be sustainable.

·                     Project should not be owned by a private individual.

·                     The project must have a job creation element for the local community.

·                     The project should subscribe to the EPWP principle of labour intensive, public infrastructure development and skills transfer.

·                     The project must have an element of SMME development.

 

6.         ISIMANGALISO WETLAND PARK

 

The CEO of the iSimangaliso Wetland Park presented to the Committee a brief overview of the iSimangaliso and its contribution to economic development through tourism to the surrounding communities.  The iSimangaliso WetlandPark, previously known as the Greater St Lucia Wetland Park was officially renamed iSimangaliso Wetland Park as gazetted during May 2007. It was established in November 2000 that a large portion of land covering 332 hectares were consolidated into a single protected area. In 1999 iSimangaliso was recognized during its listing as the first World Heritage Site in South Africa along with Robben Island and the Cradle of Human Kind. The iSimangaliso also forms part of the anchor project of the Lumbombo Spatial Development Initiative which includes three countries - South Africa, Mozambique and Swaziland.

 

The CEO outlined the main vision of iSimangaliso as that of integrating a strong conservation of the ecological wealth of the area, the development of tourism with the empowerment and development of historically disadvantaged communities in and adjacent to the Park and promoting equitable use of iSimangaliso’s natural resources.

 

The Committee was briefed about the strategic vision of the Park, which encapsulates the following pillars:

 

·                     Co-management agreements

·                     Job creation

·                     Equitable access

 

6.1        Co-management agreement

 

There has been a number of land claims cases over the vast hectares of land under the iSimangaliso Wetland Park lodged by the surrounding communities who were forcefully removed from their land by the former repressive apartheid regime. iSimangaliso has to enter into a cordial working relationships with the land claimants through the facilitation of the KwaZulu-Natal Regional Land Claims Commission (RLCC). iSimangaliso has to make it a point that the post-settlement process is being coordinated smoothly and so far 9 out of 14 land claims have been settled.

 

6.2        Job creation and economic development programmes

 

In terms of job creation during the financial year 2008/09, of the R27.5 million that was spent, 65% was spent on SMME’s and local labour force.

 

6.3        Equitable access

 

In terms of enhancing equitable accessibility to the Park, iSimangaliso allows communities and individuals free entery to the Park and also encourages all school children to visit the Park. The target is to have 200 schools and 5000 learners visiting the park each year.

 

7.         KZN DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM

 

On day two of the oversight visit, the Committee visited uMhlautuze Municipality and was briefed by the Honourable MEC M Mabuyakhulu on economic opportunities for 2010. The Committee was further briefed by uMhlautuze LocalMunicipality on its Local Development Strategy.

 

In his briefing on the opportunities that are envisaged during the 2010 FIFA World Cup, the MEC of the Department of Economic Development and Tourism, Hon Mike Mabuyakhulu took the Committee through the 2006 FIFA World Cup post-analysis. According to the Department of Economic Development and Tourism, the 2006 FIFA World Cup in Germany generated estimated revenue of 6 billion euros for Germany. The analysis reflected that foreign tourists had spent up to 600 million euros. The World Cup has also managed to accrue intangible benefits such as improved community spirit and civic pride among the people. All these were achieved through the effective “Let’s make a friend campaign”. The Committee was informed that the improvement of the infrastructure, especially in transportation will benefit the country’s productivity in the long run.

 

According to the Department of Economic Development and Tourism there are a number of economic opportunities which the province of KwaZulu-Natal and South Africa in general would benefit from, flowing from the hosting of the World Cup. These benefits include:

 

·                     Tangible and intangible values

·                     Regulated and unregulated opportunities

·                     Pre-event 2010 opportunities

·                     2010 Post-Legacy opportunities

·                     Accessing 2010 opportunities

 

7.1        Tangible and intangible values

 

It is envisaged that the country would benefit tremendously in terms of the tangible values, which are benefits that can be measured generally in monetary terms which amounts to?. The country is also expected to benefit on the intangible values, which are benefits that are difficult to attach a rand and a cent value. Some of the intangible benefits include nation building, community spirit (how will these be measured) and international reputation as a World Cup Host nation.

 

7.2        Regulated and unregulated opportunities

 

The regulated opportunities are those opportunities that are fall under the auspices of FIFA and the Local Organising Committee (LOC). These opportunities include products and services which generally relate to regulated sites such as stadia and surrounds, the fan fest parks, official parking areas and media centres. For SMMEs to access these opportunities, they are required to register on an official database and will have to go through a tendering and accreditation procedure. Unregulated opportunities are those that cannot be controlled by FIFA and the LOC.

 

7.3        Pre – Event 2010 opportunities

 

The province of KwaZulu-Natal, through the opportunities presented by the pre-2010 event has created a number of economic opportunities that relate to the construction of various 2010 infrastructure development projects. The construction of the Moses Mabhida Stadium created 7 512 jobs by the end of September 2009 and a total of 7 941 employees were on site at the Dube Trade Port. The stadia development in Umgungundlovu, Ugu, uThungulu,aMajuba and eThekhwini have created 1 023 jobs and the upgrading of uMhlathuze sports field for use as a potential base camp during the World Cup has created 140 jobs.

 

7.4        2010 post-legacy opportunities

 

The World Cup is envisaged to leave a long lasting legacy football national teams or other, which is the main event, shall benefit through soccer administration support whereby FIFA shall offer training on the technical aspects of football through the training of soccer administrators, specialist coaches and referees. The Department of Sports and Recreation would utilize the 2010 FIFA World Cup for the development of football in the grassroots.

 

7.5        Accessing opportunities

 

The Department of Economic Development and Tourism assured the Committee that it will be working closely with the host city and the Department of Trade and Industry and its agencies such as SEDA and the IDC to provide and disseminate sufficient information to SMMEs regarding access to the 2010 opportunities.

 

8.         UMHLATHUZE LOCAL MUNICIPALITY

 

The municipality briefed the Committee on its Local Economic Development Strategy, which focuses on the following areas:

 

·                     Manufacturing clustering for growth in which the municipality refocuses on its industrial development and SMME development; regard to a business friendly environment in which enterprises of all sizes can prosper and grow;

·                     Implementation of apprenticeships, learnerships and skills development programmes;

·                     Development of the Community Based Development based satellite campus of the University of Zululand to meet the community needs in both the business and industrial sector;

·                     Establishment of the 100 seater Call Centre in Richards Bay in a partnership between the City of uMhlathuze and the KZN Department of Economic Development;

·                     Develop uMhlathuze as a tourism destination and develop and implement a tourism strategy;

·                     Provide visitor information and signage

·                     Maximise the job creation potential of agriculture, through a partnership of local and provincial role-players;

·                     Strengthen the local stake in commerce;

·                     Raise awareness of the importance of local business in order to reduce economic leakage; and

·                     Control informal trading while improving conditions and returns of traders.

 

9.         DEPARTMENT OF MINERAL RESOURCES

 

The Provincial Regional Director, Ms N Njoko, briefed the Committee on the issues affecting the two mines that have been in the media and have been part of the discourse of many forums for many years (Exxaro and Richards Bay Mine). It was indicated that the communities were aggrieved about the following issues:

 

·                     Participation of communities in the shareholding of companies;

·                     Lack of a procurement strategy that focuses on the development of local businesses and the companies’ lack of commitment thereof;

·                     Reconstruction and compensation of households that were affected or damaged by mining operations and companies’ historical reluctance to remedy;

·                     Lack of developmental initiatives by companies in the areas affected by mining in terms of their social and labour plans;

·                     Strained relations between the company and the community;

·                     Pollution of water resources and depletion of the rivers that have been part of the communities’ heritage.

 

9.1        RICHARDS BAY MINERALS (RBM)

 

Ms Njoko also briefed the Committee about the concerns raised by the communities of Mbonambi and Sokhulu. Currently the mine has a heavy mineral sand operation affecting two communities of Mbonambi and Sokhulu. The operations will in future extend to the Dube and Mkhwanazi communities. RBM engaged with the four communities to participate in their equity allocation for communities and this has not been met in an equal manner by the communities.  The concerns also related to the reluctance of the company in affording local businesses the opportunities to have meaningful shareholding in the mine. In addition the following concerns were noted:

 

·                     There is suspicion that businessmen outside Mbonambi are involved in the BEE deal with the mine hence the Government’s reluctance to act decisively against RBM in trying to resolve the historical problems that the communities have;

·                     The community has been calling for the Department to suspend the mining rights until such time that the issues are resolved;

·                     There is a lack of consultation by the company;

·                     These are the communities that staged a march, barricaded roads, blocked trucks in demonstration of their anger. RBM took the identified community members to court and the court found the community members? guilty and ordered them to pay compensation for loss of income. This judgement further placed additional strain on the relations with the community.

 

The mining rights for RBM have also not been transferred,  the Department of Mineral Resources wants to ensure that the community issues and all the necessary consultations are conducted, and RBM maintains a good neighbourly relation with its communities.

 

9.2        EXXARO (KZN SANDS)

 

Exxaro Mine is a company that mines Heavy Mineral Sands in the area of Gobandlovu and Mandlankala with the KwaDube Traditional Authority. The conflict started during 2002/2003 when a pipe carrying slime burst and caused damage to homes in the Mandlankala community. The mine admitted responsibility and entered into agreements with the community. Compensation was paid for damages to about 18 homes that were affected.

 

In 2004 the municipality of uMhlathuze received complaints from the Gobandlovu community regarding water progress  to 12 homes, which they alleged was due to the mining activities of Exxaro KZN Sands. Many studies were conducted and in some cases the mine was found liable and in others the mine’s liability could not be confirmed conclusively.

 

There were other factors that could have been contributing to an elevation in water level thus causing flooding of the homes. As a settlement it was proposed and agreed that Exxaro would include the building of the 12 homes for the community in their Social and Labour Plan. The amount quantified would be the amount allocated to the building of the homes.

 

The meeting was held on the 29th October 2009 and the matter was resolved in agreement with the affected households, Government and the mine and new houses will be built. There are three families which have not agreed to the resolution and a further consultation process will be undertaken to reach a feasible conclusion. A resolution of the matter has been a joint initiative by the Department of Mineral Resources, Department of Agriculture, Environmental Affairs and Rural Development.

 

 

9.3        KWAMBONAMBI AND MANDLANKALA COMMUNITIES’ CONCERNS:

 

The communities of KwaMbonambi and Mandlankala noted the following:

 

·                     RBM built schools without installing the equipment (what specifically);

·                     RBM should consult  and respect the Amakhosi and the community with regard to all the activities that have an impact on communities;

·                     The community wants to be involved in the business opportunities at RBM;

·                     In 2009, employees from KwaMbonambi and surroundings were fired because they participated in a march, and RBM took a decision to employ people from outside the community;

·                     The communities made recommendations that the Government should not renew the license for RBM when it expired;

·                     The chemicals used by RBM have poisoned their land and as a result their plantations do not grow;

·                     The communities also raised a concern that RBM appeared to interfere with their projects and delayed them;

·                     Out of the four communities surrounding RBM, only two communities are accommodated and this is very divisive in the communities;

·                     Communities felt that RBM is more powerful than the Department of Mineral Resources.

                        10.        BRIEFING BY RICHARDS BAY MINE (RBM)

10.1 Background

 

Richards Bay Minerals (RBM) was established in 1976 to mine, process, beneficiate and market the heavy minerals occurring naturally in the sand dunes along the coastline of KwaZulu Natal (KZN), near Richards Bay. The Company is equally owned by Rio Tinto plc and BHP Billiton plc, both based in London. RBM is the trading name for two registered companies: Tisand (Pty) Ltd (Tisand) and Richards Bay Iron & Titanium (Pty) Ltd (RBIT). Tisand is responsible for the dune mining and mineral separation operations and RBIT for the smelting and beneficiation process. The RBM headquarters is in Richards Bay, where all mining and beneficiation takes place.

10.2  The Operation

The Company has four (4) smelting plants with a total mining capacity of over 90 million tons of sand per annum: Mining, with four (4) dredges; the Minerals Separation Plant (MSP); the Smelter; and the Tailings Treatment Plant (TTP) (currently under construction) on the Zulti North Lease area.  Sokhulu and Mbonambi communities are located in this lease area.  A fifth operation on the Zulti South Lease area (south of the Richards Bay harbour) is scheduled to commence full-scale operation in 2015. The Dube and Mkhwanazi communities are located in this lease area. 

10.3 Life span of the Mine

The estimated remaining life span of the mining operations is 32 years with final closure expected in the year 2041. With this in mind, RBM is giving considerable thought to the post-mining activities of employees and the surrounding local communities.

10.4 Relationship with the Regulator

 

RBM executive management had a meeting with the Department of Minerals and Energy (DMR) executive officials, where the relations between the company and the regulator were repaired and restored. The National office advised that the company should work through the Regional office on all issues of contention as raised by the communities.

 

 

10.5 Broad-Based Black Economic Empowerment Transaction

On the 09th December 2009, a RBM BBBEE transaction was finalised and completed. The transaction was approved by the National Treasury and the Reserve Bank. The Mkhwanazi and Mbonambi communities also signed all agreements and set up their Development Trusts in December 2009. On the 11th December 2009, a once off endowment allocation of R17,5 million each was handed over to Dube and Sokhulu communities’ Public Benefit Organisation (PBO) Trusts. This funding is to kick-start their development. Each community will then receive trickle dividends of R1,5 million per annum plus R1,5 million CSI top up funding.

The Mkhwanazi community received their once-off endowment funding on 25 January 2010. The Mbonambi community has not received its funding due to the current leadership transition. The community has requested that RBM holds all engagements regarding the BBBEE transaction.

RBM agreed to provide the communities with capacity building support during the first five years of the transaction.  The purpose of the endowment of R17.5 million given to each community by PBO Trust is to support amongst other things the training of trustees and the establishment of initial operational infrastructure.

 

The four host communities and the lead investors now participate directly through Blue Horizon Investments 41 (Pty) Limited (Blue Horizon), a special purpose vehicle established to hold RBM interests. Blue Horizon will hold a 24% direct interest in RBM, while RBM’s employees will hold their 2% equity interest directly in the company via an Employee Share Participation Trust (ESPT).

10.6 Local Economic Development

The Social and Labour Plan, in particular the LED section was submitted to the Committee. All the commitments stand as they are, and a process is in place to consult and engage all communities with the DMR and LocalMunicipalities.

 

 

                        10.7 RBM’s economic contribution to Local Municipalities

 

The principles of sustainable development drive RBM’s programmes. RBM’s programmes are diverse and cut across all communities, such as:

 

·         Education and skills development

·         Health

·         Agriculture development

·         Sports and Recreation

·         Culture and Arts

·         Business developments

·         Infrastructure/safety

·         Environment

 

(i)                  Richards Bay Minerals’ economic contribution to RSA

 

·         Over 80% of RSA’s output of titania slag and mineral sands;

·         3.5% of RSA’s gross mining output;

·         50% of KwaZulu-Natal’s gross mining output.

 

 

(ii)                Expenditure incurred for RBM in 2007 was in relation to the following:

 

·         Taxes                                       R 890 million

·         Salaries                                    R 559 million

·         Procurement                  R2, 557 million

·         Richards Bay Mine, directly and indirectly sustains about 26 600 jobs

 

(iii) Successes

 

·         All local communities benefited from the State-of-the-art technical high school built and equipped in Eskhawini and a computer centre established at the University of Zululand and the programmes and donations to local schools, colleges and universities.

·         1996 and 2002- Global Best Award (International Partnership Network) for community education partnerships.

·         1996- Presidential Award (National Department of Education for Business in Education).

 

(iv) RBM’s BEE transaction from a community perspective:

 

·                     Direct engagement with communities from Day 1. Communities were treated like all other partners and were engaged in the negotiations from the outset.

·                     Trickle dividends will be passed to communities from the outset.

·                     Communities will receive an endowment benefit of R17.5 million each to initiate their CSI development projects.

·                     Communities will have the ability to channel cash flows to other trusts to be used for enterprise development basis (e.g. Royal Bafokeng Nation).

·                     RBM will assist communities with capacity building e.g. training and administration facilities.

 

Richards Bay Mine has the rights to mine the following lease areas:

 

Property Description

Lease Area

Land Owned By

Leased from

Community

Mining Activity

Remainder of Lot 5335Richards Bay

Town Board Lease

Umhlathuze LocalMunicipality

Umhlathuze LocalMunicipality

Mbonambi

Past Mining

Remainder of Reserve No.4 No. 15823

Tisand  Mineral Lease 1

Republic of South Africa

Department of Land Affairs

Mbonambi

Active

Remainder of Reserve No. 4 No. 15823

Zulti North Mineral Lease 2,3 & 4

 

Republic of South Africa

Department of Land Affairs

Sokhulu

Active

Remainder of Reserve No. 10 No 15830

Zulti South

Republic of South Africa

Ingonyama Trust

Dube &Mkhwanazi

Active

Farm no 16317

None

Richards Bay Iron and Titanium (Pty) Ltd ]

None

Mbonambiarea

Smelter and Admin offices

 

Both Sokhulu and Mbonambi communities have lodged land claims on mining lease areas with the Commission on Restitution of Land Rights. These claims were validated and deemed as meeting the minimum requirements in terms of Section 2 of the Restitution Act. The claims are at different stages towards resolution. The Mbonambi claim was approved by the Minister. The symbolic handover of the land was done on the 20 April 2009. Outstanding matters related to the State land disposal process and the registration of title in the name of the appropriate community entity. The Commission on Restitution of Land Rights and the Department of Land Affairs and Rural Development are in the process of drafting new lease (surface rights) agreements that will guarantee continued mining to the end of life span of the Mine without compromising the communities.

 

The lease agreements and the conditions thereof will come into effect upon transfer of land ownership. The Sokhulu claim is at the valuation stage and upon approval by the Minister will follow the same process as Mbonambi. The lease agreement is being drafted to take effect on the date of transfer. The terms of this will be aligned to the remaining Life of the Mine.  It will then follow the same process as Mbonambi community of State land disposal. The ZultiSouth mining lease areas are not subject to land claims. 

 

 

10.8 The Royalty payments are as follows:

ROYALTY PAYMENTS

Lease area

Past Payment To

Current Payment To

Future Payment To

Town Board Lease

Republic of South Africa

Department of Mineral Resources

National Treasury

Tisand

Republic of South Africa

Department of Mineral Resources

National Treasury

Zulti South

  Ingonyama Trust

Ingonyama Trust

National Treasury

 

 

 

 

 

 

 

 

 

 

10.9  Richards Bay Mine BBBEE structure

 

RBM’s BBBEE process commenced in 2006 and continued through 2007. Initially 147 parties expressed interest. Following the RBM Board review and approval and a rigorous selection process, driven by the RBM board of directors, 7 parties were chosen as BBBEE investors.

 

RBM is proud that the transaction was structured to benefit all four host communities, all permanent employees and lead investors who are mostly from KZN. Leadership representatives of participating communities have, from the outset of the negotiations, had opportunities to meet and interact with RBM shareholder representatives and representatives of each of the participating consortium. The communities are direct shareholders in their own right in the BBBEE Holding Company and are aware of the lead investors and the rationale for their leadership. All four communities are represented in the Board of the BEE Holding company as individuals and each has a director’s seat.

 

RBM has been very open about communicating the composition of its consortium and has made several Press releases at national, provincial and local level providing explicit detail.

 

The leadership of the two communities (Sokhulu and Dube) who have signed the BEE documents transaction are aware of the lead partners’ companies and lead individuals from interactions they have had. A process of engagement with the other two communities (Mbonambi and Mkhwanazi) has commenced and they are generally aware of who the lead partners are.  A process towards ensuring that there is consolidation between communities and the lead investors is in progress.

 

Lead Partners

Key Leader

% allocated

Province

Imbewu

JB Magwaza

3.0

KZN

Matasis

Manne Dipico

3.0

NC/Gauteng

Sambulo

Sibongile Mthembu

2.0

KZN

Gade

Dr. Ben Ngubane

2.0

KZN

SAWA

Taniya Krishna

1.4

KZN

Ungoye

Musa Zondi

0.9

KZN

Bingelela

Phiwo Thango

0.9

KZN

SUBTOTAL

13.2

 

 

 

 

 

Communities

 

 

 

Mkhwanazi Community

Inkosi Mkhwanazi

2.7

KZN

Sokhulu Community

Inkosi Sokhulu

2.7

KZN

Mbonambi Community

Inkosi Mbuyazi

2.7

KZN

Dube Community

Inkosi Dube

2.7

KZN

SUBTOTAL

10.8

 

 

 

 

 

Employee Share)

Participation

Scheme

(ESPS)

         All employees

 

2.0

 

 

 

 

 

TOTAL

26.0

 

 

RBM shareholders consciously made a decision to equally involve all four host communities. The communities will collectively hold 10.8% of the equity in RBM worth approximately R2 billion.

 

RBM involved all four communities in all aspects of the transaction from the onset. Three of the four communities i.e. Sokhulu, Mbonambi and Dube were involved in the process up to the signing of the Memorandum of Understanding on 29 July 2008. In September 2008, Mbonambi community withdrew from the process. However, significant progress has been made to get both Mkhwanazi and Mbonambi communities on board. As such, engagements with Mkhwanazi community have progressed and subsequently signed of the Memorandum of Understanding.

 

Re-engagement with the Mbonambi community leadership started in August 2009; this has led to formal repairing of relationship. The Mbonambi community will also be registering their special purpose vehicle Trust to hold shares at RBM. The overall value of RBM was estimated at R19 billion.

 

10.10 Funding strategic partners and employees

 

The global economic crisis and banking liquidity shortfall together with the nature, size and the timing of RBM BEE transaction necessitated RBM shareholders to:

 

·     Use RBM balance sheet as security for funding;

·     Assist with shareholder loans since most banks were not willing to fully fund a transaction of this size due to the global economic meltdown.

 

The loans were provided by the current shareholders Rio Tinto and BHP Billiton (not RBM) and were subordinated in respect of payment entitlements. BBBEE lead investors have contributed unencumbered equity of R30 million to buy shareholding in RBM.  This equals only 1% of the equity purchase price. The communities and employees were not required to contribute any equity at all.

 

The current economic environment has required most companies and their shareholders to fund their BBBEE transactions. Examples of these transactions are SAB and Foskor, both of which were fully vendor funded. The Companies Act was changed specifically to assist in BBBEE transactions and RBM’s transaction conforms to all regulatory requirements.

 

RBM has designed a structure that allows current employees to participate in the profits of the company until the end of the life of the mine. Its shareholders agreed on a principle of share participation for all permanent employees while in the employment of RBM.

 

10.11 Employee participation

 

The Employees’ Share Participation Scheme (ESPS) will own 2% of the equity in RBM through a Trust. Employees will therefore not directly hold any shares in RBM. The qualifying permanent employees of RBM will be beneficiaries of the trust for the duration of their employment in RBM. This will result in the employees participating in all dividends distributed to the Trust. Employees have not had to contribute financially to be the members of the ESPS.

 

10.12 Challenges

 

RBM is committed to diversity and transformation in the work place. Notwithstanding this, the current employment equity statistics show that RBM has no women representation at Executive level since the retirement of the General Manager: Strategic Affairs in August 2009, Ms.Shange who remains an advisor to the Managing Director. RBM recognises its Social Labour Plan (SLP) commitments and has an urgent pipeline to develop women for core mining, professional and management roles.

 

Below are some examples of RBM’s direct intervention to address this issue:

·                     Strategic level: the company has put in place a transformation committee which comprises General Managers from key functions. This committee includes a manager from Human Resources who has been tasked with ensuring the realisation of not only appointments but also training and development of women in preparation for key positions in the business.

·                     Operational level: RBM seeks to ensure that female technicians/engineers and other professions receive equal development opportunities to their male counterparts whilst being remunerated equitably. RBM continues to ensure that the transformation structures / forums are fully functional and operate in line with the targets that the company has set and committed to. 

·                     Ownership level: the company has demonstrated its commitment to women empowerment by ensuring that its BBBEE deal is inclusive of a women’s grouping which holds 1.4% of the 24% held by the BBBEE Holding consortium. Furthermore, all lead investment partner companies have fair women representation at senior level. It is also estimated that 50% of the community’s population are female.

 

RBM pays specific focus to the employment of people with disabilities, for both permanent employees and service providers and contractors. As such, all facilities are compatible for use by people with disabilities. Currently RBM employs 5 persons with disabilities. The security monitoring contractor has set up the control room to be operated by staff confined to wheelchairs. The plan is to increase employment of persons with disabilities.

 

The company also has a number of development programs that support the empowerment of people with disabilities, namely the establishment of a computer centre for disabled people in the Mbonambi community that is run and managed by people with disabilities.  These include support for the Thuthukani special school and other three special schools in the Nkandla area. RBM encourages its contractors to appoint people with disabilities.

 

In addition to the above, RBM through Rio Tinto is a partner and supporter of South African Women in Mining and has delivered  workshops aimed to  empower and educate women more about mining and some of the opportunities that exist. This long standing relationship with SAWIMA continues through RBM’s parent company Rio Tinto and extends beyond our local jurisdiction.

 

10.13 Procurement in Dube and Mkhwanazi

 

RBM is committed to its transformation programme which includes increasing procurement from historically disadvantaged South Africans and local suppliers. Most of RBM’s mining activities have been in Mbonambi and Sokhuluareas. RBM operates a dry mining operation in Dube and Mkhwanazi areas. The Company’s community development programmes in Zulti South were initiated in 1998 and will continue until the end of the life of the mine. Procurement opportunities have been targeted at services and support of LED programmes.

 

Importantly, RBM will not commence large scale mining in Zulti South until around 2015. This represents a 17 year LED / CSI commitment prior to economic returns to RBM.

 

10.14 Environmental claims

 

RMB follows transparent procedures when dealing with issues relating to community impacts. Its goal is to curb any such incidents from occurring in the first place. Should an incident occur the claim is handled in terms of RBM’sPolicy (POL 101). This policy stipulates that complaints and claims for damages get assessed by a panel comprising members from the provincial Department of Agriculture and Environment, the claimant, Indunas and representatives of RBM. RBM then ensures that claimants are compensated based on the outcome of the investigation.

 

10.15 Rehabilitation programme

 

RBM’s rehabilitation program is world renowned and is conducted according to leading practice principles which places sustainable development at its pinnacle. RBM is aware of some of the negative impact mining can have on the environment but seeks to ensure that its programs are comprehensive and achieve a net positive impact.

 

Historically, RBM worked closely with numerous specialist environmental organisations to research the region’s biodiversity and dune formation. This research culminated in a rehabilitation program tailored to the uniqueness of the species endemic in the region and ensuring that dunes are restored to their natural state after mining.

 

The rehabilitation program is done in accordance with the requirements of the Department of Water and Environmental Affairs, and the DMR (in full). RBM’s EMP requires that approximately one third of the rehabilitated area is restored to natural Coastal Dune Forest. The selected technique is to use the natural succession processes that formed the dunes in the first place. A consequence of this is that some species will take longer to re-colonize the area than others. The indigenous rehabilitation and ecological progress is monitored annually and confirmed to be trending towards? a natural dune forest.

 

The remaining two-thirds of the area is rehabilitated for commercial plantations, to ensure sustainable future economic benefits. RBM is in the third year of a trial aimed at assessing a wide variety of commercial agricultural crops for suitability on the rehabilitated dunes. If successful, this will contribute to increasing rural income from the dunal areas.

 

10.16 Health and safety of employees

 

The safety of employees and ensuring a healthy working environment is important to RBM. RBM has had no cases of respiratory disease reported in its history. RBM products are very low in crystalline silica which is often the cause of silicosis. Research was commissioned to verify the size of the particles released during processing. This study showed that the particle sizes are significantly low and would not pose any health risks or hazards.

 

A majority of RBM’s plants involve wet processes that do not generate dust. In addition to this, RBM has implemented several safety controls which include the use of dust masks in dusty areas.

 

The working environment is continuously monitored for any potential threats to the health of employees according to the requirements of the Mine Health and Safety Act, RBM’s Code of Good Practice and Corporate Standards.

 

10.17 Concerns raised by Mbonambi community to RBM

 

Of the issues presented by the march organisers, the following were found to be valid and an update is presented below:

 

(i) Relocation of houses built by RBM

 

Significant progress has been achieved in repairing houses that were originally constructed for 32 households who were relocated for operational reasons. Each household will benefit through an additional 2 roomed house constructed before the full refurbishment of the original houses built by RBM. This plan was presented to Inkosi Mbuyazi, the Traditional Council and the affected community members who fully supported and signed off. This plan will be executed in 2 phases and the progress to date is as follows:

 

PHASE 1 :

Status

Group 1: 15 houses

 

15 new 2 roomed houses

Complete

Full refurbishment of 15 houses

 

 

Scheduled to commence by December 2009

Group 1: 17 houses

 

17 new 2 roomed houses

12 houses work in progress – 60-90% complete

Full refurbishment of 17 houses

 

Scheduled once new 2 roomed dwelling are complete

 

RBM is currently reviewing this situation with all other relocations covered by the entire mining lease estimated at 30 dwellings. RBM will take the necessary remedial actions.

 

(ii) Phase 2: Tails Treatment Plant (TTP) employment and business opportunities

 

In early 2008 RBM commissioned a R1.2bn expansion project, a Tails Treatment Plant (TTP). The Mbonambi community demanded a sole direct shareholding in this project. This demand could not be accommodated in the BBBEE transaction. However, the benefits of this project are being shared in the following manner:

 

·                     The construction of the plant commenced in 2009. RBM and its contractors have actively been recruiting local labour within the company’s lease area from both the Sokhulu and Mbonambi communities. This has led to the creation of a pool of unskilled and semi-skilled labour to draw from during the construction phase of the TTP. To date, approximately 130 members from local communities have been trained by RBM and employed by the contracting company Steffanutti Stocks, whilst Kentz are looking to employ 150 additional community members.

·                     Contract service opportunities in fabrication, civil and painting and steelwork have also been made available to local companies. To date, R70m has been spent on these services.

·                     In addition, RBM has a job readiness and a skills development program for school leavers from these host communities.

 

(iii) RBM’s leverage over DMR and communities

 

RBM is currently owned jointly by BHP Billiton and Rio Tinto, with Rio Tinto being the managing partner. One of the main values of Rio Tinto is to respect the values, norms and culture of local communities and authorities of the jurisdiction within which it operates. It abides by the relevant state laws and acts as a minimum. RBM is committed to continuously ensure that it subscribes to and demonstrates mutual respect and commitment to both the State, including the DMR, the communities and all the stakeholders. This is also consistent with the Government’s objective of a developmental state.

 

The period from 2006 to 2009 has been characterised by sporadic public expression of dissatisfaction by some sections of the Mbonambi community. RBM believes that the BBBEE transaction has been the catalyst for many of these issues.  During this difficult time, RBM has remained committed to address issues around the discussion table and with the recognised leadership. RBM’s leadership has been working tirelessly to resolve issues that have been raised. However it must be recognised that certain matters raised are not owned by the community leadership.

 

Building relationships with the host communities can be a bit challenging at times, however RBM is committed to work together with communities to deal with issues that create problems if not attended to. Working in collaborative co-operation with both the DMR and the communities, there is opportunity for improving lines of engagement. RBM’s leadership is determined to strengthen and improve these relationships.

 

RBM is governed by the various regulatory legislative frameworks, which dictate obligations on the running of operations and the business. DMR is a critical stakeholder whose functions are key to continued existence of the operations and RBM’s preferred approach is to engage with the DMR as regularly as possible. 

 

 (iv) Employment

 

RBM employs 1 700 to 2 000 permanent employees, 80% of whom come from the Umfolozi and Umhlathuze local municipalities. It has approximately 2000 employees from service providers drawn in similar proportions. When taking into consideration the multiplier effect, RBM is certain that 26 000 people indirectly benefit from its operations in the area. RBM is the world class employer and provides lucrative employment opportunities. The benefits are as follows:

 

·                     Very competitive salaries

·                     Pension and retirement funds including death and disability insurance

·                     Housing allowance

·                     Compulsory medical aid

·                     Company transport

·                     Daily meal allowance

·                     Generous annual and sick leave provisions

 

Employees enjoy access to many in-house and external training and personal development programs. In addition every employee has access to education support for their children undertaking tertiary studies.

 

RBM continues to support education in the communities where it operates. Among its programmes, the company has invested in a program for Learners with high potential, particularly those who come from local communities. In 2008 and 2009, RBM offered 4 full bursaries and 8 grants to graduates for learners who show commitment and excellence in their studies. It offered 12 scholarships to tertiary students. Over and above this, its CSI education projects saw more than R6,5m being spent in 2008.

 

In addition to the above, RBM recognises that the local secondary economy is also active, with a number of small and medium enterprises, informal traders and vendors benefiting indirectly from being positioned at RBM’s vicinity. RBM believes that in the next 20 years this community will be thriving, sustainable and self sufficient. 

 

11. DEPARTMENT OF TRADE AND INDUSTRY (DTI) AND INDUSTRIAL DEVELOPMENT ZONE (IDZ)

 

The Chairperson of the IDZ briefed the Committee on the strategic objectives of the IDZ programme, IDZ designation process, challenges facing the IDZ programme, and measures taken to address the challenges facing IDZ.

 

He also addressed the Committee on the background to Richards Bay Industrial Development Zone (RBIDZ), Status with the RBIDZ Operator Permit and challenges facing the RBIDZ.

 

11.1 Strategic Objectives of IDZ programme

 

The Industrial Development Zones in South Africa were established to meet four primary objectives namely:

 

·                     To promote competitiveness of South African enterprises through the export of value-added manufactured products with linkages to South Africa’s economy and natural resources;

·                     Attract foreign direct investment;

·                     Select and attract targeted advanced foreign production and technology methods in order to gain experience in global manufacturing and production networks; and

·                     Develop linkages between domestic and zone-based industries to optimise infrastructure, technology or skills transfer.

 

11.2 Designation Process

 

·                     The potential IDZ applicants register interest with the Minister of the DTI;

·                     The Minister consults provincial and local governments for support of the initiatives;

·                     Formal application for IDZ Designation and Operator Permit;

·                     Public participation or consultation;

·                     Manufacturing Development Board consideration;

·                     The Minister’s decision is ratified by Cabinet;

·                     Publication of the IDZ in the Government Gazette;

·                     Implementation of the IDZ; and

·                     Ongoing monitoring of the IDZ.

 

11.3 Progress to date

 

There are four designated IDZ’s: Coega, East London, Rechards Bay and OR Tambo. Collectively, these IDZ’s secured approximately R50bn worth of investments in Coega, East London and Richards Bay IDZ.  Over 40 000 jobs have been created and over R3bn of the national government funds spent on infrastructure development of the IDZs.  The Customs Controlled Area regulations and Standard Operating procedures developed by SARS are to be implemented soon. The IDZ policy has been drafted and ready to be submitted to Cabinet.

 

 

11.4 Challenges facing the IDZ programme

 

·                     The current legislative framework does not facilitate successful development of the world class IDZs in South Africa;

·                     Legislation does not provide for policy tools to enable inter-governmental and inter-departmental cooperation;

·                     Roles and responsibilities between three spheres of Government could not be adequately implemented in the current inter governmental relations set-up;

·                     Dual reporting and accountability for funding is burdensome on IDZ entities and create uncertainties;

·                     Uncoordinated activities such as investment promotion sends out mixed signals to investors;

·                     Lack of appropriate set of IDZ-specific incentives;

 

11.5 Measures taken to address IDZ challenges

 

The following measures have been taken to address the IDZ challenges:

·                     Benchmarking exercise with Malaysia, Taiwan and Philippines;

·                     IDZ summit held in 2008 where all the stakeholders, including international experts participated, of which an action was drawn and the DTI is in the process of implementing;

·                     Impact analysis of the IDZs to the economy;

·                     Action plan as a response to policy proposals;

 

The Background to Richards Bay Industrial Development Zone (RBIDZ) was designated in 2002. The TATA steel is the only investor located in the IDZ. Pulp United registered interest to be located in the IDZ, but this was delayed due to energy constraints. The Provincial operator permit was issued and lapsed. The DTI raised the matter with the IDZ’s management as far as 2007. The Richards Bay Industrial Development Zone operator could not lodge an application due to outstanding compliance issues of land transfer to the IDZ and shareholder agreement that entirely depend on shareholders.

 

The DTI convened a stakeholder meeting which comprised RBIDZ operator, KZN Department of Economic Development and City of uMhlathuze to resolve outstanding compliance matters and to speed up the issuing of a permit. It further sanctioned compliance audit to verify compliance of the operator before funds can be transferred as required by the Public Finance Management Act (PFMA). The audit report that was shared with the province, the former IDZ Board and the operator reflected non-compliance and non-existence of financial systems and controls.

 

11.6 Status with the RBIDZ Operator Permit

 

The RBIDZ submitted an application for an operating permit during June 2009. The application was assessed by the DTI and submitted to the Manufacturing Development Board (MDB) for recommendation to the Minister. The application was submitted to the MDB for adjudication on the 26th of August 2009. The MDB was satisfied with the application, even though the main concern was that the RBIDZ has been operating from 2007 without a valid permit, and a recommendation was made to the Minister to grant the permit in favour of the IDZ.

 

There were consultations with legal staff on the legal ramifications due to the IDZ operating without valid a permit from 2007 to 2009 before a submission to the Minister. After reviewing the application, the Minister had to consult more broadly on the matter. The consultation in this regard this has been completed and the submission has been routed back to the Minister’s office.

 

11.7 Challenges facing the RBIDZ

 

The DTI has the following concerns about the RBIDZ:

 

·                     Lack of Human Resource capacity that raises questions about the IDZ’s ability to spend the allocated budget;

·                     RBIDZ needs a significant capital injection to become a competitive IDZ;

·                     Funding remains a big challenge;

·                     Reporting lines not clarified. There are too many authorities that the RBIDZ must report to.

 

The DDG responded on the issue of incentives shared by the Department of Trade and Industry and the Department of Finance that this is the competence of the Minister of Finance. The incentives with regard to electricity are done at local government. The national government has not been offering incentives on electricity.  It was also reported that the views were taken by the province in terms of electricity to have a provincial industrial strategy to promote certain type of industry that will not require a lot of power.

                      

12.  EXXARO MINE

 

Exxaro was established in 2001 by TICOR with 700 permanent employees. It is the major export company to various parts of the world with a turnover of R1billion p.a. It is also a major earner of foreign currency, mainly procuring inSouth Africa.

 

12.1 Priorities of Exxaro

 

·                     The company prioritises Local and BEE procurement;

·                     Currently 90% compliance to BBBEE Mining charter targets for 2014;

·                     Budget for training and development of employees;

·                     The safety and health of employees, contractors and the public is their first priority.

·                     Social and development responsibility towards neighboring communities and making a practical contribution by means of LED projects, Social Investments and community procurement

 

12.2 Environmental Monitoring programme for:

 

·         Dust

·         Emissions

·         Water Quality

·         Radiation

 

 

12.3 Rehabilitation:

 

Placing of 1,5m to 2m of a sand/slimes mixture on previously mined areas. Research showed the optimal mix and depth for the required water retention and ground stability required for successful sugarcane farming.

 

Placing of the sand/slimes mixture is also very effective in reducing wind blown dust, which has a positive effect even before planting the area.

 

12.4 Heavy Mineral products

 

Zircon   -           Use in ceramics and tile glazing industry

Rutile    -           Titanium metal; welding rods and pigment

Ilmenite  -          SA – Smelting to produce iron and titanium slag

                        Pigment

 

12.5 Economic Development in communities

 

·                     The procurement committee was established within the following Amakhosi areas: Dube; Somopho; Zulu; Mkhwanazi;

·                     Monthly meetings to identify contracts that community SME’s can tender for;

·                     Assistance is given with the tender processes, registration of companies etc.;

·                     Mentorship programmes in place to mentor SME once contract has been awarded;

·                     If necessary training is arranged, after needs assessment is done;

·                     First successful established community SME –Somopho Ladies;

·                     Received first contract on CPC site.

 

12.6 Investment in Dube community

 

·                     21 household project –investment R 1,7 million; 5 new structures -4 houses and a tuck shop, 12 houses repaired as good as new, 4 gardens has been established;

·                     Community gardeners on mine property relocation and compensation worth R601 000 compensation for existing gardens, R100 000 for garden project to implement new gardens for 116 beneficiaries;

·                     Bhekizita relocation project – community living in a water seepage area to be relocated – R 1,6 million investment;

·                     9 new houses and community churches to be built

 

12.7 Completed and sustainable Local Economic Development projects

           

·                     Somopho Community Creche –Somopho Traditional Authority;

·                     Somopho Multipurpose Centre –Somopho;

·                     Vusani Agricultural Co-operative –Dube;

·                     Dinangue Trading – Developed out of Dube Village project  -  Dube ;

·                     Gobandlovu School Library – Dube;

·                     Zikulise SME Development and Skills Training Centre –Dube;Somopho;

·                     Proposed Community Clinic in Dube – not be able to implement as a result of lack of partnership and trained staff complement from the Department of Health.

 

12.8 Operational challenges

 

·                     Current LOM only until Q3 of 2012;

·                     Need to develop a new deposit as replacement mine;

·                     High slimes content in the current ore-body and other available deposits;

·                     Heavy Mineral concentration and separation are technically difficult metallurgical processes with scarce skills availability;

·                     DC-arc smelting is a relatively new technology;

·                     Logistics (Transportation of product between sites and harbor);

·                     Effective rehabilitation.

 

12.9 Market and Economic challenges

 

·                     KZN Sands Produce lifestyle products, hence the demand is severely affected by the recession.

·                     Currently a product oversupply which resulted in final product stocks.

·                     Low increase for Heavy Mineral Commodity prices over the last decade.

·                     Earnings are highly sensitive to the Exchange Rate.

·                     Cost is highly sensitive to electricity prices. Proposed electricity prices by Eskom will have a significant effect on the cost base.

·                     Significant capital investment required to develop a replacement mine for Hillendale.

 

13.  MEETING WITH MANDLANKALA COMMUNITY

 

The Mandlankala community raised the following concerns:

 

·                     The houses situated next to the company have cracks;

·                     The company does not employ people from the community;

·                     The condition of the roads are poor, with no stop signs and fatalities have been attributed due to motor vehicle accidents;

·                     The community wrote letters to Tyco requesting assistance to buy food for the children at the crèche, the company never responded to their request;

·                     The community also raised a concern that Tyco divides the communities and it was alleged that the Amakhosi and the Councilors receive preferential treatment. It has also been noted that the Councilors were dividing the people according to their political affiliation;

·                     The Government awarded  Tyco a license without communicating with the community;

·                     The people of Mandlankala requested the Department of Home Affairs to bring mobile offices to assist old people to register for pension.

 

14. BRIEFING BY ENGEN REFINERY

 

14.1 Engen history

 

·                     1948 - Idea to build the country’s first Crude Oil Refinery by Standard Vacuum Oil Company. 1st Oil Refinery in South Africa

·                     1951 - Plans to build the refinery to the south of Durban Harbour were announced. Site allocation - empty stretch of land in Wentworth.

·                     1952 - Foundation stone was laid.

·                     1954 - First barrel of crude was discharged.

·                     7 significant expansion and modernization projects in the last 54 years.

 

14.2 Employment approach

 

·                     Core skills employed on permanent basis:  Engineers (Chemical, Electrical, Instrument, Mechanical) Artisans and Technicians (Chemical, Electrical, Mechanical, Instrumentation) Operators; Lab Technicians; Planners Other Functions include HSE, Finance, HR / Operational improvement, Procurement and Purchasing

·                     Some Specialised skills outsourced – Partnering contract: Project engineering, execution and management, Fabrication & installation (Piping, Structural Steel and Tank repairs)

·                     Some Specialised skills contracted - intermittent basis: e.g. Inspection, scaffolding, etc

·                     Shutdown labour – contracts,  no labour broking allowed during shutdowns

 

14.3 Labour broking and wage rate control

 

·                     Minimise Labour broking  : No bakkie brigade, “Labour broking” specialist in intermittent and non-core activities, Inspection campaigns, Draughtsman for projects, Regulate wage rates by setting minimum rates during normal activities, Regulate wages by setting site wide standard rates during shutdowns and aligned rates with SEIFSA.

 

14.4 Opportunities for permanent employment: Continue efforts to reduce contract staff to permanent

 

·                     Mainly artisan personnel – to retain skill

·                     80 personnel moved between 2005 - 2009

·                     Directly contracted semi skilled staff present the remaining challenge:

-                      Loading operators

-                     Dispatch

-                     Semi-Artisan skills 

 

14.5 Refinery contribution through CSI Projects: CSI focus areas

 

14.5.1 Education programmes

 

Mathematics, Physical Science, Technology and Early Childhood Development

·                     Pre-primary teacher training program

·                     Technology for all training for primary school teachers

·                     Sponsor two Maths & Science Incubator Schools in Umlazi at Mangosuthu University of Technology with 725 learners and 352 Learners at Fairvale Secondary in Wentworth

·                     89 learners in uMlazi & 39 learners in Wentworth obtained A&B symbols in Maths & Science Matric final exams

·                     Career Day:  Career Day for Learners at Fairvale,  Mangosuthu & UKZN incubator schools

·                     Lamontville Library Career Fair

·                     Junior Achievers Course

-                      80 Learners from 8 different neighbouring high schools

 

14.5.2 Safety & Security

 

Crime Alleviation

·                     Basketball (Peace Players)

·                     South Durban Football Association

·                     U17 Durban Football tournament

·                     uMlazi SAFA

·                     Cycling ECPP

·                     5 neighbouring police stations and their CPF’s received financial help, training and support for safety campaigns

·                     Project Management course for Community Policing Forum members and SAPS

 

14.5.3 Outreach Programmes

 

Community Development Initiatives and Job Creation Initiatives

·                     Bakery Project uMlazi/Welbedacht

·                     Refurbished computers and new printers

·                     Used office furniture

·                     New Community Computer Centre refurbishments

·                     Clean Drums Project

-                     Exchange

·                     ECO – Schools WESSA

 

14.5.4 Community Liaison Forum (CLF)

 

·                     CLF consists of, local Councillors, (+/- 25) Non Governmental Organisations from local communities, namely,  Wentworth, Merebank, Bluff, Lamontville and Umlazi

·                     The NGOs represent Health, Safety, Environment, Education, Youth, Women, Civic Associations.

·                     Engen uses the forum to communicate, and update the community on Environmental Issues, Corporate Social Investments and IR issues.

·                     Engen assisted the NGOs by facilitating & creating their own CLF constitution

·                     The CLF has five committees, viz, Corporate Social Investment, Industrial Relations, Health Safety & Environment, Media & Dispute Resolution 

Engen CLF sponsored R250 000 towards the Independent Electoral Commission & CLF members were trained and worked as observers during the April 2009 elections.

 

14.5.5 Engen’s intentions

 

·                     To ensure that there is continuous communication between Engen, the community, and other enabling stakeholders (E.g. Local government; Business Sector of the South-Industrial Basin, et al)

·                     To identify & contribute towards community needs

·                     Inform community when there are employment opportunities e.g. Turn Around, & Learnership Programmes

 

14.5.6 Environmental hot-spots

 

·                     Enref first recipient in SA of both Scheduled Trade and Effluent 5 year permits

·                     Environmental Management Plan which looks at prioritisation of projects

·                     Extensive monitoring on both air and water/effluent

·                     Comparable with best practise in Europe but implementation period shorter

·                     Result of Engen’s continued co-operation with authorities at the forefront of environmental management in SA

·                     Since inception part of MPP managed by eThekwini Health which has become part of their Air Quality Management Plan

 

14.5.7 Threats

 

·                     New Air Emission standards

·                     Implementation of new SA Ambient air standards

·                      Ever increasing Environmental standards should take cognizance of economic impact, time for implementation and the receiving environment impact.

·                     Intergovernmental co-operation on these.

 

14.5.8 Strategy tactics process: meetings

 

•                      Yearly offsite FM strategy session

•                      Half Yearly FM tactic session

•                      Half Yearly Imbizo Session

•                      Regular (Formerly Wednesday mornings) FM roadblock removal and tactic progress meeting

•                      Monthly Steercoms for tactics &Task Teams

 

14.5.9 Current Refinery Strategy

 

·                     working at Engen is desirable and fun working

·                     Reliability Centered Production

·                     Double our Profits

·                     Responsible environmental performance

·                     Serve your Customer

·                     Leading International Safety performance

·                     Effective information flow

 

14.5.10 Basic Refinery Economics

 

There are three things that make up profitability:

·                     Cost of the crude

·                      Cost of running crude: Cost of fuel and Operating expenses (OPEX)

·                     The value of the products sold, made from the crude that we run.

 

 

14.5.11 Operating expenses

 

·                     It costs us about US$3.5/barrel of crude to run crude through the Refinery. The best large Refineries in the world do this at half that cost. The advantage they hold over us due to this is worth more than R500million per year. Large components of this cost are:  Maintenance cost,  Projects, Volume related operating expense and  Salaries and wages

 

15. RECOMMENDATIONS BY THE COMMITTEE

 

·                     The Committees recommend that the Department of Trade and Industry should explain why funding is not available for the Industrial Development Zone (IDZ).

·                     The Richards Bay Industrial Development should have their own bank account.

·                     The relevant Department and the District Municipality should investigate the possibility of building a dam in the Mtubatuba Municipality, and report the progress back to Parliament.

·                     Eskom should investigate stumbling block in terms of power supply of electricity in the Mtubatuba Municipality.

·                     Mtubatuba Municipality should forward a progress report with regard to the exchange of land with the private land owners.

·                     The National Department of Tourism should strengthen the relationship on the National Marketing Strategy, with Intergovernmental stakeholders.

·                     Umhlathuze Municipality should provide a progress report with regard to the SMME development and manufacturing.

·                     With regard to RBM, the Department of Mineral Resources should facilitate the process to improve the relationship between the mineworkers and the mining company and also expedite the process of mine workers.

·                     Mining companies should consult the communities at all times with regard to new developments, of course through their traditional leaders and also develop a strategy of writing newsletters and distribute them to the communities.

·                     The Department of Mineral Resources had to scrutinize the mining companies before the approval of mining licenses.

·                     The Department of Mineral Resources should also engage the House of Traditional Leaders, the relevant department and Mining houses with regard to the agreements.

·                     The Committees would be in contact with various Committees in the province with regard to the progress made to develop the communities.

·                     Follow-up on Engen Refinery with regard to compliance to the New Air Emission Standard.

·                     The Committees would make a follow-up with all stakeholders for progress report.

 

16. CONCLUSION

 

In conclusion, the Committee will engage with the relevant Departments and monitor the progress with respect to the recommendations. The Departments will be requested to report on the progress of the recommendations within six months.

 

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