ATC100421: Report on Budget Vote 31 And DMR Strategic Plan

Mineral Resources and Energy

REPORT OF THE PORTFOLIO COMMITTEE ON MINERAL RESOURCES ON BUDGET VOTE 31 AND DMR STRATEGIC PLAN, DATED 21 APRIL 2010

 

1          Introduction

 

Budget vote 31 was referred to the Portfolio Committee on Mineral Resources, for consideration and report, on the 2nd of March 2010. The Committee undertook to receive briefings from the affected department. The Department of Mineral Resources is a newly realigned department, formerly part of the Department of Minerals and Energy. This new realignment became effective on the 1st April 2010.

 

The Committee received briefings from the Department of Mineral Resources on their strategic plans and their allocation from budget vote 31.

 

2          Overview of Budget vote 31

 

Budget vote 31 is divided between four programmes of the Department of Mineral Resources. Each programme of the department has a specific purpose. The Budget allocated per programme is as follows:

 

R million	2009/10	2010/11	2011/12	2012/13
	Total	Total	Total	Total
MTEF Allocation
1) Administration	183.2	239,0	265,3	271,8
2) Promotion of Mine Safety and Health	133,0	145,9	159,6	168,9
3) Mineral Regulation	202.5	215,9	233,1	245,9
4) Mineral Policy and Promotion	406.5	429,2	454,2	481,4
Total expenditure estimates	925.2	1, 030,0	1,112,2	1,168,0

 

The Department of Mineral Resource’s overall budget allocation for 2010/11 is

R 1, 030, 00, which is a nominal percentage change of 11.33 per cent, or a real percentage change of 4.34 per cent from its allocated budget of 2009/10.

 

The key priorities of the department over the medium term include the following:

 

·         The minerals beneficiation strategy

·         Promoting sustainable development in the mineral and mining sector

·         Reducing the impact of mining on the environment

·         Community upliftment through small scale mining

·         Management of energy commodities

·         Promotion and enforcement of mine health and safety in line with international guidelines and legislative standards

·         The review of the legislative framework, in particular the Mine Health and Safety Amendment Bill; the Geoscience Amendment Bill; the Diamonds Act and the Mineral and Petroleum Resources Development Act.

 

The budget is divided into four programmes.

 

2.1        Programme 1: Administration

 

Programme 1 is allocated R 239 million, which is a nominal percentage increase of 30.46, or a real percentage increase of 22.27 per cent from its allocation in 2009/10. Its purpose is Policy, strategic leadership and support and overall management of the department. This programme houses Management and Corporate Services sub-programmes.

 

2.2        Programme 2: Promotion of Mine Health Safety and Health

 

Programme 2 is allocated R 145,9 million, which is a nominal increase of 9.70 per cent, or a real change of 2.81 per cent from its allocation in 2009/10. Its purpose is to ensure safe mining of minerals under healthy working conditions. The priority areas under this programme are:

·         Contribute towards skills development

·         Promote Mine Health and Safety

·         Manage Health and safety risks

·         Provide clear policies and regulatory framework

·         Enforce compliance and monitoring

·         Improve turnaround times

·         Develop and review internal processes

 

Some of the objectives and measures of this programme are:

·         Participation in Mining Qualification authority structures

·         Monitor  and improvement in the compliance to Health and Safety

·         Development of a guideline for small scale mining

·         The development of a strategy for occupational health and safety

·         And contribution to the reduction of mining related deaths, injuries and ill health by:

o        Reviewing the Mine Heath and Safety Act (1996) along with supporting regulations and aligning it with changes in the mining sector each year.

o        Monitoring compliance with mining safety and health standards by conducting 12 700 mine inspections and audits each year.

 

2.3         Programme 3: Mineral Regulation

 

Programme 3’s budget allocation is R 215,9 million, which is a nominal increase of 6.62 per cent, and a real percentage change of -0.08 per cent, from its allocation for 2009/10. The purpose of this programme is to regulate the minerals and mining sector to promote economic development, employment and ensure transformation and environmental compliance. The sub-programmes of this programme are Management, Mineral Regulation and Administration and an entity operating as the South African Diamond and Precious Metals Regulator which is a regulatory entity responsible for the issuing of licenses related to the trade of diamonds, gold and platinum and monitoring activities within these commodity groups.

 

·         The strategic focus areas of the programme are as follows:

·         Contribute towards skills development

·         Promote sustainable resource development

·         Promote job creation

·         Regulate mineral and mining sector to achieve transformation

·         Educate and communicate with stakeholders

·         Monitor and enforce compliance

·         Improve turnaround times

·         Develop and review internal processes

·         Reduce State environmental liability

 

Some of the Objectives of the programme are:

·         Contribute towards broad based black economic empowerment (BEE) and transformation in the minerals and mining sector by issuing 27 new mining rights a year to historically disadvantaged South Africans.

·         Contribute to sustainable development in the minerals and mining sector by conducting 1380 environmental compliance inspections and 140 charter inspections per year.

·         Promote investment and job creation in the minerals and mining sector by processing mining and prospecting rights applications within specified timeframes according to the Minerals Petroleum Resources Act (2002)

·         The development of a strategy for the management and rehabilitation of  ownerless and derelict mines

·         Monitoring of the improvement and implementation of Social and Labour Plans in accordance with the Mining Charter through consultation with stakeholders, industry representatives and communities

 

2.4        Programme 4: Mineral Policy and Promotion

 

Programme 4 has an allocated budget of R 429,2 million. This amount is 5.58 per cent nominal increase, and a real percentage change of -1.05 per cent, from the in the budget allocated to programme 4 in 2009/10.The purpose of this programme is to develop relevant mineral policies that promote South Africa’s mining and minerals industries to attract investment. The sub-programmes are Management, Mineral Policy, Mineral Promotion, Economic Analysis, Mine Environmental Management and Assistance to Mines. Two entities are further funded under this programme namely Council for Mineral Technology and Research which partially funds the Council for Mineral Technology and the Council for Geoscience.

 

The priority areas of this programme are as follows:

1. Contribute towards skills development
2. Promote sustainable resource management
3. Promote job creation
4. Promote investment in the Mineral Sector
5. Build strategic partnerships
6. Drive transformation policies
7. Promote Mineral Beneficiation
8. Regulate the Mining Sector
9. Mine environmental management- ownerless and derelict mine rehabilitation

 

Some of the Objectives and measures include the following:

Promote South Africa’s mining and minerals industry to attract investment across the commodities value chain by:

• Providing relevant information on the South African mining industry to investors and the industry by producing 84 quality publications by 2012/2013
• Disseminating relevant information by participating in sixty local and international conferences and exhibitions as well as other platforms such as seminars and workshops by 2012/2013
• Establishing and supporting small scale mining and minerals beneficiation projects in line with the new small scale mining strategy
• Facilitating the transformation of the mining industry by reviewing mining and minerals policies and legislation regularly between 2010/11 and 2011/2012
• Increase mineral value add by adopting the beneficiation strategy as policy in 2009/10 and completing the implementation plan for prioritized value chains in 2010/11.

 

3.         Findings

 

The Department of Mineral Resources is a newly realigned department formerly part of the Department of Minerals and Energy. This realignment has resulted in instability relating to staff losses and reduced budget. The Department faces challenges of capacitating its human resources in order to fulfil its new mandate which has been amended to reflect the importance of transformation and economic growth within the mining sector.

 

Key issues of concerns raised by Members include the following:

·         Timeframes for the realignment of the new department and the amount of employees envisaged in the new structure. There were furthermore concerns over the cascading impact this realignment will have on a district level.

·         The lack of transformation of women in respect of the mining industry.

·         The need for more stringent control measures to ensure that those mining companies that flaunt environmental issues are dealt with.

·         The funding model for small scale mining, to which extent does the Department ensure that there is sufficient support for those groups.

·         The extent to which the department has managed and addressed derelict and ownerless mines. The department must provide the committee with a detailed progress report on developments regarding ownerless and derelict mines.

·         The extent to which the Mining inspectorate is monitoring mine safety and the measures taken to address non-compliance.

·         In terms of skills development, why learnerships have been favoured over apprenticeships which are longer and more in-depth.

·         What are the timelines for the beneficiation strategy and to what extent is there co-ordination with other stakeholders and departments in terms of its consultation and implementation.

·         The low performance targets set by the Department in their strategic plan that does not adequately represent a clear picture of prevailing conditions and this disproportion is further reflected in the finance allocation of the Department.

·         Even though action have been undertaken to combat illegal mining, the scourge continues.  

·         Single sex hostels remain a challenge.

·         The issue of investor confidence in mining, need to be unpacked and discussed in more detail between the committee and various other stakeholders.

 

 

3.1.             Slow rate of Transformation in the mining industry

 

The Committee raised serious concerns with regard to the slow rate of transformation in the mining industry. The Committee also highlighted that the industry appears to be employing and promoting a disproportionately high number of white women in senior and management positions. The empowerment, training and employment of black women in particular must be made a priority by the industry if we are to meet the targets. The Committee suggests the Department closely monitor these trends and ensure these loopholes in legislation are addressed through the amendment of existing legislation.

 

Further concerns were raised that large mining companies still dominate the mining industry, greatly reducing the opportunities and potential of small mining companies, particularly those that come from previously disadvantaged communities.

 

4          Conclusion

 

Briefings by the Department of Mineral Resources on their strategic plan and their budget allocation from Budget vote 31 enabled the committee to explore the budget and strategic plans of the Department.

 

 

5          Recommendation

 

The Portfolio Committee recommends that the National Assembly approves Budget Vote 31 for 2010/11.

 

The report was unanimously adopted by the Portfolio Committee on Mineral

Resources on 21 April 2010.

 

Report to be considered.