ATC141030: Budgetary Review and Recommendation Report of the Portfolio Committee on Mineral Resources, dated 24 October 2014
Mineral Resources and Energy
THE
BUDGETARY REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON
MINERAL RESOURCES, DATED 24 OCTOBER 2014
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
1.1.
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 Parliaments 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 Committees 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.
1.2.
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 countrys mineral wealth.
The mining sector has shown a 71 per cent
increase in the number of mines since 2004 and a 12 per cent increase in
employment over the same period.
The
minerals sector is a key contributor to the South African economy because of
the half million workers it employs directly and because of the minerals used
in value chains from energy to manufacturing. It is also responsible for more
than half of South Africas earnings from exports and is critical to the
ability of the economy to earn foreign exchange and reduce the trade deficit.
The good stewardship of the DMR over the minerals sector is of exceptional
importance to the future of the country.
The
Council for Geoscience
The Council for Geoscience (CGS) is one of
South Africas eight main science councils. Reporting to the Minister for
Mineral Resources, the CGS lends support to the mandate of the Department of
Mineral Resources (DMR) through the development and maintenance of the national
geosciences knowledge infrastructure both on land and beneath the oceans
surrounding South African territory.
Mintek
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 Africas diamond cutting and polishing industry.
South
African Diamond and Precious Metals Regulator
The South African Diamond and Precious Metals
Regulator (SADPMR) regulates the diamond, platinum and gold sectors.
1.3.
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 departments 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 Departments
budgetary needs and shortfalls vis-à-vis the Departments operational
efficiency and performance. This is done taking into consideration the fact
that the Department has oversight responsibilities over five entities.
1.4.
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 2013/14
financial year, as well as performance in the first quarter and second quarter
of the 2014/15 financial year where information was available.
The Portfolio Committee on Mineral Resources held a
meeting on the 2013/2014 Annual Report of the Department of Mineral Resources
on 15 October 2014, which was addressed by the Director-General and the senior
leadership of the DMR. The office of the Auditor General accepted two
invitations to give input during the budget review and recommendation report
process. The Financial and Fiscal Commission (FFC) also addressed the Committee
on the performance of the DMR and provided an analysis of the challenges facing
the mining sector in South Africa at present. Moreover, the Committee undertook
an oversight visit to Gauteng Province from 25 -26 September 2014 to look at
the areas of illegal mining and understand the extent of Acid Mine Drainage in
the Witwatersrand area.
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, 2013 and 2014 Estimates
of the National Expenditure (ENE), briefings by the Department and its entities
during the course of the year, as well as the two State of the Nation Addresses.
In addition the Committee has taken note of reports from the
Department
of Performance Monitoring and Evaluation in the Presidency, the Financial and
Fiscal Commission, the SA Human Rights Commission and comments submitted to the
DMR and the Committee on the Minerals and Petroleum Development Amendment Bill.
The Committee also used the Constitution as its basis.
1.5.
Outline of
the contents of the Report.
·
An overview and analysis of the Departments strategic
priorities and measurable objectives;
·
An assessment of the overall financial performance for
2013/14 and first half of 2014/15;
·
An assessment of the overall service delivery
performance for 2013/14 and first half of 2014/15;
·
Consideration of the Auditor-Generals findings in
relation to the Department;
·
Consideration of oversight reports and other
engagements held with the Department;
·
Consideration of the Financial Fiscal Commission
submissions;
·
Committee observations on overall performance of the
Department; and
·
Recommendations.
2.
Overview of the key relevant policy focus areas
Following the 2014 General Election,
President Zuma appointed Adv N. Ramatlhodi, MP as the Minister of Mineral
Resources.
2.1
Delivery Agreement targets for 2013/14
and 2014/15
DMR outcomes are
linked to national outcomes as follows:
Table 2.1: Departmental and
National Outcomes
Departmental Outcomes
|
National Outcomes
|
Increased investment in
the minerals and mining sector
|
Linked to National
Outcome 4: Decent employment through inclusive economic growth
|
Improved health and
safety conditions in the mining sector
|
Not directly linked to a
National Outcome
|
Equitable and sustainable
benefit from mineral resources
|
Linked to National
Outcomes
4: Decent employment
through inclusive economic growth
7: Vibrant, equitable,
sustainable rural communities &
10: Environmental assets
and natural resources that are well protected and continually enhanced
|
Transformed minerals
sector
|
Linked to National
Outcome 4: Decent employment through inclusive economic growth
|
Efficient, effective and
development-oriented Department
|
Outcome 12: An efficient,
effective and development-oriented public service and an empowered, fair and
inclusive citizenship.
|
Targets in place include the following:
Table 2.2: Selected DMR
Performance indicators and their links to National outcomes
Indicator
|
Programme
|
Outcome
|
2013/14 Actual
|
2013/14 Targets
|
Percent achieved
in 2013/14
|
Targets 2014/15
|
Number of
occupational health and safety inspections and mine audits conducted per year
|
Promotion of Mine
Safety and Health
|
Outcome 4: Decent
employment through inclusive economic growth
|
9 446
|
8 396
|
113%
|
8 396
|
Number of mining
rights granted to historically disadvantaged South Africans per year
|
Mineral Regulation
|
Outcome 4: Decent employment
through inclusive economic growth
|
192
|
200
|
96%
|
200
|
Number of industry
workshops on compliance issues per year
|
Mineral Regulation
|
Outcome 4: Decent
employment through inclusive economic growth
|
9
|
9
|
100%
|
9
|
Number of mining
charter inspections per year (now SLP inspections)
|
Mineral Regulation
|
Outcome 4: Decent
employment through inclusive economic growth
|
285
|
210
|
136%
|
250
|
Number of
environment inspections per year
|
Mineral Regulation
|
Outcome 10:
Environmental assets and natural resources that are valued, protected and
continually enhanced
|
1 868
|
1 700
|
110%
|
1 700
|
Number of
publications per year
|
Mineral Policy and
Promotion
|
Outcome 4: Decent
employment through inclusive economic growth
|
13
|
11
|
118%
|
13
|
Number of policies
developed or reviewed per year
|
Mineral Policy and
Promotion
|
Outcome 4: Decent
employment through inclusive economic growth
|
2
|
2
|
100%
|
3
|
Number of derelict
and ownerless mines rehabilitated per year
|
Mineral Policy and
Promotion
|
Outcome 10:
Environmental assets and natural resources that are valued, protected and
continually enhanced
|
28
|
30
|
93%
|
50
|
Number of
sustainable SMMEs supported (new and established) per year
|
Mineral Policy and
Promotion
|
Outcome 4: Decent
employment through inclusive economic growth
|
81
|
67
|
121%
|
67
|
The DMR delivery
agreement indicators above showed overwhelmingly positive achievement in
2013/14. Seven of nine indicators were 100 per cent or more, two targets were
missed, but even here performance exceeded 90 per cent of the set targets.
2.2:
Summary of key impacts on Mineral Resources policy contained in the National
Development Plan
The National Development Plan (NDP) suggests
that the policy priority for the mineral sector is to address the central
constraints that could derail growth and development in the sector.
These are named as uncertainty in the
regulatory framework and property rights; electricity shortages and prices;
infrastructure weaknesses, especially in heavy haul rail services; ports and
water; and skills gaps.
The NDP is a national plan which will require
contributions and commitments from all stakeholders for it to be successful.
The following
proposals to grow investment,
outputs, exports and employment in the minerals cluster are listed in the NDP:
-
Address
the major constraints impeding accelerated growth and development of the
mining sector in South Africa. The main interventions include:
-
ensuring
certainty in respect of property
rights;
-
ensuring a predictable, competitive and
stable mining regulatory framework by passing amendments to the Minerals
and Petroleum Resource Development Act (2002);
-
securing , reliable electricity supply;
and
-
securing , reliable rail services,
potentially enabling private participation.
-
Develop,
deepen and enhance linkages with other sections of the economy. This
includes linkages with:
-
both manufacturers of inputs (capital
goods and consumables) and suppliers of mining-related services; and
-
downstream producers, especially for
platinum-group metals and chrome ore. In this regard, an export tax could
be considered.
-
Provide
focused research and development support to enable improved extraction
methods that lengthen mine life. This includes:
-
better energy efficiency and less water
intensity; and
-
alternative uses of South Africa's
extracted minerals, especially platinum-group metals, titanium and others
that have potential for application in new energy systems and machinery.
-
Identify
opportunities to increase regional involvement and benefit in the whole
minerals cluster. This could include encouraging the establishment and
development of alternative providers of partially processed intermediate
inputs in other countries in the region.
-
Ensure active engagement on, and resolution to, issues
raised through the Mining Industry Growth and Development Task Team
process (MIGDETT).
-
Improve alignment of mining charter requirements to
ensure effectiveness in local communities.
These issues, including the need to support
and implement the Special Presidential Package on distressed mining towns, all
find mention within the Strategic Plan of the Department for 2014/19. The
strategic plan also emphasises the important issues of mine health and safety,
which are not specifically mentioned in the NDP as a priority.
The
2014 DMR Budget refers directly to the NDP and, in particular, repeats very
optimistic NDP projections for employment growth based on the minerals cluster.
It states that: The national development plan suggests that that there is
significant unrealised opportunity in South Africas mining sector and that the
countrys global market dominance in mineral deposits offers an opportunity for
growth of 3 per cent to 4 per cent a year, as well as the creation of 300 000
additional jobs.
-
This prospect will
depend upon resolving the ongoing serious labour and economic problems that
are placing
short term constraints on the progress of the mining sector
.
On the one
hand there is a need to secure more rapid and peaceful resolution of
labour disputes and to build consensus on the future development of the
mining sector. On the other hand structural changes are made more
difficult by the weakening of gold, platinum, coal and iron ore prices
since 2011.
The imperative of bringing
stability to the mining sector from an industrial relations perspective
was highlighted FFC in their 2014 presentation to the Committee where they
stated that the impact of the mining strikes on growth inflation and
investment are a key sector challenge.
This was also a strong theme within the 2013
and 2014 Medium Term Budget Policy Statements (MTBPS) and within the two
State of the Nation addresses in 2014.
3.
SUMMARY OF PREVIOUS
KEY COMMITTEE RECOMMENDATIONS
3.1.
2013/14
BRRR recommendations and responses
The Committee made the following
recommendations to the Department in the 2013 Budgetary Review and
Recommendation Report:
BRRR
2013 Recommendations
|
Response
by the Department
|
·
Should fast-track the filling of vacant posts,
especially the funded vacancies.
|
·
In progress
|
·
Should create a recruitment and retention strategy
for its staff members.
|
·
In progress
|
·
Should fast-track the implementation of the talent
management strategy to reverse the tide of staff-turnover.
|
·
In progress
|
·
Should give quarterly reports
to the
Committee indicating progress with the implementation of the action plan
towards a clean audit for 2013/14 and going forward
|
·
No specific response
|
·
Should build capacity to ensure the enforcement of
compliance requirements, particularly with Section 28 of the MPRDA.
|
·
Problem cleared in
2013/14 audit
|
·
Should address the issues raised by the Auditor
General in his 2012/13 financial year report and present to Parliament action
plan thereof with specific timeframes.
|
·
Improved overall audit
performance in 2013/14, with most issues attended to successfully
|
·
Should review the indicators that are used to
measure performance with regard to projects that impact upon vulnerable
groups.
|
·
No specific response
|
·
Should develop a much clearer score card used for
compliance to the Mining Charter in order to prevent the confusion within the
mining industry
|
·
No specific response
|
·
The Department of Mineral Resources should develop
an audit improvement plan to address all issues raised by the external and
internal audit authorities in the 2012/13 financial year.
|
·
Largely accomplished
DMR on track for a clean audit in 2014/15
|
·
Should
develop and implement systems to improve and enhance the quality of
its performance information so that it adheres to guidelines contained in the
Framework for Managing Performance Information Policy Guideline
|
·
Apparently achieved in
2013/14
|
·
Should
consult with National Treasury and the Department of Performance
Monitoring and Evaluation on mechanisms to ensure
alignment between its Strategic Plan,
Annual Performance Plans and Annual Reports
|
·
No specific response
|
·
Should develop and implement mechanisms to enhance
its stakeholder engagement programme and ensure that it effectively reaches
out to communities in the process of formulating and implementing minerals
industry policies and regulations.
|
·
There is progress as
the department is overcoming the matter.
|
·
Should develop strategies to ensure that there is an
elevated focus on increasing HDSA minerals industry awareness in its industry
workshops
|
·
No specific response
|
·
Should follow up on developments of the integrated
financial management systems to
help
align licensing processing effectively with developments of the MPRDA
|
·
This remains an area
of challenge
|
·
Should improve on its training and development
programmes to ensure appropriately targeted skills development in both
employees of the industry and surrounding mining communities.
|
·
No specific response
|
·
Should conduct oversight to the offices of the
Department of Mineral Resources to get an understanding of the licensing
system.
|
·
The new Committee has not yet had time to conduct
such an oversight
|
Response
by Minister of Finance
In response to
the recommendation that the Department should build capacity to ensure the
enforcement of compliance requirements, particularly with Section 28 of MPRDA,
the Minister of Finance stated that:
The National Treasury will work with the department to address the
organisational structure, enforcement, compliance and monitoring of mines
function.
The National Treasury supported the
recommendation that the DMR should
ensure alignment between its Strategic Plan, Annual Performance Plan and Annual
Reports
and stated that it would help the Department finalise its
strategic plan. The National Treasury proposed that the department report to
the committee on its progress in this area.
3.2.
2014/15
Budget Vote Recommendations
The Committee made the following
recommendations for the 2014/15 financial year, after considering the Annual
Performance Plan and the Budget of the Department of Mineral Resources:
·
As
most entities are conducting research, the committee recommends that research
should be centralised, or at least centrally co-ordinated, so that full value
may be gained from government financial support for research to strengthen the
mining sector. The establishment of Centre for Excellence to deal with the
entire research work should be considered;
·
The
National Treasury should increase the budget of the department so that more
inspectors (in particular health and safety inspectors) be employed to ensure
effective and efficient compliance with the mining legislation and regulations
of the sector;
·
The
process being undertaken by the inter-ministerial task team on Social Labour
Plans (SLPs) should be speedily driven to ensure the maximum participation by
all role players.
·
Compliance
conditions for mining licenses should be an audit requirement that is reported
upon by the auditors of mining companies;
·
The
Department should strengthen the systems that enforce compliance which includes
amongst other things harsher measures in relation to revoking of licences;
·
Urgent
attention should be given to the ability of the Council for Geoscience to fund
both the requirements of the 2010 Geoscience Amendment Act and the additional
responsibilities that may be given to the Council if/when the MPRDA Amendment
Bill is signed into law;
·
A
platform should be created whereby critical issues are discussed, for an
example a stakeholder discussion forum that includes Salga in how mining
companies can best link SLPs and IDPs to effectively serve our communities in
mining areas; and
·
The
mechanisms being used by the Department to monitor compliance with the Mining
Charter are not sufficient. The process of monitoring must be begun now, not
only after the deadline expires in December 2014. This should also take into
consideration the role of the Committee in overseeing this function of the
Department.
4.
Overview and
assessment of financial performance
4.1.
Overview
of Vote allocation and spending (2010/11 to 2015/16)
Vote 32: Mineral Resources
|
|
|
|
|
|
|
|
|
Programme
|
2010/11
|
2011/12
|
2012/13
|
2013/14
|
2014/15
|
2015/16
|
||
R '000
|
Audited
|
Audited
|
Audited
|
Main
|
Adjusted
|
Revised
|
Main
|
Estimates
|
1. Administration
|
226.7
|
257.6
|
295.2
|
271.5
|
282.3
|
310.1
|
284.2
|
296.8
|
2. Promotion of Mine Safety and Health
|
137.1
|
141.3
|
140.7
|
163.7
|
163.7
|
154.0
|
168.0
|
177.7
|
3. Mineral Regulation
|
188.6
|
184.4
|
191.3
|
222.7
|
211.9
|
205.5
|
231.4
|
245.2
|
4. Mineral Policy and Promotion
|
442.3
|
446.2
|
546.2
|
735.9
|
735.9
|
724.2
|
787.8
|
879.5
|
TOTAL
|
994.7
|
1 029.4
|
1 173.6
|
1 393.8
|
1 393.8
|
1 393.8
|
1 471.4
|
1 599.2
|
4.2.
Financial
performance 2013/14
The audited financial statements for 2013/14
were tabled in Parliament together with the Annual Report of the DMR for the
2013/14 year, on 23 September 2014.
The Department of Mineral Resources had an
available appropriation of R1.4 billion in 2013/14 which represented a nominal
increase of R218.3 million, or 18.6 per cent, from 2012/13. At the end of March
2014, the DMR had spent 99.5 per cent of its available budget. This compares
with 99.8 per cent at the end of the previous year.
Transfers and Subsidies accounted for R692.7
million of the available budget and of this amount the Department transferred
R688.5 million, or 99.4 per cent, mainly to public corporations and private
enterprises and departmental agencies and accounts. This means the Department
had an available budget of R701.1 million for operations. Of this, the Department
spent R698.7 million, or 99.7 per cent, the majority of which was used on
compensation of employees and goods and services.
When considering operational expenditure, the
DMR was closer to the target of 100 per cent of budget spent than 31 of the 38
other national departments.
There was a minor difference from the pattern of past budgets
through the year 2013/14, following budget adjustments. The balance of
expenditure between current payments and transfers is now exactly even. In the
past, expenditures were slightly more weighted to current payments (55 per
cent) compared to 45 per cent to transfers (mainly to the Council for
Geoscience and MINTEK).
Main appropriation,
virements and shifts
The Adjusted Estimates of
National Expenditure (AENE) for 2013/14 for Vote 32, tabled in October 2013, did
not propose any adjustment in the
main appropriation of R1.393 billion for
the DMR and the
virements and shifts were minimal.
The DMR received a main
appropriation of R1.393 billion for the 2013/14 financial year, which was not
changed during the adjustment budget process.
No roll-overs were
requested. There were no items of unforeseeable expenditure and no declared
unspent funds or other adjustments. Table 4.5.1 shows the changes in the
programme allocations:
Table 4.5.1: Roll-overs, Unforeseeable/unavoidable,
Virements/shifts, declared savings and other adjustments
Programme R'000
|
Main Appro-priation
|
Roll-overs
|
Unforeseeable /unavoidable
|
Virements and shifts
|
Declared unspent funds
|
Other adjust-ments
|
Adjusted appro-priation
|
1. Administration
|
271 459
|
-
|
-
|
10 821
|
-
|
-
|
282 280
|
2. Promotion of Mine
Safety and Health
|
163 731
|
-
|
-
|
-
|
-
|
-
|
163 731
|
3. Mineral
Regulation
|
222 729
|
-
|
-
|
(10 821)
|
-
|
-
|
211 908
|
4. Mineral Policy
and Promotion
|
735 930
|
-
|
-
|
-
|
-
|
-
|
735 930
|
Total
|
1 393 849
|
-
|
-
|
-
|
-
|
-
|
1 393 849
|
Source:
National Treasury
In terms of virements
and shifts the following was observed:
·
A total of R10.821 million was defrayed from
Programme 3 Mineral Regulation to Programme 1 (Administration):
o
Programme 1 was allocated R10.821 million in
virements. R8.571 million was allocated to Corporate Services and R2.250
million to the Ministry
·
Within Programme 2 Mine Health and Safety: R578 000
was shifted, within goods and services, to pay for operating leases and
advertising from travel and subsistence.
·
Within Programme 3. Mineral Regulation,
R13.145 million was shifted from travel and subsistence and computer services
to the compensation of employees responsible for implementation of the National
Environmental Management Act (NEMA). This is a DMR responsibility that has
recently been clarified in a joint agreement with the Department of
Environmental Affairs and which has legislative authority in the amendment act
to the MPRDA brought into force in June 2013 and in the planned amendments to
legislation currently before Parliament. Treasury approval was obtained for
this shift.
·
Within Programme 4 Mineral Policy and
Promotion, R50-million was transferred to Mintek from mine environmental
management. This accords with Minteks role in research and action for the project
to rehabilitate derelict and ownerless mines. In addition, R18 million for
assistance to mines (which is dependent upon applications) has been shifted to
the Council for Geoscience (R6 million for the Witwatersrand water ingress
project) and to Mineral Policy (R12 million for mining charter assessments and
for the Kimberley Process certification scheme). All the shifts were approved
by the Treasury.
4.3.
Report of the Auditor General of South
Africa
The Auditor General of South African appeared
before the Committee on 15 October 2014. The DMR financial statements received
an unqualified audit opinion in 2013/14. This indicates that the Department has
successfully dealt with the concerns and criticisms raised in the qualified
audit opinion in the previous financial year.
The Auditor General indicated that while
there had been material misstatements in the reported performance information
and financial statements that were submitted for auditing, these were all
subsequently corrected by management.
While none of the entities within the DMR
portfolio obtained a clean audit in 2013/14 breaking the pattern of previous
years the Auditor General told the Committee that this was an achievable goal
for the 2014/15 financial year. There were findings attached to the audit
opinions on all the entities, but all were unqualified and action plans were
being implemented in all cases to address the problems. A very positive
relationship was reported between the AG and all of the entities during the
consideration of the annual reports.
4.4.
Findings of the Financial and Fiscal
Commission on the DMR budget
Mr Khumalo, the Acting Chairperson of the Financial
and Fiscal Commission (FFC) briefed the Committee on 17 September 2014. The FFC
analysed the budgeted expenditure of the DME over the period 2006/7 to 2014/15.
Grants and subsidies comprise the largest item within the Departmental budget
over this period, at just under 50 per cent The FFC noted that to give effect
to baseline reductions, transfers and subsidies (to Mintek and the Council for
Geoscience) were cut by R40-million over the MTEF.
All of the five entities and agencies for
which the Department was responsible were performing well financially. All
obtained unqualified audits in 2011/12, 2012/13 and 2013/14, their finances
were sound, expenditures were efficient and effective and they were meeting
goals and objectives.
The FFC judged that the Department was
playing an effective monitoring role over entities and agencies It
highlighted two Departmental challenges:
Maintaining
mine health and safety, and attraction and retention of key staff. The FFC
referred to high levels of staff being poached by the private sector at salary
levels that government cannot compete with and noted that this problems was
especially severe with respect to inspectors and mineral economists.
4.5
Financial performance 2014/15
Expenditure trends for the first
six months of the 2014/15 financial year
Expenditure as at 30
th
September 2014 amounted to R832 million or 56.4 per cent of the adjusted
appropriation.
The 2014/15 mid-year expenditure
rate of 56.4 per cent is similar to the 2013/14 mid-year expenditure rate of
53.5 per cent of the adjusted appropriation. This represents a year-on-year
increase of 11.7 per cent in the Departments expenditure. The increased
expenditure in 2014/15 compared to 2013/14 was mainly due to the filling of
vacant posts and to make provision for annual inflation.
The percentage of the adjusted
appropriation which had been spent by September 2013 by each of the programmes
was within reasonable limits, ranging between 49.2 per cent and 60.5 per cent.
4.6
2015/16
MTEF financial allocations
Summary of
funding submissions to National Treasury for the 2015/16 MTEF.
·
The
National Treasury should increase the budget of the department
o
so
that more inspectors (particularly those with specialist skills) be employed to
ensure effective and efficient compliance with the mining legislation and
regulations of the sector. Improved inspection is essential also to the
promotion of transformation.
o
so
that the integration of DMR databases can be accomplished to ensure
transparency in the applications for and granting of licenses. This will also
allow better monitoring and enforcement of compliance and increase the
confidence of investors in the sector in the quality and fairness of
regulation.
·
Urgent
attention should be given to the ability of the Council for Geoscience to fund
both the requirements of the 2010 Geoscience Amendment Act and the additional
responsibilities that may be given to the Council if/when the MPRDA Amendment
Bill is signed into law. The CGS has made representations to the Treasury in
this regard. (The annual amounts are R 115-million and R 156 million
respectively for the MTEF period of three years.)
·
The
future growth of the mining sector is dependent upon continued mineral
exploration. A substantial national investment in geological mapping, of the
order of R1-billion, is needed to provide the knowledge base to attract
exploration companies (and to assist the State Owned Mining Company in its
exploration endeavours).
·
State
liability for the environmental harm caused by mining operations in the past
exceeds R40-billion across the country. Present resources allocated towards the
rehabilitation of hazardous mine sites, acid mine drainage and research on
these issues are clearly inadequate
4.7
Concluding comments on financial performance
The financial performance of the DMR and its
entities over the 2013/14 financial year has been entirely uncontroversial.
Unqualified audit reports were achieved in all cases and there is a real
possibility of clean audits across the portfolio in 2014/15.
5
Overview and assessment of service delivery performance
5.1
Overall performance and achievements for
2013/14
The
achievements of the DMR for the 2013/14 financial year, include:
·
The
Department achieved 77 per cent of its performance targets, i.e. 127 out of 166
set targets. This is similar to the previous financial year, when 79 per cent
of targets were achieved i.e. 126 out of 160;
·
The
Department continued its participation in the Framework Agreement for a
Sustainable Mining Industry which was led by the Deputy President in the wake
of labour instability across the mining sector;
·
The bill
to amend MPRDA was passed by Parliament in March 201;
·
Draft
technical regulations for hydraulic fracturing were published for public
comment;
·
A
draft bill to amend the MHSA was published for public comment;
·
Streamlined
licensing processes in respect of mining and the environment have been developed,
jointly with the Departments of Environmental Affairs and Water Affairs. This
process will allow licensing to be finalised in parallel rather than
sequentially and move towards the goal issuing licenses within 300 days;
·
The
electronic mining application and licensing system, SAMRAD has been enhanced to
improve service delivery. This will also allow better management of the balance
between mining, agriculture, conservation and urban development;
·
South
Africa assumed the role of Chair of the Kimberley Process Certification Scheme
(KPCS) for 2013. The KPCS celebrated its tenth year of operation, ensuring the
better control of so-called blood diamonds;
·
Important
progress was made in improving the record of fatalities, injuries and
occupational diseases on the mines. The fatality rate in 2013 was 17 per cent
less than the previous year. For the first time ever, mine fatalities fell
below the figure of 100 for the year 2013;
·
The
DMR collaborated successfully with the Department of Higher Education (DHET)
and the Mining Qualifications Authority (MQA) to improve skills of youth and
mineworkers;
·
Through
the MQA, 50 graduates have been placed at various mines as part of a learner
inspector programme. This is to increase capacity in the Mine Health and Safety
Inspectorate (MHSI);
·
Former
mineworkers have been assisted by the establishment of One Stop Service Centres
at public health facilities through a DMR collaboration with the Departments of
Health and Labour. Two initial sites have been established at Mthatha in the
Eastern Cape and at Carletonville in Gauteng. Additional sites will be
established at Kuruman in the Northern Cape and at Burgersfort in Limpopo;
·
The
Florida Lake Canal was completed as part of a mechanism to control acid mine
drainage (AMD) in Gauteng. The Council for Geoscience and Mintek continue to
undertake research and development related to AMD, which is a problem across
the country;
·
A
detailed implementation framework has been developed with the relevant
departments within the Economic Sector and Employment Cluster too give effect
to the Mineral Beneficiation Strategy which was adopted by government as policy
in 2011;
·
13
publications were produced by the Department in 2013/14. This is more than the
10 promised in the Annual Performance Plan, but considerably fewer than the 35
produced in the previous financial year. However, unlike in previous years, the
2013/14 and 2012/13 Annual Report have not included a list of these
Departmental Publications and Key Documents;
·
9 446
health and safety inspections were conducted in 2013/14, compared with 8 632
the previous year and an annual target of 8 000. Arising out of these
inspections, 1 074 instructions were issued in terms of Section 54 of the
MHSA and 2 390 in terms of Section 55. These actions were taken in terms
of enforcement guidelines to protect the health and safety of mineworkers
against unsafe conditions, practices or acts. 9 Administrative fines imposed
during the year to the same purpose;
·
473
health and safety audits were conducted in 2013/14, the same as the number of
audits completed in the previous year. The target set of 396 audits was
exceeded in both years;
·
5 206
new jobs were verified to have been created through the Social and Labour Plans
which every mine has to implement. The Department, however, has no control over
the number of people that are employed by a right-holder or the number and
timing of jobs that arise from expenditure on Social and Labour Plans;
·
285
social and labour plan (SLP) inspections were completed in 2013/14, compared
with 181 in the previous year; and
·
There
were also 1 868 inspections conducted of mine Environmental Management
Plans/programmes compared with a target of 1 700 and a figure of
1 751 in the previous year.
5.2
Programme Performance
The DMR Annual Performance Plan specified 166 measures
by which to assess the performance of the Department in the 2013/14 period. 77
per cent of the measures were achieved. This is a similar result, overall, to
the previous year, in which 79 per cent of 160 measures were achieved. This
level of achievement for performance targets is better than most government
departments.
Table 3.1:
Summary of 2013/14 Performance Measures
|
||||||
Programme
|
Total count of measures per
programme
|
Achieved
|
Not achieved
(including 20 Partially Achieved)
|
|
Achievement
comparison with 2012/13
|
|
1
|
Administration
|
66 (100%)
|
51 (77%)
|
15 (23%)
|
78%
|
|
2
|
Promotion of Mine Safety and
Health
|
36 (100%)
|
29 (81%)
|
7 (19%)
|
77%
|
|
3
|
Mineral Regulation
|
34 (100%)
|
26 (76%)
|
8 (24%)
|
72%
|
|
4
|
Mineral Policy and Promotion
|
30 (100%)
|
21 (70%)
|
9 (30%)
|
92%
|
|
Total all Programmes 2013/14
|
166 (100%)
|
127 (77%)
|
39 (23%)
|
|
79%
|
An analysis was made of the 39 measures that were
not
achieved (or which were partially achieved) and it was determined that several
of the measures that were not achieved in 2013/14 (30 per cent) were
also
not achieved in 2012/13. This
allows some general comment on trends to identify where there are continuing
gaps
across programmes
in the
performance of the department.
When the filter of non-achievement in
both
2013/14 and 2012/13 is applied to
the indicators, the worst performing area relates to the objective in Strategic
Goal 5, to
Attract, develop and retain
appropriate skills
. Every one of the programmes failed to match the measure for Improved
numbers in terms of identified employment equity categories. Several of the
branches noted that the challenge was to attract Indians and Coloureds.
Explicit numerical targets were, for the first time, included in the APP for
2013/14 for Coloureds; Indians; People with disabilities; Women and Women in
senior management. While posts were advertised, they failed to attract people
from all categories. Reporting against the segmented targets is not provided
in the Annual Report, but the numbers in Employment Equity (EE) categories
failed to meet the set targets, except for Mineral Regulation, where EE
categories occupied 11 more than the 236 posts targeted, but where the balance
between categories was not realized.
A second area of non-achievement relates to the
5 per cent target set for a reduction in staff turnover.
Meeting staff turnover targets defeated
Corporate Services and the Mine Health and Safety Programme in both periods. The
average s
taff turnover across
the department in 2013/14 was 8.5 per cent. This is a slight deterioration from
the figure of 7.5 per cent in 2012/13 but still shows an improvement on the 9.9
per cent turnover rate in 2011/12. The main reasons why staff are leaving the
department are transfers out (41 per cent compared with 31 per cent in the
previous year). Resignations, which were the dominant reason for leaving in the
previous year, fell from 44 per cent to 26 per cent. The above-average turnover
rates seen in the previous year for Senior Management and Safety, health and
quality inspectors show a marked improvement with low turnover rates in 2013/14
of 2 per cent and 3 per cent respectively. The high turnover of inspectors with
scarce mining-related skills and valuable departmental experience has been a
long standing problem.
The third area which stands out in this analysis is
filling vacancies
, also a component of
Strategic Goal 5. Mine Health and Safety was the only programme to meet the
target in 2013/14.
These
Human
Resource
(HR) issues are truly cross-cutting, but they reflect on the
Corporate Services branch which is responsible, across the department, for
putting in place the levers that will allow the Departments other branches to
be more successful in meeting the human resource goals. The measures for
performance on Strategic Goal 5 have been significantly adjusted in the 2014/15
APP. The target for the improved vacancy rate will be a reasonable 10 per cent
(compared with a 2013/14 figure of 15 per cent and figures of 13 per cent and
15 per cent in 2012/13 and 2011/12 respectively). The detailed employment
equity targets have been replaced by a vague measure of the number of
affirmative action measures implemented. The EE profile of the Department will
still be reported upon. It is nevertheless interesting that meeting specific EE
targets is no longer to be a key performance area for the Department.
Corporate governance
indicators were overhauled and
re-specified for all branches in 2012/13 and, the department recorded a perfect
achievement record for all programmes, using the new set of indicators.
Performance in 2013/14, however has not been satisfactory. The new measures
(which are continued as indicators for the 2014/19 Strategic Plan) judge
whether the agreed-upon management action plans arising out of the internal and
external audit processes have been fully implemented or not and whether risk
management plans have been implemented. Appropriately, the target for
achievement is 100 per cent.
Percentage of agreed management plans implemented
Target 2013/14
|
Corporate Services
|
Financial Admin
|
Mine Health & Safety
|
Mineral Regulation
|
Mineral promotion
|
Risk management
|
76%
|
93%
|
100%
|
100%
|
94%
|
External Audit
|
100%
|
69%
|
100%
|
100%
|
100%
|
Internal Audit
|
50%
|
100%
|
33%
|
33%
|
50%
|
The results here show that all parts of the DMR are
failing successfully to implement the full programme of management
interventions which have been identified as necessary by the monitoring and
evaluation systems. The aggregated performance measure of 77 per cent
achievement of performance measures, by itself, is satisfactory. But sustained
improvement on this result is surely dependent upon full application of the
action plans, without exception.
5.2.1
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 and
management services to the Ministry and the DMR. The DMR achieved 77 per cent
of the performance measures set for Programme 1 (51 measures achieved out of 66).
37 environmental management positions were created and
filled during the financial year to capacitate the DMR to implement the
National Environmental Management Act and other national environmental
legislation in the mining sector.
The performance measures for the alignment of ICT
systems to business objectives were changed in 2012/3, following the approval
of the master system plan, and again for 2013/14. The previous measure on the
percentage reduction in licensing costs was not met in 2012/13 or in 2011/12
due to delay in
integration of
Application Systems
. This was to be finalised in 2013/14, but there is no
clear reflection on this outstanding issue in the 2013/14 annual report.
The Annual Report describes a wide range of efforts to
increase the number of
women in the
mining sector
, which is traditionally biased towards the employment of men.
The department has programmes to ensure that girl learners pursue technical
studies related to mining, a girl learner programme where 18 out of an initial
intake of 21 students are progressing well with their studies, and it
organises womens day events focusing on women working in mines as workers,
managers, professionals and mine owners. In addition, amendments adopted by
Parliament in the MPRD Amendment Bill seek to raise the employment of women in
the mining sector from the current level of 10 per cent to over 50 per cent,
reflecting the demographics of women in South Africa. Yet there remain concerns
that women are often not safe from sexual harassment and even assault at work,
particularly underground, where woman miners have been murdered.
The 2013/14 Annual report acknowledges with concern
that the number of reported incidents of women being sexually harassed and
treated inhumanely by fellow workers underground has increased
The DMR has been engaged in developing a
Women in Mining Strategy
since at
least 2011. This was a target in the Strategic Plan for 2011/14 and in the
Annual Performance Plans for 2011/12, 2012/13 and 2013/14. Yet the Women in
Mining Strategy has not been produced, despite postponing completion dates four
times. It was reflected in the Annual Performance Plan for 2013/14 for
completion in the final quarter of the financial year, but this performance
measure was not achieved. While it is omitted from the APP for 2014/15, the DMR
has now promised the Women in Mining Strategy by 31 March 2015. The
Department was Still in the process of consultation and also had to align to
the amended MPRDA.
There is an expectation that the Departments strategy
will be finalised as now promised and that it will deal appropriately with the
need for women mineworkers to have a safe and dignified working environment.
5.2.2.
Programme
2: Mine Health and Safety Promotion
The purpose of the Promotion
of Mine Safety and Health programme is to safeguard the health and safety of
the mine employees and people affected by mining conditions.
The DMR achieved 81 per cent of the performance
measures set for Programme 2 (29 out of 36).
Welcome improvements in the safety record in the
mining industry are recorded in the DMR Annual Report and in the report of the
Mine Health and Safety Inspectorate (MHSI). Fatalities due to mine accidents,
while continuing to be a matter of great concern, have fallen in each of the
last three years, in both absolute and relative terms. Reportable injury rates
declined by 5 per cent on average in the year of 2013, but remain high in the
deep mine areas, Rustenburg, Gauteng, Klerksdorp and Free State although
there were increases in injuries in both absolute and relative terms only in
Rustenburg.
The performance target of a 20 per cent reduction in
dangerous occurrences was not achieved in 2011/2, 2012/3 or 2013/14. While the
fact of non-achievement is recorded correctly, the matrix entry indicates a 15
per cent reduction in 2013/14 when in fact there was a 1.5 per cent increase.
The variance should therefore be negative 21.5, not negative 18.5. The same
recording error was made in this indicator in the previous year.
While the turnover rate for Safety, health and quality
inspectors is now at a low level, well below the Departments average, the
vacancy rate in this critical category (the largest by number in the DMR)
remains (with 49 vacant posts), at 18.5 per cent, above the 14.7 per cent
average.
The DMR is taking steps to address the skill and
capacity problem in collaboration with the Mining Qualifications Authority
(MQA) through the award of bursaries and a learner inspector program that has
recruited 50 candidates. The Inspectorate has reported that the vacancy problem
is due to government salary packages for inspectors being lower than in the
private sector.
5.2.3
Programme
3: Mineral Regulation
The purpose of the
Mineral Regulation Programme is to regulate the minerals and mining sector to
promote economic development, employment and ensure transformation and
environmental compliance.
The DMR achieved 76 per cent (26 out of 34) of the
performance measures set for Programme 3.Although not referred to in the Annual
Report, the Mineral Regulation branch avoided repeated censure from the Auditor
General for failing to ensure that holders of mining rights and permits submit
regular reports on their activities. This is an important recovery of
performance as these reports allow monitoring of mines compliance with the
Mining Charter.
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 environmental management plan that was approved during the
year considered issues of sustainable development. This may prevent state
liability in these cases in the future, but it remains the case that many old
mines do not have reserve funds that are adequate to meet their environmental
rehabilitation responsibilities. Here the burden of a destroyed environment
falls on local communities and the state. While the branch issued closure
certificates only in cases where the regulatory framework has been complied
with, mine closure still presents a major problem. A speaker at the recent
mine closure conference
stated that the
court-driven process of liquidating a mining company did not appear to take
into account the effect on closure obligations, transfer of risks and liabilities
and provision for rehabilitation. The liquidation process of the
Blyvooruitzicht gold mine once owned by DRDGold was used to illustrate the
weaknesses in the present system, which allows mining companies even those
not in liquidation to dodge their closure obligations.
The Mineral Regulation branch is adding to
its capacity related to environmental inspections of mines in order to regulate
mines in accordance with the National Environmental Management Act.
With regards to licences, 687 out of 921
licence applications (75 per cent) were processed in line with the prescribed
timeframes in 2013/14. 571 out of 800 rights to minerals (71 per cent) were
registered within the prescribed timeframes. The target is 70 per cent in both
cases.
5.2.4
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 70 per cent of the performance
measures set for Programme 4 (21 out of 30).
Mineral Policy and Promotion is the largest
programme of the 2014 MTEF. It absorbs over half of the budget of the DMR and
includes transfers to Mintek and the Council for Geoscience. The Programme
encompasses the DMRs 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 R41billion.
The Mineral Policy and Promotion programme is
also responsible for the assessment of the Mining Charter. In 2013/14, the DMR
paid the consultant company Moloto Solutions R5.7-million to assess
compliance with the Broad Based Socio-economic Charter for the mining industry
The findings of the report will be released during the 2014/5 financial year.
5.3
Oversight Visit to Gauteng
The Committee conducted an oversight visit in Gauteng in August 2014, to
assess the areas where illegal mining is taking place and to understand the
practical measures that are in place and to form a view on whether the
resources currently voted to deal with AMD are sufficient. An oversight covered
the area where the problem of AMD is most acute (along with the Olifants River
basin in the East).
The Committee
found that
there is an evident of lack of capacity and
resources in dealing with illegal mining at present. All parties said the
problem is worse than in 2009, when the PC last considered the issue. The
Committee was very impressed by the knowledge, dedication and professionalism
of all the officials, security and mine staff they interacted with. The issue
of legislation to combat illegal mining is quite critical. There should be
careful consideration of creating legislation in silos where separate laws do
not allow a cross-cutting issue to be addressed. Most of illegal miners are
foreign citizens and they enter the country illegally. The Committee found out
that there were more than 700 people underground in these holes who are
illegally mining. Police officials are not sure how to take statements when
these illegal miners get arrested. On the issue of acid mine drainage, the
Council for Geoscience and Mintek have done a lot of work in dealing with AMD
and Derelict and Ownerless mines. More funding is needed especially in CGS for
ageing infrastructure.
While the Committee
was in Gauteng, they visited the House of Traditional Leaders and found out
that there should be more engagements with traditional leaders especially with
the offices that issue mining licenses and the Committee. As the Mining Charter
reaches its ten year milestone, it would assist if the NHTL would undertake to
contribute to the process of evaluation.
The Committee made
the following recommendations:
·
The Department of Home Affairs needs to
tighten immigration laws to prevent foreign illegal miners from being in the
country.
·
There should be a workshop of police officials
on how to take statements with regards to illegal mining.
·
There should be more engagements between the
NHTL and the DMR regional offices issuing mining licenses.
·
The Department of Mineral Resources should
increase the funding for CGS in order to carry out its mandate and implement
Geoscience Amendment Act.
5.4
Other service delivery performance
findings
5.4.1
The DMR is now compliant with PAIA and now grants most requests for information
.
The Promotion of Access to Information Act
(PAIA), Act 2 of 2000, was intended to set standards for transparency and
accountability that would enable citizens to access records from government and
business. The South African Human Rights Commission (SAHRC) is responsible for
monitoring the implementation of PAIA in the public sector. It has reported
that overall compliance of public bodies does not reflect commitment to PAIA .
The DMR received the largest volume of
requests under PAIA of all national departments, with the notable exception of
the South African Police Service (which received over 20 000 requests). In
2013/14 the DMR reported that it had received 686 (2012/13: 510) requests for
information. Of these, 509 (2012/13: 182) were granted in full and 71 (2012/13:
325) were refused in full by relying on the provisions of the Act. There was
one
application made to court on
grounds that an internal appeal was dismissed by the DMR failing to give notice
of its decision (section 77(3).
6 internal appeals (one of which was
still pending at year end) were
lodged
on account of a deemed refusal by the DMR.
27 other requests were
pending at 31 March 2014. [The SAHRC report does not give information on the
status of the balance of 79 reports that were neither granted nor refused nor
pending.] 74 per cent of requests were granted in full in 2013/14, compared
with 36 per cent in the previous year. The greatly improved performance of the
DMR is not commented upon by the SAHRC. The DMR is now formally listed by the SAHRC
as compliant with section 14 of PAIA (which requires a manual of how to access
information to be available, updated annually), the DMR posted the 2012 manual
on its website in April 2013.
5.4.2 Performance issues illustrated in the
comments on the MPRDA Bill
On 5 August 2013,
the
Parliamentary Portfolio Committee on Mineral Resources (National Assembly)
invited interested individuals and organisations to submit written comments on
the Mineral and Petroleum Resources Development Amendment Bill [B15-2013].
Public hearings on the Bill
were held in Parliament on 11
th
, 12
th
, 13
th
and 18
th
September 2013.
Many of the concerns that were raised
reflected directly on
key performance/service delivery issues related to
the DMR. Stakeholders expressed dissatisfaction about many aspects of the
performance and service delivery of the DMR.
Three issues are highlighted below:
Issue 1. The DMR performs poorly in providing
access to information
At a formal level, this is judged by the responses
by the DMR to requests for information made under PAIA. The Centre for
Environmental Rights (CER) found that it was still very difficult to access
records, even where a decision has been made to grant access and the DMRs
response rate to requests remained at 19 per cent, the same level as in their
2010-11 assessment (when it was rated as certainly the worst-performing
department). The DMR is also tardy in processing appeals. As at the end of
2012, the DMR had not made a decision on one of the twenty appeals submitted
(by CER) against refusals under PAIA since 2010.
Less formally, the DMR may be judged by reports on
its responsiveness in providing information to mining communities, their
representatives and to Non-Profit Organisations who work with people affected
by mining to challenge mining and environmental decisions.
The
Mining
and Environmental Justice Community Network (MEJCON)
told
the PC that their member communities are denied copies of Social and Labour
Plans (SLPs) by the DMR. They said that m
ines
report on their own compliance and communities cannot be sure what the mining
companys obligations are. MEJCON proposed that
c
communities
be provided with the necessary information to enable them to assist the
Department in monitoring compliance and to engage with the mining company, as
necessary, in regard to their obligations in the SLP. Poor monitoring of
compliance with SLPs and limited enforcement by the DMR has meant that many
communities do not see the benefits promised in those plans.
DMR
needs to significantly increase its compliance
monitoring capacity
over SLPs.
ActionAid
South Africa
also questioned the fact that SLPs are
not made public by the DMR despite the provisions of various acts concerning
public information including PAIA and the Promotion of Administrative Justice
Act (PAJA), No 3 of 2000. SLPs are a fundamental part of the compensatory
commitment by the mines and which should accrue to the community. The
disadvantage extends to local municipalities which often rely on the companies
SLPs to promote local economic development. The fact that local communities
are not even aware of what are in these plans contributes to the mistrust that
has permeated relations between mines, local municipalities and communities and
does not foster social or economic development.
The
Centre for Environmental Rights,
citing the
Bengwenyama Constitutional Court (CC) judgment in 2011 said that vulnerable
rural communities and emerging farmers are usually without the resources to
challenge applications for mining or mitigate its impacts. The CC recognised
that communities should have necessary information on all that is to be done
when mining starts. Yet, the PC was told, the DMR and consultants hired by
mining companies refuse to make available even most basic information, such as
works programmes and information relating to financial and technical
capability. The refusal to give communities access to SLPs means that affected
parties cannot comment meaningfully on applications because they have no
information and are effectively blindfolded. The DMRs failure to make
information available renders even those consultation provisions that are in
the MPRDA meaningless. The CER stated that in most cases DMR and mining
companies do not even notify landowners and occupiers when rights have been
granted on their own land, which they described as a blatant infringement of
right to fair administrative action.
The basic argument from these and other
stakeholders who represent mining communities was that the DMR, in practice,
does not follow either the statutes or case law in its reluctance to share
information with communities on mining applications and SLPs.
The DMR did not respond in the PC meeting
afterwards to answer the many allegations made during the public hearings in
September 2013 on its reluctance to make information available.
Issue 2: The DMR implements the law in ways that undermine environmental
rights
The legislative mandate of the Department of
Mineral Resources in terms of section 24 of the Constitution is to ensure that
the nations mineral resources are developed in an orderly and ecologically
sustainable manner while promoting justifiable social and economic
development.
This provision, which has to be upheld by the laws
and the way they are implemented, opens a wide area for debate on what is
sustainable and justifiable. The CER submitted a digital video disk (DVD) to
the Committee that raised questions about the ways in which the DMR fails to
protect communities from the harmful effects of certain mining operations:
·
In Hondeklipbaai, an area affected by decades of
opencast mining, De Beers applied to the DMR to reduce its rehabilitation
obligations and failed to consult the community on the implications of its
Social and Labour Plan;
·
As Vogelspruitpoort in Belfast, Mpumalanga, Mr
Samson Sibanda found that a farm he had bought was polluted by an
unrehabilitated abandoned mine. Some of his livestock died. The same company
that had been responsible for the damage, Cousins Coal, was attempting to
obtain new rights to minerals on the farm from the DMR;
·
A community in Wesselton outside Ermelo took more
than a year and a court order just to access from the DMR copies of the permits
of mines which were operating directly adjacent to houses and causing them to
crack; and
·
At Bathlabine near Tzaneen in Limpopo, the Blue
Platinum Ventures started mining clay outside the area in which they had an
approved mining permit, in areas sacred to the community. When the DMR issued a
notice to Blue Platinum, it did not instruct the company to rehabilitate the
pits closest to the community, despite the encroachment on private land.
Issue 3: The
DMR has not made sufficient space for mining communities to comment on the
amendments to the MPRDA
The process of amending the MPRDA has been
long and complex. In 2011, the Minister accepted contributions from the Mining
Growth, Development and Employment Task Team (MIGDETT), consisting of
government, business and labour on amendments to the MPRDA. At the same time,
the CER wrote to the DMR on behalf of a number of NGOs requesting an
opportunity to make inputs into the draft legislation that was being developed.
The purpose of the requests was to convey to the DMR the very grave concerns of
civil society groups (including, in particular, the mining-affected communities
CER represents) in order for these to be accommodated in the draft legislation
being developed. Civil society and community groups have no representation on
forums such as MIGDETT. The CER made a specific submission to the Portfolio Committee
in September 2013 detailing its efforts since 2011 to bring these matters to
the attention of the Department and how these efforts had been rejected or
ignored. Even drafting and spelling errors that were pointed out remained in
the Bill. The thrust of the submission was that the DMR did not consult
adequately with communities in framing the draft Bill and continued to ignore
comments made after the Draft Bill was gazetted in December 2012.
5.4.3 DEA Green Scorpions refer more complaints to the
DMR
The
national Department of Environmental Affairs (DEA) publishes an annual report
on the incidence of offences under national environmental legislation. This
does not cover the environmental compliance and enforcement work being
undertaken by other departments, such as Water Affairs or Mineral Resources.
However the 2013/14
National
Environmental Compliance and Enforcement Report
(NECER) reports a doubling
(from 14 to 28) of the number of complaints referred to the DMR, because these
particular environmental matters are regulated under the MPRDA. Neither the DMR
nor the DWA publishes a similar report that deals with the enforcement of their
environmental responsibilities. The DMR will retain responsibility for the
environmental regulation of mines under the One Environmental System for
mining which is scheduled to come into operation on 8 December 2014. It has
been suggested that the DWA and DMR should demonstrate their commitment to
compliance monitoring and enforcement on environmental issues by publishing
their own NECER, or providing statistics for a single, comprehensive NECER in
future.
5.4.4
DMR identified as one of a few excelling departments in the Presidencys 2013
Management
Performance Assessment
The
NDP emphasises the importance of building a capable state and, since 2011,
the Presidency has sponsored the use of a
Management Performance Assessment Tool
(MPAT)
to assess performance against key policy standards in all national and
provincial departments. The MPAT provides a comparative survey of the quality
of management practices across government, with the results being published in
a series of report on the website of the Presidency.
The National
Department: Mineral Resources is ranked very highly on management performance
indicators compared with other government departments. One of the eight or so
excelling departments, is the only department singled out as providing an
example of good case studies in as many as three instances. The DMRs
management practices are rated as superior in
KPA 2: GOVERNANCE
& ACCOUNTABILITY 2.6.1 Risk and 2.4.2 Fraud and in
KPA 3: HUMAN RESOURCE
MANAGEMENT 3.4.2 Disciplinary process
The
overall report quotes an official of the DMR as saying
We now have an
established practice for monitoring progress on actions to be taken to mitigate
risks. We receive reports from Champions and collate these for submission. We
also engage directly with relevant senior managers on risk areas and progress
on actions for which they are responsible for. Its a live function as we
constantly face new risks in our operations.
The
MPAT helps the DMR, and other Departments, to identify where improvement is
needed.
6
COMMITTEES Observations and response
The Portfolio
Committee on Mineral Resources having assessed the performance of the
Department of Minerals Resources and five entities made the following findings
and observations:
·
The
Committee views stakeholder engagement as critical in ensuring that the
Departments Programme of Action resonates with the realities of communities in
the minerals sector. The Department needs to be more effective in reaching out
to all affected parties as it formulates and implements minerals policy;
·
The
Committee notes with concern the extended delay in the finalisation of the
Women in Mining Strategy. Ensuring the participation of women in the minerals
sector in safety and dignity - is a key objective of transformation in the
minerals sector;
·
The
Committee welcomes efforts spearheaded by the DMR to streamline licensing
processes in respect of mining and the environment and the partnerships with
the Departments of Environmental Affairs and Water Affairs. This will allow the
licensing process to be finalised in parallel rather than sequentially;
·
The
Committee views with concern the continued expressions of socio-economic
discord which is particularly concentrated on those communities living close to
mining operations. This necessitates that the Department conduct an urgent
review of levels of compliance with the Mining Charter;
·
The Department still faces challenges in
attracting and retaining skilled professionals especially in the Inspectors:
Mine Health and Safety programme and other specialised inspection services such
as the environment and social and labour plans;
·
There is a need to co-ordinate skills
training better across the mining industry, making use of institutions such as
the Mining Qualifications Authority (MQA);
·
The Department and its entities must deal
more effectively with employment equity issues particularly equitable employment
of youth, women and people with disabilities;
·
There is a need for targeting an improvement
in the proportion of raw mineral exports compared to the export of (and local
consumption) of beneficiated products that use minerals as inputs.
·
60 per cent of the worlds diamonds are mined
in Africa, yet the polishing and cutting and setting of stones is done
elsewhere, not on the African continent. There needs to be a continent-wide
effort to correct this situation;
·
The Department and the entities frequently do
not respond promptly with information they have agreed to provide to the
Committee, this delays oversight processes and blunts the ability of the
Committee to intervene effectively;
·
The Council for Geoscience has been prevented
from undertaking the full mandate assigned to it by Parliament because of a
lack of Resources. This is an issue that needs to be settled on a firm
timeline, as the work of the Council in these new areas is critical for the
future of exploration and mineral development for the people of South Africa;
and
·
The Department and most of the entities
perform extremely well on the performance measures on financial and service
delivery issues, yet the mining sector as a whole is in crisis. The performance
measures should be reconsidered so that they incentivise the DMR and its
entities to tackle the difficult problems. At present they are recognised for
excellent overall performance but on the basis of some targets that are easy
to reach. There is a need for a few stretch targets that deal with more
challenging issues such as the actual benefits that the people of SA get from
mining and the attractiveness of the investment environment for South African
mining entrepreneurs.
7
Recommendations
The Portfolio Committee on
Mineral Resources recommends that the Minister of Mineral Resources should ensure
that his Department and its entities address the following:
BRRR
2014 Recommendations
|
Motivation for
inclusion
|
Time Frame for DMR
response
|
·
Fast-track the creation and filling of vacant posts,
especially critical and strategic posts as well as essential service posts.
|
·
The DMR and entities
lack human resources despite efforts to recruit.
|
·
Next Quarter - 2015
|
·
Create a recruitment and retention strategy as well
as a succession plan for its staff members.
|
·
The DMR and
entities lack human resources and need to grow their own timber
|
·
Next Quarter - 2015
|
·
Fast-track the implementation of the talent
management strategy to reverse the tide of staff-turnover.
|
·
Minimal progress
- recommendation repeated from 2012 and 2013
|
·
Next Quarter - 2015
|
·
Attend to the issues raised by the Auditor General
in its reports (particularly on issues of supply chain and internal audit)
and present to the Committee the action plan with the stipulated timeframes.
|
·
Need for a clean
audit in 2014/15 and beyond. The Auditor General believes that a clean audit
is within the capacity of the Department.
|
·
Next Quarter - 2015
|
·
Develop a much clearer score card used for
compliance to the Mining Charter in order to prevent the confusion within the
mining industry
|
·
Repeated from
2012 and 2013. No changes have been proposed to the Mining Charter score
card. Issues of vagueness were raised by the Committee in its 2013 report on
the Mining Charter public hearings.
|
·
Next Quarter -2015
|
·
Develop and implement mechanisms to enhance its
stakeholder engagement programme and ensure that it effectively reaches out
to communities in the process of formulating and implementing minerals
industry policies and regulations.
|
·
Repeated from 2013. This
has been a point of concern raised during public hearings and oversight
visits to mining areas.
|
·
Next Quarter - 2015
|
·
Develop strategies to ensure that there is an
elevated focus on increasing HDSA minerals industry awareness through
industry workshops
|
·
Repeated from 2013. Transformation
still lags behind despite a decade of the Mining Charter.
|
·
Next Quarter 2015
|
·
Follow up on developments of the integrated
financial management systems to help align licensing processing effectively
with developments of the MPRDA
|
·
Repeated from 2013. Weak
systems continue to have a negative impact on license processing
|
·
Next Quarter 2015
|
·
Improve on its training and development programmes
to ensure appropriately targeted skills development in both employees of the
industry and surrounding mining communities.
|
·
Repeated from 2013. There
is a need for an investigation into the MQA regards the training programmes
and skills development within the industry as well as mining communities. There
needs to be improved implementation of learnership, internships and
bursaries.
|
·
Next Quarter 2015
|
·
Afford the Committee, when it conducts oversight visit
to the Department, access to the full details in respect of the SAMRAD system
in order to get a better and experiential understanding of the workings of the
licensing system.
|
·
Repeated from 2013. The
SAMRAD system is critical to the management of the licensing process
|
·
Next Quarter 2015
|
·
The Mining Qualifications Authority submits to the
Committee a comprehensive report on skills audit in the mining industry, department
and its entities
|
·
The lack of
co-ordination evident on skills issues
|
·
Next Quarter 2015
|
·
Develop a strategy for providing access to
information including social and labour plans
|
·
To ensure transparency
and accessibility
|
·
Next Quarter 2015
|
·
Take the fight against illegal mining beyond our
borders, to Lesotho, Zimbabwe and Mozambique
|
·
This is a major issue
that has implications for criminality and immigration control and is a threat
to the economy,
|
·
To be discussed with
DMR and other Departments
|
·
Facilitate the workshoping or training of senior DMR
management on expanding employment of HDSAs
|
·
There is an apparent
lack of understanding on this issue as evidenced by the unevenness of
achievement in employment equity
|
·
Next Quarter 2015
|
·
Develop (in collaboration with communities) the best
practice template to help communities to benefit more from mining on
community land when they are approached by a mining company. This should
include best practice to encourage community ownership in mining projects on
communally owned land.
|
·
There is a need for
communities to be active participants and to be fully capacitated to interact
with mining companies and to get access to mineral resources in their own
right
|
·
Next Quarter 2015
|
·
Strictly adhere to the Committees prescribed
turnaround times for submission of responses to Committee requests. And further
that they drastically shorten the time they take to respond to commitments made
before the Committee.
|
·
The Committee is undermined in its ability to undertake
effective oversight, when there are long delays in meeting requests for
information.
|
Immediate effect
|
Summary of recommendations with financial
implications
·
The
National Treasury should increase the budget of the department
o
so
that more inspectors (particularly those with specialist skills) be employed to
ensure effective and efficient compliance with the mining legislation and
regulations of the sector. Improved inspection is essential also to the
promotion of transformation; and
o
so
that the integration of DMR databases can be accomplished to ensure
transparency in the applications for and granting of licenses. This will also
allow better monitoring and enforcement of compliance and increase the
confidence of investors in the sector in the quality and fairness of
regulation.
·
Urgent
attention should be given to the ability of the Council for Geoscience to fund
both the requirements of the 2010 Geoscience Amendment Act and the additional
responsibilities that may be given to the Council if/when the MPRDA Amendment
Bill is signed into law. The CGS has made representations to the Treasury in
this regard. (The annual amounts are R 115-million and R 156 million
respectively for the MTEF period of three years;
·
The
future growth of the mining sector is dependent upon continued mineral
exploration. A substantial national investment in geological mapping, of the
order of R1-billion, is needed to provide the knowledge base to attract
exploration companies (and to assist the State Owned Mining Company in its
exploration endeavours); and
·
State
liability for the environmental harm caused by mining operations in the past
exceeds R40-billion across the country. Present resources allocated towards the
rehabilitation of hazardous mine sites, acid mine drainage and research on
these issues are clearly inadequate.
8
Appreciation
The time lines for
the assembly of the BRRR are very tight. The Committee expressed its
appreciation to the Minister, Deputy Minister and the Director General (Including
the five entities), the Auditor- General of South Africa and the Financial
Fiscal Commission who all participated in the 2014 BRRR process.
The Committee appreciated the helpful
training and guidelines on the requirements of the Act from Parliament prior to
the BRRR process. The Committee also extended its unreserved gratitude to the
committee staff which has willingly and voluntarily ensured that the work is
done and doing so beyond normal working hours and set an example of how public
servants should operate. Lastly, the words of appreciation goes to committee
members for their constructive contribution towards the success of the
committee.
Report
to be considered
.
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