ATC150304: Report of the Portfolio Committee on Mineral Resources on its oversight visit to the North West Province, on the 23 – 26 November 2014, dated 04 March 2015

Mineral Resources and Energy

Report of the Portfolio Committee on Mineral Resources on its oversight visit to the North West Province, on the 23 – 26 November 2014, dated 04 March 2015
 

The Portfolio Committee on Mineral Resources, having undertaken an oversight visit to North West, reports as follows:

 

1.         Introduction                                                  

 

The Portfolio Committee on Mineral Resources undertook an oversight visit to North West Province from 23 to 26 November 2014.  The Committee went to the North West to see, listen and understand the difficult situation that still surrounds the operations of the mining sector.

 

The North West is known as the leading mining Province in South Africa. It has more mines operating legally than any other province (338 mines) It has more mineworkers than any other province. One third of all mineworkers are employed in the North West - more than 170 000.

 

If the mining sector is to make its promised contribution to our economy and to the National Development Plan, the North West is where that potential will have to be proven.

 

Mining is a national competency under the Constitution – so there is no MEC for mines in the Provinces. But while mining is a national competency, it takes place in provinces and in municipalities.

 

The national portfolio committee responsible for the oversight of mining legislation needs to understand how this legislation is working on the ground in provinces and municipalities.

• Is mining making its proper contribution to local development?
• Is the legislation been constructively administered by the responsible Department?
• And are the mining companies keeping up their commitments to contribute to development – about which they have made clear undertakings in their social and labour plans and in the mining charter?

 

2.         Background

 

A delegation of the Portfolio Committee on Mineral Resources (the Committee) visited North West Province from 23 – 26 November 2014

 

The Committee visited Royal Bafokeng Platinum, Anglo American Platinum and Lonmin to understand the views of local communities, regional DMR officials and unions as well as management. The resolution of labour difficulties on the platinum mines is an essential condition for the country to realise the economic benefits that can be obtained from our mineral wealth.

 

The visit comprised an orientation briefing by the Regional Manager of the Department of Mineral Resources, a tour to the mines including the mines’ operations, the outline of their social and labour projects and a meeting with Traditional Leaders in the North West Province.

 

3.         Composition of Delegation

 

1. Parliamentary Delegation

 

The delegation was composed of the Chairperson of the Committee as the Leader of the delegation, Mr S Luzipo (ANC), Mr ZMD Mandela (ANC), Ms MV Mafolo (ANC), Mr I M Pikinini (ANC), Mr J Lorimer (DA) joined the delegation on 26 November 2014

 

Accompanying the committee was the Committee Secretary Miss A Boss, Committee Researcher, Dr M Nicol, Committee Assistant, Ms S Skhosana.

 

1. Department of Mineral Resources

 

Mr J Raphela, DDG, Mr V Magagula, Parliamentary Liaison Officer, Mr M Mothiba, Principal Inspector of Mines, Mr X Mbonambi, Deputy Chief Inspector.

 

4.         Meeting with Office of the Premier

 

Mr Supra Mahumapelo, the Premier of the North West Province delegated Advocate Karabo Kgoroeadira, the chairperson of the mining sector stakeholder coordinating committee to brief the Members on mining developments in the Province.

 

The mining sector stakeholder coordinating committee was appointed by the Premier in 2014, among others, to monitor mining sector transformation programmes and advise the premier on activities related to the implementation of the Mining Charter and the social and labour plans (SLPs) of various mining companies. The Mining Charter and the SLPs are fundamental aspects of the Mineral and Petroleum Resources Development Act (MPRDA), No. 28 of 2002. The committee also seeks to promote co-operation on mining issues between the local, provincial and national spheres of government.

 

Advocate Kgoroeadira explained the strong connection that North West communities have to the land. The land is not a commodity to be bought and sold. It has spiritual value. The land actually owns the people. Indigenous mining communities experience mining as an infringement of their rights to the land. Australia and Canada recognise the land rights of indigenous peoples, but that is not the case in South Africa. In the past, profits went only to the state and to mining companies and conflict grew from the divergence of interests.

 

There is a need for mineral equity and sustainable development that draws together the state, mining companies, indigenous communities and the mine workers. Community consent should be required for mining on communal land as is specified in ILO Convention 169 (the Indigenous and Tribal Peoples Convention, 1989).

 

Mining is central to the economy of the North West. Mining is what drove imperialists to take over the country. Democracy has been good for the mining sector. It has taken advantage of the opportunities it created to relocate head offices, merge companies and extend operations globally. But the majority of people have still not benefited. Marikana exposes South Africa’s structural weaknesses. Organisations like the Bench Marks Foundation and MACUA (Mining Affected Communities United in Action) have highlighted the frustrations of the youth in the North West with mining issues in the Platinum Belt.

 

The MPRDA represents a significant step to deal with the legacies of 140 years of mining. It provides for social and labour plans that must uplift communities, improve skills and develop infrastructure. Communities could benefit from the requirement for 26 per cent local ownership by 2014.

 

Advocate Kgoroeadira outlined the need for improved co-operative governance in mining and called for the national Department of Mineral Resources (DMR) to re-examine how it helps communities. The absence of the direct involvement of communities in deciding on the right to minerals is an ongoing problem. Traditional councils are not in tune with the co-operative governance skills which are needed to negotiate effectively with mining companies. The DMR needs to educate indigenous mining communities. Control at local level is complex and not easily comprehensible. There have been examples of tokenistic participation where elites have been targeted for participation and there has not been collective community inclusion in resource utilisation.

 

The consequences of the slow pace of transformation in mining is best illustrated by demands for nationalisation of the mines. South Africa has the highest level of mineral wealth in the world. But this has not been passed on to the people.

 

Advocate Kgoroeadira said that there is a lack of access to data about mining in the province. Communities are suspicious of the licensing decisions of the DMR. The DMR issues licences for prospecting and mining without the community being properly consulted. Often the people who get the licences are not from the North West Province but from elsewhere. This creates serious conflict. The DMR should inform the Provincial Government when it grants licences on land in the North West.

 

The DMR amended the Mining Charter in 2010 to allow them to revoke licenses when there is no compliance with the Charter (under Section 47 of the MPRDA). This should be implemented, but the North West government finds that the DMR is reluctant to do so.

 

Mines are major users of water and are in competition with domestic and agricultural users of water. Effluents discharged by mines also create water problems. Mining licenses should not be granted unless water issues have been dealt with. Conflict between mining and agriculture is a major issue.

 

The DMR needs assistance in implementing its laws. This could be assisted by creating a mineral resource department at provincial government level.

 

Advocate Kgoroeadira’s contribution from the office of the Premier was supplemented by insights from the three MEC’s who deal with finance, rural development and traditional affairs:

 

The Province sees mining as temporary in nature. The permanent foundation of the North West economy for the future is agriculture, culture and tourism (ACT). Mining in just an investment – a catalyst – which must be used wisely to support ACT. Water sources and land used by mines need to be properly rehabilitated for agriculture. In areas like Orkney, mining has left ghost towns and dumps of waste.

 

Most of the mines in the North West are on traditional land. Royalties accrue to communities (under the transitional arrangements within the MPRDA) but the controversial “D-account”, into which royalties have been deposited by mines, has not been audited for 20 years. The North West government has had meetings with the Public Protector on this issue and it is receiving attention.

 

There is a move away from royalties to shares in the mining companies. The MECs said, however, that “where there is mining there is conflict”. DiKgosi sign agreements and contracts alone, then the youth want to know what has been agreed. Contract management is key. The DMR step back and leave the Provincial Government to resolve the difficult issues.

 

The province feels a lot of pressure from migrant labour. When shafts close, people don’t go back home. They stay. The Bapo-ba-Mogale community complain that people from the mines settle on their land without permission.

 

The MEC’s repeated the earlier statements that communities in the province find that there is a lack of access to data from the DMR.

• Communities do not know what is in the SLPs that the DMR has approved.
• There is a general lack of trust in the licencing processes of the DMR.
• There is no proper consultation with the community of whose land the prospecting and mining is to take place. This leaves the province to manage the great dissatisfaction that arises.
• The DMR gives licenses to people from other provinces and other countries when there are local people who should have these licenses.

5.         Briefing by Regional Manager of DMR in Rustenburg

 

The Acting Regional Manager outlined the legislative footprint. He indicated that in 2004 the law on regulation of Mineral Resources changed from the then Minerals Act and the Mineral and Petroleum Resources Act was enacted as the new law to regulate the minerals and petroleum sector; with the DMR responsible for the licensing and regulation of mineral resources and PASA responsible for the licensing and regulation of all petroleum resources. As part of the transformation of the mining industry, the mining charter was adopted and gave birth to Social and Labour plans. The Act was amended in 2008 and came into effect in 08th July 2013. The new amendments are also up for consideration currently. The mining charter was also amended in 2010. He reported the number of rights issued in the Rustenburg district for the companies that the Committee were going to visit. BRPM has been issued 30 year mining rights with 28 years of mining remaining. Historically Disadvantaged SA (HDSA) ownership is 67% (against the Mining Charter target of 26%). Lonmin has been issued 30 year rights with 23 years remaining and HDSA ownership is 18%. RPM has been issued 30 year rights with 28 years remaining and HDSA ownership is 85%. Impala has been issued 30 year rights with 24 remaining years of mining and 28% is in HDSA ownership.

 

5.1        Mining Related Challenges

 

The DMR reported that about 70% of the operating mines in Rustenburg are old order converted mining rights and 30% are new order mining rights. The commodities mined are commonly PGMs, chrome and associated minerals and granite/gabbro norite. Although most are operational, some were affected by the economic meltdown and the industrial strikes which led to scaling down and retrenchments. The Lonmin Karee mine was put under care and maintenance in 2007, and some 10 000 employees were dismissed after the 2011 strike on the Karee K3 shaft and the Marikana 2012 incident.

 

In 2012 Impala experienced labour related challenges which led to a long strike which affected three major platinum producers (Lonmin, Impala and Anglo). The five month long wage strike in 2014 had severe impact on the local economy of Rustenburg. SLP implementation is the first generation SLPs on the first 5 year life cycle from the date of conversion and the second circle is starting now in 2014.

 

5.2        Mining Related Community Issues

 

The Acting Regional Manager reported that the Luka Community has raised the issue with Impala Platinum Mines Limited that no information is distributed to the community from their representative. Royal Bafokeng Ward Councillors who sit in the Impala Future Forum where all the consultation happens, and even Kgosana’s (Headmen), are not conversant with the developmental issues. Their expertise is in Traditional issues hence they are not able to raise their needs accordingly in this forum. The Luka community indicated that they are not benefiting from the procurement of Impala. There is a group of 19 women who were trained in the laundry business with a promise that they will be given a laundry opportunity in the company, however this laundry business was given to another company. The community also have a problem with tailings dams that are creating pollution in their community.

 

6.         Visit to Bafokeng Rasimone Platinum Mine Joint Venture (BRPM)

 

The delegation was welcomed by HR Executive and present was the Head of JV Operations, Head of JV Concentrator, Mine Managers Royal Bafokeng Platinum and National Union of Mine Workers (NUM) Leadership.

 

The company structure was outlined. It is a Joint Venture that is 67% owned by Royal Bafokeng Resources and 33% by Anglo American Platinum. For lost time injuries, BRPM strategy is to move from maturity to resilience with the aims of zero harm, zero fatal injuries, zero occupation diseases (health including noise-induced hearing loss (NIHL) and zero spills of contaminants into the environment. BRPM was reported to have a poor safety start in January but after actions plans in terms of effective leadership, good designs, implementation of systems and zero harm behaviour, good recovery in April and May were seen. There has been reduction in labour costs with rationalisation and shared services with Styldrift shaft.

 

BRPM reported that they had major capital projects which included phase 2 North and South Shaft Merensky (now complete to 10 level), North Shaft Phase 3 (ahead of schedule), North Shaft Chairlift (ahead of schedule and below cost) and Housing (R255 million). All these projects amounted to investment of R3,145 million. SIB projects included a water treatment plant, ICT optimization and Social and Labour expenditure, which amounted to R215 million since 2010.

 

With regards to Styldrift safety performance, the mine obtained international OSHAS 18001 certification for its occupational health and safety management system. One fatality had occurred - after 3.5 years - but there were no serious injuries recorded in the year to date. The key aspects to be addressed by the teams were the RBPlat safety frame work, maintaining the certification of OSHAS 18001, attending to standards and procedures, training for new workers and those coming back from leave on site induction and training and contractor management. The focus on new activities included working at heights (silos, conveyors), staff sinking (completion of main shaft), ground support and gases (intersection on site) and material handling (equipping/construction)

 

6.1        Employee Relations and Housing

 

Mr Colin Alexendar, Senior HR Manager gave an overview of the way mines had housed black workers across five phases. Phase one, from 1886 to 1901, was the compounds. Phase two, the establishment of hostels form 1901 -2009. Phase three, the establishment of townships from 1923 – 1994. Phase four, the establishment of home owners allowance (HOA) and living out allowances (LOA) and phase five, mine housing delivery between the late 1980’s and 1990’s. He gave a background of the wage agreement between employees of RBPM and the mine.

 

Employees of RBPlat are faced with the following challenges, 25% of employees are known to have impaired credit status due to garnishee orders. A further 15% are assumed to have impaired credit statuses and these employees are unable to get access to normal credit. Where employees are able to raise credit, lending institutions are insistent on deposits to be paid by borrowers upfront, varying from 10% to 30% of the value of the property, which is prohibitive for most employees.

 

RBPlat’s model should enable all employees to gain access to housing irrespective of the above mentioned challenges. Employees are able to apply contributions made by RBPlat to gain access to decent accommodation. Employees over time will build reasonable equity for themselves i.e. an employee/contributor at Patterson A level occupying a house of about R537 000 will in ten years have a proper worth R1 058 781 at a growth rate of 5%. The model should further ensure that employees/contributors would be in a position at retirement age to sell the houses to re-establish themselves at their place of origin.

 

Mr Alexander presented the Developmental Wholesale Funding Model. The DFI will provide finance to Royal Bafokeng Resources Properties (RBRP) and hold Primary Surety over the properties. RBRP will receive the proceeds from RBPlat and Employees monthly. DFI to raise capital (20 year Finance) to enable it to build houses for RBPlat employees. RBPlat contributes HOA and LOA and an agreed additional contribution. Employees will be the registered users of the property with various conditions over the right of use title (i.e. they must remain employed with RBPlat to enjoy the protection of scheme. Each employee contributes between 8% to 12% of post-tax income. Housing funding for employees will total R2, 7 billion in the period from 2013 to 2018/19. This follows the formation of 5-a-side Housing Investigate Committee (HIC) with employees in terms of the 2011 wage agreement.

 

6.3        Visit to Waterkloof Hill Estate (Housing Project)

 

The Committee was taken to the Housing Project which Royal Bafokeng built for their employees. The houses are 80 square metres for A and B Band (less skilled workers).

 

7.         Meeting with the Traditional Leaders

 

The Committee held a meeting with the Traditional Leaders in the North West The Chairperson, Kgosi Maubane welcomed the delegation from Parliament and introduced the delegation of traditional leaders. The Chairperson outlined the purpose of the visit which was to engage with NHTL members with issues affecting mining at Provincial level. He indicated that the committee had a stakeholder engagement on the 20th August with mining stakeholders and the committee felt that as the time goes it needs to engage with traditional leaders and the mining communities.

 

During the discussion between the NHTL and the Committee, the Traditional Leaders commented as follows:

 

• Welcomed the engagement with the committee and took it as a first of many engagements to follow. The Platinum belt has a problem and they indicated that Marikana is a game changer.
• Raised concerns of not being invited to the Mining Indaba and Mining Lekgotlas.
• Proposed joint oversight over mining with the Human Settlement Committee and the Traditional Affairs committee
• Raised concerns about the actions of the DMR and Department of Rural Development. An example was given whereby communities are receiving rights to minerals over Amakhosi. e.g. People have occupied land illegally by putting squatter camps in the land belong to Amakhosi. “We can’t have people from wherever having rights over our land”.
• Were concerned that mining divides the communities. “”Mining to us has become a curse – some are consulted, others are not and the DMR grants licenses.” “Mines are not consulting with people or land owners.”
• Indicated that there was collusion between Department of Mineral Resources and Department of Land Affairs. An example was given in Thabazimbi where Anglo spoke to a Headman and made a deal to pay R123 000 per year to him. The issue was raised with the Minister and nothing was resolved. Under the land restitution process, land comes not to the Kgosi, but to a group of claimants.
• Strongly raised the issue of political influence. Political leaders influence who gets shares in mines without declaring this to traditional leaders.
• Were concerned about compliance by mining companies with the mining charter. Can the PC look into the validity of contracts between mining companies and mining communities?
• Complained that skills development is not happening in their areas.
• Indicated that there was a big concern that the communities should benefit from the mines. Mines should develop small businesses related to beneficiation or mine procurement. But they never give it to local people. “They call people from Joburg ‘local procurement’”.
• Proposed that housing conditions should be visited.
• Responded with shock at the fact that the IDC has funded a Chinese company which mines cement. They argue that the land belongs to the community and no community member is employed in that mine. Instead about 500 Chinese work there.
• Brought up the issue of BEE partnership as a serious concern. First consultation should be done with the communities of the area to find a partner, before someone from another province is approached.

 

8.         Meeting with Anglo American Platinum (Precious Metal Refinery)

 

8.1        Welcome and Safety Brief

 

Ms S Mkhabela, Executive Head, Corporate Affairs welcomed the delegation from Parliament and introduced her team. She handed over to Mr Fortune Mashimbye who gave a safety briefing.

 

In the area of North West, Anglo Platinum operates in Bojanala District municipality and Rustenburg, Moses Kotane, Madibeng Local Municipalities. A business strategy announcement was made in July 2014. Anglo is repositioning its investments in line with the Company’s vision to create a more sustainable, socially acceptable and profitable Platinum portfolio for the future. By following this strategy, Anglo Platinum will be in a position to have improved safety, better wages for more high skilled and productive employees, less dependence on migrant labour, better living conditions and housing for employees and a continued ability to ensure mining communities benefit form mining. The new strategy will provide flexibility to grow the portfolio in line with market demand whilst retaining the ability to expand production as necessary and to make more profits, guaranteeing sustainability through the cycles.

 

It was reported that some existing operations do not form part of the vision and would be better placed in the hands of a new owner who would be able to provide the focus and capital for the operations. The Rustenburg operations are to be prepared for sale. AAP will be retaining ownership of the processing plants and smelter in Rustenburg and will continue to implement social commitments in Rustenburg. The company is not closing mines. It is selling mines as going concerns. Already 81 bids had been received for Union Section, three of which are under detailed consideration. The intention is to sell to a good operator – not to another Aurora. The sale will go through in 2015/16 and the mine still has 25 years of life. There is no shrinkage in terms of investment in SA, in fact investments of R70 to R100 billion are in planning stages.

 

8.2        Implications on SLP commitment and Community Projects

 

The company invests across a broad spectrum including community investments: SLP’s and Corporate Social Investment (CSI) include supply chain (local procurement and Supplier Development), Housing, and Alchemy- a multi-billion Rand social development project, based on an integrated, sustainable and empowered community development framework model for share ownership, training and development. There are Local government and Traditional Authority Capacity Building Programmes and Infrastructure.

 

With regards to community aspects, about R300 million is available annually from AAP for community development projects via SLPs and CSI in South Africa. The focus is on local projects around the operations: including; infrastructure e.g. schools, clinics and water, education; health e.g. mobile clinics and medial provisions; enterprise and small business development; agriculture e. g. Groenfontein. There is a need for macro and more strategic community development projects. AAP indicated that they are committed to improving the lives of the communities around the operations and need Government support to improve effectiveness. An average of R40 million is spend annually in the Rustenburg region.

 

With regards to enterprise and supplier development programme, AAP has a comprehensive supplier development programme managed through supply chain functions and Anglo American Zimele. AAP has six small business support hubs – Rustenburg, Mogwase, Bokoni (Atok), Tubatse (Burgersfort), Mokoopane and Thabazimbi. In 2013, 96 new business were supported by AAP. AAP is financially supporting 36 companies with a combined annual turnover of R232.5 million, creating 644 new jobs and sustaining 486 existing jobs. In 2013, AAP spent R19.3 billion on procurement, R11.1 billion of which was spent with BEE- compliant companies. R2.6 billion (23%) was spent locally (in Limpopo and North West). Beneficiation offers opportunities to establish local enterprises.

 

To mitigate the negative impact of the Platinum belt strike, the following activities were carried out by supply chain:

 

• Interest on loans given to local businesses through Zimele was frozen until the situation normalised
• Shortened payment cycle of 7 day after submission of invoice was introduced.
• Affected companies were allocated opportunities in other Anglo operation where there was no industrial action
• Employees were provided with food parcels to ensure a healthy life style
• The contract to build the Western Limb DC valued at over R135 million, was unbundled to local communities from Photshaneng, Thekwaneng and Mfidikwe communities
• Total spend with local HDSA owned and HDSA empowered companies for the period 1 January 2013 to date in the Rustenburg area amounted to R1 737 784 293.72
• Motivational speaker was brought in (Dr Aaron Lechuti), to help reorientate and motivate local businesses.

 

8.3        Provincial infrastructure projects supported by AAP

 

Various water initiatives supported through the Olifants River Joint Water Forum (JWF) e. g. raising of Flat Boshielo dam, Lebalelo pipeline and De Hoop dam. Equivalent of circa R1 billion of infrastructure projects completed or in progress. 4 AAP employees allocated part-time to the forums’ infrastructure initiative. N11 safety project, study for the upgrade from Mokopane to the mine and study for N11 re-alignment. R37 road risks mitigated-upgrading section between Modikwe and Polokwane (Upgrades from Modikwe to Tubatse being planned). New R37 carriageway and interchange at Polokwane smelter which AAP RPM contributed R20 million.

 

8.4        Skills development Initiatives

 

In 2013, AAP spent R470 million on skills development (internally and externally). 354 learners participated in various engineering training schemes (86% were HDSA candidates and 25% women) and 196 learners qualified during the year. Of the 273 candidates on engineering learnerships who qualified, 169 were Platinum employees and 30 were members of communities: 50 more learners from communities started in October 2014. 1,511 learners participated in six specialised trade-related short courses. Over 200 schools benefited from Education support programmes from early childhood development to High School levels with focus on developing maths and science. Access to ABET was provided to 1,320 employees, 87 contractors and 408 community members. Bursaries were provided to 282 people, of whom 82% were HDSAs and 30% females.

 

8.5        Municipal and Traditional Leadership Capacity Building Programme

 

The Development Bank (DBSA) and Anglo American Corporation entered into an MoU in March 2011 to collaborate in capacity building in selected municipalities in Anglo mining areas. The proposed partnership aims to leverage the capacity of the two institutions for holistic implementation of capacity building initiatives in the Anglo American labour sending municipalities. The main objective is to build and enhance institutional capacity and capacity for service delivery, alleviate poverty and promote municipal sustainability. The project objectives include Municipal and traditional capacity building initiatives, to have local service delivery. Project cost is estimated at R60 million over the three year period, from 2014-2016. Municipalities covered include Mogalakwena, Thabazimbi, Greater Tubatse Municipalities (Limpopo), Moses Kotane, Rustenburg (North West) and King Sabata Dalindyebo (KSD) in the Eastern Cape.

 

8.6        Housing

 

All hostels have been converted from shared rooms to single or family occupation, with Anglo Platinum today focused on developing family units within communities close to the operations. Some 8 700 employees reside in converted hostels, but the number has been reportedly decreasing. In most cases, single room occupancy has been achieved thereby exceeding the 2013 Mining Charter target of 78%. Around 6,260 company owned homes in total are leased to employees in high job categories. A substantial challenge relates to the less-skilled 27 000 employees who receive a living-out allowance, many of who live in informal settlements or backyard accommodation in the villages around the mines. The living- out allowance is R1 840 per month, yet most employees spend a fraction of this on accommodation, the balance used for other expenses.

 

Home ownership options are encouraged through various projects, with 1 300 homes built since 2010. The housing development model includes the provision of water supplies, sewerage, electrical reticulation, road and storm water systems. Approximately 1 000 of the units form part of Seraleng social housing project in Rustenburg in North West Province.

 

8.7        Site Visit to Tlhabane West Primary School

 

The delegation was taken to one of the projects with which Anglo American Platinum was involved. The principal of the school welcomed the delegation and guided them through the school premises and explained the role played by Anglo American Platinum.

 

He said discussions about this school project started as early as 2005, following a concern that the Department of Education had in relation to children from Tlhabane West having to attend school at the other side of the town. Since most children were walking to school they had to cross over the busy Provincial Road, R104. In 2008 Anglo American Platinum took a decision to fund the construction of this school.

 

The school currently accommodate 1 047 learners and initially the roll was just under 500 learners. Anglo American Platinum provided the physical infrastructure and some equipment for the school at a cost of just over R12 500 000 in 2010 terms. The construction of the school commenced late 2009 and was completed in December 2010 and opened in March 2011. The contractor that was appointed to complete the project was based in Rustenburg and in accordance with the Anglo American Platinum’s procurement policy is HDSA compliant. Two hundred and thirty three jobs were created during the construction of the facility. These can be broken down as follows:

 

• One hundred and twenty four males and two females from Rustenburg area;
• Nine males and six females from Ward 8; and
• Twenty nine employees were brought in by the contractor.

 

The school has, amongst others, 24 classrooms an administration block, resource centre, a computer room and library. Stakeholders involved with this project included the Department of Education, Department of Mineral Resources, Rustenburg Local Municipality, unions, other government officials and Anglo Platinum representatives.

 

9.         Meeting with Lonmin

 

9.1        Overview of Operations

 

Ms Lerato Molebatsi, Executive Vice President, Communication and Public Affairs welcomed the delegation from Parliament and introduced the management team from Lonmin. The unions represented in the mine were present except for the National Union of Mineworkers (NUM). Mr Johan Viljoen, the new Chief Operating Officer presented the overview of operations. [All the senior management of Lonmin has been replaced since the Marikana tragedy in 2012]. The operational flow of Lonmin was reported as exploring, mining, concentration, smelting, base metal refining and precious metal refining. With regards to mine safety, it was reported that one calendar year without fatality was achieved from 27 October 2013 to 26 November 2014. This was a first for Lonmin and included limited contract mining during strike and ramp-up after the strike. The Lost Time injury Frequency Rate (LTIFR) improved by 40% over 5 years and industry safety leadership was maintained.

 

Mr Viljoen reported how the year end results and operation performance had been impacted by prolonged strike. He indicated that there was one fatality on the 26 October 2013. LTIFR was reported as 3.34 – a 4.6% year on year improvement. Platinum sales were reported to be on 441,684 ounces. Lost platinum saleable ounces was reported to 391,000 due to the strike. The net debt was $29 million and committed facilities was reported at $575 million. A strategic asset review had identified significant savings. The three year wage agreement was signed.

 

Mr Viljoen explained how Lonmin spends the cash they earn and indicated that no dividends were paid. The costs account for 76 cents in every dollar earned, mostly in South Africa. 60 percent of the costs are labour related and 20 cents in every dollar kept for future investment mostly in South Africa. 2 cents in every dollar was paid in tax and 1 cent in every dollar used for community projects. Lonmin employs 38 000 people and 304 000 people dependant on Lonmin for their livelihood.

 

9.2        Employee Value Proposition

 

Mr Abey Kogtle, Executive Vice President, Human Resources gave a presentation on the involvement of HDSAs. He reported that the HDSA in management is at a target of 40% of which 48% included white women in 2014 and 47% in 2013. The target on women in mining was reported to be at 10%. The total women in workforce for 2014 was 8.2% and in 2013 8.0% and women in core mining for 2014 was 5.3% and in 2013 was 5.1%. Bursaries allocated in 2014 numbered 89, 56 (63%) was allocated for members of surrounding communities and 74 (83 %) for HDSAs and 24 (27%) for females.

 

Lonmin had a BEE deal with Bapo ba Mogale community.. With regards to ESOPs (employee share ownership plans), employees have the opportunity to benefit in a profit-sharing scheme. The implementation will give Lonmin HDSA equity credits of 3.8 %.

 

Mr Kogtle reported that the three year wage deal provides stability and embeds relationships. The relationship charter emphasises respect, trust, transparency, communication and effective relationships. He reported that the company had taken steps on the way it works by improving relationships between managers and employees and management/AMCU. A two day leadership workshop was held in August 2014, including union members.

 

9.3        Community value Proposition

 

Ms Molebatsi presented the community value proposition. Amongst the projects Lonmin is doing, the company has spent R7.3 million on education, R10.7 million on skills development, R5.1 million on community health and R38.5 million on local economic development for the 2014 financial year. Ms Molebatsi reported that genuine robust stakeholder engagement relationship building is vital and Lonmin management communicate on key issues transparently, consistently and timeously. Functional partnership between Government, organised labour and community leaders is essential. She indicated that the tragic events at Marikana in August 2012, the protracted strike of 2014, and media hype surrounding the Farlam Commission of Inquiry impacted negatively on Lonmin.

 

She reported that education and skills development is a long term investment for Lonmin. Benefit support and carry learners through the educational value chain to create employable skilled individuals. With regards to community health, a holistic healthcare service is available to employees and the broader community. Community health programmes comprise awareness, promotion, prevention and infrastructure development to alleviate the issues. The Economic footprint and CVP project highlighted need to continue improving living conditions. Local economic development investment includes: bulk water infrastructure, road infrastructure, waste removal and lighting to improve public safety. With regards to enterprise development, Lonmin is committed to local enterprise development. Potential local suppliers are assisted with proposals to bid for procurement opportunities. Lonmin entered into a memorandum of understanding with National Empowerment Fund to fund small business that is awarded with Lonmin contracts. MoUs were also signed with Shanduka Black Umbrellas and Badumela Projects, a youth- owned enterprise from Bapong.

 

Ms Molebatsi reported what Lonmin is doing differently. She indicated that greater direct engagement is required to ensure that every employee has a voice. Taking back the relationship with employees is assisted by the formation of a communications and public affairs division (of which she is the head), a CEO roadshow, operational Legotla’s, making communicating with your team a Key Performance Indicator (KPI), Lonmin/AMCU relationship workshops, a communities campaign and care for widows and dependants post August 2012. In addition industry collaboration, ESOP/Community Trust, the Bapo ba Mogale BEE Transaction, an Employee Call Centre and a Culture and Values campaign along with a Communication Audit have all had positive impacts.

 

In terms of Housing and living conditions and migrant labour she reported that Housing is a South African issue not only a mining industry problem. Lonmin has collaborated with local authorities on infrastructure developments, hostel conversion into single quarters and family accommodation. The dismantling of the migrant labour system is not immediately possible even if it is desirable. She indicated that the Eastern Cape received R1 billion in remittances per annum from migrant mine workers. An depth research project on migrant labour has been commissioned by Lonmin to consider possible ways forwards that could be proposed..

 

9. 4       Site Visits

 

The delegation visited Marikana Ext. 2 where most Lonmin employees reside and visited the hill that was the site of the Marikana tragedy in 2012. It was reported that in October 2013 Lonmin donated 50 hectares of land consisting of serviced stands, to the Department of Human Settlements, Public Safety and Liaison of the North West Province and Rustenburg Local Municipality. The aim was for local government to develop the land into new integrated human settlements, comprising a range of high and low-density residential housing together with all associate municipal services. The donation forms part of Lonmin’s commitment to support the Presidential initiative to improve living conditions and supports the development of a vibrant, sustainable and dignified lifestyle for the people living in the Marikana area. To support this initiative, Lonmin’s Community Development Department will build a school as well as a new clinic in the area over the next four years.

 

The delegation also visited the hostel conversion. The conversion of 128 traditional single sex blocks into a mixture of family and bachelor units was expected to be complete at the end of December 2014. Upon completion it will yield 796 family units and 1 868 single units. This conversion process is measured and monitored by the Department of Mineral Resources. All conversions to date have been carried out by Black-owned GLC contactors which Lonmin has incubated, mentored and assisted. In addition to these conversions, Lonmin is also investigating the feasibility of developing the open spaces between the existing renovated buildings to create additional accommodation and leverage off existing bulk infrastructure. An amount of R500 million has been approved to be spent over the next five years to develop a village that will have the capacity to be home to between 4 000 and 5 000 families and will include security upgrades, landscaping, crèches, learning centres and recreation facilities.

 

9. 5 Bapo ba Mogale Royal Palace

 

Lonmin’s host community is the Bapo ba Mogale traditional community. The company has recently entered into a BEE transaction with Bapo that heralds a new milestone in that relationship. Lonmin has also assisted in 2014 with training of staff at the Royal Palace through the Company’s Portable Skills Training Programme which aims to provide community members with non-core mining skills. 158 community members (of which 90 are from the Bapo) were trained during 2014, better equipping them to access job opportunities in the local communities. Lonmin also offers ABET, a Mining Skills Programme, a Process Division Training Programme, an Engineering Learnership Programme and a Mining Technical Skills Programme for community adults looking for work in the mining industry.

 

10.        Findings

 

The Committee observed that:

 

• The issue of housing for mineworkers and the need to transform the migrant labour system were the strongest points that came from the visit.
• The Committee saw efforts from many companies to give dignity to workers so more can live with their families close to the mine. But it is not enough. There are still many mineworkers and mining communities who live in unacceptable conditions. This is an issue on which all stakeholders have to work together more effectively.
• All mines are now working with the trade unions and with the communities to move beyond the difficult and tragic period of Marikana and the strike. Some companies presented a very rosy view of the situation now. Others admitted more openly that they are struggling to find new ways of operating, that progress is still uneven and that there are challenges that still need to be addressed. We need a mining sector that reflects the best features of our new democracy – not one that is bound only to the problems of the past.
• The North West has huge mineral wealth. It has more mines operating legally than any other province. Mines can be a catalyst for economic development. There is much more potential for the local procurement of mine supplies and skills which is not being realised at present. There is a need for real partnership and co-operation to resolve these issues
• In the meetings with the Provincial government, the Department of Mineral Resources (DMR) and the National House of Traditional Leaders it became clear that mining creates conflict when it occurs on land that is owned or occupied by a community. The DMR follows the letter of the law but it needs also to educate communities on what their rights are when prospectors want to come on their land.
• The DMR does not adequately share information with communities, traditional leaders and the Provincial Government on what is intended by any possible new mine. Communities are not aware of the law and this often raises expectations unrealistically and creates intense disputes which traditional leaders and the Province find it very hard to deal with.
• The Portfolio Committee believes that it made very useful contacts on its visit and will undertake its oversight responsibility by reflecting the views of all sides and suggesting where intervention by stakeholders can be useful.
• Communities are often suspicious of the actions of traditional leaders and trusts. In some cases this is because they lack information and understanding. In other cases – such as the disappearance of community money from the D-account – community dissatisfaction is well-founded (according to the MECs who met with the Committee).
• The misunderstandings around the DMRs policies for the Issue of licenses - including prospecting and exploration - need to be attended to.
• The DMR should request the local traditional house to be part with DMR when evaluate the original SLP, any revised SLP and performance on the SLP.
• The safety of mine workers, despite reported improvements, should be closely monitored.
• Most of the mining companies have complied with the Mining Charter requirement for the conversion of hostels to single and family accommodation. Only Lonmin had not complied as it had still hostels with shared facilities when the Committee visited.

 

11.        Recommendations by the Committee

 

The Portfolio Committee on Mineral Resources having heard evidence from all stakeholders listed above recommends the following:

 

• The stakeholders in the mining sector – both in the North West and in other mining provinces – need to accord strong urgency and top priority to the review of the migrant labour system on the mines and to the discussions to reform labour arrangements so that mineworkers all live in safety and dignity.
• The present initiatives to deal with the distressed conditions of communities surrounding the mines must be taken forward in broad consultative processes, including the steps emphasised by the President in the 2015 State of the Nation Address.
• Strong and healthy mining communities are vital for the future of the mining sector. The DMR is one of many players involved in these issues of housing and living conditions. The DMR needs to work co-operatively with other government departments both nationally and provincially and with municipalities.
• The review and reassessment of the Mining Charter needs to consider more carefully the potential for the local procurement of mine supplies and skills. Mines are huge consumers of a wide range of inputs. This secure demand base could be better used to develop local businesses and increase the positive economic impact of mines on local economies.
• The DMR needs to have an active, effective and sensitive communication strategy that improves transparency and real understanding of its role and the role of mining. In particular:
  • The DMR should explain the content of Social and Labour Plans to traditional leaders and communities and explain how both are involved in monitoring the SLP and validating claimed performance by the mining company.
  • The DMR should actively engage with the Provincial Government, traditional leaders and affected communities, in good time, to inform them of decisions it has made with respect to both the acceptance and granting of prospecting and mining rights. It also needs to explain the implications of these decisions and the avenues available to stakeholders to influence how prospecting and mining rights and permits are implemented in practice.
  • The DMR should look beyond its narrow obligations under the law and actively seek to lessen the scope for conflict, disagreements and misunderstandings around mining. One good place to start is with the effective sharing of information.
• The North West government should be commended for establishing the mining sector stakeholder coordinating committee and for its intentions to address the conflicts in the mining sector in the province, including those relating to the disappearance of community money from the D-account.
• There needs to be an investigation on government policy related to the practice of communities exchanging rights to royalties from mining for shares in mining companies. One concern is that this trend, which exposes communities and community trusts to the risks of shareholders, may be used by mining companies not to allow communities to share in the real benefits from mining, but simply to allow the company to claim the 26 per cent HDSA shareholding the company is required to have under the Mining Charter.

 

 

Report to be considered.