ATC150910: Report of the Portfolio Committee on Mineral Resources on its oversight visit to the Northern Cape Province, on the 24 – 27 March, dated 12 August 2015

Mineral Resources and Energy

Report of the Portfolio Committee on Mineral Resources on its oversight visit to the Northern Cape Province, on the 24 – 27 March, dated 12 August 2015


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


  1. Background

A delegation of the Portfolio Committee on Mineral Resources (the Committee) visited Northern Cape Province from 24 – 27 March 2015.


The Committee visited Kumba’s Sishen Iron Ore Company (SIOC) in Sishen, De Beers Sightholder Sales SA (DBSSSA) and the Petra diamond mines in Kimberley and had a community meeting around the areas of old asbestos mines in Kuruman. The Committee also paid a courtesy visit to the Premier in Northern Cape and attended a consultative meeting with the Diamond Leadership Forum.


  1. 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), Nkosi ZMD Mandela (ANC), Ms MV Mafolo (ANC), Ms H Nyambi (ANC) Mr S Jafta (AIC).


Accompanying the committee was the Committee Secretary Miss A Boss, Committee Researcher, Dr M Nicol, Content Advisor, Mr N Kweyama and Committee Assistant, Ms S Skhosana.


  1. Department of Mineral Resources

Mr R Semenya, Director, Ms G E Babuseng, Principal Inspector of Mines, Mr V Magagula, Parliamentary Liaison Officer (PLO), Mr K Matrose, Office of the Director General


  1. Meeting with Kumba Iron Ore

The CEO of Kumba, Mr Norman Mbazima and the Executive Head: Public Affairs, Ms Yvonne Mfolo gave a presentation about Kumba. Kumba is the largest iron ore miner in South Africa. Anglo American PLC owns 69.7%, IDC owns 12.9% and minorities own 17.4% The BEE ownership is 26.1%, of which Exxaro holds 19.98%, SIOC Community Development Trust CDT 3% and Envision 3.1%. SIOC’s South African shareholding is greater than 60%.


Kumba has four operations which are Thabazimbi mine, Sishen Mine, Kolomela mine and Saldanha port operations. The Corporate office which is situated in Centurion has 220 employees. Thabazimbi mine has been operating since 1931 and produces primarily high-grade haematite ore. Its product is particularly low in contaminants and is currently sold exclusively to ArcelorMittal South Africa. Sishen mine was opened in 1947 and is located in Khathu. The life of mine is 16 years and is one of the largest open-pit mines in the world. All mining is done by open-cast methods. Kumba is the only haematite ore producer in the world to fully beneficiate its product. Kolomela mine is situated in the town of Postmasburg and the life of mine is 21 years. It is a R8,5 billion investment in the Northern Cape. In Saldanha Bay, all Kumba export volumes are handled by Saldanha Bay Port Operations at the only dedicated iron ore export facility in South Africa.


It was reported that Kumba employs over 13 000 employees and contractors. The company has a low 4.3% staff turnover rate and average employee tenure is 10 years. Average employee age is 37 years. The proportion of Historically Disadvantaged South Africans (HDSA) in management is 57% (48% of management is black South Africans). It was reported that 19% of employees are women (the highest of all mines in SA) and 85% are from local communities. Employees that are unionised in bargaining units are 85%. The total training spend is 5.6% of the wage bill.


With regards to operational performance, it was reported that total production has increased, the mine’s stockpile has been rebuilt and export sales volumes have improved. The Sishen mine successfully delivered on a 2014 turnaround plan. The strategic redesign has been completed and improved ore exposure will support future production. The production target increased by 1 Mt to 38Mt in 2016 and 2017. The Kolomela mine continued strong performance and its production target was substantially exceeded. The annual production capacity improved to 11 Mtpa form 10Mtpa. The Thabazimbi mine production of 1Mt delivered as per plan. Work on reconfiguration continues but impacted by the current low price environment, the low grade project was suspended.


The progress on Sishen mining rights was reported. There has been good progress on many regulatory issues during the year including mining rights over SWEP Railway properties granted in February 2014. A new Sishen dumps licence was approved and 3 prospecting rights renewals granted. The timing of the grant and related conditions on the 21.4% Sishen mining right applied for in February 2014 remained uncertain. This followed a Constitutional Court judgement in 2013 in favour of SIOC. The company had ongoing engagement with DMR on these matters. The consolidated water use licence application was submitted in July 2013. Higher costs are associated with longer hauling distances.


With regards to mine community development, R202 million was spent on community development in 2014.


  1. Global Supply and Demand

Mr Mbazima emphasised the “extremely serious position” that Kumba is facing because of the global economic climate and the drastic fall in iron ore prices. Supply capability exceeds demand resulting in downward pressure on prices. Australia and Brazil are the major seaborne iron ore suppliers. Expansion projects have underpinned Australia’s significant volume growth in 2014. Over 60% of global seaborne supply is contributed by the 3 biggest players (Vale, Rio Tinto and BHP Billiton). South Africa is amongst the top 5 global iron suppliers, but relative to the global market, Kumba is a small producer and cannot influence prices. Roy Hill, an Australian based high quality producer is expected to produce 55Mtpa by Q1 2017. China remains the key driver of steel production, however China’s steel demand conditions remains subdued.


  1. Iron Ore Price Outlook

Iron ore was the worst hit bulk commodity in 2014, when prices halved. The price reduction in coal and copper (10% - 15%) was low in comparison. The long term forecast for iron ore is bearish and prices are likely to remain depressed. 2014 started at a level of $134/dmt and ended in December 47% lower at US$71.75/dmt. Prices have continued to decline in 2015. At the time of the oversight visit, the iron ore price reached a low of US$55.25/dmt. The iron ore price is not expected to recover to previous levels soon.


The decline in iron ore prices will reduce the value Kumba will be able to distribute to stakeholders. At a price of US$60/dmt the value distribution in 2014 would have been about 75% lower, and prices have fallen below that level.


  1. Kumba responses to Prices

New production coming on line from other countries is at a cost of less than US$20/tonne. Kumba’s freight cost is higher than competitors due to longer distance from Saldanha to China. The company has reviewed all aspects of the group to remain in a competitive position on the cost curve as the average peer cost is significantly lower.


The decisive short term actions taken were to reconfigure operations to achieve lower cost production and to fill rail capacity. Capital expenditure (capex) has been reduced and re-phased and the company has streamlined its project portfolio. It has reduced exploration, technical and project study expenditure by ~50%. It has restructured its head office by reducing the workforce by ~40%. The Sishen life of mine plan (LoM) was optimised in 2014. The LoM strip ratio has been reduced to 3.9 and the mine life has fallen from 18 to 16 years.


The ongoing actions for Thabazimbi’s future are under consideration.  It was reported that Thabazimbi was unable to compete at current cost of production. The mine is in operation since 1932 and produces primarily high grade haematite ore. Over the past 15 years Kumba has extended the life of the mine 6 times. It was due to have closed already in 2008. Its product is currently sold exclusively to ArcellorMittal South Africa. The mine employs about 850 people and currently only produces ~1Mtpa and has less than 10Mt of haematite ore reserve left. There were five challenges highlighted which are:

  • Mining has always been difficult, due to mining remnants and fall of ground and geotechnical difficulties
  • Inherent technical challenges brought about by the structural complexity of the pit ore body
  • High production costs due to high stripping ratios-currently in excess of 20:1
  • Significant capital is required to extend the life of mine
  • Kumba has invested significantly in investigating the option of utilising low grade material to extend the life of mine. These projects have proven unsuccessful.

Due to the above factors, Thabazimbi mine was currently under review.


Kumba outlined the factors to be considered when evaluating the Beneficiation Policy. The iron ore price has a negligible impact on the downstream industries. The economic importance of iron ore is less than 1% of downstream production cost. South Korea has no iron ore, but it is the best steel-making country in the world. Australia has lots of iron ore, but even less of an industry than South Africa.  And South Africa is presently manufacturing only half of its 11 Mt capacity for making steel. A significant amount of the costs involved in the production of steel cannot be controlled because labour cannot be reduced significantly without reducing either salaries or activities, energy - electricity costs continue to increase due to challenges faced by Eskom and South Africa does not produce coking coal, hence coking coal is imported. This price is determined in the international market.      


  1. Commitment to Empowerment

Kumba has paid out R24 billion in dividends to BEE shareholders since 2006. Exxaro is the biggest BEE shareholder with 19.98% ownership followed by Envision (the Employee Share Ownership Plan – ESOP) with 3.1% and SIOC CDT with 3%.  Envision has 7,500 active participants (all are below management level e.g. truck drivers, operators, cleaners, line supervisors, admin staff at operations etc). The average payment to employees in November 2011 was R576,000.


Envision has been structured into 2 phases with 5 year maturities in 2011 and 2016 respectively. In phase 1 i.e from 2006 -2011, up to 3% empowerment achieved and SIOC paid 3% of its dividends to Envision. The dividend declared is split: employees receive 50% of dividend paid to them, the balance repays the loan for the shares. The capital lump sum payment of R576, 045 per employee at maturity was part of a total R2.7 billion total payout. R8m was spent on financial education ahead of the phase 1 payout.


In phase 2 i.e from 2011 -2016 there was a notional loan of R2.6 billion from SIOC with a discount of R3.5 billion. An additional up to 3% empowerment achieved and there is R2.3 billion loan balance outstanding as a t 31 December 2013. Envision has done better than any other ESOP in SA in terms of meaningfully expanding opportunities for HDSAs.


  1. SIOC Community Development Trust

A community based trust was established for the sole purpose of advancing meaningful social and economic empowerment of the communities within which SIOC operates beyond the life of SIOC’s mines. It was reported that there are 361 000 beneficiaries in five communities i.e. Thabazimbi, Ga-Segonyana, Gamagara, Joe Morolong and Tsantsabane.


The trust – CDT - acquired 3% of SIOC from Kumba in 2006. The debt was fully repaid in 2010 and CDT currently holds a 3% debt-free stake in SIOC. It has funded 203 projects (R1bn) since inception and 63 new projects were approved in 2013 (R333m). The Committee visited the local office of the CDT and saw evidence of the impressive variety and scope of CDT local economic development projects (from communities making honey to entrepreneurs supplying technical cleaning expertise for the mine). The value of CDT has multiplied 7 fold in 7 years (R822 million to R5.7 billion). The CDT has 1 representative on the SIOC Board, voting on the 3% shareholding.


In establishing the CDT, Kumba has created a sustainable community investment vehicle with a diversified portfolio in business and social upliftment programmes. These have advanced employment objectives and have expanded business opportunities for the HDSA beneficiaries in those communities.


Major social projects funded include; R116 million  for 5 construction projects within the Gamagara Development Forum “GDF, R92 million for education (teacher and learner intervention), R52 million for Science laboratory buildings, mobile laboratories and technology kits, R32 million for bursaries, R19 million handed over 978 mobile libraries to the Department of Education for Northern Cape, R6 million for Hope project, an initiative by Families South Africa aimed at dealing with social issues within the Gamagara communities such as HIV/AIDS, teen pregnancy, rape abortion etc. Kumba believes that the improvement in matric results in the Province have partly stemmed from the investments in education made by the company and the CDT.


  1. Impact on Shareholders

It was reported that lower iron ore prices have negatively impacted Kumba’s share price, which has seen a more than 70% reduction from the high of R612 per share in February 2013 to the current share price of R166. This has had a significant impact on Kumba shareholders given the capital loss and substantially lower dividends due to low profits and limited cash availability. Empowerment partner Exxaro has lost significant value due to the 10 year lock-in period ending November 2016, during which time it was unable to dispose of its shareholding at favourable share prices.


  1. Meeting with Asbestos Mine affected Communities

Mintek is currently managing the implementation of a programme of mine rehabilitation for old asbestos mines in collaboration with and funded by the Department of Mineral Resources. The programme formally commenced with the conclusion of a contract between the parties on 06 June 2013 with effect from 1 April 2013. The programme is currently funded to the value of R165 million over a period of three years, ending on 31 March 2016.


The Committee went to Vergenoeg to witness the rehabilitation programme and hold a meeting with representatives of the affected communities. The following issues emerged:

  • Kumba Iron ore established a Supa trust which has 5 Trustees.
  • Beneficiation plans have not materialised as Chiefs do not know anything.
  • Some of the mines do not comply with law especially with respect to water usage.
  • Municipalities do not include communities in their plans.
  • There seems to be a problem with BHP Billiton which operates in the area.
  • The Chiefs were concerned about a school in the area, which was built from ground to roof with asbestos as it posed danger to the kids.


The Committee members were concerned about the issues raised and requested that a report be compiled on the number of mines operating in the area and since when they were in operations. Members further requested the structure of the Trust be sent to the Committee Secretary.


  1. Meeting with the Premier

The Premier of the Northern Cape, Ms Sylvia Lucas welcomed the delegation and expressed her appreciation for the manner in which the Committee recognises them as the Province. She indicated that ever since she took office she has established a relationship with the mining houses. She mentioned that as the Provincial Government they have a problem with Kumba iron ore because they want to relocate 600 people living on the land at Dingleton, where they next want to mine. The community is left without anything in writing to safeguard their future in terms of resettlement.


She had a concern on the way permits/licences are issued by the DMR. A mine has been working for 40 years mining iron ore, then the DMR gives another person a permit for manganese on the same ground. The people come to complain to the Premier. The DMR staff change. They say they lack the authority. It becomes the problem of the Premier instead of the DMR when land is restored to a community and it transpires that the DMR have awarded prospecting rights and mining permits on that same land to other people. “Mining is a national competency, but we want a say on what is going on in our province. It is our minerals.” The Small Scale Miners experience a lot of challenges with the Regional office of DMR. The SAMRAD system for ensuring rights are not duplicated is simply not working – “SAM RAD but not ALL RAD!”


The MEC for Agriculture and Land Reform, Mr Norman Shushu raised the problem that the DMR has granted prospecting rights and mining permits on good agricultural land. This goes to waste as mining destroys the top soil, or buries it deep, making the land sterile and useless for farming when the miners move on. “If there is one national department that does not command respect, it is the DMR. That is what the people think. The DMR skirt around our land committee. At Kathu, Hotazel and other areas, our people do not have water while the mines are swimming in wealth. They are not benefitting from the mines. We are a rich province struggling to deal with basic poverty.”


The Premier of the Northern Province emphasised that she was not complaining – she was explaining to the Committee the pressures she is facing to deal with these serious issues.


  1. Meeting with Petra Diamonds

The delegation was welcomed by the executive management of Petra. Before getting dressed for an underground visit, the Committee was taken through the emergency evacuation protocol, objectives and safety performance overview, mandatory measures and self-contained self-rescuer training.


The CEO, Mr Johan Dippenaar presented the brief history of Kimberley mines.  In 1869, Cecil John Rhodes arrived in Kimberley following the discovery of diamonds on the farm Bultfontein. In 1880 he formed De Beers Mining Company. In 1888 De Beers Consolidated Mines Limited was established, gaining control of Kimberley, De Beers, Bultfontein and Dutoitspan mines. In 1891, De Beers acquired Wesselton mine. In 1914 Kimberley mine ceased production having produced 14.5m carats. 1931 Kimberley Mines Treatment Plant commissioned. In 1954, new treatment plant commissioned. In 1991 the De Beers mine closed and in 2001 a combined Treatment Plant was commissioned.


  1. Introduction to Kimberley Underground Petra Ownership

Petra’s Kimberley Underground asset comprises 3 mines: Bultfontein, Dutoitspan and Wesselton.


Wesselton, Bultfontein and Dutoitspan were closed by De Beers in 2005 and placed on care and maintenance. In September 2007, Petra enter into an agreement with De Beers to acquire Kimberley Underground mines and associated assets. The purchase price of R78.5 million comprised payment in cash by Petra to De Beers of R15 million and an assumption of environmental liability valued at R63.5 million. Petra has operated the mines on care and maintenance basis and full mining and diamond recoveries will commence as soon as all mining approvals are received from DME. It was reported that Petra owns 74% and BEE partner Sedibeng Mining owns 26%.


  1. Meeting with De Beers

The Committee was welcomed by Ms Mpumi Zikalala, Senior Vice President of De Beers Sightholder Sales South Africa (DBSSSA). Sightholder Sales sorts and values all of De Beers Consolidated Mine’s production. It is also responsible for local sales and working closely with its South African Sight holders, and industry at large, to support the establishment of a sustainable diamond manufacturing industry in the country. The company is part of a global De Beers Group network that has offices globally. Based in Kimberley, Sightholder Sales is focused on the improvement of local skills and boosting employment in the Northern Cape Province. This generation of employment opportunities in the Province promotes producer government objectives to grow the downstream diamond industry. The company is very much aligned to the South Africa government’s local beneficiation objectives, and engages in a range of activities that aim to further government’s wider economic goals. These activities include transformation, skills development and the promotion of South Africa abroad.


In terms of employment Statistics, the number of employees in the company is 181 with 84% HDSA in management.  The gender ratio is 56% female and people with disabilities is 2.8%.


With regards to production, since 2014 the carats sorted was 4.9 million and sight sales was $334.1 million and State Diamond Trader (SDT) sale was $41.0 million.


De Beers strategy is focused on sustainably capturing the maximum value of each carat mined by the group. It was reported that every year, De Beers invests US$50m in Exploration. In South Africa, De Beers invests R30 million per annum in exploration activities.


With regards to beneficiation initiatives, De Beers supports the state diamond trader. The company has been assisting the SDT since the inception by providing the machinery and secondment of skilled employees to deal with the up to 10 per cent of run of mine diamond output that has to be offered to the SDT by every mine.  The company has supplied the local cutters and polishers by assisting in the sight holder contact (supply of 40% by value) and the beneficiation licences. De Beers have always exceeded the 40% local sales.  The cutting edge technology has grown the skills of the company’s workforce. De Beers has contributed to the training of the Regulator, the State Diamond Trader, SAPS and other producers.


  1. Meeting with Diamond Leadership Forum


  1. Overview of the Diamond Leadership Forum

Mr Roger Baxter, the economist at Chamber of Mines gave a presentation on the Diamond Leadership forum, global diamond mining and exploration industry, SA diamond industry economics, key mining industry themes and key challenges and a possible way forward.  


He reported that the Chamber’s Diamond Leadership Forum (DLF) was established to outline how the diamond mining industry can effectively work in partnership on common industry issues. The Chamber’s DLF is a CEO leadership drive and includes De Beers, Petra Diamonds, Transhex SADPO, and Rockwell Diamonds.


The key objectives of the DLF are to:


  • Establish a coordinated stakeholder engagement plan for the diamond mining industry to facilitate a better policy, legislative and operating environment for the mining sector while in parallel working together with government to achieve the country’s growth, development and transformation objectives as encapsulated in the National Development Plan;
  • Outline issues that have or may have an impact on the diamond mining industry and develop mitigation plans;
  • Consider an intervention that the diamond mining industry may implement as a collective; and
  • To work collaboratively with other key stakeholder to engender a climate conducive for growth, development and transformation.


Mr Baxter reported that the diamond mining industry’s safety performance has improved significantly. The number of fatalities in diamond mines from 2003 was 15 compared to 1 in 2014. The fatality frequency rate per million hours worked has declined markedly from 0.38 in 2003 to 0.03 in 2014.


  1. Global diamonds mining and exploration industry

Mr Baxter indicated that finding economically viable diamond deposits has become increasingly difficult. The number of diamond deposits sufficiently rich to warrant development. The stats indicated that the global diamond production in 2013 for South African was 7.1 which is behind the giants of Russian, Botswana and Canada.  South Africa market share has fallen to 8% in global diamond carat supplied. Since the end of the bull market in 2011, rough diamond prices have been volatile and trending lower. Global demand for rough diamonds has not recovered to pre-2008 crisis levels.


  1. SA diamonds industry economics

It was reported that SA diamond production peaked in 2007 at 15 million carats and has not recovered to those pre-crisis levels. Employment in the SA diamond mining sector is 13 385 employees, 2.6 of total mining. Diamonds contribution to SA export minerals sales revenue was 3% in 2013. The diamond contribution to mining employment reduced significantly as a result of the global financial crisis. SA’s share of the global diamond market has fallen based on sales value and volume (carats). Productivity has risen but so have real labour costs. When looking at the complete global diamond value pipeline, it is clear that most of the value addition is created in mining and retail sales, not in cutting and polishing.


Since 2007, the employment in SA diamond cutting and manufacturing sector has reduced 55% to 986 people currently. This is on par with Namibia at 947 and represents 29% of Botswana’s cutting industry of around 3 400 (a factory recently closed in Serowe). The reasons for decline in SA cutting and polishing number were:

  • Cost of operations above other cutting centre: SA cost of operating is $130 to $140/carat which is similar to Tel Aviv
  • Highest in Southern Hemisphere
  • Above India at $60/ct to $80/carat (which accounts for >65% of global cut diamond production)
  • In line with Antwerp at $150/carat
  • Below New York at +$250/carat

SA’s traditional competitiveness in cutting larger value diamonds has declined due to competition from India. There is a negligible number of new industry trainees, and they are being drawn away by larger international cutting centres. There has been a decline in production volumes.


  1. Key mining industry themes

Mr Baxter indicated that relative industry competitiveness in the value chain is key. Diamond prices have unique characteristics. They are volatile and internationally set.

Diamond The diamond mining margin potential is 15% to 55%. Cutting and polishing margins is 1% to 8% (small global value add) and jewellery margin potential is 11% to 14%. Maximising the diamond price received for mining, means maximising benefits for the country to sustain the viability of mining, add to export revenues, royalties and tax revenues, increased capital expenditure in mining, increased volumes and with commensurate productivity, employment.


It was indicated that technology, innovation and automation are key. It is unrealistic to expect that the SA diamond mining industry can experience a quantum leap in productivity based on existing systems and technology. Such a rise in productivity will require the adoption of more mechanised development, automation of mining and stopping methods, which will obviously have implications for skill and employment levels. This will require significant changes to shift systems and a large focus on skills development. The diamond mine of the future is likely to be more technology driven, more skills intensive, more productive and more sustainable – realising a greater portion of the ore reserve and creation large benefits for the economy.


With regards to key industry themes globally over the last 5 years:

  • The indication is that demand will exceed supply in the future – so there is a need to focus on exploration for new resources (currently constrained in SA).
  • The US remains the biggest polished market, but the strongest growth is in in China and India.
  • There is increased competition for Southern African diamond production from Russia.
  • Increased options exist now for the purchase of rough diamonds
  • Value chain shifts have increased the funding constraints on the midstream participants
  • Growth challenges of Synthetics.


  1. Key challenges Facing Diamond Industry

Mr Baxter indicated that the diamond industry has faced key challenges with regards to margin contraction i.e. double digit cost inflation, productivity, poor returns on capital. The diamond export levy introduces additional uncertainty regarding SARS assessment. Cutter and polishers have to contend with a diamond exchange characterised by poor service and inadequate security.


In conclusion, Mr Baxter said all stakeholders need to work off an agreed and shared fact base of where the industry is at in terms of productivity and the economics of the sector. All stakeholders have a role to play in moderating cost pressures and improving productivity. Government needs to address long standing restrictions within the trade of the industry, placing it at a disadvantage compared to international competitors. A regional solution should be considered regarding the downstream value addition of the diamond mining sector. The importance of diamond producers obtaining the best possible prices for their goods needs to be recognised. All stakeholders have a role to play in contributing to community development including all tiers of government, mining companies, and communities and organised labour.


  1. Findings

The Committee observed that:


  • There is a serious lack of cooperation within government on issues concerning mining, health and environmental rehabilitation. The DMR is not collaborating well with the provincial government and the mining companies are taking advantage of the lack a coherent strategy by government in dealing with compliance issues in the province.
  • It is welcome that the Premier stated she can handle the challenges around mining. But some challenges can be attributed to a poor relationship between the Province and the DMR. This is particularly the case on prospecting rights and mining permits, where the local people don’t benefit and the province is not made aware of how the rights to minerals come to be issued.
  • Local government structures are not supportive of the community’s initiatives that attempt force mining companies to comply with their social and environmental obligations as per the MPRDA.
  • Trusts formed to assist communities may have no representatives from the communities they are supposed to assist, complicating the task of efficiently selecting projects with real impact.
  • In 2013, Northern Cape mines employed 4 319 women amongst the 37 711 mineworkers in the Province. At 11.5 per cent, this proportion was the highest of all mining provinces in South Africa, where the national average for the employment of women in mines was 9.8 per cent.
  • Labour sending areas are ignored when mining companies allocate projects.
  • Mining community members reported to the Committee that there is little or no consideration for asbestosis survivors by both local authorities and mining companies.
  • There is a lack of consistency in the manner in which mining companies fulfil their social commitment as dictated by the social and labour plans.
  • Mining companies generally lack a coherent strategy of dealing with adverse economic conditions.


  1. Recommendations by the Committee

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


  • Mining companies and the DMR in the Northern Cape need to work more closely with the Provincial government, especially with regard to issues concerning community development. The mining companies should have a forum with the provincial government and DMR. A mining summit should be considered;
  • The DMR should actively assist local and provincial government to play a role in promoting local economic development based on mining ventures. Mines can act as a catalyst for further economic development that can empower a regional economy. It is part of the function of the DMR to substantially and meaningfully expand opportunities for historically disadvantaged persons, including women and communities, to benefit from the exploitation of the nation’s mineral and petroleum resources;
  • Local Government structures need to assist communities in ensuring that mining companies’ social investment projects benefit local communities in ways that strengthen the Integrated Development Plan and address the vision of the National Development Plan;
  • Mining companies in future should inform respective unions timeously about pending visits of the Portfolio Committee so as to enable meaningful participation by union’s representatives in the deliberations of the Committee;
  • Trusts established to implement social investment projects should have representatives from the community constituting the majority of members. This would ensure that funds are invested in initiatives that contribute to the development of the community in a meaningful manner;
  • More should be done to facilitate women’s participation in mining activities in the area. Learners within mining communities should be exposed at an early age to the opportunities offered by careers in mining and assisted to choose appropriate school subjects;
  • Community projects funded by the mining companies should also target labour sending areas and not limit funding to areas currently being mined;
  • Mining companies should reconsider the issue of asbestosis survivors and ensure that victims receive proper medical care and fair compensation;
  • In the event of an iron ore price collapse Kumba must have a clear strategy of dealing with the consequences that will minimize job losses;
  • Mines should comply with the law regarding environmental management obligations, as untreated water threatens both livestock and the community. The DMR must also enforce environmental rights of communities as required by the MPRDA; and
  • DMR should ensure that there is consistency in the manner in which mining companies fulfil their commitments with respect to the social and labour plans of mines across the province.


  1. Conclusion

Report to be considered.



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