ATC151020: Budgetary Review and Recommendation Report of the Portfolio Committee on Mineral Resources dated 20 October 2015

Mineral Resources and Energy

BUDGETARY REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON MINERAL RESOURCES DATED 20 OCTOBER 2015

 

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. 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 Parliament’s 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 Committee’s 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.

 

The stakeholders who are involved with Mining Phakisa confront a highly challenged industry. The necessity for transformation away from the discriminatory past is made much more difficult by the fall in commodity prices, weaker export markets, unreliable and expensive electrical energy and deep mines where the ‘zero harm’ principle is costly and elusive. The labour market is also unsettled by job insecurity arising from the reactions to the threats of mine closures from the mining companies. The future life of the industry will be bleak unless all the parties can face up to the economic, social and environmental realities and negotiate a sustainable way forward. Government needs to support the industry through this demanding adjustment process.

 

  1. 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 country’s 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 Africa’s 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 Africa’s 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 Africa’s 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. 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 department’s 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 Department’s budgetary needs and shortfalls vis-à-vis the Department’s operational efficiency and performance. This is done taking into consideration the fact that the Department has oversight responsibilities over five entities.

 

  1. 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 2014/15 financial year, as well as performance in the first quarter and second quarter of the 2015/16 financial year where information was available.

The Portfolio Committee on Mineral Resources held a meeting on the 2014/2015 Annual Report of the Department of Mineral Resources on 14 October 2015, which was addressed by the Minister and the senior leadership of the DMR.

The office of the Auditor General gave input during the budget review and recommendation report process. Moreover, the Committee undertook visits to the following Provinces, North West, Northern Cape, Kwa-Zulu Natal, Eastern Cape, Mpumalanga and Limpopo to look at issues pertaining to the role played by the Department of Mineral Resources in regulating the mining industry in areas such as community consultation, the environment, illegal mining and mine health and safety.

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, 2014/15 and the 2015 Estimates of the National Expenditure (ENE) It also reviewed briefings by the Department and its entities during the course of the year, as well as the State of the Nation Addresses. The Committee also used the Constitution as a reference point.

 

  1. Outline of the contents of the Report.

 

  • An overview and analysis of the Department’s strategic priorities and measurable objectives;
  • An assessment of the overall financial performance for 2014/15 and first half of 2015/16;
  • An assessment of the overall service delivery performance for 2014/15 and first half of 2015/16;
  • Consideration of the Auditor-General’s findings in relation to the Department;
  • Consideration of oversight reports and other engagements held with the Department;
  • Committee observations on overall performance of the Department; and
  • Recommendations.

 

  1. Overview of the key relevant policy focus areas

 

 

Following the 2014 General Election, President Zuma appointed Adv N. Ramatlhodi, MP, who was subsequently replaced by Honourable Minister M Zwane in September 2015 as the Minister of Mineral Resources.

 

2.1        Delivery Agreement targets for 2014/15 and 2015/16

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

2014/15 Actual

Targets 2014/15

Percent achieved in 2014/15

Targets 2015/16

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

8 682

8 396

103%

8 396

Number of mining rights granted to historically disadvantaged South Africans per year

Mineral Regulation

Outcome 4: Decent employment through inclusive economic growth

203

200

102%

200

Number of industry workshops on compliance issues per year

Mineral Regulation

Outcome 4: Decent employment through inclusive economic growth

16

9

178%

9

Number of mining charter inspections per year (now SLP inspections)

Mineral Regulation

Outcome 4: Decent employment through inclusive economic growth

268

250

107%

150

Number of environment inspections per year

Mineral Regulation

Outcome 10: Environmental assets and natural resources that are valued, protected and continually enhanced

1 856

1 700

109%

1 700

Number of publications per year

Mineral Policy and Promotion

Outcome 4: Decent employment through inclusive economic growth

15

13

115%

13

Number of policies developed or reviewed per year

Mineral Policy and Promotion

Outcome 4: Decent employment through inclusive economic growth

4

3

133%

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

50

50

100%

50

Number of sustainable SMMEs supported (new and established) per year

Mineral Policy and Promotion

Outcome 4: Decent employment through inclusive economic growth

87

67

130%

67

 

The DMR delivery agreement indicators above showed exceptional positive achievement in 2014/15. There was over-achievement on all of the nine targets set in Budget 2014. In Budget 2015, four additional indicators have been included, and the indicator on “Number of policies developed or reviewed per year” has been re-phrased as “Number of legislative instruments reviewed and amended per year” (with a target of 3).

 

Table 2.3 Additional selected DMR Performance indicators introduced in Budget 2015, and their links to National Outcomes

Indicator

Programme

Outcome

2014/15 Actual

Targets 2014/15

Percent achieved in 2014/15

Targets 2015/16

Number of mine economics verification audits per year

Mineral Regulation

Outcome 4: Decent employment through inclusive economic growth

520

500

104%

500

 Number of consultations, and promotional and monitoring activities on shale gas exploration conducted per year

Mineral Policy and Promotion

Outcome 4: Decent employment through inclusive economic growth

11

20

55%

20

Number of beneficiation promotional activities per year

Mineral Policy and Promotion

Outcome 4: Decent employment through inclusive economic growth

30

30

100%

20

Number of strategic partnerships per year

Mineral Policy and Promotion

Outcome 4: Decent employment through inclusive economic growth

7

7

100%

10

 

DMR outcomes are linked to national outcomes as follows:

Table 2.4 Departmental and National Outcomes

Departmental Outcomes

National Outcomes

Increased investment in the minerals and mining sector

Linked to National Outcomes

  • 4: Decent employment through inclusive economic growth
  • 6: An efficient, competitive and responsive economic infrastructure network.

Transformed minerals sector

Linked to National Outcome

  • 4: Decent employment through inclusive economic growth

Equitable and sustainable benefit from mineral resources

Linked to National Outcomes

  • 4: Decent employment through inclusive economic growth
  • 6: An efficient, competitive and responsive economic infrastructure network.
  • 10: Environmental assets and natural resources that are well protected and continually enhanced

Efficient, effective and development-oriented Department

Linked to National Outcome

  • 12: An efficient, effective and development-oriented public service and an empowered, fair and inclusive citizenship.

 

Budget 2015 additionally associates the Departmental Outcome of “Equitable and sustainable benefit from mineral resources” with National Outcome 7: Comprehensive rural development and land reform. One of the most significant outcomes of the DMR that of improved health and safety conditions in the mining sector, is not directly linked to a National Outcome.

 

2.2 Summary of key impact on Mineral Resource policy contained in 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 gap.

The NDP is a national plan which, while it has been adopted by Government, will necessarily require contributions and commitments from all stakeholders for it to be successful. The DMR is not responsible for all aspects of the NDP, for this reason, but it will have to ensure that its activities are aligned with the NDP, which includes substantial commentary on the mining sector. 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).

The above 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 emphasizes the important issues of mine health and safety, which are not specifically mentioned in the NDP as a priority.

 

  1. Summary of other DMR related issues

 

3.1 DMR admonished by the Farlam Commission for not monitoring an SLP

 

“In view of the fact that the Commission has found that Lonmin did not comply with housing obligations in the SLP’s of its two Marikana subsidiaries, it is recommended that …the apparent failure by the Department of Mineral Resources adequately to monitor Lonmin’s implementation of its housing obligations, should be investigated.”

 

One of the primary regulatory instruments provided by Parliament to drive the transformation of the mining industry is the Social and Labour Plan (SLP). Regulating the content of each SLP is a responsibility of the DMR, as is the monitoring of SLP implementation.

 

The platinum mining company, Lonmin, stated in its 2010 Sustainable Development Report that it had made a commitment to provide housing in its SLP. In 2015, the Marikana Commission found however that that Lonmin built only three of the 5,500 houses which should have been built.

 

The Commission commented that when the DMR approved the proposed Lonmin SLP, Lonmin “became legally obliged to comply with its terms, which could only be amended with the written consent of the Department, which was never given or even sought. In the SLP [Lonmin] committed to completing both the hostel conversion and the house construction processes by September 2011.”

 

Lonmin did not do this, and the DMR, it appears, did not call Lonmin to account, despite the fact that the company had broken the law by not implementing the terms of its SLP.  For this reason, the Commission has recommended that “the apparent failure by the Department of Mineral Resources adequately to monitor Lonmin’s implementation of its housing obligations, should be investigated”.

 

The Commission stated “It is also common cause that large numbers of Lonmin workers live in squalid informal settlements surrounding the Lonmin mine shafts. The living conditions in these settlements are very poor and the people living there lack basic social services. Mr Seedat conceded in his evidence that the living conditions in Nkaneng and other informal settlements were truly appalling. Mr Seedat also conceded in cross-examination that there was a critical shortage of decent housing for the employees of Lonmin and that the board and executive of Lonmin understood that the tragic events at Marikana were linked to that shortage. That link was clearly reflected in the public statements of Lonmin in the immediate aftermath of the tragedy.”

 

3.2 The Department of Environmental Affairs’  “Green Scorpions report” will cover
       mining

 

Adv. N.A Ramatlhodi, at the time Minister of Mineral Resources, stated in response to a question in Parliament that a mining sector environmental report will, in future, be included in the National Environmental Compliance and Enforcement Report (NECER) published annually by the Department of Environmental Affairs.   The DMR has additional responsibilities for the environmental regulation of mines under the “One Environmental System” for mining which came into operation on 8 December 2014.

 

 

 

 

 SUMMARY OF PREVIOUS KEY COMMITTEE RECOMMENDATIONS

 

  1.  2014/15 BRRR recommendations and responses

 

The Committee made the following recommendations to the Department in the 2014 Budgetary Review and Recommendation Report:

 

BRRR 2014 Recommendations

Response by the Department

 

  • Centralize and co-ordinate research in the mining industry, as to extract full value from government financial support.

 

  • Consider the establishment of a Centre for Excellence to deal with all research related work.

 

 

  • 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.

 

  • create a forum whereby critical issues are discussed with stakeholders (Salga) on how mining companies can best link SLPs and IDPs to effectively serve communities in mining areas

 

  • Increase the budget of the Department so that more inspectors (in particular health and safety inspectors) are employed to ensure effective and efficient compliance with mining legislation.

 

 

 

  • Inter-ministerial task team on Social Labour Plans (SLPs) should speed up its processes and ensure maximum participation by all stakeholders.

 

 

  • Compliance conditions for mining licenses should be an audit requirement that is reported upon by the auditors of mining companies.

 

  • The Department should strengthen its systems that enforce compliance which includes harsher measures such as the revoking of licences.

 

  • Strengthen mechanisms used by the Department to monitor compliance with the Mining Charter.

 

  • In progress – The Department is working closely with the CSIR to revitalize research and development (R&D) in mining.

 

  • A Centre of Excellence has been established by the MHSC to improve the quality and relevance of research in occupational health and safety in mining.

 

  • Applications have been made to National Treasury for the required funding

 

 

 

 

 

  • No direct response, but the DMR requires mines are to take full account of the IDPs of local municipalities in implementing their SLPs.

 

  • There are numerous, funded posts in the inspectorate, but there is a difficulty in retaining inspectors because they are poached by the mines, who offer higher salaries than the Department

 

 

 

  • No specific response , but DMR is integrally involved in supporting and implementing the Special Presidential Package on distressed mining towns, which includes a wide range of stakeholders

 

 

  • No specific response

 

 

  • The DMR has responded that it applies the law as it stands. Enhanced penalties for non-compliance are included in the proposed amendments to the MPRDA.



     
  • The Department of Mineral Resources presented the Audit Assessment on the Mining Charter to the PCMR. This is based on monitoring compliance with the Charter.

 

 

 3.2       2015/16 Budget Vote Recommendations

 

The Committee made the following recommendations for the 2015/16 financial year, after considering the Annual Performance Plan and the Budget of the Department of Mineral Resources:

  • The Department should, after the conclusion of the Mining Phakisa process report on the following; Woman in Mining Strategy (finalization), Beneficiation (legislative framework), Fracking (process going forward), Beneficiation (implication for a change in the lead Department), Mine Health and Safety, Status of Oil and Gas (legislative framework) such a report should contain and clear financial model for the Department and applicable budget implications

 

  • The Department should clarify the status of the mining charter, and clearly spell out interim targets, so as to ensure a stable  compliance regime for mining companies

 

  • The Department should prioritize the filling of senior critical positions, and ensure that the vacancy rate is reduced from 14% to an acceptable rate that is below 10%

 

  • The Department should consider the structuring an interview process that is flexible enough to allow the appointment of the second best candidate, in the event of the first candidate withdrawing.

 

  • The Department should explore ways of introducing more transparency and uniformity in the conceptualisation and evaluation of Social and Labour plans. This will assist in managing expectations by both communities and mining companies.

 

  • The Department must introduce a more robust mechanism in ensuring that there is better co-ordination between activities of the respective Provincial Governments and the DMR (strengthening of existing inter-governmental mechanisms).

 

  • The DMR must engage the Committee on the process it will undertake in order to implement the findings of the Farlam commission

 

  • The DMR needs to work closely with the office of the AG and Treasury in order to strengthen accountability, and internal control measures

 

  • The DMR must carefully scrutinize its participation in multilateral forums, and be able to make a business case for its participation, taking into account cost and benefits of such an arrangement

 

  • The DMR and its entities need to align its bursary and other human resource development policies with, demographic and gender target priorities of the respective organisation.

 

  • The DMR has to interrogate the management structure of its entities, and ensure that the business categorisation is consistent with the mandate of the organisation, as to enable the entities to deliver on their mandates effectively.

 

  • The Women in Mining Strategy needs to be finalized and implemented urgently.

 

  • The MHSC needs to present an account to Parliament of how it intends to apply its R200-m surplus to in mining

 

  • The DMR must frame proposals for an alternative business plan for the SDT that allows its objectives to be reached. This may involve amendments to the law.
  • There is a need for better legislation and intergovernmental co-operation to deal properly with the closure of mines. The DMR should research sustainable mine closure, that considers both the environment and community issues.

 

  • DMR needs to co-ordinate inter-governmental action on assisting ex mineworkers with their claims. There is also a need to harmonise compensation laws to remove the bias against mineworkers

 

  1. OVERVIEW AND ASSESSMENT OF FINANCIAL PERFORMANCE

 

4.1 Overview of Vote allocation and Spending

 

Table 4.1.1 DMR/Vote 32 - Expenditure Performance 2014/15

Programme (R millions)

Available budget

Actual Expenditure

Apr-14 to Mar-15 percentage Spent

Operational Expenditure

     

1. Administration

 310.7

 310.4

99.9%

2. Promotion Of Mine Safety And Health

 162.3

 162.3

100.0%

3. Mineral Regulation

 189.8

 189.8

100.0%

4. Mineral Policy And Promotion

 89.1

 89.1

100.0%

Sub Totals

 751.8

 751.5

100.0%

Transfers and Subsidies

     

Departmental Agencies and Accounts (mainly Council for Geoscience)

347.3

347.3

100.0%

Public Corporations and Private Enterprises (mainly MINTEK)

 370.9

 370.9

100.0%

Households

 5.6

 5.6

100.0%

Sub Total

 723.7

 723.7

100.0%

Payments For Financial Assets

 - 

 - 

-

Totals

 1 475.5

 1 475.2

100.0%

 

 

4.2 Financial Performance

 

The audited financial statements for 2014/15 were tabled in Parliament together with the Annual Report of the DMR for the 2014/15 year, on 29 September 2015.

The Department of Mineral Resources had an available appropriation of R1.475 billion in 2014/15 which represented a nominal increase of R 77.6 million, or 5.2 per cent, from 2013/14. At the end of March 2015, the DMR had spent 100 per cent of its available budget. This compares with 99.5 per cent at the end of the previous year

Transfers and Subsidies accounted for R723.7 million of the available budget and of this amount the Department transferred R718.1 million, or 99 per cent, mainly to public corporations and private enterprises and departmental agencies and accounts. The Department spent R723.7 million, or 100 per cent, the majority of which was used on compensation of employees and goods and services.

 

Main appropriation, virements and shifts

 

The DMR received a main appropriation of R1.471 billion for the 2014/15 financial year, which has been marginally increased to R1.476 billion during the adjustments budget process. Unforeseeable/unavoidable expenditure associated with the Gauteng office fire was the reason for this. No roll-overs were requested and there were no declared unspent funds or other adjustments. Table 4 shows the changes in the programme allocations:

Table 4.1: Roll-overs, Unforeseeable/unavoidable, Virements/shifts, declared savings and other adjustments

 

Table 4.2.1

Programme R'000

Main Appropriation

Roll-overs

Unforeseeable /unavoidable

Virements and shifts

Declared unspent funds

Other adjustments

Adjusted appropriation

1. Administration

 284 174

  -

  -

  13 439

  -

  -

  297 613

2. Promotion of Mine Safety and Health

 167 970

  -

  -

  4 031

  -

  -

  172 001

3. Mineral Regulation

 231 365

  -

  4 250

  1 100

  -

  -

  236 715

4. Mineral Policy and Promotion

 787 782

  -

  -

  (18 570)

  -

  -

  769 212

Total

 1 471 291

  -

  4 250

  -

  -

  -

  1 475 541

Source: National Treasury

 

In terms of virements and shifts the following can be observed:

  • A total of R18.570 million was defrayed from Programme 4 Mineral Policy and Promotion  to Programmes 1, 2 and 3 in the following amounts
  • Programme 1 (Administration): R13.439-m
  • Programme 2. (Promotion of Mine Safety and Health): R 4.031-m.
  • Programme 3. (Mineral Regulation): R1.1-m
  • The virements and shifts were not large enough to have any significant effect on the structure of the budget, either within programmes or across the Department. The largest adjustment was a R32.4-m increase in the transfer to Mintek. Mintek is the largest component within Programme 4 and, as a result of the change, Mintek’s share of the budget rose from 43 per cent to 48 per cent. All the virements and shifts were approved by the Treasury, where this was required.

 

4.3 Report of the Auditor General

 

The Auditor General of South African appeared before the Committee on 14 October 2014. The DMR financial statements received an unqualified audit opinion in 2014/15. This indicates that the Department has successfully dealt with the concerns and criticisms raised in the qualified audit opinion in the 2012/13 financial year.

 

Mintek and the State Diamond Trader received clean audits, while the DMR and other three entities had unqualified audit opinions, with findings. This is an improvement from the previous financial year where none of the entities received a clean audit. The Auditor General’s office told the Committee that in their view the portfolio is performing very well. The DMR and the entities are working closely with the AGSA to attend to the few, minor problems which stood in the way of a clean audit across the whole portfolio in 2014/15.

 

4.4 2015/16 MTEF Financial Allocations

 

Summary of funding submissions to National Treasury for the 2015/16 MTEF

 

  • Treasury should increase in base funding for the Council for Geoscience at a rate above inflation adjustment, such an increase will allow the Council to cover its operational costs, especially personnel costs. Baseline funding for CGS should at least cover mandatory functions as it is the norm with other research institutions internationally. Currently the CGS has R 36 million deficit, which can be addressed through an above inflationary increase in the medium term baseline allocation. For the institution to fulfil its mission it is important that it retain its human capital base.
  • 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

 

4.5 Concluding remarks on financial performance

 

The financial performance of the DMR has been consistent that of the previous financial year, the goal of having a clean audit across all the entities, is within the reach of management, if it applies itself to this goal.

 

  1. Overview and assessment of service delivery performance

 

  1.  Overall performance and achievements for 2014/15

 

The repeated achievement of an unqualified audit opinion from the Auditor General of South Africa (AGSA) signifies that most of the financial and performance issues raised in the qualified audit report two years ago (2012/13) have been successfully addressed by the DMR.  Achievements for the financial year under review are outlined below:

  • The annual report indicates that the Department achieved 90 per cent of its performance targets, i.e. 96 out of 107 set targets. This marks a significant improvement. The DMR met 77 per cent of targets in the previous financial year, and 79 per cent in 2013/14.  (Note, however that the number of targets has been reduced from over 160 targets in the past reporting periods – and the content of some indicators have been altered.)
  • Streamlined licensing processes in respect of mining and the environment, known as the One Environmental System, were brought into effect on 8 December 2014, jointly with the Departments of Environmental Affairs, and Water Affairs and Sanitation.  This will allow licensing for mining, the environment and water use to be finalised in parallel rather than sequentially and granted within 300 days.
  • 28 officials completed the Environmental Mineral Resource Inspector (EMRI) training in January 2015. The DMR has different and increased environmental responsibilities in terms of the Mineral and Petroleum Resources Development Amendment Act, No. 49 of 2008, which has come into effect in stages since 2013.
  • Technical regulations for hydraulic fracturing were gazetted and a Shale Gas Communication Strategy was developed to create awareness about this potential resource and the measures that will be in place to deal with environmental risks.
  • The Department held a Mine Health and Safety Tripartite Summit in November 2014 where all stakeholders signed off on new milestones to improve this area of critical importance. Fatalities in the mining sector, at 93 in 2014, were reduced to their lowest ever level.
  • A revised draft bill to amend the mine health and safety legislation is under consultation within the National Economic Development and Labour Council (NEDLAC).
  • The Council for Scientific and Industrial Research (CSIR), has undertaken the task of revitalising the focus on mining Research and Development (R&D), in co-ordination with universities and the Council for Geoscience (CGS), Mintek and the Mine Health and Safety Council (MHSC). Providing and co-ordinating R&D support is needed to ensure the future development of mining for the benefit of all South Africans. This is an expression of the principle established in the MPRDA of State custodianship of the nation’s mineral and petroleum resources.
  • The African Exploration Mining and Finance Corporation (Pty) Ltd (AEMFC) Draft Bill 2015 was developed by the Department. Consultation with affected stakeholders will take place after it has been approved by Cabinet. This follows a Cabinet decision in 2012 to provide for the state-owned mining company to be an entity of the DMR.
  • The Department continued to play an important role in the “Framework Agreement for a Sustainable Mining Industry” which is led by the President, and also in the initiatives of the inter-Ministerial Committee for Distressed Mining Towns.
  • An assessment of the state of transformation of the mining industry was initiated after 10 years of implementation of the Mining Charter ended in December 2014.
  • A user-friendly application for the electronic mining application and licensing system, SAMRAD, was deployed to make land search easier for the public. It will also allow better integration and sharing of information with other state organs.
  • The DMR collaborated successfully with the Mining Qualifications Authority (MQA) to improve skills of mineworkers and unemployed youth.
  • Former mineworkers continued to be assisted by the One Stop Service Centres at public health facilities at Mthatha in the Eastern Cape and at Carletonville in Gauteng, through a DMR collaboration with the Departments of Health and Labour.
  • The Council for Geoscience and Mintek continued to implement interventions to address acid mine drainage (AMD), which is a problem across the country.
  • 555 health and safety inspections were conducted in 2014/15, compared with 9 446 the previous year, an over-achievement in both years on the annual target of 8 000.
  • 523 health and safety audits were conducted in 2014/15, 50 more than the number of audits completed in the previous year. The target set of 396 audits was exceeded in both years, due to the intensification of monitoring and evaluation of mines.
  • 5 338 indirect jobs were verified, by inspection, to have been created through the Social and Labour Plans (SLPs) which every mine has to implement. This is a new performance measure, replacing a count of the number of jobs. The Department 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 SLPs.
  • 268 SLP inspections were completed in 2013/14, compared with 285 in the previous year, and 181 in 2013/14.
  • There were also 1 856 environmental authorisation inspections conducted of mine Environmental Management Plans/programmes compared with a target of 1 700 and a figure of 1 868 in the previous year.
  • The Department reported that there was a high demand from communities for it to intervene in issues between themselves and the mines. 263 such engagements / conflict management interventions were held between communities/stakeholders and the mining industry in 2013/14.

There is a marked (if not complete) improvement in the presentation of the detailed performance measures in the 2014/15 DMR Annual Report. The number of complex indicators has now been reduced and content has been adjusted, in most cases, to track measures that are within the control of the DMR. While it is now easier to compare performance across years, the appropriateness and scope of the indicators themselves is a matter for interrogation. There is no indicator for the performance of SAMRAD, for instance, and the monitoring of environment inspection performance is far inferior to the comprehensive details provided on mine health and safety.

 

5.2 PROGRAMME PERFORMANCE

The DMR Strategic Plan specified 109 measures by which to assess the performance of the Department in the 2014/15 period. Two measures, for various reasons, could not be measured, so the total used in the assessment below is 107.  90 per cent of the measures were achieved i.e. 96 out of 107 set targets. This marks a significant improvement, as 77 per cent of targets were met in the previous financial year, and 79 per cent in 2013/14. 

 

Comparability with past results is limited by the fact that the DMR reduced the number of targets by over 50 – from 160 targets or more in the past reporting periods and the content of some indicators have been altered.

This 90 per cent level of achievement for performance targets is exceptional, far above the reports of most government departments.

 

 

Table 5.2.1 : Summary of 2014/15 Performance Measures

   
 

Programme

Total count of measures per programme

Achieved

Not achieved (including 3 Partially Achieved)

 

Achievement comparison with 2013/14

1

Administration

43 (100%)

39 (91%)

4 (9%)

 

77%

2

Promotion of Mine Safety and Health

22 (100%)

19 (86%)

3 (14%)

 

81%

3

Mineral Regulation

21 (100%)

19 (90%)

2 (10%)

 

76%

4

Mineral Policy and Promotion

21 (100%)

19 (90%)

2 (10%)

 

70%

 

Total all Programmes 2014/15

107 (100%)

96 (90%)

11 (10%)

 

77%

Notes:

  1. One Financial Administration indicator that was included in the Strategic Plan is excluded here because Treasury failed to develop the Financial Management Capability Maturity Model that was the subject of the planned performance indicator.
  2. Two occupational health and safety indicators did not meet the planned levels of improvement, but there was change in the right direction.
  3. One Mineral policy indicator that was included in the Strategic Plan is excluded here because the DMR is no longer the lead department in the beneficiation action plan and therefore did not produce the targeted progress report. This is the responsibility of the DTI.

 

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 management services administrative support to the Ministry and the DMR. The DMR achieved 91 per cent of the performance measures set for Programme 1 (39 measures achieved out of 43).

One measure was not achieved by the Corporate Services Branch. The DMR did not maintain the vacancy rate below ten percent. The ten percent target was set for government as a whole by the Department of Public Service and Administration (DPSA).

According to information presented to the Portfolio Committee on Public Service and Administration on 2 September 2015, the DMR performs poorly when compared to National Departments. The vacancy rate in national departments has increased over the last year (from seven per cent to nine per cent) – but it is still below 10 per cent. This compares with the 14 per cent vacancy rate in the DMR. The DMR figure was worse than in all provincial departments in March 2015, except for Mpumalanga and the Northern Cape.

 

The vacancy rate in the DMR is a continuing and serious problem over many years. The PCMR has previously noted with concern the ongoing challenge faced by the DMR in trying to recruit and retain qualified staff for the regulation and promotion of occupational health and safety on the mines. In July 2014, the PCMR stated in its report to Parliament on the 2014/15 budget vote for the Department that, “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”.

 

In September 2015, there were a greater number of vacant posts in Mineral Regulation, but posts in other branches have been vacant for much longer periods. In particular, half of the posts in the Mine Health and Safety Inspectorate (MHSI) have been vacant for more than a year and 3 months. This compared with a figure of 8 months for all the other branches together. Yet the most recent annual report of the MQA reports that the Mine Inspector Training project was discontinued during the 2014/15 financial year.

 

A “Women in Mining Strategy” was a performance target set in the DMR Strategic Plan for 2011/14 yet the completion (or status) of the  Women in Mining Strategy is not reported on in the 2014/15 Annual Report. There is an expectation that the Department’s strategy should be finalised and that it will deal appropriately with the need for women mineworkers to have “a safe and dignified working environment.”

Three performance measures were not achieved by the Financial Administration branch:

  • The branch scored below the target level required in a Customer Satisfaction Index (3.4 out of 5, where the target is 4).
  • There was one incident of irregular expenditure – this is a very much better performance than most state entities, but the target is zero.
  • The measure for reducing the value of assets that were disposed of before their end of lifespan was not met. The amounts of money involved are negligible, however.
  • Strictly speaking, a fourth unachieved measure should be added, because one invoice out of 233 was not paid within the 30 day target period for the payment of suppliers. The delay was due to budget constraints. Performance on the indicator was recorded at 99.57 per cent, close enough to the 100 per cent target.

 

 

5.2.2     Programme 2: Mine Health and Safety Promotion

The purpose of the Promotion of Mine Safety and Health programme is “to ensure the safe mining of minerals under healthy mining conditions”

 

The DMR achieved 84 per cent of the performance measures set for Programme 2 (19 out of 22).

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 four years, in both absolute and relative terms.

One indicator was not achieved and two were partially achieved.

  • The percentage of inquiries completed stood at 67 per cent against the required minimum of 80 per cent. This under-performance was due to the strike action on the platinum belt, which made it difficult to get access to witnesses and delayed the finalisation of the inquiries.

 

  • The DMR was unable to report meeting the performance target of a 20 per cent reduction in occupational injuries occurrences in 2011/2, 2012/3, 2013/14 or 2014/15. However the 14 per cent reduction in 2014/15 is in the right direction. Note that the DMR reports that the information on which the reported improvement is based is still provisional as it includes duplicate entries.

 

  • The DMR reported a 3 per cent reduction in the number of occupational diseases (including TB) in 2014/15. This is below the target of a 10 per cent annual reduction, but it is in the right direction. The DMR states that the statistic was affected negatively by an increase in the number of annual medical reports submitted by the mines. The total rose from 761 in 2013 to 836 in 2014. The measure, it seems, is calculated on a simple comparison of the number of diseases counted from all submitted reports each year.

Unlike in previous years, the DMR does not reveal in the 2014/15 Annual Report how many Section 54 and Section 55 instructions were issued as a result of the 8 555 health and safety inspections that were conducted in 2014/15. For example, 1 074 instructions were issued in terms of Section 54 of the MHSA in 2013/14 and 2 390 in terms of Section 55. These actions are taken in terms of enforcement guidelines to protect the health and safety of mineworkers against unsafe conditions, practices or acts.

It is useful to know the total number, as well as the percentage analysis of whether a total or partial closure of a mine was ordered. The number of administrative fines imposed during the year – another useful index of law enforcement - is also no longer indicated. (There were 9 reported in the DMR 2013/14 Annual Report).

 

The vacancy challenge in the Inspectorate

 

The turnover rate for Safety, health and quality inspectors increased over 2014/5 to match the 10 per cent turnover rate for all the critical occupations. The vacancy rate in this category, increased to 21 per cent in 2014/15, up from 18.5 per cent the previous year, and well above the 14 per cent average vacancy rate for the DMR as a whole.

Safety health and quality inspectors are the largest group of staff in “critical occupations” identified within the Department. There were 166 safety health and quality inspectors (Permanent) in April 2014. During the financial year, 10 new appointments were made, but 17 inspectors left their positions.

 

The number of vacancies for all the posts in the MHSI deteriorated from 49 vacant posts in 2013/14 to 56 in 2014/15. (The vacancy rate was still 55 posts on 7 September 2015, half way through the next financial year).The annual report states that inspectors are “being poached by the Mining Industry for salaries exceeding those offered by the Department.”

 

The number of posts provided for the MHSI grew steadily from 256 in 2001 to 315 in 2005. The Department’s efforts to close the employment gap has failed completely for fifteen years. Employment since 2005 has averaged 252, with the present MHSI complement only 2 above this level, at 254. The vacancy rate has never fallen below 12 per cent.

 

The DMR stated in the 2013/14 annual report that it was 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 had recruited 50 candidates. The MQA 2014/15 Annual Report, however, reports that the project was discontinued in 2014/15.

5.2.3 Programme 3: Mineral Regulation

The purpose of the Mineral Regulation Programme is to “regulate the minerals and mining sector to achieve transformation and sustainable development”.

 

The DMR achieved 90 per cent (19 out of 21) of the performance measures set for Programme 3.

One indicator was not achieved and one was partially achieved.

  • The target for indirect jobs created through SLP was 7,000 in 2014/15, although only 5,338 jobs were verified after inspection. Mines have to carry through with their job-creation commitments which are legal commitments made to the DMR but it seems that they are allowed considerable flexibility on the timing of delivery. A five year term is set for the achievement of the commitment made in each SLP.

 

  • 87 per cent of the revenue due to the DMR was collected during the year, compared with the 90 per cent target. The explanation for the partial achievement of this goal is not clearly explained in the comment on deviations.

 

Two areas of the Annual Report reflect ongoing public concern with aspects of the responsibilities of the branch:

  1. Over-achievement is reported by Mineral Regulation in the number of inspections (environmental and mine management) following "complaints from the public and to enforce compliance". 1 856 inspections were conducted (a similar number to 2013/14) compared with a target of 1 700.

 

  1. The number of engagements with communities and the mining industry was reported at 263 for the year - above the planned target of 230 - there was "a high demand from communities for the Department to intervene in issues between themselves and the mines."  Targets here have increased steadily - from 40 in 2012/13. 260 engagements were recorded in 2013/14.

 

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. The branch reported that it issued closure certificates only in cases where the regulatory framework has been fully complied with and that 100 per cent of orders had been issued to remedy inadequate financial provision. Mine closure still presents a major problem.

A speaker at a 2014 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 DRD Gold was used to illustrate the weaknesses in the present system, which allows mining companies – even those not in liquidation – to “dodge” their closure obligations.

 

With regards to licences, the target is for 70 per cent to be processed within the prescribed time frames. In 2014/15, the percentage target achievement is given (70.4 per cent), but the numbers of licenses are not indicated for 2014/15. This useful indicator for the mining sector was given in previous years – for example, 687 out of 921 licence applications (75 per cent) were processed in line with the prescribed timeframes in 2013/14 and 571 out of 800 rights to minerals (71 per cent) were registered within the prescribed timeframes.

 

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 90 per cent of the performance measures set for Programme 4 (19 out of 21).

Two performance measures were not achieved:

  • The “Revised Mining Strategy for sustainable growth and meaningful transformation” was scheduled for completion in 2014/15. This was not done, and no explanation is given in the Annual Report.

 

  • 88 per cent of Risk Management Plans were completed against a performance standard of 100 per cent. The shortfall was dependent on the approval of the MPRDA Bill (B15B-2013) by the President, but the President has raised “a handful of concerns that may not pass the Constitutional muster”. The bill was returned to Parliament to address the identified concerns.

 

Mineral Policy and Promotion is the largest programme of the 2015 MTEF allocation. It absorbs over half of the budget of the DMR and includes transfers to Mintek and the Council for Geoscience. The Programme encompasses the DMR’s 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 R47.1 billion.

 

  1. COMMITTEES OBSERVATIONS

The Portfolio Committee of Mineral Resources having assessed the performance of the Department of Minerals Resources and its five entities made the following findings and observations:

 

  • The Committee notes the improved operational and financial performance of the DMR and its entities, however the exceptional performance, as measured by the selected indicators, continues to be clouded by the unacceptably high vacancy rate in the Department which needs to be attended to as a matter of urgency.
  • Operation Phakisa has a potential for bringing stakeholders together for the future of the mining industry, hopefully contributing in resolving challenges.
  • The Committee notes the slow pace of progress with regards to policy development and legislation as outlined in the 2014-2019 Strategic Plan. Those will assist in contributing towards certainty in the industry. This is further compounded by the technical processes of Parliament that have hampered the progress on fast-tracking the reservations raised by the President on the MPRDA Bill [B15B-2013].  The mining sector is in a dire state at present – because of both external and internal challenges.
  • The Committee is concerned about the lack of appropriate increases in the base funding levels of the CGS, which performs functions that are crucial to the future growth capacity of mining industry. The inability of the CGS to fully cover operational costs, seriously compromises its ability to compete and retain scarce human capital, its main resource as a science council.
  • A strategy is needed for attracting and retaining mining inspectors as well as a proper regulatory approach.  A lack of progress in this regard threatens the Department’s ability to properly regulate the industry.
  • The delays in clarifying the future status and specific performance targets of the mining charter have created a gap in the regulatory regime for mining. This compromises the effectiveness of the Charter as a lever for transformation in the sector.
  • Safety in mines has improved, but the Department should continue to enforce compliance, focusing more strongly on the occupational health problems of mineworkers and improvement of their living conditions.
  • The Committee has noted the Department’s initiatives on reviving research in the industry and expects to see a co-ordinated research agenda between both the private and the public sector in future.
  • The Committee recognises initiatives that have been taken by the Department in combating illegal mining, however a legal framework is required to deal with the problem, coupled with vigorous promotion of small scale mining, where this can be done safely and viably, with due regard for the environment.
  • There is a serious lack of co-ordination between the activities of the Provincial governments and those of the DMR in taking full advantage of the catalytic power of the mining sector in local economic development. This lack of coherence results in mining companies taking advantage of the situation to their advantage and to the detriment of communities who are supposed to benefit from mining activities.

 

  1. RECOMMENDATIONS

The Committee recommends that the Department of Mineral Resources

 

2015 BRRR Recommendations

Motivation for Inclusion

Time Frames for DMR response

The Department should, immediately after the conclusion of the Mining Phakisa process report to the Committee

It appears that the progress of all  programmes is expected to benefit from the Phakisa process

Next Quarter 2016

The Department should develop a comprehensive report on the outcomes of the mining charter   including the names of the companies that did not comply with commitments or meet the targets. Such a report should also provide clarity on the interim measures.

 

 

Department should as a matter of urgency clarify the status of the mining charter, and clearly spell out interim targets that mining companies are expected to meet in 2015/16.

Reduce regulatory uncertainty in the industry

Next Quarter 2016

DMR should report on applications for and the granting of the rights to minerals and provide the outstanding information on SAMRAD requested in March 2015.

This is provided for petroleum by PASA, but not for minerals. The information is needed for transparency and to evaluate transformation

Next APP

DMR should report as fully on environmental and community issues related to mining as it does on health and safety

An excellent standard for reporting has been set by the MHSI – this should be replicated because of the DMR’s responsibilities for the environment and to ensure that communities benefit from mining.

Next APP

The DMR to engage the Committee on the process it will undertake in order to implement the findings of the Farlam commission that relates to the department.

Ensure accountability

Immediately

The department and the entities to prioritize the filling of critical and strategic positions. This should include an effective and cost saving interview process

Improve service delivery and reduce vacancy rate, to an acceptable level

Next Quarter 2016

Explore ways of introducing more user friendly processes for SLPs that are accessible to the public. Transparency and uniformity in the conceptualisation and evaluation of Social and Labour plans is essential.

Assist in managing expectations by both communities and mining companies

Next Financial Year

Introduce a better coordinating  mechanism in ensuring that there is better co-ordination between activities of the respective Provincial and Local Governments and the DMR

Avoid unnecessary tensions between the provincial government and   DMR

Next Financial Year

The Department and the entities to develop effective internal control measures in particular in financial and human resources. This should include issues of supply chain management

 

 

The DMR to continue working closely with the office of the AG and Treasury in order to strengthen accountability, and internal control measures.

Ensure clean audit going forward

Next Financial Year

The DMR should carefully scrutinize its participation in multilateral forums, and be able to make a business case for its participation, taking into account cost and benefits of such an arrangement

 

To ensure value for money for the country when participating

Next Financial Year

The DMR and its entities need to align its bursary and other human resource development policies with, demographic and gender target priorities of the respective organisation.

 

To address demographic and gender compliance

Next Financial year

The Women in Mining Strategy needs to be finalized and implemented urgently.

 

The DMR, the entities and the industry need to address gender issues deliberately. The WIM strategy provides a basis for such action as it seeks to build a safe and dignified work environment for women in a male-dominated sector

 

Within the next 6 months

 

The DMR has to interrogate the management structure of its entities, and ensure that the business categorisation is consistent with the mandate of the organisation, as to enable the entities to deliver on their mandates effectively.

 

To achieve standardisation of entities’ structures

Next Financial year

The MHSC needs to present an account to Parliament of how it intends to apply its R200-m surplus

 

The MHSC has failed to provide for the wise spending of the levies it collects from mines for the purpose of promoting occupational health and safety

 

February 2016

 

Treasury should consider above inflationary increase in base funding for the Council for Geoscience, such an increase will allow the Council to cover its operational costs

Enhance the council’s ability to attract and retain critical human capital, which is the lifeblood of a research institution

Immediately, due to its urgency

The DMR should frame proposals for an alternative business plan for the SDT that allows its objectives to be reached. This may involve amendments to the law.

 

The failure of the SDT to perform as intended in transforming the diamond sector is widely recognised. This is not due to fault of the part of the management team, but to an unviable business model

 

February 2016 for the outline of a road map to address the SDT problems

 

There is a need for better legislation and intergovernmental co-operation to deal properly with the closure of mines. The DMR should research sustainable mine closure, that considers both the environment and community issues.

 

Closed gold mines encourage illegal miners. The gaps between companies, mineral, insolvency and environmental laws in effect encourage fraud and asset stripping. This leads to poor custodianship over mineral resources in practice.

 

First quarter 2016

 

DMR needs to co-ordinate inter-governmental action on developing a comprehensive strategy on ex mineworkers. This must include harmonising compensation laws to remove the bias against mineworkers

 

The one stop service centres are a welcome e innovation, but retirement fund managers and regulators need to act to pay the R5-billion in unclaimed benefits to the beneficiaries.

 

First quarter 2016

 

 

Summary of recommendations with financial implications

 

Treasury should effect an above inflationary increase in base funding for the Council for Geoscience, such an increase will allow the Council to cover its operational costs, especially personnel costs. Baseline funding should at least cover mandatory functions as it is the norm with other research institutions internationally. Currently the CGS has R 36 million deficit, which can be addressed through an above inflationary increase in the medium term baseline allocation. For the institution to fulfil its mission it is important that it retain its human capital base.

 

 

 

 

 

 

8.         APPRECIATION

 

The Committee would like to express its appreciation to the Department under the leadership of the Minister, Deputy Minister and the Director General, the Auditor- General of South Africa and the all the entities.  The unreserved word of appreciation and gratitude goes to the support staff of the Committee who work diligently during the entire process including going beyond normal hours of work. This is what is expected from selfless public servants who are committed to see this country moving forward.  . 

 

Report to be considered.

 

 

 

 

 

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