ATC170315: Report of the Portfolio Committee on Mineral Resources on its oversight visit to the Western Cape from 30 January till 03 February 2017, dated 15 March 2017
The Portfolio Committee on Mineral Resources, having undertaken an oversight visit to the Western Cape Province, report as follows:
- Purpose of the report
The purpose of this report is to report back to the National Assembly on the findings of the Portfolio Committee on Mineral Resources (the Committee) oversight visit to the Western Cape Province.
The Committee outlined two themes for this oversight. The first theme is the Implementation of the One Environmental System for Mining in the Western Cape by the Department of Mineral Resources (DMR)
The responsibility for environmental approval for mining licenses was changed from 8 December 2014, with the introduction of the “One Environmental System for Mining”. Under this system, the DMR implements specific aspects of the National Environmental Management Act, No. 107 of 1998 (NEMA) and its regulations, including the new Regulations Pertaining to the Financial Provision for Prospecting, Exploration, Mining and Production, which were published on 20 November 2015
The second theme relates to mineral resource export logistics. This is a follow-up on the 2015 visit to Kumba Iron Ore in the Northern Cape, by visiting the iron ore export facility at Saldanha Bay.
Mr S Luzipo Chairperson and leader of the delegation
Ms. HV Nyambi ANC Member
Inkosi ZMD Mandela ANC Member
Ms. MV Mafolo ANC Member
Mr. J Lorimer DA Member
Adv. HC Schmidt DA Member
Mr S Jaffa AIC Member
Mr S Mthonjeni Stand in Committee Secretary
Mr N Kweyama Content Advisor
Mr M Nicol Committee Researcher
Ms S Skhosana Committee Assistant
- Purpose of the oversight visit
The proposed oversight visit programme relates specifically to Committee’s Objective 4: To increase oversight over the Department of Mineral Resources (DMR) with relation to its responsibilities to implement Environmental legislation for prospecting and mining and oil and gas exploration and production. (Environmental responsibilities of the Department of Mineral Resources are enshrined in (amongst others) the Bill of Rights, MPRDA, National Environmental Management Act (NEMA) and joint agreements between the three Departments namely the DMR, Environmental Affairs and Water and Sanitation.
The Committee visited the Office of the Premier Western Cape, DMR’s Western Cape regional offices on 30 January 2017, Tronox Namakwa Sands mine on 31 January 2017, Tormin mine on 1 February 2017, Kumba Iron Ore export and Elandsfontein Exploration & Mining (Pty) Ltd (EEM) mining site on 2 February 2017 and Maccsand sand mine on 3 February 2017.
- Visit to the Office of the Premier.
The MEC, Mr Anton Bredel of the Provincial Department of Environmental Affairs (DEA) in the Western Cape opened the Meeting and introduced his delegation. This was followed by the Chairperson of the Portfolio Committee of Mineral Resources introduction of the Parliamentary delegation. The Chairperson thanked the MEC for welcoming the Committee into the province and explained that it is a common practice to start the oversight by visiting the Provincial office of a province being visited. The Chairperson appreciated the Department’s readiness to host the delegation. The Chair then went further to state that Mineral Resources regulation is a National Competency and the entire economy of the country depends on it. He further explained that the Committee takes its work very seriously given that the mineral resources of the country are a strategic asset.
2.1 DEA (Department of Environmental Affairs) Presented as follows:
2.1.1 In the Western Cape our “gold” is above ground
“Our challenge as a nation in a developing state context is to find a balance between economic growth and environmental sustainability. We need to be mindful of the fact that without the integrity of our natural systems, there will be no sustained long-term economic growth or life.”
South Africa’s Constitution and the laws stemming from it recognise the vital role of both ecological and mineral resources in a development path built upon the socially just, environmentally sustainable and economically efficient use of these resources. These are not necessarily opposing objectives, and if pursued carefully, enable us to strive towards the principles and progressively realise the rights outlined in our Constitution.
(Department of Environmental Affairs, Department of Mineral Resources, Chamber of Mines, South African Mining and Biodiversity Forum, and South African National Biodiversity Institute. 2013. Mining and Biodiversity Guideline: Mainstreaming biodiversity into the mining sector. Pretoria.)
2.1.2 The One Environmental System requires an enabling Legal Framework.
Conflicting mandates set out by the MPRDA (Mineral and Petroleum Resources Development Act) and NEMA (National Environmental Management Act) must be rectified:
Ensuring “sustainable development” vs. promoting “sustainable mineral and petroleum resources development” (“best practicable environmental option” vs. best mining option)
- "Sustainable development" means the integration of social, economic and environmental factors into planning, implementation and decision-making so as to ensure that development serves present and future generations” (NEMA)
- "Sustainable development" means the integration of social, economic and environmental factors into planning, implementation and decision making so as to ensure that mineral and petroleum resources development serves present and future generations” (MPRDA)
- Conflicting legal requirements with regard to the MPRDA (Mineral and Petroleum Resources Development Act) and NEMA (National Environmental Management Act) must be rectified as a matter of urgency. E.g. Section 16(4) of the MPRDA requiring the EIA (Environmental Impact Assessment) reports with regard to prospecting to be submitted within 60 days, whereas the NEMA (National Environmental Management Act) EIA (Environmental Impact Assessment) Regulation 19(1) require the EIA (Environmental Impact Assessment) report to be submitted within either 90 or 140 days.
2.1.3 DMR as the 11th Competent Authority in terms of NEMA
The original position of the Western Cape Government (WCG) and others: concerns related to DMR’s (Department of Mineral Resources) conflicting mandates, poor co-operative governance and DMR’s performance.
Eventual position of the WCG (Western Cape Government) and others: Similar to the other 10 Competent Authorities, DMR as the 11th Competent Authority must perform in accordance with the requirements of the One Environmental System. Following the law reform process and the coming into effect of the One Environmental System on 8 December 2014, the WCG (Western Cape Government) have worked with and tried to support DMR through amongst others: with DMR and other partners presenting the One Environmental System to the WC, Western Cape practitioners and public during December 2014; sharing with the DMR the WCG’s forms and templates; assisting DMR: WC with staff capacity building initiatives and regularly communicating with DMR on matters of common interest;
2.1.4 Emerging position by the Centre for Environmental Rights (CER) and others:
The conflict of interest in the DMR’s mandate, to promote mining, and to regulate its environmental impacts, fundamentally compromises effective regulation of the detrimental impact to Mining. Key Recommendation is to remove responsibility for environmental regulation of mines from the DMR, and have mining governed by environmental authorities as is the case for all other industries. Poor environmental governance of mining in South Africa is one of the chief causes of the violation of environmental rights in the mining sector in South Africa. Some of the governance problems are related to the regulatory regime itself, and others relate to failure to implement the law.
DMR cannot adequately regulate and mitigate negative environmental impacts, while at the same time having to encourage and promote mineral development. Instead, the environmental authorities with their existing and appropriate mandates, incentives and experience should be responsible for ensuring sustainable development in South Africa. The DMR is responsible for enforcing mining operations’ compliance with environmental and mining laws, while the Department of Water & Sanitation (DWS) enforces compliance with the National Water Act and water use licenses. Unfortunately, these departments are failing to hold mining companies accountable for their legal obligations, imposing few or no consequences for unlawful activities & shifting the costs of pollution to local communities
2.1.5 DMR as the 11th Competent Authority in terms of NEMA (6)
DMR must ensure the integration of EIAs with the processes for WULAs, (Water Use Licence Authorization) Atmospheric Emission Licences, Waste Management Licences, & Heritage Impact Assessments.
DMR’s performance to date: poor to average
Recommendation: DMR should enter into an Operational Agreement with Heritage Western Cape (HWC) similar to the one in place between the DEA&DP & HWC. DMR should also enter into an Operational Agreement (draft already produced by the DEA&DP) with the Department of Water & Sanitation to improve EIA & WULA integration.
DMR must consult with the relevant State Departments (Provincial & National Departments) (Section 24O of NEMA) when considering an EIA.DMR’s performance to date: average
Recommendation: DMR should, similar to what DEA has done, agree with the relevant State Departments who each Department’s point of entry person is.
DMR must ensure openness & transparency during the MPRDA & NEMA processes.
DMR’s performance to date: poor
DMR must undertake environmental compliance monitoring & law enforcement, incl. of mining related Environmental Authorisations issued by previous Competent Authorities prior to 8 Dec 2014.DMR’s performance to date: poor
General: During the transitional period DMR’s responsiveness to concerns raised by the Western Cape Government) WCG has been poor. No response has been received to various attempts by WCG to ensure consistency of interpretations and prevention of threatened litigation.
2.2 Committee Observation and findings
- The Committee noted from the presentation that the Western Cape Department of Environmental Affairs has identified a number and administrative inefficiencies caused by the DMR and the Committee was concerned about the practical effect caused by these.
- With regards SPLUMA (Partial Planning Land Use Management Act) and LUPO (Land Use Planning Ordinance) case the Committee asked what is the involvement of the DEA (Department of Environmental Affairs) and how long are the cases going to be in court. Who are the sighted respondents in the cases beside the WCDEA (Western Cape Department of Environmental Affairs)?
- There is a need to have more environmental forums in the Western Cape Province to ensure the free flow of environmental ideas amongst the Departments
- Meeting with the Department of Mineral Resources Western Cape Regional office
- Presentation presented by Western Cape Region
3.1.1 Implementation of the one environmental system
One Environmental System, commenced on the 8th December 2014 to streamline the licensing processes for mining, environmental authorisations and water use. This represents the Government’s commitment to improving the ease of doing business and enhance South Africa’s global competitiveness as a mining investment. Under One Environmental System, the Minister of Mineral Resources, will issue environmental authorisations and waste management licences, for mining related activities. The Minister of Environmental Affairs will be the appeal authority for these authorisations.
3.1.2 Challenges with the Implementation of the one environmental system
Interpretation of the Transitional Provisions:
Section 12(4) (5) (Transitional Provisions) of NEMA (National Environmental Management Act) Act 62 of 2008 as amended, states that an environmental management plan or programme approved in terms of the Mineral and Petroleum Resources Development Act, 2002, immediately before the date on which this Act came into operation must be regarded as having been approved in terms of the principal act as amended by this Act”. This matter has been elevated to the IPIC for deliberations.
3.1.3 Court Challenges on a Mining Right granted to Elandsfontein
The matter is Sub-judice and Department is opposing the application to set aside the mining right granted to Elandsfontein Mine. Full information will be made available once the court process is finalized.
- Management of Biodiversity offsets
It is the final measure in the mitigation hierarchy in response to the permanent/irreversible losses caused by mining. The Department of Environmental Affairs is finalising the biodiversity regulations. There are two cases wherein offsets were proposed, one finalised and one still in process.
- Expansion of Namakwa Sands and its impact on the Namaqualand Sandveld.
Vegetation found on the site consist of Namaqualand Strandveld, Sand Fynbos and Sea-Shore. A botanical assessment was compiled by a specialist. It recorded all associated impacts, mitigation measures and made recommendations to be taken into account during mining and rehabilitation. Sensitive areas have been demarcated as no go areas and have been excluded from the mining areas. The impacts on the sensitive areas will be reduced provided the recommendations of mitigation measures are implemented. These recommendations have been included as conditions of approval of the EMPR (Environmental Management Programme) and we will continuously monitor the implementation.
- Financial Provision
The Department currently hold R238 000 000.00 in Financial Provision. The holder is required to submit an annual update and review quantum of financial provision they have been compliant with this provision.
4.1 Tormin Mine
Tormin Mine has a mining right that was approved in 2008. The mine is situated at a coast, therefore, the Department has received a number of complaints from environmental lobby groups, surrounding communities and anonymous sources. The Principal Inspector had engagements with unions/community members on safety concerns, audits were conducted and the outcome was communicated to the unions. Engagements were also held with community members on environmental and social and labour plans concerns, statutory notices were issued where necessary. Tormin mine has applied for new prospecting rights. The Environmental Authorisations (EA) were refused based on inadequate public participation process. The applicant appealed the decision to the Minister of Environmental Affairs and our decision was upheld.
4.1.1 Challenges with LUPA (Land Use Planning Act)
The effects of the Maccsand Constitutional Court Judgment was that:
Every mining right/permit requires an application for rezoning before mining can commence. This application is lodged with the relevant Municipality where the proposed mining is situated. Often at times farm owners withhold the Power of Attorney required for zoning application. There are no time frames for processing such applications, which can take up to three years. Once granted, some conditions of re-zoning contravene the Environmental Affairs provisions.
4.1.2 SPLUMA (Spatial Land Use Management Act) to be integrated with the One Environmental System
The Department had engagements with the Department of Rural Development and Land Reform during the drafting of SPLUMA. There have been no further engagements since the promulgation of SPLUMA. There are no effective Municipal Planning Tribunals as required by SPLUMA
4.2 Observations and findings
- In relation to the assessment done by the Provincial Department of Environmental on the DMR (where poor performance was indicated) The DMR expressed serious lack of appreciation on the matrix applied in conducting such assessment given the lack of consultation during the process.
- The Committee noted the low level of illegal mining in the Western Cape and commended the DMR in maintaining the low rate
- The Committee indicated the mining right application process needs to be streamlined, the time frames between the issuing and granting of the Mining right and also application for rezoning needs to be reconsidered.
- An applicant can only apply for rezoning if the owner of the land grants him/her the power attorney this also prolongs the process of mining as the applicant cannot start mining without the rezoning application.
- The Provincial Principal Inspector in the Western Cape indicated that after receiving numerous complains about safety issues on Tormin mine, they conducted an audit at the mine and made findings with regard to safety and procurement,
- In relation Ilandsfontein the Committee feels that there is a need to engage before taking matters to courts so as to avoid a situation where government Departments are litigating against one another.
- The Committee requested that the DMR responds in writing to the Committee on the nine areas raised by the PDEA (Provincial Department of Environmental Affairs) and also submit the audit report done by the DMR on Tormin Mine.
- Visit to Tronox Mine
5.1 Overview of the Mine
5.1.1 Tronox Limited operates two vertically integrated mining and inorganic chemical businesses.
Tronox TiO2: mines and processes titanium ore, zircon and other minerals, and manufactures titanium dioxide pigments that add brightness and durability to paints, plastics, paper, and other products.
Tronox Alkali: Mines trona ore and manufactures natural soda ash, sodium bicarbonate, sodium sesquicarbonate, and caustic soda which are used in the production of glass, detergents, baked goods, animal nutrition supplements, pharmaceuticals, and other essential products
5.1.2 Tronox at a Glance
- Leading global producer of: TiO2 via chloride technology, Titanium feedstock (Synthetic rutile, natural rutile, and slag ilmenite), Zircon and low-manganese pig iron, Natural soda ash (sodium carbonate), Sodium bicarbonate and sodium sesquicarbonate and Caustic soda (sodium hydroxide).
- Global footprint – 20 locations worldwide, including: 3 mineral sands mines & processing facilities in South Africa (2) and Australia, 3 TiO2 plants in USA, Australia, and the Netherlands, 2 trona ore mines in USA, 2 soda ash manufacturing and 7 processing facilities in USA, 1 electrolytic plant in USA, Corporate office in Stamford, CT (USA); regional offices in Philadelphia, PA (USA); Perth, WA (AU); Sandton, Gauteng (SA) and Pigment R&D centre in Oklahoma City, OK (USA)
- World’s largest producer of natural soda ash: Mine and process trona ore and manufacture soda ash used in production of glass, detergents, chemical manufacturing, pulp and paper, and water treatment. The company produces sodium bicarbonate used in healthcare and food industries and sodium sesquicarbonate serving the animal feed market.
- 3rd largest global producer of chloride process titanium dioxide (TiO2) this product is used in the production of paints and coatings, plastics, and paper laminates.
- Electrolytic & special chemicals: Electronic manganese dioxide used in battery production and boron products used by pharmaceutical and auto industries
- Long-Standing Blue-Chip Customers: Tronox supplies top-tier TiO2 and soda ash customers. It has a diversified customer base of approximately 1,400 customers worldwide. Customers include market leaders in each of the major end-use markets for soda ash, sodium bicarbonate, sodium sesquicarbonate, caustic soda, chloride-grade TiO2. They maintain strong customer relationships with high retention rates
5.1.3 Tronox Values:
- Health & Safety we work safely (all the time): they believe passionately that everyone at Tronox should experience a safe and healthy workplace. The company proactively identifies and manage risk, conduct ourselves responsibly, exercise good judgment and take responsibility for their actions.
- Responsibility: The company care for the environment and the communities, making them responsible citizens, as a company and as individuals. They regard themselves as stewards of the environment and active in their communities.
- People: Employees are regarded as the most important resource, the company create opportunities for development and act intentionally to create a diverse and supportive work environment. Everyone is committed to their personal growth and development, embraces change, and learns from their successes and mistakes in order to create a high-performance culture.
- Customers: It really is all about the customer. The company’s collective purpose is to create and sell differentiated and competitive products and services, and to make it easy for their customers (internal and external) to do business with them.
5.1.4 Tronox Mine on the One Environmental System
- All previous EA (Environmental Authorization) applications (including water & heritage) - prior to the implementation of the One Environmental System (EOS), had been granted.
- The most recent application was the application for the Houtkraal Mining Right. The DMR granted the mining right on 30 March 2016. There were significant delays with the issuing of certain authorisations from other authorities, in particular, for water use (and many of these issues are yet to be resolved Water Use Licence (WUL) from Department of Water and Sanitation (DWS); Environmental Authorization (EA) from DEA. An application for postponement of date of commencement of mining (30 March 2017) as a result of delay
- The company is currently applying for various environmental authorisations for an additional slimes dams’ disposal facility (including water and waste) under the OES (One Environmental System).
5.1.5 Bio-Diversity Offsetting
- Tronox has not formally adopted offset for ecological impacts at Namakwa Sands
- Offsetting has not been found to be an essential mitigation for mining / expansions in any impact assessment study;
- Currently exclude mining in sensitive ecological areas within the authorised mining footprint (e.g. rocky outcrops, heritage areas); and formally exclude mining in important ecological corridors such as Coastal setback zone and Groot and Klein Goeraap River Valleys.
5.1.6 Managing Impact on Namaqualand Sandveld
- Exclusion of communities of species of conservation concern in the expansion areas (including buffer areas) reduces high-grade resource areas by more than 20% (300 ha).
- Retain various corridors of significant ecological value, including Groot and Klein Goeraap River Valleys, Coastal setback zone, Northern portion of Houtkraal and Natural vegetation “ribbon” along public road and Eskom servitude.
- The Company plans to conduct rehabilitation concurrent with mining, 5cm topsoil is removed and is stocked and replaced after mining because it is the seed bearing soil. The company’s main closure objective is to return land back to the farmer for small livestock grazing.
5.1.8 Financial Provisioning
- Ongoing Rehabilitation Costs for 2016:
Mining topsoil stripping and replacing tailings cost the company R47 mill for 2016. Placement of nets/net maintenance and transplantation R2 mill. The total Annual Rehabilitation Operating Costs R49 million for the year 2016.
5.1.9 Closure Cost Provision (2016):
- The Company has R78 319 511 for scheduled closure and R 181 600 092 for unscheduled closure.
5.2 Committee observation and findings.
- The Committee noted that Tronox need to increase the number of female in top management and acknowledged the steps being taken in ensuring that there are female employees operating the big machinery vehicles. Tronox has about 16% of woman in the core mining business.
- The Committee was pleased to know that the entire rehabilitation of the mining site is done by a local company that employs members of the local communities and Tronox employ most of its ad-hoc staff members from the local community.
- The Committee encouraged the sound relationship between management and the union.
- The Committee noted that Tronox does not use any Chemicals in their processing process they separate the mineral using gravity, magnetic separation and electro detection and the entire separation process is physical.
- The Committee is concerned about delays in the process of acquiring a water license from the Department of Water and Sanitation for the mine. There is a need to increase capacity within the Department to fast-track the process.
- The Committee encourages the company to participate in more forums so that other companies and stakeholders can learn from the good work that the company does in terms of rehabilitation.
- Visit to Tormin Mine
6.1 Overview of the mine
Over the last 20 years, Mineral Sand Resources has been focused on investing in South African mineral sands projects in conjunction with its BEE Partners their total investment Capital is R600m.
Mineral Commodities South-African Black Economic Empowerment (BEE) partners own 50% of Mineral Sands Resources (Pty) Ltd and 26% of Transworld Energy & Minerals (SA) (Pty) Ltd.
6.1.1 Investment on Social Labour Plans:
The Company believes in investing in the community’s future. The MSR Tormin operation has contributed in excess of R14,289,394 since it first commenced operation, each year engaging over 80 local contracts and suppliers, investing in excess of R600,000,000.
6.1.2 Maths, Science and Accountancy project as an example of one of their projects:
The Math, Science and Accountancy Project (MSAP) was developed to assist the young community members of Matzikama to improve their apprehension of Grade 12 Math, Science and Accountancy, with a goal of providing better opportunities to meet or exceed entry requirements at tertiary level education.
6.1.3 Human Resource Development:
A number of employees and members from Tormin’s local Matzikama and Xolobeni communities are offered training programs, including learnerships, apprenticeships, Adult Basic Education Training (ABET), bursaries and scholarships. Total spend on training programmes in 2016 was R 5,904,930 (9.5% of Total Costs To Company).
6.1.4 Contribution to the Economy:
Each year the Tormin operation contributes R 63 116 000 into salaries and wages, equating to 30% of the total wage income by residents of Lutzville, Koekenaap and Vredendal thought the employment of 11% of the working population in both districts and injecting R 441 000 000 cash into the Country’s Economy.
6.1.5 Environment and rehabilitation:
Tailings are returned to the beach where it is distributed and settled along the coastline under natural wave and sea current action. All mining voids get naturally filled with beach sand during high tide and there is therefore no rehabilitation liability in this regard.
6.1.6 Environmental Regulation:
The MSR Group is subject to various environmental regulations in respect to its exploration, development and production activities. In the course of its normal mining and exploration activities, the Group adheres to environmental regulations imposed upon it by the relevant regulatory authorities, particularly those regulations relating to ground disturbance and the protection of rare and endangered flora and fauna. MSR has initiated their own Annual Independent Environmental Auditing Process as an additional commitment to being proactive in protecting the Environment. MSR has established this secondary auditing process, despite not being required to do so.
6.1.7 The One Environmental System OES:
Tormin operates under the One Environment Policy, the EIA Regulations 2014 (Government Notice (GN) R982, 8 December 2014) and have adopted and comply with the EIA Regulations 2014 in all applications. The Mine use Independent Consultants undertake the preparation of all Prospecting / EMP 102 / Mining Rights Applications. This helps the company to be Proactive “Pre-application” stakeholder engagement to consult with the public and authorities early on. The Company also ensures Pre-application stakeholder engagement includes the distribution of a Background Information Document (BID).
The BID aims to: Provide a brief motivation and description of the project and briefly describe the affected environment area. And also describe what the EIA process entails and provide information on how you can participate.
The advantage of the OES is that the DMR is the most competent authority to assess Mining Environmental Authorisations and Compliance and streamlined One-Stop Authority, reducing compliance cost and time by offering. The disadvantage is that there is a misunderstanding between delineation of Departmental Authority between DEA and DMR.
6.1.8 Production forecast and the life span of the mine:
The inability to secure necessary Prospecting and Mining Rights by second quarter in 2017 will force MSR to commence redundancies in second quarter in 2017 and cease operations in the fourth quarter in 2017. If Prospecting & EMP amendments are approved, then mining operations can continue for up to an additional 20 years.
The Mine has applied to build a Mineral Separation Plant so that is can produce a finish product of Ilmenite, Garnet, Zircon and Rutile. The mine has a Commitment of R 500 million and an approval will increase Life of Mine extended up to 20-years+. This will lead to Increase in employment – 300 employees and the mine will receive an increase in revenue R1.5 billion per annum. The increase in Procurement Spending R1 billion per annum and the increase in Social Labour Plans will be commitments R7.5 million per annum.
MSR has a proven track record of Compliance and committed to responsible environmental management & mine safety, complying with all regulatory requirements. The Mine is also committed to sustainable and effective BEE procurement as well as our responsibilities under the Mining Charter and Social Labour Plan. MSR’s Tormin Mine has a proven track record of investment and expansion offering significant economic benefits to the local regional and Republic of South Africa.
6.1.9 The Mine also noted the following:
- Mine’s resources have depleted. The Mine will close in 2017 without the award of new Prospecting Permits and EMP 102 Amendments. Exploration has identified resource potential supporting a mine life extension of 20-years.
- The One Environmental Policy works. The due process does not. Delays are jeopardizing expansion and the sustainable livelihood of employees at the Mine
- Logistics are challenging especially the move from road to rail.
6.2 Committee observations and findings
- The Committee noted that Tormin Mine is sharing the costal mining area with Trans-Hex a company that mines Diamonds, the two companies have a gentleman’s agreement regarding the mining process.
- The Committee remains concerned about the general negative public perception that Tormin mine has in relation to compliance with environmental management legislation.
- There are only two Unions in the Mine Solidarity and SHOWUSA representing only 4% of the mine employees.
- Visit to Kumba Iron Ore
7.1 Presentation overview of Kumba Iron ore:
7.1.1 Background of the Company
Kumba, is the largest iron ore miner in South Africa, it is part of the Anglo American Group. The Head Office is in Pretoria Centurion. Kumba has the following operations as well:
7.1.2 Saldanha Bay Port:
All Kumba export volumes exported through Saldanha Bay Port
7.1.3 Export Rail Line:
The current capacity of 60M tons per annum of which Kumba has 44M tons per annum allocation.
Opened in 1953 its located in Kathu it has a reserve life: 15 years. The bulk of Kumba’s production (28.4Mt in 2016). It is one of the largest open-pit mines in the world and all mining is done by open-cast methods. Sishen is the only hematite ore producer in the world to beneficiate all its product.
Opened in 2011 and produces high-grade direct shipping ore (DSO) it produced 12.7Mt in 2016 it has an R8.5 billion investments. The Mine is situated near the town of Postmasburg it has a reserve life of 21 years.
7.1.6 The Company’s Performance:
- In relation to safety: the mine regrettably had two fatalities in 1H16, and rise in injury frequency rate is also concerning. The Mine has an Elimination of Fatalities Framework with key focus on critical control awareness and culture and leadership
- Health: Exceeded 90% take – up for voluntary HIV testing. The Mine also has a holistic wellness programmes with emphasis on management of chronic conditions.
- Environment: Overall footprint reduced through improved water and energy efficiencies. The Mine also has the platinum certificate of recognition for both the Global Carbon Disclosure Project (CDP) Water and Carbon A lists. The Mine was awarded 2nd highest score for carbon disclosure in Metals & Mining by Integrated Reporting & Assurance Services (IRAS). There is progress on rehabilitation (reshaping) target at Sishen and Thabazimbi.
7.1.7 Operational Performance:
- Sishen: Successfully implemented new mine plan based on lower cost pit shell and increased life of mine to 17 years and the people restructuring completed without interruption. The Mine has full year production exceeded target and continued improvement in productivity key in sustaining competiveness
- Kolomela: Full year production target exceeded due to optimisation of the plant and strong focus on operating model and technology to increase plant throughput.
- Sales: The Performance is lower compared to 2016 however in line with plan
7.1.8 Mining Charter
- Ownership: 26% Ownership achieved by 2006 and the Mine remains concern that the current status of the Mining Charter is causing uncertainty within the sector.
- Housing and living conditions: Employees at all our operations have access to decent housing and the company already promoting home ownership, challenges with affordability experienced.
- Procurement and Enterprise Development: Percentage of procurement spend allocated to black owned or empowered companies beyond mining charter requirements. The Mine is of the view that the Mining Charter proposals for locally manufactured goods & services not achievable unless local capacity is developed. Supplier Development Programme in place for local entrepreneurs.
- Employment Equity: Top management target of 50% achieved and 20% of women in management.
- Mine community development: SLP projects delivered according to plan, and target of 1% of NOPAT also met and the new regulatory proposal of 1% of revenue will be onerous.
- Contribution to South Africa: Iron Ore contributed c.10% of total SA exports in 2015; significant stakeholder value created.
7.1.9 Community Development:
- Education: Encompasses skills development and capacity building. Empowers individuals and leads to economic growth and emancipation. Capacity building for local authorities will address service delivery challenges
- Healthcare: Encompasses wellness and social development. Flagship projects have delivered desired impact and are replicable
- SMME/Supplier Development: The Mine will facilitate local procurement and supply chain integration.
- Infrastructure: good impact achieved with infrastructure projects. Next phase is the capacitation of communities and authorities to utilise and maintain the infrastructure
7.1.10 Kumba Initiatives in relation to the National Development Plan
- Create Jobs: Kumba ensures sustainable development within Supply Chain Principle and also meeting the local procurement targets and the company also carries out as supplier development programme.
- Inclusive Planning: Kumba has a low cost housing programme and also a town planning for Dingleton resettlement. The company also has a strategy of conversion of hostels. Kumba also carries out a bulk services and IDP infrastructure projects.
- Quality Education: The Company provides ECD & school’s infrastructure and teacher development and the company also provide Maths, Science and English interventions and School Administration Interventions. The company also offers ICT in schools and Infrastructure support. Kumba has Bursary scheme / Bridging School / Learnerships / Portable Skills.
- Quality Health Care: The Company offers Mobile Clinics and Clinics to the community and provision of ambulances. Kumba also offered its support in upgrading of Postmasburg Public Hospital.
- Build a Capable State: Anglo DBSA Municipal Capacity Building Programme
- Unite the Nation: Compliance to and exceeding of Mining Charter transformation targets - address inequality, poverty and job creation.
- Use Resources Wisely: Anglo has a Kathu Solar Park and infrastructure projects are made energy efficient. The Company also does energy and water efficiency campaigns in schools.
- Transnet presentation on the Saldanha Port
8.1 Operational Overview:
Saldanha Bay was stumbled upon in 1601 by Dutch explorer Van Spilbergen. In 1969 feasibility studies for an extensive iron ore export project were conducted. Construction of the Port began in 1973. The first deliveries of iron ore were exported on the vessel Fern Sea during September 1976. The line was originally built by Iscor. In June 1977 – South African Railways and Harbours take over the rail line and Terminal. Assmang began with iron ore exports in 1980, using the terminal to export its iron ore. In 1998 the Saldanha Steel Mill was commissioned, for which the IOT offloads about 1.2mt of iron ore per annum. To date >1 Billion tons of iron ore has been exported through the Iron Ore Terminal. The port of Saldanha is South Africa's main iron ore export harbour. A highly mechanized ore-handling plant remains the largest facility at the port. Saldanha Terminal is South Africa's largest natural anchorage and port with the deepest water.
8.1.1 The port consists of the following:
- A reclaimed area on which approximately 4.5 million tonnes of iron ore can be stockpiled.
- A causeway 2, 3 km long from the reclaimed area to the ore/tanker quay.
- An ore quay with two berths (Draft 21 Meters).
- Iron Ore Terminal capacity of 60 million tons per annum.
- MPT terminal with 4 berths (Draft 13.5 to 14 meters).
- MPT capacity of 8.2mt per annum.
8.1.2 The Port holds the following Operational Records:
- The current monthly offloading record for the bulk terminal, achieved in December 2015 stands at 5.7 million tons.
- 24 hour offloading record, set on 27 Dec 2014 stands at 240 564 tons.
- Monthly export volume record, January 2015 stands at 5.4 million tons
- 24-hour export record, set on 1 Jan 2015 stand as 246 776 tons (3t/s)
- Highest average monthly loading rate achieved in Nov 2013 stands at 8 924 tons per hour.
- Record loading rates achieved on a single vessel stands at 11 749 tons per hour, achieved on the Bison Clover on 2 October 2014.
- Largest single consignment loaded totals 300 792 tons on the CSB Talent on 1 January 2015.
8.2 Committee observations and findings on Kumba and Transnet
- The Committee is of the view that there is a need to develop a strategy to attract woman in mining. The environment must be conducive female employees, and it cannot be a general view that women are not interested in mining.
- In relation to the impact of the dust that comes from the production on the port, has on health of the employees and the surrounding community, Kumba indicated that the dust is not harmful to the employees as well as the community around the port. It does (dust), however, have a nuisance value. During February 2016 the company was issued with a provisional environmental license that had 20 conditions and the company complied. The Company also clean and paints properties.
- Visit to Maccsand
- Overview of the Mine and the environmental issues that the mine has:
9.1.1 The Impact on expropriation.
The Committee was informed that there is currently litigation underway to expropriate a recently granted mineral right. This is in pursuance of a failed land claim where the claimants unsuccessfully petitioned the Land Restitution Commissioner to restore their ownership to the land by expropriating the mineral right from Maccsand.
This litigation is making its way to the Constitutional Court. The Department of Mineral Resources were cited as the first respondent and had to defend Maccsands’s mineral right that was issued after due process.
The mine submit that the argument by the claimants are fatally flawed in that the land restitution process deals with the ownership of the land that may or may not be restored to them in terms of the Land Restitution Act, 1994 (Act 22 of 1994). On the other hand, the mineral rights pertaining to the minerals on any land in South Africa, whether the land is owned by the State or in private ownership, are separate from the ownership of the land as set out in the Mineral and Petroleum Resources Development Act, 2002 (Act 28 of 2002)(MPRDA).
Maccsand indicated that if the case of the land claimants were to succeed then the mineral rights are no longer protected or held by the Minister of Mineral Resources. The rights will then effectually be tied to the ownership of the land. This will signal a return to the status of the now repealed Minerals Act, 1991 (Act 50 of 1991) instead moving to implement the MPRDA that aims to move the country to redress the effects of apartheid.
- One environmental system or not
The government set in place one environmental system on the 1st of December 2014 in terms of the National Environmental Management Act, 1998 (Act 107 of 1998) (NEMA). The intent was that, in the case of the mineral applications, the environmental authorisation is no longer granted by the Departments of Environmental Affairs, but rather by the Department of Mineral Resources. This noble intention is being defeated by the Constitutional Court judgment pertaining to Maccsand vs. City of Cape town and others (CCT 103/11 [2013 ZACC7) in the application of the land use planning legislation of the time that have been replaced by the Spatial Planning and Land Use Management Act, 2003 (Act 16 of 2013) (SPLUMA) and the thereto pursuant Western Cape Land Use Planning Act, 2014 (Act 3 of 2014) (LUPA) and the various Municipal Planning bylaws.
The above constitutional court judgement came as a bombshell to the mining industry as well as the legal fraternity as the common understanding and practice of the time was that land use application is not required if a mineral right is granted for a mine.
Reading the above in conjunction states that even though an applicant obtains a “one environmental system approval” to mine that the land use approval should also be obtained prior to the commencement of any mining activity. This shows how the land use legislation can trump and veto the mineral rights to such an extent that the mineral rights may not be acted upon.
The above goes directly against the intent of the MPRDA that states that an applicant who has obtained a mineral right must and may not extract the resources. This is a useful principle that was entrenched even in the now repealed Minerals Act, 1991.
The Department of Mineral Resources must investigate the ability for it to make the mineral right approval a truly “one stop approvals” process and not just a “one environmental system” approval. In this regard the SPLUMA, provincial and municipal legislation needs to be amended to allow for this. The amendments need to be similar to the NEMA item that allowed the decision to be taken by another of State with due considerations to the required process and aspects as prescribed in the land use planning legislation during decision making. This will make a significant improvement to the approvals process to initiate a mine.
- Changes to the mineral right (new changes can be brought about now)
Constantly yielding to the land use planning legislation, further complicates the mining process, area and activity. Section 40 of the LUPA empowers the decisions makers to impose conditions to any application (including a mining application) as they consider, within their judgment, to be appropriate and relevant.
In the case of the Maccsand land use application for Portion 110 of Farm 664, Maccsand this has revealed yet another challenge for mining companies. The City of Cape Town imposed conditions that severely hinder the mining to take place. The City of Cape Town imposed conditions imposed that read: (i) the levels of the final mine have to be negotiated with the appropriate of Cape Town official;
(ii) the time period the mine was limited from the to 3 years and then subject to a maximum of 6 months after the date the City is likely obtain their environmental authorisation to extend the adjacent treatment work;
(iii) in a separate application the condition for the lease of land had to be signed first.
The first two above-mentioned conditions imposed by the City of Cape Town effectually changes the approved and registered mine plan and related contracts through the imposition of the mentioned conditions. This then affects the constitutional competency of the Department of Mineral Resources. It also changes the lifespan of the mine from 25 years to 3 years or less depending on the date of the commencement of the mine and the date the environmental authorisation for the extension of the sewerage works is granted.
This latter condition is tantamount to another royalty for the execution of an already agreed to the mineral right. This means that other owners may also charge royalties for the extraction of minerals. The mine has another application for Erf1211, Mitchells Plain where the owners have similarly requested a lease be entered into for an exuberant amount should we wish to mine on their land.
As a consequence of the condition relating to the negotiation of the final mining levels, an official at the City of Cape Town with no experience in mining will be tasked with signing off the final mining levels.
A further concern here has been the delays that the above introduces to the intended mining activity. In this cited example, the official refuses to discuss the final levels (he recommended that the mine not be approved) and refuses respond to the requests to deal with this matter. Almost two years have passed since we got the approval with conditions, and we are still unable to mine, given the trumping of the land use processes.
In terms of the SPLUMA (Spatial Planning Land Use Management Act) and the pursuant provincial acts and municipal bylaws, the owners of the land must grant permission to the holder or applicants of mineral rights for them to be able to submit the required land use application. Again the above means that the owners may decide to give such permission, in that way the owners dictate whether the mineral right can be acted upon. As discussed above, some owners have already requested compensation for this which is tantamount to an additional royalty.
Furthermore, if an owner refuses to give consent to make an application or a municipality refuses to grant an extension for a temporary land use departure that is granted for 5 years only, in the case of the City of Cape Town, then the mineral rights holder, even if he has invested a lot of money in plant and contracts stand to lose the entire investment because of this. Please note a temporary land use departure may not be utilised for more than ten years (initially for five years with the ability to extend it for only another 5 years.
- Owners claiming Mineral Rights and Resources
Maccsand have perceived a new trend where the owners refuse to grant permission to mine because they want to use the sand elsewhere, on another property in some instances. This, in our interpretation, is tantamount to commercial mining without a mineral right. The City of Cape Town officials, in more than one application has submitted this as a reason why they refuse to grant permission for us to submit a land use application to permit us to mine in terms of the process as described above.
- Biodiversity offsets
The notion of biodiversity offsets is a Western Cape attempt to safeguard representative samples and targets of endangered species. However, along with this notion is the requirement of yet another level of decision making where Cape Nature has to give permission before mining can commence. This unwelcomed add-on, therefore further complicates and protracts the decision making process to initiate a mine.
If the above-mentioned notion is to succeed without unduly extending the approvals process, then it is proposed that the Competent Environmental Authority in this case being the Department of Mineral Resources be authorised to make the decision on the offsets. This would safeguard the process against any random official requesting offsets without understanding the bigger picture or just to protect any and all environmental assets even if there are other representative samples in the vicinity. This is a common experience where the officials shout offsets right at the start without even giving the assessment phase an opportunity to consider the impacts and potential mitigation measures.
Given the small size and narrow margins for viability of some mines this presents a big challenge that immediately sabotages the mineral rights application and subsequent mine which an opportunity for economic emancipation. Needless, to say in this regard the natural environment is used as a means to prevent mining and knowingly or unknowingly keep the previously disadvantaged marginalised.
The notion of biodiversity offsets should only be applied when there are no other effective mitigation measures and when there are no representative samples of the critically endangered or red listed species in the immediate surroundings.
- Committee Observations
- The DMR regional office is assuming more responsibilities with regard to the One Environmental System without a corresponding increase in resource allocation (same number of inspectors)
- The DMR is faced with a dilemma with regard to its dual mandate of promoting transformation while at the same time having to regulate the industry, as the two objectives are in conflict. (The participation of the Historically Disadvantaged groups in the Western Cape mining industry is only 10%, this is accompanied by an increased rate of mining permits (from the targeted groups) rejections since the introduction of the One Environmental System.
- It is not clear how was the Tormin deal evaluated with regard to the stated criteria (how was the representation of people of Exholobeni verified)
- The intergovernmental relations framework is not functioning optimally with regard to the implementation of the One Environmental System, cooperation between the Department of Mineral Resources, Environmental Affairs and Water and Sanitation, still require further enhancement in order to fully realize the objectives of the One Environmental System.
- Despite the One Environmental system coming into effect, with an aim of rationalizing the decision process when granting a mineral right, the Constitutional court judgement in the Maccsand vs. City of Cape Town case, has an effect that (in terms of Spatial Planning Land Use Management Act 16 of 2013,) the granting of a mineral right by a competent authority is not a sufficient condition for the mine to start operating.
- The Committee noted that Maccsand Quarry Mine has been involved in numerous court cases between the 2001 and 2012 and the mine won 77 out of the 78 court cases at an estimated cost of R12m.
- The Committee is concerned that the number of court cases, especially involving emerging mining companies, creates uncertainty for the future of mining, both in the Western Cape and elsewhere in the country.
- There is a high level of pollution in the Saldanha jurisdiction, despite the area not being a mining area,
- The Committee notes that the regulations that affect the mining sector, of which the One Environmental System is just one example, place a huge cost burden (in terms of compliance) for new emerging miners. The high compliance costs involved are a barrier to entry and hamper the growth of mining.
- The DMR regional office should motivate for more human resources in order to deal with increased responsibilities imposed by the One Environmental System.
- The DMR should implement the One Environmental System in a manner that support transformation objectives of the Department, more support should be given to Historically Disadvantaged Companies to ensure better compliance with legislation.
- Kumba should furnish the Committee with details of its recent retrenchment process.
- The DMR should write to the Committee and fully explain the evaluation criteria used in assessing the representation of the people of Exholobeni in the BEE deal of Tormin
- Intergovernmental relations between the Departments involved in the One Environmental System process should be enhanced. The DMR should consider negotiating the Memorandum of Understanding with sister Departments, to fully formalize the process and clear all ambiguities in the system, in order to ensure that the system function in a manner that fulfil its stated purpose.
- The DMR should consider the incorporation of the provisions of SPLUMA relating to land use approvals into the one environmental system, the Department need to explore the possibility of the above proposal with the relevant Departments E.g. Corporate Government and report to the Committee on the progress.
- The intergovernmental relations framework is not functioning optimally with regard to the implementation of the One Environmental System, Cooperation between the Department of Mineral Resources, Environmental Affairs and Water and Sanitation, still require further enhancement in order to fully realize the objectives of the One Environmental System.
- The Committees responsible for the oversight of the above Departments should meet and map out a framework for close co-operation.
Report to be considered.
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