ATC170906: Report of the Portfolio Committee on Mineral Resources on its oversight visit to the Province of North West on the 26 – 29 June 2017, dated 06 September 2017
Mineral and Petroleum Resources
Report of the Portfolio Committee on Mineral Resources on its oversight visit to the Province of North West on the 26 – 29 June 2017, dated 06 September 2017
The Portfolio Committee on Mineral Resources, having undertaken an oversight visit to North West, report as follows:
1. Introduction
The Portfolio Committee on Mineral Resources (the Committee) visited three mines Assen Iron Ore Mine (Manngwe Mining) Bakubung Platinum Mine (Wesizwe Platinum Limited ) and Maseve Mine (Platinum Group Metals (RSA) (Pty) Ltd) under the theme “transformation through junior miners”. In addition, the Committee had a briefing from the regional officials of the Department on Mineral Resources (DMR) on junior mines and issues related to approvals for emergent mining companies in general.
“Junior” mines are not small mines, they are new mines that have been developed by new exploration and mining companies that are not part of the established mining houses. Junior companies are the seed for growth of mining in the future and face specific challenges around transformation issues.
At Mangwe Mining, the request was to focus on how the mine came to be developed, from the perspective of the investors and operators. The following questions were relevant:
• What are the problems the investors in Manngwe Mining faced prior to the
development of the mine and continue to face, as a black owned and run, junior
mining venture?
• What assistance was forthcoming from the established mining industry?
• What assistance / advice was offered by the Department of Mineral Resources?
• Are there steps DMR should take to make mining more accessible to black junior
miners?
• How has Manngwe complied with environmental, health and safety and Social and
Labour Plan requirements?
• Are the above requirements significant barriers, and if so, how could this issue be
addressed, so that more black mining companies can have access to the industry?
Bakubung is a huge underground mine that will last 30 years, employing over
3,000 mineworkers full time, based on over R10-billion investment, mainly raised from Chinese investors (It started production in 2017). Its holding company, Wesizwe is listed on the Johannesburg Stock Exchange. In 2005, it was 52 per cent owned by black South Africans. Ownership was substantially diluted after 2008 when the Ledig community “monetised“ half of their ownership. Today the community owns less than 5 per cent, and there are complex and sensitive community disputes over what happened to the proceeds from liquidation of shares (some R800 million). A leading mining journalist described the experiences as “a story, which shows how empowerment can go disastrously wrong”.
Maseve is a shallow (500m) underground mine that is already in production and has its own processing plant in operation. Its main investors are based in Canada, and it has faced major problems both in raising capital and technically to ramp up platinum ore production to planned levels.
2. Background
A delegation of the Portfolio Committee on Mineral Resources (the Committee) visited North West Province from 26 – 29 June 2017.
The Committee visited the office of the Department of Mineral Resources to get an overview of the mines to be visited and visited Assen Iron Ore Mine, Bakubung Platinum Mine and Maseve Mine to look at the transformation issues.
3. Composition of Delegation
- Parliamentary Delegation
The delegation was composed of the Chairperson of the Committee as the Leader of the delegation, Mr S Luzipo (ANC), Mr M Matlala (ANC), Ms M V Mafolo (ANC), Ms HV Nyambi (ANC) Mr I M Pikinini (ANC), Mr S Jafta (AIC)
Accompanying the committee was the Committee Secretary Miss A Boss, Committee Researcher, Dr M Nicol, Content Advisor, Mr N Kweyama, Committee Assistant, Ms S Skhosana.
- Department of Mineral Resources
Mr MMA Zondi: Deputy Chief Inspector of Mines, Mr M Mothiba: Principal Inspector of Mines, Mr NV Zindela: Regional Manager (North West), Ms T M Mateta: SLOM, Mr A Dikutle: SLOM, Mr R Nkambule: Chief Director, Mr N V Mahwasane: Acting Chief Director, Mr J Segobaetso: Technical Administrator, Mr K Sennao: Deputy Director: Social and Labour Plan Mr B Legwale: Senior Inspector of Mines, Mr K Matrose: Office of DG, Mr K Mhlongo, Office of DG, Mr M Madlala, Media Liason Officer
- Manngwe Mining
Mr T Masutha: General Manager, Mr T Mathlare: Safety Officer, Mr N Shiburi: Group Human Resources, Mr T Kwinda: Mine Manager
- Bakubung Platinum Mine
Mr PMH Morule: Executive: Legal and Corporate Affairs, Mr MG Mosesane: Engineer, Mr D Terblanche: Production Manager,
- Maseve Mine
Mr M Mgudlwa: Vice President, Mr DT Johnson: Safety and HRD Manager, Ms EW De Bruyn: Senior Buyer, Ms JS Thanjekwayo: HR Superintendent, Mr LA Lewis: General Manager,
4. Briefing by the Department of Mineral Resources
Mr M Nkabinde (Principal Inspector of Mines) introduced the DMR briefing by emphasizing the constitutional mandate under which the Department operates, namely section 24, which states that “Everyone has the right to an environment that is not harmful to their health or well-being and to have the environment protected through reasonable legislative measures”. He then proceeded by giving the regional mining overview of the province (North West). From his presentation the following facts transpired
4.1.1 There are 110 mines that are operating in the province
4.1.2 Major commodities mined are Platinum Group Metals, Chrome, Iron Ore, Dimension Stone and other base metals
4.1.3 About 180 000 people are employed in the mining industry within the province, which constitute about 40 percent of the total mining labour force
4.1.4 Major mining houses involved in mining are:
4.1.4.1 Impala Platinum
4.1.4.2 Lonmin Platinum
4.1.4.3 Anglo American Platinum
4.1.4.4 Sibanye Platinum
4.1.4.5 Royal Bafokeng Platinum
4.1.4.6 Glencore Mining
4.2 Regional Strategic Objectives
4.2.1 The region strives towards a safe and healthy mining environment; this is achieved by reducing mining related deaths, injuries and ill health through a series of enforcement measures
4.2.2 The primary objective is to ensure that mineral resources development within the region is carried out in a manner that is healthy and safe to employees and the public.
4.3 Regional Staff Complement
4.3.1 The Regional Office is operating at a 60% capacity i.e. 40% vacancy rate
4.3.2 There are 20 instead of 34 inspectors (4 of the 20 still studying towards
qualification
4.4 Safety Analysis
4.4.1 Between 2008 and 2016 fatalities have fallen from 33 to 26 per annum
4.4.2 In 2017 to date 10 fatalities have been recorded in the province
4.5 Injury Analysis
4.5.1 Between 2008 and 2016 injuries have averaged 1100
4.5.2 The only exception was in 2014 when 764 injuries were recorded, this was due to Marikana strike
4.5.3 In 2017 to date 489 injuries have been recorded in the industry
4.6 Fatalities per Mining Company
4.6.1 Between 2015 and 2017 Impala Platinum recorded the highest number of fatalities at 18
4.6.2 During the same period Northam Platinum recorded only one fatality
4.6.3 Fall of ground has been the main contributor (18 deaths) to fatalities during the period in question
4.7 Health Analysis
4.7.1 Between 2014 and 2015 the total provincial disease burden in the mining industry was at 1733 and 2254 respectively
4.7.2 Pulmonary Tuberculosis and Noise induced hearing loss contributed about 99% to the disease burden
4.7.3 In 2014, out of a total of 1733 cases in the province, 1166 were Tuberculosis while 342 were due to Noise Induced Hearing Loss
4.8 Regional Challenges
4.8.1 Disaster type accidents related to underground fires (workers at Impala were allowed to work at the section of the mine where there was no fire, while the other section was under fire, the decision eventually led to fatalities. A manager was suspended as a result of the above incident).
4.8.2 Safety of women in mines
4.8.3 Increasing number of medical deaths (natural)
4.8.4 Copper theft due to unauthorized entry into mines (compromises ventilation for properties that are under care and maintenance)
4.8.5 Ageing infrastructure
4.8.6 Litigation emanating from section 54 and admin fines (safety vs profits)
4.8.7 Union rivalry (especially post 2012, this has raised discipline issues)
4.9 Regional Strategies
4.9.1 Increase capacity to conduct inspections, audits (proactive), investigation and inquiries (reactive)
4.9.2 Removal of negligent supervisors/managers (those exposing workers to harm)
4.9.3 Involvement of CEOs for repetitive findings and fatalities
4.9.4 Establishment of regional tripartite structures and steering committees to address various health and safety matters (includes seeking unity amongst unions) and Woman in Mining Forum
4.9.5 Independent Audits for ageing shaft infrastructure
4.9.6 Establishing co-operation with local community organisations to address any health or safety matters affecting them
In conclusion Mr Nkabinde stated that the wellness of mine employees is at the forefront of regional initiatives, hence the province is vigilant in maintaining zero tolerance attitude towards safety and health hazards.
5. DMR presentation on Manngwe Mining (Pty) Ltd
Mr Zindela, the regional manager, reported that the mining right for Manngwe mining was issued on the 29th of January 2016 for 12 (twelve) years ending January 2028. The commodity being mined is iron ore and the extent of the mining area is 768 Ha. All relevant documents which are required for the execution of the mining right such as: the Social and Labour Plan, Mine Work Program and the Environmental Management Program were also approved as part of the mining right. The Magisterial District is Brits and farms involved are farm Assen 161 JQ, remaining extent of portion 2,3,4,5,6 portions 8,9,10,12 remaining extent of portion 13, portion 14, remaining extent of portion 15, portions 16,19,20,21, 22, remaining extent of portions 23,24, portion 25, remaining extent of portion 26, portions 27,29,30,31,32,33,34,35,36,37,38,39,40,44,46,48 and 50 of the farm Buffelspoort 149 JQ, portion 12 of the farm Doornkloof 141 JQ, the farm Doringkloof 5 JQ, remaining extent and portion 1 of the farm Swarthoek 10 JQ and portion 1 of the farm Assen 140 JQ. The mine is owned, managed and controlled 100% by a Historically Disadvantaged South African – Mr Matodzi Nesongozwi. The first Social and Labour Plan inspection will be conducted in 2017/2018 financial year.
5.1 The following Social Labour Plan (SLP) projects were committed to
|
Project Name
|
Details |
Comment |
|---|---|---|
|
Bulk Water Supply
The total budget for the project is R3 065 000.00
The project will be implemented over five years (2016 -2020) |
Provision of portable water through boreholes
The company will equip the boreholes with pump and casing and the piping will be installed from the boreholes to points to reach the deserving communities
The project will be implemented 100% by the company |
The villages to be impacted on are Mmupudung, Legonyane, Sephal, Fafung, Rasai, Rooiwal, Mmasebolane and KwarrieKraal. |
|
Poultry and vegetable farming
Total budget allocated for the project is R3 065 000.00
The project will be implemented over five years (2016-2020) |
The establishment of organic Poultry and vegetable farming project
The project will contribute towards job creation
The project will be implemented in partnership with Madibeng Local Municipality and Department of Agriculture |
The project will be located at Kwarriekraal village
4ha land has been identified
Fifteen to twenty (15-20) jobs will be created. |
5.2 Mine Environmental Management
5.2.1 The EMPR was approved on 29 January 2016 and will be in force until 2028
5.2.2 The mining right was also issued on 29 January 2016
5.2.3 Financial provision provided is R5 654 388. 00 in a form of a bank guarantee
Guardrisk (Guarantee No: GR/G/20871/0615/0254) on 27/01/2016
5.2.4 The company has not yet submitted the financial provisions review for the first year.
5.2.5 There is an environmental audit inspection planned for the financial year
2917/2018
5.2.6 Since the right was issued there were no complaints lodged. However, should it arise, it shall be dealt with accordingly.
5.3 Mine Economics: Approved Mine Work Plan (MWP)
5.3.1 The total resource and reserves at Manngwe is 21 000 000 tons
5.3.2 The first year of mining is 600 000 ton/year and the steady state mining will
be 2 400 000 tone /year
5.3.3 Open pit mining would be used to extract the mineral.
5.4 Community Challenges
The following community challenges were reported, and are included to indicate the variety of issues mining companies face when they try to develop a mine. The issues listed were not verified by the Committee.
5.4.1 The Supuputle Communal Property Association (SCPA) has complained about the conduct of Manngwe Mining representatives who allegedly embarked on a process of sowing divisions and instability within the SCPA community and encourages violence within the members in an attempt to destabilise the community and its involvement in mining activities.
5.4.2 There has been a few incidents of intimidation, threats, arson and damage of property. This happened because Manngwe had embarked on building and encouraging parallel structures which operate against the interest of the SCPA.
5.4.3 Manngwe Mining has thus knowingly and intentionally entered into various negotiations with this parallel structure knowing exactly that such structures have no authority to negotiate and or enter into any agreements which bind the SCPA.
5.4.4 According to the SCPA, Manngwe has failed to come to a meeting to address the issues.
5.4.5 The SCPA has opened criminal cases of fraud, intimidation, incitement, incitement to commit murder and malicious damage to property against Manngwe employees.
5.4.6 Manngwe has failed to sign the draft head of terms with the SCPA.
5.4.7 The SCPA has since asked for the department’s intervention.
6. Presentation by DMR on Bakubung Mine
Mr Zindela, presented the background on Bakubung Minerals (Pty) Ltd/ Wesizwe Platinum Limited. The following transpired from the presentation.
6.1 Validity of mining right
6.1.1 Issued on the 25th May 2009 for 25 (twenty five) years ending on 24th May 2034
6.2 Commodities
6.2.1 Platinum Group Metals, Gold, Silver, Nickel, Copper, Cobalt and Chrome
6.2.2 Extent of Mining Area: 2343.4094 Ha.
6.3 Farms Involved
6.3.1 The remaining extent of portion 1, portion 3,4 and 11 of the farm Frischgewaagd 96 JQ, portion 7 and the remaining extent of the farm Ledig 909 JQ and a certain portion of the remaining extent of the farm Mimosa 81 JQ
6.3.2 Magisterial District: Mankwe
6.3.3 All relevant documents which are required for the execution of the mining right such as; the Social and Labour Plan, Mine Work Program and the Environmental Management Program were also approved as part of this mining right.
6.4 Bakubung Ownership and Empowerment Structure
6.4.1 Bakubung is a wholly owned subsidiary of Wesizwe Platinum Limited, which is a company listed on the JSE
6.4.2 The ownership structure, as at date of issuing of the mining right (2009) and in accordance with office records, is such that Wesizwe is owned 51% by black South Africans with Bakubung – Ba-Ratheo Tribe at 33%.
6.4.3 This gave the company a broad based status in accordance with the approved charter requirements.
6.4.4 The 49% balance of shares are owned, controlled and managed by Wesizwe
6.5 Bakubung Social and Labour Plan
6.5.1 The five year plan in the approved SLP started in May 2008 and ended in April 2013 (2008 - 2013)
6.5.2 First inspection was conducted in January 2013
6.5.3 Regulation 44 application was submitted on 27 May 2013
6.5.4 Challenges with regard to implementation were experienced and led to section 93 issued to the company on 23rd May 2013.
6.5.5 The company responded to section 93 directive with three months
6.5.6 Section 93 was uplifted on 06 August 2014 after implementation of all commitments.
6.5.7 Second Generation SLP was submitted on 29th August 2014, the final document was submitted on the 16th February 2015 (2014-2018) and new project committed.
6.6 Mine Environmental Management
6.6.1 The first Environmental Management Program was approved on the 25 May 2009 and will be in force until 2034 (25 years)
6.6.2 The EMP was amended to include expansion of: processing plant, dumps, bulk sewage transportation, road, storage of dangerous goods, topsoil storage etc., the EA was issued on the 27 March 2017
6.6.3 The latest environmental liability that was determined to be R27 016 360.94, this amount is sufficient as per premature closure environmental liability and has been provided for.
6.6.4 As part of the approval conditions of the EMP, the company was required to submit annual revision of the financial provision in line with latest audit. The company has been submitting this report as required.
6.6.5 Performance Assessment to be conducted every two years.
6.6.6 There were not environmental complaints which have been received about this operation.
6.7 Mine Economics
6.7.1 Bakubung Mineral operation is situated in the Western limb of Bushveld Complex
6.7.2 Two economic reefs, within the critical zone is exploited, Merensky and UG2
6.7.3 The total reserve of UG2 and Merensky is 79.005 million tons at a grade of 5.22g/t (metal (kg) 412 432 Kg)
6.7.4 These reefs will be mined at a rate of 230 kt/pm and Merensky UG2 20 kt/pm
6.7.5 The method of accessing the ore body is by means of 3 vertical shafts and concentrate is 3E+AU
6.8 The following Community Issues were reported:
- Community alleges that the compilation of the social labour plan processes is not sufficiently an inclusive process to ensure it is based on serving the interest of local communities and changes their lives. They would prefer the current SLP be tabled for review on the basis of representation of 60% BBR Royal Family, and 40% from the community and that such a social labour plan subcommittee should replace the current one.
- Currently, there is a group of people who are claiming that they own the community remaining shares and they wanted to
- Sell the community shares without properly consulting with the community in an open meeting convened by the DMR
- They do so under the disguise of an entity called Bakubung Community Development Corporation which claims it is a community organisation which is technically and legally not true because it is owned by “members” who are 7 community members and a board. It is some of these individuals who are authorising unlawful selling of community assets arising from the proceeds from Wesizwe community shares which were sold through monetization. They are now part of these individuals who wanted again to sell the remaining 4.5% community shares.
- Some of the directors with allegiance to the community approached the courts and managed to stop the looting of these shares. The same group that wants to sell the community shares is also planning to have a hold on community promised shares once Wesizwe de-list under the same entity (BCDC) which lacks community legitimacy and never accounted on community assets.
- There are also other pending legal cases against these individuals arising from the previous investigations conducted by various independent organisations.
- It was also reported that there was also another matter affecting the community which was a well-known fact that Kgosi SM Monnakgotla was not in a good state of health, has no contact whatsoever with the Royal Family and under the full control of individuals implicated in the above mentioned court case, and also cited on how he relates to community assets. They are experiencing challenges with these individuals trying to place undue pressure on Wesizwe around community interest.
- The community is also appealing for support from DMR to actively conduct Wesizwe local procurement/employment performance commitment in terms of legislation with special focus on the following: employment stats comparing local employment opportunity against the totals number of Wesizwe total employment staff, procurement stats locals versus outside Ledig, empowerment support programs, impact of delayed payments which kills local suppliers, programs and plans to upscale local procurement.
- Board representation is crucial for the community. But this should be extended to management structures for skills transfer and participation throughout all structures of Wesizwe.
- Bakubung Community indirectly own share in Maseve via Wesizwe. Currently there is no role, consultations with Bakubung community. Community is requesting interventions from the DMR to assist facilitating getting Maseve to comply with local participation.
The visit to Maseve mine was undertaken at short notice, so no formal briefing was presented by DMR. This was due to the cancellation of the planned meeting with the Ledig community because of security concerns.
7. Visit to Manngwe Mining (Assen Iron Ore Mine)
The Committee visited the Manngwe Mining and received the briefing. Mr T
Masutha, Manager briefed the committee and the following transpired:
7.1 Locality
7.1.1 Project located some 65 km North of Brits and 95 km South of Thabazimbi towns east of the R511 road.
7.1.2 The project is located at the farm Assen 140 JQ, covering just over 60000 hectares
7.2 Geology
7.2.1 Proven Reserve 22.2Mt (million tons)
- BIF – 8.3Mt
- Hematite – 2.4 Mt
- Calcitic – 8.9 Mt
- Detrital 2.5 Mt
7.3 Mining
7.3.1 Life of Mine (LOM) is 12 years
7.3.2 Phase 1 – Detrital Iron Ore Mining is 3 years
- Detrital iron ore mining commenced in August 2016
- Phase 2 – Mining main ore body to commence in 2019 until 2027
- Phase 3 extension of LOM by 10 years until 2037
7.4 Processing
7.4.1 160t/hr DMS plant construction commenced February 2016 and commissioned January 2017
7.4.2 First consignment of Iron was dispatched March 2017
7.4.3 Phase 2 include additional 75 t/hr DMS plant in fourth quarter of 2018
7.5 Marketing
7.5.1 Off-take agreement with Arcellor Mittal SA (AMSA) for 2 years, supplying between 45 and 60Kt/month
7.6 Social Partners
7.6.1 Two communities of Ga-Rasai and Kwarriekraal
7.6.2 Farmers and Madibeng municipality
7.7 Shareholding and Directors
Mr Masutha reported Shareholders and Directors as follows:
7.7.1 Manngwe Trust – 60%
7.7.2 Anglo American Sefa Mining Fund (AASMF) – 20 %
7.7.3 Tsedu Family Trust – 11 %
7.7.4 Manala Family Trust – 6%
7.7.5 Akula Trading – 3% representing Manngwe Mining Employee Trust
7.7.6 80 % Black owned company
7.7.7 AASMF purchased 20 % equity in 2013
Directors
7.7.8 Chairman: Mathatha Tsedu
7.7.9 CEO: Matodzi Nesongozwi
7.7.10 Director: Alugumi Dzebu (representing AASMF)
7.8 Brief profile: Manngwe Mining/Assen Iron Ore Mine (AIOM)
7.8.1 Manngwe Mining (Pty) Ltd (MM) established in 2010
7.8.2 Assen Iron Ore Mine (AIOM) “established in 2011
7.8.3 AIOM is a subsidiary of MM
7.8.4 AIOM is owned 100% MM
7.8.5 AIOM special purpose vehicle (SPV) to manage the plant processing
7.8.6 Parties in the SPC are: Concentrate Capital representing DRA (who constructed the processing plant), Manngwe Mining and Minopex
7.8.7 Mining Right, EMP, EIA, Water Use licence and all other statutory requirements were granted in 2015.
7.9 Manngwe Challenges
The following were identified as the challenges faced by Manngwe Mining:
7.9.1 Funding
- Manngwe Mining (MM) original shareholder funded the project prior to AASMF purchase of equity to the value of R50 million.
- AASMF funded the project ot the value of R40 million in equity and loan
- DRA and Minopex funded the plant construction through loan to the value of R74 million
- Arcelor Mittal South Africa (AMSA) funded the project operating expenses, each work and Civils for the plants ot the value of R44 million through prepayment advance
- It was explained that the reason for not funding by institutions like IDC, NEF and the banks was because the project does not meet funding requirement of these institutions, due to the high risk associated with shareholders not being able to offer a collateral.
- The reasons for DRA, Minopex and AASMF being on the board was because these institutions only fund if they can appoint directors and managers to manage the project, thus control the cash flow waterfall.
- The original shareholders would not receive any dividends or payment of their loans until the loan is paid in full with interest, period 3-5 years.
- Government should look into funding vehicles available to new entrants to mining or grants for mine development similar to the Black Industrialists Programme
- The Black industrialists Programme does not include mining but only assists beneficiation projetcs.
- Ownership of mining industry might look like it is changing but until funding of black owned companies is resolved, economic transformation will remain a dream.
7.9.2 Land
- The owners of the land Manngwe Mining is mining are Kumba Iron Ore, PPC and Private landowners (Farmers) 80 % of the land
- Manngwe purchased 35 ha from Kumba Iron Ore
- Manngwe has a 12 year lease agreement with Kumba Iron Ore on land covering 140 ha
- Manngwe has a 12 years lease agreement with PPC on land covering 300 ha
- The total mining area is 6000 ha, but MM has access to less than 10% of the land required for mining
- Local farmers have inflated the price of land on willing seller and willing buyer principle (only one farmer willing to sell, but at an inflated price)
- Only small portion of land belongs to the community
- Suggestion: DMR, Rural and Land Affairs Departments must facilitate on the land negotiations with land owners and purchase thereof.
7.9.3 Rail Infrastructure
- Manngwe Mining transports 45 to 60 kt per month of iron ore to Vanderbijlpark by road, i.e. 520 km round trip, which has a huge impact on the road and risky due to community unrest along the way to the client
- There are two railway sidings – 25 km form the mine
- One belong to PPC, Beesterkraal and another to Transnet Freight Rail (“TFR”) Atlanta
- PPC raised the issue of contamination, lime and Iron Ore cannot be in the same siding.
- The current PPC siding is not in use as the mine is closed but MM must reach a commercial arrangement with PPC with contamination becoming a deal breaker.
- The second one, TFR (Atlanta), requires R75 million of investment to upgrade the siding
- Manngwe Mining does not meet TFR requirements as it cannot offer collateral and has a short off-take agreement with AMSA, TFR prefer off-take of over 5 years
- The current phase 1 off–take is only for 2 years
- In order to increase the off take to 5 years, Manngwe Mining must spend another R40 million on feasibility study for Phase 2
- Suggestion: DMR should facilitate agreement with PPC and TFR.
7.9.4 Infrastructure – water and electricity
- Eskom requires R19 million to bring electricity to the mine
- The mine utilises 4 diesel generators to run the mine
- The mine uses borehole water to run the plant
- No water infrastructure around the mine as it is rural area
- Suggestion: DMR may play a role in resolving this challenge especially that of electricity
7.9.5 Community Relations
- Manngwe Mining together with communities of Ga-Rasai and Kwarriekraal have established Manngwe Mining partnership board in 2015
- The board is responsible for employment, business opportunity, community development, environmental and community company
- Manngwe Mining have employed a total of 202 employees and 96 come from local communities
- The mine has offered bursary to youth to study at tertiary institutions and selections are being finalised
- Manngwe intends to build a Secondary school at the village of Kwarriekraal
- DMR, Madibeng Municipality, Department of Education and Maangwe Mining may have to resuscitate Atlanta Secondary School as an alternative to building a new school.
- The mine lost four weeks of production due to community unrest blocking the mine entrance demanding that the mine supply borehole water facilities; transport for scholars, bursaries, and employs more local people, even without necessary qualifications.
- Suggestion: Madibeng Municipality should be more actively involved in offering basic services to the local community especially water and gravel road maintenance
- Department of Education should set up ABET facilities in the villages to up-skill locals.
7.10 National Development Plan
- NDP aims to eliminate poverty and reduce inequality by 2030
- South Africa can realise these goals by drawing energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, and promoting leadership and partnership throughout society.
- Manngwe Mining would like to be counted amongst active citizens as a company that strives to achieve inclusive economy, by reducing unemployment, poverty and inequality in line with goals of National Development Plan
- Manngwe mining believes that it is through the commitment by Portfolio Committee on Mineral Resources to bring changes and transformation in the mining industry that the mine can achieve objectives of NDP, economic growth and prosperous country for future generation
- Manngwe Mining gives unqualified support to the recently gazetted mining charter 3 as it is in line with the objective of the National Development Plan.
8. Visit to Bakubung Mine
The Committee visited the Bakubung Mine and received the briefing. Mr
H Marule, Stakeholder Relations Manager briefed the committee and the following transpired:
8.1 Bakubung Platinum Mine (BPM) is a subsidiary of Wesizwe Platinum Group listed on the Johannesburg Stock Exchange (JSE)
8.2 Wesizwe is majority owned by a Chinese consortium (45% share) with the Jinchuan Group being the major shareholder
8.3.1 Community Shareholding
8.3.1.1 In 2005 Bakubung Community was the largest shareholder, owning 33% of BPM
8.3.1.2 Shares of the Community were held through a section 21 entity, called Bakubung Community Development Corporation
8.3.1.3 In 2007, the Traditional Council engaged services of a financial advisor (Musa Capital with Antoine Johnson & William Jimmerson as Directors (representing the community in the Board)
8.3.1.4 Musa Capital was mandated by the Traditional Council to sell some of the shares held by the trust
8.3.1.5 About 30% of the shares held by the community trust were liquidated and an estimated value of R 700 – 800 million was realized from the sale
8.3.1.6 The above transaction resulted in a series of court litigation (its aim was to determine the whereabouts of community shares)
8.3.1.7 Wesizwe had no role in the liquidation of shares; furthermore, it did not derive any value from the proceeds of the sale
8.3.1.8 The capital injection by the Chinese consortium of $ 220 million has further diluted the BEE shareholding of the Community trust to less than 6%
8.3.1.9 The Chinese consortium has secured a funding facility of $ 650 million from the China Development Bank
8.4 Health and Safety Performance
8.4.1 The project to date has experienced two fatalities and 31 serious injuries
8.5 Key Facts about BPM
8.5.1 Bakubung comprises an underground mine accessed by twin independent vertical shafts and raise bore hole for ventilation
8.5.2 The main shaft will be for men and materials plus ore, whilst the services shaft will do men and material only
8.5.3 The main shaft will have a hoisting capacity of 250 000 tonnes of ore and 15 000 tonnes of waste per month
8.5.4 Key development phases are as follows: Headgear construction (2013) – Vent Shaft construction (2013) – Shaft sinking (2014) – M Loading Box Flask (2015) – Mine Development (2015) – Main Shaft commissioning (2017) - Process Plant commissioning (2019) – Steady State production (2021)
8.5.5 Capital budget up to May 2017 total R 10.7 billion
8.6 Community Relations
8.6.1 Stakeholder engagement forum, which is a two way engagement platform between the mine and the community, it convenes quarterly
8.6.2 Executive level of engagement, which is a meeting between BPM and Bakubung executive to discuss issues relating to the socio economic development of the Bakubung community, it holds 2 meetings (minimum) per annum
8.6.3 In 2016 BPM spent R 647.7 million on community projects
8.7 Highlights of Community Projects
8.7.1 Water supply in Ledig, Mahobieskraal and Matooster communities (R 15, 8 million)
8.7.2 Bakubung Agricultural Project (R 11, 2 million)
8.7.3 Educational Support and Upliftment Project (R 10, 7 million)
8.7.4 Improving health care services (R 4, 5 million)
8.7.5 Gabonewe Housing Development (2 324 housing units).
8.8 Investment Drivers
8.8.1 Southern Africa hosts 90% of the global Platinum Group Metal (PGM) resources and currently produces 75% of the PGM in the world
8.8.2 Jinchuan Group Ltd is a large mining group engaged in mining, concentrating, metallurgy and chemical engineering and deep processing
8.8.3 Jinchuan is the 4th largest nickel manufacturing enterprise in the world, 2nd largest cobalt manufacturing enterprise in China, and 1st largest PGM manufacturing in China
8.9 Challenges
8.9.1 Depressed global economy and platinum price
8.9.2 Exchange rate risk
8.9.3 Reviewed Mining Charter and its implications on further investments in South Africa
8.9.4 More support for facilitation of work permits by foreign investors
9. Presentation by Maseve Mine
9.1 Profile of Maseve Platinum Mine
9.1.1 Maseve Mine is situated in the Western limb of the Bushveld complex which contains 70% of global platinum production
9.1.2 The mine produces large scale (approx. 10 million ounces) shallow deposits of platinum and palladium
9.1.3 An initial investment of $ 500 million has been made up to date; the mine is currently in the ramp up phase
9.1.4 While platinum prices are depressed, the palladium market is experiencing deficit, due to a combination of limited supply growth and strong demand
9.2 Maseve Mine Overview
9.2.1 The mine was commissioned in February 2016 (Mining right granted in 2012)
9.2.2 Smelter off take is transported to Anglo Platinum (first concentrate deliveries were made in February 2016)
9.2.3 Environmental Management Plan and Environmental Impact Assessment was approved on May 2012 and authorized on September 201
9.2.4 Waste Management Licence was granted by the Department of Environmental Affairs on November 2013
9.2.5 Water Use Licence Number was granted by the Department of Water Affairs on July 2015
9.3 Mine Production Profile
9.3.1 Total current workforce of the mine is 1700
9.3.2 Development and mining in block 9, 10, 11, 12 and 16 is still in progress with 24 reef ends opened
9.3.4 Block 11 is a key block for production in 2017 containing thick and high grade ore (mining is underway)
9.3.5 With regard to processing all major components have been installed and commissioning completed. The main decline conveyor and chairlift is operational
9.3.6 Installation of a power transformer is complete (20 MVA (mega volt ampere))
9.4 Health, Safety and Environment
9.4.1 Key Safety Focus Areas
9.4.1.1 Change management
9.4.1.2 Risk assessment
9.4.1.3 Internal stoppage red card system
9.4.1.4 Legal compliance
9.4.1.5 Team participation
9.4.6 Culture change
9.4.2 Since its inception the mine had a total of 62 injury free days
9.5 Concentrator Capacity
9.5.1 Confirmed milling capacity is 125 000 tonnes per month
9.5.2 Low grade development feed has achieved 70% - 83% recovery, this exceeds design criteria
9.5.3 Reagents and mill ball consumption is within the design criteria
9.5.4 From November 2016 to May 2017 dry tons milled have risen from 29 945 to 50 484 tons
9.6 Procurement
9.6.1 Procurement Procedure
9.6.1.1 Need identified
9.6.1.2 RFQ process for goods and services up to R 100 000
9.6.1.3 Tender process for goods and services above 100 000
9.6.4 Outsourcing
9.7 Procurement Process
9.7.1 SMME (Small and Medium Enterprise) database is maintained by the SLP) Social and Labour Plan) unit
9.7.2 The database is categorized into different areas of operation
9.7.3 To date there are 447 companies on the database
9.8 Procurement Values
9.8.1 Maseve Investments continually strive to support local businesses, in particular suppliers within the six immediate local communities
9.8.2 The company is committed to improve business with BBBEE suppliers
9.8.3 There are six immediate local communities namely;
9.8.3.1 Rasimone
9.8.3.2 Chaneng
9.8.3.3 Mafenya
9.8.3.4 Robega
9.8.3.5 Phatsima
9.8.3.6 Ledig
9.8.4 Maseve procurement gives preference to Maseve’s SLP SMME data base
9.8.5 The SMME data base is updated and maintained by the Maseve SLP department, and made available to the Procurement department
9.8.6 When enquiries are made, the Procurement department will identify companies that provide the required services, and send such inquiries to the companies
9.8.7 Maseve is also actively involved in JV intermediate opportunities
9.8.8 Total procurement spend for the 2016 financial year ended was R 2, 3 billion
9.8.9 Total black equity spend during the same period was R 749, 6 million (32.57%)
9.8.10 Total woman spend (9, 52%)
9.9 Social and Labour Plan (Human Resource Development and SLP)
9.9.1 Interventions entailed; Bursaries, Internships, Portable skills, ABET
9.9.2 Total number of beneficiaries from the above interventions was 187
9.10 Social and Labour Plan Progress Update
9.10.1 First five year plan completed by April 2017 (Budget spent was R 38 million)
9.10.2 Socio Economic status of the mining area (community profile)
9.10.3 Human Resource Development
9.10.4 Local Economic Development (LED) projects
9.10.5 Mining Charter report submitted (March 2016)
9.10.6 Annual report submitted end of August 2016
9.10.7 Second five year plan completed and awaiting management approval and submission to the DMR
9.11 BEE Status
9.11.1 Maseve mining right was awarded in 2012
9.11.3 BEE partner to Maseve is Africa Wide/Wesizwe
9.11.4 Africa Wide/Wesizwe has since been diluted and was filed with the DMR
9.11.5 Mining Charter scorecard was filed as required in May 2014
9.11.6 All documentation provided to DMR. No notice for non-compliance
10. Findings
The Committee made the following observations:
- Too few black people are “mining industrialists”. Rustenburg is centre of the nation’s mineral riches, yet DMR has not succeeded in growing the number of black-owned mines and ensuring that the people share in the mineral wealth.
- Not enough mine inspectors. The high vacancy rate for mine health and safety inspectors (40%) in Rustenburg is unacceptable. This is an area with many safety challenges and the DMR is failing in its duty to workers and communities when it lacks the capacity to apply the laws and regulations that promote zero harm. All vacancies in Rustenburg are fully funded.
- DMR and the community. There is always conflict and disputes when there is mining. The DMR is aware of this, and intervenes where possible, but the intervention is not sufficient to deal with the problems, which spill over into the disruption of mining operations and community unrest. The management of the investments of mining communities, particularly where shares are involved, is often problematic. There is often abuse of community funds from mining.
- BEE presently below 26 per cent. Both the Bakubung, and the Maseve mines currently have less than 26 per cent black ownership. They were compliant when the mining rights were granted, but since then the HDSA shareholding has been diluted.
- Emergent mining companies are often not in real control of the operation of their mines for up to five years. Because banks and Development Finance Institutions refuse to fund mines without collateral, they have to rely on project financing. The financiers require board seats and decide on project issues. This means the black emergent miners are not true owners, despite holding the mining right granted by the DMR.
- Farmers try to extort high rents from emergent miners who hold mining rights. This is the case even for land they do not use for farming. This is outrageous, and hampers the growth of junior miners. The farmers did not put the minerals there. Mineral wealth belongs to the nation, with the DMR as the custodian.
- Black economic empowerment (BEE) shareholders get diluted in their ownership when they cannot answer cash calls to develop the mine. This creates problems for the junior mining company when it cannot maintain its required level of BEE shareholding. The dilution also means the returns for the BEE partners are less.
- Joint SLP commitments are welcome. The Committee welcomes the way that DMR has approved that Wesizwe and the neighbouring Maseve mine have undertaken jointly to build a water reservoir for the Moses Kotane Municipality IDP. All SLP projects align with provincial development priorities and joint projects between mines in the same area improve the benefits for the community from mining.
- Innovative community projects, implemented by all three of these junior miners, are impressive. This is particularly so because the projects are in place now, even before any of the mines are revenue positive. These projects are part of the Social and Labour Plans (SLPs) and range from farming and catering to water and other infrastructure. They include the youth and women, as well as close interaction with the integrated development plans of local municipalities.
- DMR as a “coach” to assist mines to comply. The Committee heard from the mines themselves how the regional office of the DMR in Rustenburg assists them to comply with the laws and regulations, particularly on safety. The DMR acts as a helpful coach, before it intervenes as a referee.
11. Recommendations by the Committee
The Portfolio Committee on Mineral Resources having heard evidence from all stakeholders listed above recommends the following:
11.1 The Department (DMR) devise a strategy to position more black miners to enter the sector especially in the North West province, in order to exploit minerals in the Western limb of the Bushveld complex
11.2 The Regional Office motivate for the funding of inspectors posts, the 40% vacancy rate is unacceptably high
11.3 The DMR should make a proposal to the Committee on the most effective way of protecting community investments in mines, while at the same time minimizing friction amongst community structures
11.4 The DMR should investigate funding models that will ensure effective control of the mining project by BEE owners, MoU with development finance institutions should be considered in this regard
11.5 The DMR should adopt a common framework of dealing with farmers who deliberately frustrate mining by demanding exorbitant fees (in the form of rent) on land which they are not using, given that expropriation without compensation is provided for in the constitution.
11.6 The DMR should work with affected mines to deal with the issue of ownership dilution, due to what seems to be illegal liquidation of BEE holdings
- Government needs to develop a Black Mining Industrialists programme to accelerate transformation in the mining sector in pursuance of the NDP objectives
- This should include staged developmental assistance that provides appropriate advice, facilitation and permissions at each stage of the development of a new mine
- Emerging mine developers should get government funding to pay for the studies, plans, consultations and investigations that surround applications for right to mining. Most of these instruments – all necessary for a sustainable mining sector – are costly and were not in place before the MPRDA. Established miners today did not face these costs, but emergent miners do and this retards transformation and diverts energy to other sectors of the economy.
- The growth of the mining sector, and its provision of good jobs, is a key responsibility of the DMR. Junior miners are the key to this process
- Eskom and Transnet (and other bulk service providers) should be approached by DMR in the interests of junior miners, so as to improve the benefits available from new mines. Coordination of government departments to better serve new entrants and junior miners would greatly aid in the reduction of the cost burden of mining.
- DMR needs to address the opportunism and abuse of the law by surface land holders who demand high rentals for leasing land where mining permits and rights have been granted. Surface right holders are entitled to full, reasonable compensation when mining interrupts their use of the land, but they are not entitled to extort huge payments to the extent that they profit from the fact that there are minerals below the surface. The minerals belong to the nation, not to the holder of surface rights.
- DMR needs a mechanism to assist communities to manage investments in mines and the income/royalties they get from mines.
- DMR needs to take responsibility for building the relationship between mines, communities and local municipalities so that it is constructive. Mining is a national competency and stability in communities surrounding mines is vital to orderly mine development.
- DMR needs to approach the Department of Home affairs to ensure that junior miners, when required, get the work permits they need for foreign nationals. This is particularly harmful when foreign investors in mining are themselves denied work permits, or their documentation is delayed.
- Vacancies must be addressed. The senior management of DMR should apply their determined efforts to fill the 40 per cent vacancy of inspectors in the Rustenburg Regional office in 2017. In the longer term, it is apparent that the scheme to train 50 inspectors needs to be an ongoing programme, within the Department, not a once off. This issue should feature in the 2018/19 Annual Performance Plan.
12. Conclusion
The Committee expresses its appreciation to the managements of Assen Iron Ore Mine (Manngwe Mining (Pty) Ltd), Bakubung Minerals (Wesizwe Platinum Ltd), and Maseve mine (Platinum Group Metals (RSA) (Pty) Ltd) for honestly explaining the challenges they face. The visit has assisted the Committee significantly to exercise its oversight responsibilities over the DMR. Several specific issues have been identified for follow-up in Parliament as a result of the oversight visit.
Report to be considered.
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