ATC181107: Report of the Portfolio Committee on Mineral Resources on its oversight visit North West and Gauteng on the 13-14 September 2018, dated 07 November 2018

Mineral Resources and Energy

Report of the Portfolio Committee on Mineral Resources on its oversight visit North West and Gauteng on the 13-14 September 2018, dated 07 November 2018

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


  1. Introduction


A delegation of the Portfolio Committee on Mineral Resources (the Committee) visited North West and Gauteng Provinces from 13-14 September 2018.


Two specific mining operations in business rescue were in danger of being liquidated in terms of company law (Company’s Act of 2008). The PCMR needed to understand challenges that the Department is facing in dealing with mines that may not have sufficient resources to cover environmental rehabilitation costs in the event of closure.


The management of distressed mines is a major weakness in current mining policy. The PCMR needs to understand whether the weaknesses are due to poor implementation by the department or gaps in the mining legislation.


The first objective of the oversight was to visit Shiva Uranium/Gold mine in Klerksdorp, North West Province. The environmental impact of the mine is under question, and whether or not required rehabilitation is adequately funded. The issue is whether the Department of Mineral Resources has monitored the situation with sufficient care to ensure that environmental laws are properly enforced. For example, the Committee had been informed that:

  • No work was going on at the mine. Shiva security (who had not been paid) and security appointed by the IDC were said to be the only people on site.
  • Certain equipment had been stolen or vandalised. A security bakkie was burned and the jaw crusher has been broken. One person estimated the cost of damage and replacement would be in the region of R30 million.
  • Local people say a former mine manager and his family members were trying to get workers to sign some sort of document. There were reports of threatening behaviour to workers.
  • An allegation has been made that some former management were trying to falsify reports of how much gold is still at the mine to make it seem more viable.

The second objective of the oversight was to visit Mintails mine in Mogale City, Gauteng Province and get a briefing from DMR and environmentalists where the Department has failed to ensure that this mine had made the required provision to repair over R300 millions of environmental damage.

  • Why had the Department not required that funds be deposited long before the company went into business rescue?
  • What steps will the Department take against the owners and directors of Mintails to ensure that they are held personally responsible for paying the money needed for rehabilitation, now that the business rescue process has failed?


The PCMR is often confronted by instances of the devastation caused by careless mining where the DMR says it is a state liability because no-one can be found to take responsibility.


In the case of the Mintails operation in Krugersdorp, this mine went into business rescue in 2015 at a time when the mining company had an unfunded environmental liability of over R300-m. It had saved barely R20-m for all its responsibilities.


According to the Business Rescue Practitioner, Mr Dave Lake, DMR withdrew its demand for a cash deposit as security “and agreed upon a ground-breaking and pragmatic approach for Mintails to practically effect rehabilitation activities monthly over the life of mine.”


This action of DMR staved off immediate liquidation of the mine in 2017 (and was said to have saved 800 jobs). But now the mine has been finally liquidated and there are not enough funds saved to pay for the environmental rehabilitation of the site.


The DMR was quoted as saying that it would engage with the appointed liquidators “with the intention to safeguard the environmental and social responsibilities.”


The Committee visited the two mining areas and held meetings with some of the stakeholders.


3.         Composition of Delegation


  1. Parliamentary Delegation


The delegation was constituted by the Chairperson of the Committee as the Leader of the delegation, Mr S Luzipo (ANC), Mr M Matlala (ANC),  Ms MV Mafolo (ANC); Ms HV Nyambi (ANC) Mr I M Pikinini (ANC), Adv H C Schmidt (DA), Mr J Lorimer (DA), Mr T Rawula (EFF) Mr S Jafta (AIC).


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


3.1.3     Guests in Attendance





Adv T Mokoena



Mr MMA Zondi

Deputy Chief Inspector of Mines and acting chairperson, MQA


Mr X Mbonambi

Acting Deputy Chief Inspector


Mr S Mabaso

Regional Manager: Gauteng


Mr R Nkambule

Chief Director


Ms M Maduka

Deputy Director: MEM


Ms R Masenya

Director: Mine Clousure


Mr F Nkuna

Acting Principal Inspector Of Mines


Ms M Liefferink


Federation for Sustainable Environment (FSE)

Ms J Sherlok



Mr N Zindela

Regional Manager: North West


Mr K Mhlongo

DGs Office


Mr K Matrose

DGs Office


Mr K Mateboge



Mr T Ngwenya

Principal Inspector


Mr S Mabaso

Regional Manager: Gauteng


Mt K Malefo

Acting Director SDM


Mr H Phumudzo

Deputy Director Mine Environment


Mr T Manakana

Deputy Director Mine Economics


Ms R Dyobiso

Senior Inspector of Mines


Mr C Murray

Business Rescue Practitioner

Sechaba Trust

Mr C Monyela

Business Rescue Practitioner

Sechaba Trust

Ms R Murray

Office Administrator

Sechaba Trust

Mr R Van Zyl

Financial Manager

Sechaba Trust

Ms N Mabelane

Marketing Manager

Masiye Administrators Cc

Mr M Tumi



Mr J White

Ops Manager


Mr M Moloi

Ops Manager


Mr C Rheeder



Mr P Richardson


Shiva Uranium Mine

Mr I B Marais

Mineral Resource Manager

Shiva Uranium Mine

Mr J Kruger

HR Manager

Shiva Uranium Mine

Mr P H van der Merwe

Mining Rights Officer

Shiva Mine

Mr R J Barnard

Mine Manager

Shiva Mine


4. 1       Shiva Uranium: Presentation by BRPs


4.1.1     HISTORY

The current Business Rescue Practitioners, Cloete Murray and Chris Monyela were appointed following a Court Application brought by the Industrial Development Corporation (IDC) on Thursday, the 31st of May 2018.  The IDC applied for the removal of the erstwhile Practitioners, Kurt Knoop and Louis Klopper.  On the morning of the hearing, Knoop and Klopper resigned.  This led to the appointment of Cloete Murray (31 May 2018) in terms of the Court Order.  Chris Monyela was then appointed by the CIPC on Friday, 1 June 2018. 


The new Business Rescue Practitioners immediately made arrangements to visit the mines, which happened on Monday, the 4th of June 2018. 


Shiva Gold: Hartbeesfontein, Klerksdorp

On arrival at the mine in Hartbeesfontein, the Practioners found that the mining operations have ceased but that the employees were still on the mine.  They met with mine management and employees present on the day.  The employees were requested to form an Employees Committee in terms of the Act.  They were advised that the mining operations were halted when the business rescue proceedings commenced in February 2018. 

The Practitioners were made aware of the volatile security situation on the mine and the incidents that had occurred shortly before their appointment.  They were also advised that a number of the electrical cables had been stolen and that there was no electrical supply to some parts of the mine.

The Practitioners are in the process of identifying suitable contractors who might be interested in mining the Hartbeesfontein mine in an attempt to establish an income stream.  No firm offers have been received to date and this process continues.

Shiva Gold: Brakfontein Delmas

The BRP’s explained the complex interconnections between the Shiva Gold mine in Klerksdorp and a coal mine that the company operated for another right-holder near Delmas. This contract was critical to Shiva Gold because it could earn the company immediate income, to deal with all its debts and responsibilities.

On arrival at the mine in Brakfontein, the BRPs met with the mine management and employees present on the day.  The employees were requested to form an Employees Committee in terms of the Act.

The BRPs found that the mining operations had also ceased although there was a stockpile of coal next to the crushing plant.  The mine manager also informed them that there was a Section 54 notice in place in respect of the Health and Safety aspects relating to some of the mining equipment being used on the mine.  It should be noted that this mining equipment did not belong to Shiva but rather to a related company, Confident Concepts.  These assets have in the meantime been sold by the Business Rescue Practitioners of that Company and have been removed from the mine. (This automatically lifted the notice).

The Practitioners, in the meantime, identified a suitable mining contractor which will start mining the Brakfontein mine in terms of a contractor’s agreement to be concluded with him. This process was severely delayed because of the refusal and/or inability of the employees to agree among themselves to continue the mining operations.  Action by the employees at Brakfontein has hindered the company from getting back on its feet.

As soon as the contractor’s final agreement has been signed, the relevant appointments will be made and forwarded to the Department.


It was reported that the Company was currently in a severe financial predicament primarily because of the following reasons:

  1. The refusal and/or inability of Eskom to pay the amounts due to Shiva Uranium via its ultimate owner, Tegeta, in terms of a sub-contractor agreement.  The amount due is in the vicinity of R9,5-million and notwithstanding various requests to both Tegeta and Eskom, this money had not been paid.  The BPRs were advised that Eskom refuses to make payment on any of the amounts due to all the entities related to Tegeta. 
  2. The Practitioners require post-commencement finance in order to secure and preserve the assets of the company and to pay the salaries of the employees.
  3. The Practitioners were led to believe that the IDC would provide post-commencement finance to allow them sufficient time to market and dispose of the two mines to the best benefit of all concerned.  This post-commencement finance has however not been forthcoming.  They are not aware of the reasons, although it was a decision of the IDC board.
  4. The Practitioners have also not been successful in procuring post-commencement finance from any other source.  The holding company, Oakbay Resources, is not in a position to provide post commencement finance as they have no transactional banking facility available in the country.
  5. If no post-commencement finance could be procured by the end of September 2018, there was a very good likelihood that the Practitioners would have to apply to the High Court for the provisional liquidation of the company.  This was said to be a very last resort and it would have a dramatic impact on employment and the communities on and around both the mines. 


There are 152 employees at Brakfontein and 200 employees at Hartbeesfontein. The employees have not been dismissed or retrenched and their employment contracts are still in place. 

The employees on both mines have formed Employees’ Committees who represent them.  The Practitioners have not been in a position to pay the employees’ salaries in full.  The employees had been paid their June salaries as well as a portion (30%) of their July salaries.  The remainder of the July salaries as well as the August salaries would be paid as soon as possible.

The Practitioners communicate with the employees on a regular basis through a bulk sms system or via the Employees’ Committees.  The Practitioners have also engaged with the representative labour unions:  AMCU (Brakfontein) and NUMSA (Hartbeesfontein).



There is a large security contingent present at the Hartbeesfontein mine at a huge expense.  This is mainly because of the incidents of cable theft and the illegal mining activities.  The security contingent consists of stationary guards, mobile guards and a reaction capacity.

The security situation has calmed down considerably after the appointment of the new Practitioners with no major incidents.  The three incidents (burning of a conveyor belt, burning of two transformers) have been reported to the SAPS and the mine management have met with the SAPS regarding it.

Regarding the allegations of the vandalizing of assets, these incidents occurred before the appointment of the present BRPs.


The environmental risk posed by the mine is minimal as there are no mining activities taking place.

Regarding the rehabilitation guarantee, the Practitioners have been notified by Guardrisk that the guarantee would be cancelled.  After engaging with Guardrisk, they agreed to withdraw the notice and re-issue it in four months.  The Practitioners are aware of the R38 million shortfall, but the company is not in a position to pay it. However, the physical challenges on the mine will be attended to in order to reduce the shortfall.

Regarding the section 54 notice issued by the Department for Brakfontein, the majority of the notice related to the equipment on the premises of the mine.  As mentioned above, these vehicles were owned by Confident Concepts and have been sold.  A letter will be forwarded to the purchasers in which the section 54 notice will be brought to their attention.


The current Business Rescue Practitioners have been inundated with a number of legal challenges since their appointment from the previous shareholders/directors.  This by enlarge relates to the appointment of Murray and Monyela.  The one matter that has been adjudicated was found in their favor.  There are currently two legal matters that still need to be adjudicated and although the Practitioners are confident of their legal positions, the legal costs are escalating, and the funds being diverted to the legal fees could have been better allocated to the critical expenses of the company.


Various companies / individuals have approached the Practitioners to purchase the mines.  The Practitioners have, together with an outside forensic auditor, introduced a vetting process to which potential purchasers have to submit themselves.  This process includes making available basic financial information such as the latest financial statements and external confirmation of funding.  To date, not a single party that has contacted the Practitioners could provide the requisite information.

The Practitioners stated that the Shiva assets are contaminated due to the involvement of the Gupta’s before the business rescue process commenced. A number of companies have indicated that they are not willing to purchase these assets for that reason alone.  This will have a dampening effect on the ability of the Practitioners to sell the mines as going concerns and to procure post commencement funding.  When and if the mines have been sold, the section 11 process in the MPRDA will follow.

The financial predicament makes it impossible to launch a comprehensive marketing campaign to dispose of the mines.


4.2        Presentation by DMR


4.2.1     Mining Right


The Regional Manager, North West, Mr N Zindela made a presentation. He started with the introduction saying Shiva Uranium was issued with mining rights in respect of various portions of farms situated in the Magisterial district of Klerksdorp. There is an approved section 11 application for Oakbay Resources (Pty) Ltd to acquire 100% of the entire issued share capital and loan accounts of Uranium One Africa Limited business and assets dated 09th April 2010. Uranium One Africa Limited was also the right holder at the time and there was a name change to Shiva Uranium hence the rights falls under Shiva Uranium.


Shiva Uranium has three mining rights issued in the North West Province under file reference numbers 228MR, 400MR and 401MR. Mining Right  228 was issued on the 28th of October 2006 with a duration of up to October 2036 for gold ore and allied minerals, uranium ore and allied minerals, rare earths and monazite (heavy minerals) over various portions of the farms Hartbeestfontein 297 IP, Rhenosterhoek 299 IP, Ryneveld 300 IP, Bramley 301 IP, Syferfontein 303 IP, Syferfontein 333 IP, Rhenossterspruit 326 IP, Wolwerano 425 IP, Wolwerano 413 IP, Rietkuil 397, Rietkuil 414 IP.


Mining Right 400MR was issued on the 10th of March 2011 and is valid until the 9th of March 2041 (30-year period), it allows the company to mine uranium and precious metals over the following farms; Rietkuil 397 IP, Rietkuil 414 IP, Wolwerand 413 IP and Wolwerand 425 IP. Mining Right 401MR was issued on the 10th of March until the 9th of March2041 for 30 years for uranium and precious metals over portion 44, 48, 49, 50, 51, 54, 55, 56, 57, 58, 59, 60, 61, 62, 73 of the Rietkuil Farm (397 IP).


Shareholding Structure

The shareholding structure of Shiva Uranium in respect of the three mining rights is as follows:

Oakbay Resources (PTY) Ltd                             74%

Islandsite Investment 255 (PTY) Ltd                    26%

Islandsite investment is made up of five shareholders namely Silver Heron Trade 14, Zim Holdings, Dixie Investments, Kyovert Holding who together hold 17.5% of the Islandsite Investment, while Mabengela Investments holds 45% of the Islandsite Investment, with the remainder being held by the MK War Veterans Association, Dominion Reefs Uranium Mine HDSA Community Trust, Aflease Workers Trust and Management.


4.2.2     Mining Works Program


Mining is executed through three declines and an incline namely dominion 1 and 2, Rietkuil and Rietkuil incline as per the approved Integrated Mine Works Programme. The production rate per annum (tpa) is 2400 000 tons, the initial production rate is 200 000 tons/month and was to increase to 400 000 tons/month when the mine has reached a steady state.


Geology of the Area:


The Uranium and Gold mineralization is hosted within two narrow, quartz pebble conglomerate units that are located within the lower sedimentary unit of the Dominion Group. The Dominion Group sedimentary and volcanic uncomfortably overly Archaean granites. There are two major areas under consideration are the Dominion Reef and Rietkuil areas. The lower and upper reefs are of major economic interest, with the middle reef being of a lesser economic importance, the economic horizons are outcropping in the Rietkuil and Dominions Reefs. A resource statement was compiled on the 30th of November 2009 by Mr Izak Bosman Marais (Mineral Resources Management certificate at Wits and is professionally registered). The uranium yield of the mine (Dominion Group) geology is 0.48 kg per ton and the total yield of the mineral is 90 Kilo Ton. With respect to gold the yield is 1.04 gram per ton with a total gold content of 194 kg. According to the competent person’s report the Rietkuil geological yield is 5.79 grams per ton which is equal to 661 658 ounces of gold in terms of the overall gold content.


4.2.3     Mining Operations


As per the report submitted in terms of section 28 of the MPRDA, the company undertook opencast mining, the production from the opencast gold section from July 2017 to 2018 April was 144 kg, for the same period 7kg of silver was produced and no uranium was produced. During the same period 211 people were employed by the operation together with 255 contractors. On the 30th of April 2018 there was no production.


4.2.4     Social and Labour Plan


Shiva Uranium Limited has one integrated Social and Labour Plan (SLP). The company’s first Social and Labour Plan commenced in 2011 (which was due in 2016). The second SLP (2017 – 2021) has been submitted and approval is pending. The initial SLP is still active following section 93 order issued on 08 March 2018 on non-compliant elements in respect of Human Resource Development Programme, Employment Equity and Local Economic Development projects, the company submitted an action plan to address the non-compliance in response to Section 93.


4.2.5     Human Resource Development Compliance (Social and Labour Plan 2011 - 2016)


The company did not meet committed targets in respect of the following:

  • Internal and external learnerships.
  • Employee portable skills.
  • Career progression.
  • Mentorship.
  • Bursaries.
  • Internship.

At the time of the audit, the company’s employment equity status was below the Mining Charter target of 40% HDSA in terms of top, senior and middle management.

Local Economic Development Projects Compliance (Social and Labour Plan 2011 – 2016).


The company is behind and did not complete implementation of the Enterprise Development Centre and Upgrading of Bakang Primary School. Furthermore, the company only implemented one project, namely Semogare Agricultural project. The project is however currently not operating, it consisted of six beneficiaries from Tigane Village with the produce sold to Matlosana Fresh Produce Market and the general public.


Housing and Living Conditions Compliance (Social and Labour Plans 2011 – 2016)

The company does not have employees living in hostels, the hostel buildings are used as work offices. There is no ownership scheme in place, the company pays transport allowance.


4.2.6     Environmental Compliance


Shiva Uranium (Pty) Ltd has a financial provision to the amount of R 61 424 275 provided in a form of several insurance guarantees issued by Guard Risk Insurance Company Limited. In respect of the environmental liability report submitted, there is a shortfall amount of R38 594 383 which must be provided by the company. A compliance notice was issued to the company on the 20th of April 2018 to request a shortfall amount, however it has not been provided to date. A compliance notice was sent to the company dated the 11 April 2018 to instruct the company to provide the shortfall amount. A feedback letter was received from the company on the 09th of May 2018 indicating that the company is not in a position to provide such an amount based on their current financial status. On the 14th August 2018, this office has received a formal notification by Guardrisk insurance company stating their intension to withdraw Shiva Uranium Guarantees after four (4) months from the date of notification (12 December 2018). The company was informed about Guardrisk’s intention and was required to make alternative arrangements to provide financial provision within 60 days from the date which the letter was signed i.e. 30 August 2018.


4.2.7     Rehabilitation on site


The inspection conducted on the 30th June 2017 revealed that the company was not rehabilitating the disturbed environment in line with the approved EMP. The company was requested to provide the rehabilitation plan with target dates for implementation indicating how outstanding environmental liabilities will be dealt with (letter dated 27 July 2018), such report was never submitted to the Department. A follow up inspection was conducted on the 7th   of March 2018 and the findings were that the rehabilitation was conducted in a very slow pace considering that a small portion of the disturbed areas was rehabilitated.


4.3        Members raised the following questions and concerns:


  • Members wanted to know the nature of legal issues to be finalised.
  • If there was some form of security towards environmental rehabilitation.
  • Clarification on statements (contradiction) on employees. No retrenchments and no employees.
  • What else has to be rescued in Shiva except employees. What other assets are there?
  • Confused about what assets are there. What is the next step?
  • IDC. Why the money has not been forthcoming.
  • No prospects. How much do you think IDC will be able to recoup?
  • More details why it is difficult to dispose assets in question.
  • Non-operation of the mine does this not expose the operation to illegal mining.
  • How often does BRP meet with DMR?
  • Confusion about the non-availability of the plan.
  • Purpose of appointing the BRP is to get the mine back into operational mode.
  • Issue of payment of salaries for employees, timeframe.
  • Does DMR have enough rehabilitation fund.
  • Will you share in future the names of potential buyers and how long it will take to finalise the process?
  • Relationship with unions. How often do you meet with them?
  • IDC, go to court to get their R293 m. Can you share more information regarding this?
  • Credibility of BRP. What is it as BRP, that the ones before were doing in the Shiva mine?
  • Members wanted to know the process followed in appointing the BRPs, as well as demographics and credentials. 
  • Regarding Braakfontein, asset is held by Concept, what then becomes the role of the BRP.
  • Estimated rehabilitation cost of this mine.
  • Estimated rehabilitation cost of the mines under Tegeta /Oakbay.
  • Is there a possibility that they will not be able to meet their rehabilitation obligations?
  • What is the department doing on the matter of Shiva? Worried appointed Liquidators as BRP.
  • Have you engaged IDC and what are they saying about the current situation?
  • Clarity on the report referred by RM.
  • Project infrastructure operations, RM not clear whether employees were retrenched or on 30 April 2018.
  • Matlosana fresh produce market and general public. For how much was this project sold to Matlosana.
  • Discussion for process on management for mine to operate. Clarity sought.
  • Has DMR been in discussion with mine management on processes?
  • Find a report of the previous BRP who were appointed before.
  • Slide 21, those vetted are the one who showed interest to purchase the mines?
  •   You can’t rescue, Tegeta group, Revoke licence.
  • Why is there a shortfall in rehabilitation funds? How come that gap was allowed to exist?
  • Down the line the department must tell the Committee what it has learnt or what is it learning. Can’t get an indication that a license comes with responsibility and consequences.
  • The Committee was concerned about the lack of implementation of the law and proposed that maybe in future they need to look at where it can be fixed.


4.4        Responses from the Department and BRP


  • First legal challenge related to the appointment of current BRP. They contest that their appointment was not legal according to the legislation.
  • Second one, labour, related to portion of unpaid wages.
  • Current fixed deposit of R61m by Gourd risk. No one from the insurance companies is prepared to invest in replacement guarantees.
  • Employment issue, except 3 suspended, no employees has been dismissed or suspended.
  • Actively engaging with potential buyers of the mine. Business Rescue Plan has not been published yet, Mr Khumalo doesn’t have funding.
  • IDC finance, when appointed, was advised that IDC will provide finance, as for the reason not forthcoming, they don’t have any idea.
  • IDC made a loan of R250 m in 2011 to Shiva and it was never repaid. Interest portion was converted to equity under Oakbay Resources. When Shiva went into Business Rescue only R38 million was owed, R250 million is a contingent liability.
  • Stockpile agreement to sell. The contractor did not physically remove the stock because of disruptions at the mine.
  • Eskom owes money to Tegeta and has taken the issue of non-payment with Tegeta.
  • When the BRP was appointed it made a financial plan which hast not been approved yet.
  • Illegal mining is the problem in Hartbeestfontein.
  • Regular interaction with the DMR. There is a designated website for Shiva. communication and talks with employees is good. Held three mass meeting with the communities in Braakfontein though the community is divided.
  • Salary issue is a big concern. As soon as we receive money, employees will be paid.
  •  IDC questioned the independence of initial BRP’s. They were appointed by the Board of Directors.
  • Moyane, the Liquidator, has been practising for 20 years. Mostly deal with labour issues. He was approached by NUM.



  • A concern was raised, given that the Committee had a meeting with the Minister in connection with this mine. Observation of BRP, Companies Act regards the process as a business ICU, which eventually leads to liquidation.
  • Did not issue section 11 but issued section 93 and NEMA to top up.
  • When the company has a shortfall, the department has to top up as creditors.
  • Company has generally not been compliant with SLP.
  • Vetting of potential buyers, BRP find out they do not have cash flows.
  • Scenario analysis, not done. 
  • Retrenchments, error.
  • DMR have funds for rehabilitation.
  • Section 54 that was issued to Braakfontein for non-compliance of the machinery. They informed the department that that the machine was sold, if that is the case then section 54 falls away.
  • IDC loan is a stand-alone loan, rehabilitation deals with environment. The total amount of the required financial provision for rehabilitation is R61 million, but there is a R38 million shortfall, still owed by the mine.  DMR has a limited control during the business rescue stage.
  • Whatever is produced will be sold to Matlosana market.
  • The DMR has constant engagement with the BRP’s to make sure that the mines are do not go into Liquidation.


5.         Briefing by DMR on the Liquidation of Mintails


Mr S Mabaso, Regional Manager, Gauteng gave a summarised overview of the state of affairs at Mintails and responded to the questions raised by the Portfolio Committee on Mineral Resources.  In terms of the legislation, National Environmental Management Act (NEMA) empowers the Minister to prevent pollution or ecological degradation of the environment or to rehabilitate dangerous occurrences by utilizing financial provision made by the holder of the relevant reconnaissance permission, prospecting right, mining right, retention permit or mining permit. The MPRDA provides that the right lapses upon final liquidation or sequestration, however the Palala Judgement, the Supreme Court of Appeal ruled that the right continues to exist.


With regards to ownership, Mintails SA subsidiary of Mintails Limited  a public company listed in the Australian Securities Exchange., 74 % - Mintails Limited. 26 % - not allocated*.

 * The 26% was previously held by Dikgoshi Pty Ltd an HDSA  entity which was bought out due to differences.   No replacement of the BEE ownership to date.


5.1        Mining Rights Operated by Mintails SA



Ref No

Date Granted



Expiry Date


West Wits Monarch





Not operational (opencast)

Minerals and Mining Reclamation





Not operational (underground)

Mogale Gold





Operational (opencast and dumps)


The Mining Rights were granted but never issued due to shortfalls in Financial Provision and non-compliance with SLP.




  • Mogale Gold (206MR) is 100% subsidiary of Mintails SA.
  • Minerals and Mining Reclamation Services (133MR) is 100% subsidiary of Mintails SA.
  • GP132MR was acquired from West Wits Mining (DRD), section 11 was lodged to  
     transfer it to Mintails SA but was subsequently withdrawn due to lack of BEE.
  • The entire Mintails operation has 260 permanent and around 500 contracting
  • Mogale is the one with higher potential since it has a plant where potential buyers
    have more interest but has the highest liability.

5.2        Environmental Liability and Financial Provision

Ref No


Amount Provided

Form of Provision



88 727 794.19

23 001 853.00

Trust Fund – DRB

65 727 794.19


13 678 265.00



13 678 265

GP206 MR

383 561 751.88

2 600 000.00

Bank Guarantee

380 961 751.88


485 967 811,07

25 601 000.00


460 367 811.07


5.2.1     Environmental Liability and Financial Provision


  • After numerous directives by the RM, the DG directed Mintails on 9/10/2014 to fully provide for GP 133MR with immediate effect and further relaxed the requirements by allowing a six months payment plan to fully provide for GP132MR and GP206MR in terms of MPRDA.

·Management changes in 2015 at Mintails disputed the liability, thus Mr Moolman the new CEO, appointed Golder Associates Africa, in 2016 and later appointed Digby Wells Environmental in 2018. Both consultants brought low liability figures which are tabled in the next slide.


5.2.2     Liability Quantified by Golder and Digby Wells




Golder Report – Feb 2016

R258 749 771.00

Digby Wells Report – Mar 2018

R245 870.177.64


The DMR could not accept these figures as they were not compliant with the relevant Regulations.



  • The company did not comply with Social and Labour Plan commitments on HRD, LED and Portable skills (much needed now) training despite numerous orders, the latest issued on 10/08/2017.
  • Mintails has not complied with the Mining Work Program. They processed ore from third party clean-up operations which was not approved in the MWP. This was stopped through a directive on 29/03/2018 and the third parties were engaged and directed to take corrective measures and the company lamented this stoppage as a contributing factor to their financial crisis.
  • Despite directives issued on 23/12/2015 and 12/09/2017, Mintails failed to submit audited financial statements for the past five years as required in terms of Sect 28 of the MPRDA the DMR to assess their financial performance.

5.2.4     Actions Taken


  • The Department had numerous engagements with Mintails and sent several statutory notices to remedy these non-compliances, in response the company pleaded financial crisis and repeatedly requested extension of the deadlines with promises to comply.
  • This matter was then referred to Compliance Section for further handling and possibly instituting prosecution to hold the directors liable.


5.2.5     Mintails ’Engagement with the Minister

·Around May 2018, Mintails requested DMR to approve the release of the rehabilitation trust funds guarantees (held by DRD Trust Fund) in order to rescue their cash flow crisis with the promise that they will replace the trust fund when the company gets into a healthy financial status. This was refused as it was against Section 24P read together with EIA Regulation 7 of the National Environmental Management Act.


·On 19 June 2018 on a meeting held with Mr Harbour, the major shareholder, Mr Lake, the Business Rescue Practitioner and Mr Moolman, the CEO of Mintails they were instructed to remedy the non-compliances with immediate effect and also submit a comprehensive business rescue plan before any request for assistance could be considered.


5.2.6     Provisional Liquidation


  • On 31 July 2018 the BRP was instructed by the majority shareholders to apply for provisional liquidation which was granted on the 17th August 2018.
  • Liquidators have been appointed and are currently engaging with the Department.
  • The hearing for final liquidation is set for 18 September 2018.
  • Upon announcement of liquidation, the Regional Manager conducted an inspection on 08/08/20158 to ascertain the status of liability on site and confirmed that an independent audit is require before accepting the liability as proposed.


5.2.7     DG’s Engagement with Liquidators



  • The DG met with the liquidators on 07/09/20185 to ascertain the status and the role the DMR can play to avoid the situation deteriorating to the level of Blyvoorzicht gold mine and Aurora.


The following interventions were requested from DMR:


  • Allow paying the liability over the life of the mine in order to enable prospective buyers to afford the huge liability requirements.
  • Request Eskom to extend the deadline for switching off the electricity supply set for Tuesday 11 September 2018 as this could result in a dire situation resulting in the assets being vandalised to a state of beyond recovery due to lack of security.


5.2.8     DG’s Role after Engagement


  • The DG wrote to Eskom CEO on the same day requesting extention of the cut-off date by 60 days, however Eskom responded by confirming a deadline of Wednesday, 12 September 2018 if no payment of R2m is made by 14:00.
  • On the second request, the DG promised to explore the possible regulatory transcripts enabling the payment of Financial Provision in stages over the life of the mine and to revert back to the liquidators.
  • DMR hoped that a determination/solution could be made to rescue the situation to avoid a humanitarian similar to the Blyvoor and Aurora.


5.3        Presentation on Mine Health and Safety Inspectorate


Mr F Nkuna outlined the presentation as follows; Health and Safety performance (mandatory Inspections and Audits, Health and Safety challenges (Liquidation), Legal Appointment, medical Examination and Explosives), Illegal Mining and impact of surrounding Communities.


It was reported that there were 2 reportable accidents that were dispatched to the Office of the DMR which was on May 2016, where an employee’s finger caught on the conveyor belt gear box and July 2018 accident where the security personnel was gassed inside the security booth. Audits and Inspections have always been conducted for both surface and underground. All disciplines have participated in individual inspections.


5.3.1     The following were reported as Health and Safety challenges during liquidation:


  • Mine Health and Safety Act to be maintained.
  • Key Legal Appointments.
  • Healthy and Safe Environment Sec 5.
  • Records of Medical Surveillance Sec 15.
  • Explosives Evacuation Chapter 4 Reg 4.2(1).
  • Annual and Quarterly Environmental Reports Chapter 9.
  • Survey plan underground and surface Chapter 17.
  • Reportable accidents and incidents Chapter 21& 23.


5.3.2     The following were reported as Health and Safety challenges for Personnel:

  • Appointment of Chief Executive Officer.
  • General/Plant Manager.
  • Electrical or Mechanical Engineer.
  • Safety Officer.
  • Health and Safety Representative.
  • Security Personnel.
  • Full or Part Time Occupational Medical Practitioner.

Whilst the plant is winding down or still functional key appointments should still be maintained.


5.3.3     The following were reported as Health and Safety Medicals challenges:


  • Records of Medical Surveillance including Exit Medicals.
  • Employees still within service medicals to continue.
  • Employees leaving the service undergo Exit Medical Summary (Exit Audiogram, Exit X-Ray Lung Function, Biological Monitoring Occupational Diseases, Summary of Compensation).
  • Records to be kept for more than 30 years and accessible to stakeholders and employees.


5.3.4     The following were reported as Health and Safety Explosive challenges:


When mine closure in intended or when mine is not being worked.

  • Type of explosive.
  • Quantities.
  • Location of such explosive.
  • Measures taken to safeguard persons from significant risk associated with explosives.


Engagements with Inspectors of Explosive with relocation for such to Supplier/s.


With regards to illegal mining, it was reported that illegal mining is happening at West Village between Randfontein and Krugersdorp. Incidents occurring on both underground outcrop and open pit areas, tailings facilities and general surface. Slime pipes being vandalised. Shafts being reopened by illegal miners. Incident with +50 trapped miners in Krugersdorp in 2017.


With regard to community impact, it was reported as follows:


  • December 2013, community of Kagiso protested against Mogale Gold due to blasting at Princess pit. (cracking of House, Damaged roofing, Shattered windows, noise and dust during blasting).
  • Drowning of Kids during School Holidays is common in the West Rand.
  • Criminals disposing bodies in the Open Pits and shafts.
  • Absence of securing is going to present SAPS with increased illegal mining activities.


5.4        Presentation by FSE


Ms Marriette Liefferink, CEO of Federation for sustainable Environment) made presentation on Mintails’ Alleged Failure in Duty of Care. She started by giving the mining background.

The desiccated Tudor dam on the Mintails property has radioactivity measuring 16 times the regulatory limit, while the water in the Lancaster dam is acutely toxic, says Federation for a Sustainable Environment CEO Mariette Liefferink.

She said, there is no uncertainty that Mintails is responsible, Both the nuclear regulator and the department of Water Affairs found [the pollution] was because of irresponsible mining activities by Mintails.”

As reported by investigative environmental journalism unit Oxpeckers, Mintails recently applied for provisional liquidation, and this appears to allow it to shirk its R336m liability to rehabilitate the environment. The report prompted the parliamentary committee to step in.

Mintails Mining SA, majority owned by Australian listed group Mintails, mined in Krugersdorp without a valid mining licence, a social and labour plan, environmental management plan or the funds required to fulfil its obligations, (Mabaso).

Mintails had three mining rights applications granted, but they were never issued as it failed to comply with several conditions. “They couldn’t make provision for the environmental liability,” (Mabaso).

Mintails disputed its environmental liability and employed consultants, who offered estimates much lower than those of the department of mineral resources. It has not produced audited financial statements for the past five years.

Mintails employed 750 people, so the department gave the company many concessions to allow it to get its affairs in order. “Mintails management kept making promises but never came through,” (Mabaso).

Liefferink said she is very concerned there were no environmental management reports for the Krugersdorp operation. “If there were [none] the mine cannot mine, it’s unlawful,” she says. “If a mining right has been granted and not issued, the operations of the mine are unlawful or illegal. I think it’s a straightforward matter.”

In late 2015 Mintails went into business rescue, a provision of the Companies Act to rehabilitate financially distressed companies. In a letter to Mabaso in June, business rescue practitioner Dave Lake warned that he would soon have to apply for liquidation if the department did not assist him.

He explained that the rescue plan required the department to provide in writing its verbal agreement that Mintails could fund the environmental rehabilitation costs over the life of the mine. Written confirmation was needed to satisfy funders of the plan, Lake wrote. The confirmation was not forthcoming and Mintails was put into provisional liquidation.

Now it seemed the state will be left with the significant environmental problem to clean up, which it estimates at R460m, significantly higher than the amount stated by the closure plan. There is only R28m in the environmental rehabilitation trust fund lodged by the previous mining right holder.

The department says it has legal options, such as the prosecution of directors in their personal capacities, and shareholders. But both the department and the Federation for a Sustainable Environment are worried about backlogs at the National Prosecuting Authority.

She said It’s very clear from the liquidation paper and business rescue plan that there was delinquency by the directors, she believed this allows the Companies and Intellectual Property Commission to deregister Mintails’s directors.

The Companies Act does not allow the environment to be a creditor. That provision could be tackled at the Constitutional Court, Liefferink says.

5.5        Members raised the following Questions and Concerns


  • Non-compliance by Mintails being it SLP, Environment. When the department received an application is there no way to ascertain that the company cannot comply?
  • Open pits, what can the department do to have those pits closed?
  • Delinquency of shareholders should be, who should have done that?
  • Why questions were not answered, nor acknowledged by DMR?
  • Members wanted to know the time frame to sorting case backlog with the NPA.
  • Members were concerned about this issue cutting across many departments, who should have a plan to clean this huge mess?
  • Value of the mine is invested in the Mineral right. Granting of mineral right is normally subjected to acceptance of environmental liability. Is that the legal requirement to transfer the whole of environmental liability?
  • Several engagements and the company did not honour, what was the outcome of the compliance officer’s engagements?
  • BRP, when were they appointed and has the department met with them?
  • Hope next time FSC and DMR can present what they are doing collaboration. .
  • Clarity was sought on the BRP process and how it (process) ended up in Provisional Liquidation.
  • Members requested the Audit report and revert back to the Committee.


 5.6       The Department responded as follows:


  • Engaged the liquidators last week Friday, indicated they have no money.  Since they are 8 liquidators only paid one, Created tension amongst liquidators.
  • Need to follow up with compliance office, to date, no feedback.
  • Able to detect. Section 16 and 17 together 22 and 23. State that they need to prove that they have all financial capabilities. These were not new applications, these were conversions. At the time of application, they had financial capabilities.
  • Did not approve EMP due to lack of financial abilities.
  • Pits not in provision.
  • Delinquency of management/shareholders. Have a backlog with NPA. Need to do a lot of training between DMR and NPA.
  • Palala Judgement, seeing being abused by the industry. Focusing on section 56 c which is deregistration of the company.
  • Mintails is not an easy company to deal with. One day you deal with a particular Director the next day he is removed.
  • Lack of Acknowledgement letters, there has been communication between RM office and FSE.
  • Splitting the liability, liability goes with the right according to the MPRDA.
  • Contact with legal services. See if the directors cannot be held liable.
  • If everything fails it becomes a liability of the state.


Marriette added that:

  •  She has a Dilemma as FSE between Company’s Act and MPRDA.
  • No single closure certificate in the Gold Waterlands by DMR.


UASA responded that:


  • One meeting, employees were told there was no more work.  Argument on BRP, reports were positive until the investor did not put the money.
  • Notified by Master of High Court that operation in under liquidation. They are busy appointing liquidators.


6.         Findings


The Committee made the following observations:


  • It is clear that some mining companies are still operating without adequate financial provision for repairing damage caused to the environment by mining activities, if they suddenly close.
  • Neither Shiva Uranium (Pty) Ltd and Mintails Mining SA (Pty) Ltd has saved all the money they were supposed to set aside under the law to pay for environmental rehabilitation. The shortfalls are R36.6-million for Shiva and R460-million for Mintails.
  • The state will inherit these liabilities if the mines are finally liquidated.
  • The DMR has failed to implement effectively and carry out the intentions of Parliament to ensure that all mines rehabilitate the damage they cause.
  • Changes to the mining law were made by Parliament after 2002 to ensure that in mining, as elsewhere, the polluter must pay.
  • The new laws have not proven effective in avoiding this situation where the state and the taxpayer still ends up paying for the environmental harm caused by mining.
  • There is a lack of clarity on the rules for the Department of Mineral Resources when it comes to Business Rescue Practitioners. It seems there is non-application of the law resulting in a free for all.
  • The DMR allowed Mintails to operate between 2012 and 2018, despite the fact that the Department had never approved the environmental management plans of the mine and had never issued the company with a mining right under the law.
  • There is a huge regulatory gap regarding the financial provision of environmental rehabilitation of a mine during the process of business rescue.
  • There is a lack of standardization by the DMR on how to relax environmental obligations of a mine during the business rescue stage.


7.         Recommendations by the Committee


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


  • The DMR must identify clearly and specifically the gaps between mining, insolvency and company law that have led to this ongoing situation, where the polluter does not pay, it is the state that ends up paying.
  • DMR should get specific legal opinion on these complex issues.
  • The DMR must report to the Committee in Parliament on what it will do [or needs to do] differently in future to ensure that this situation does not continue.
  • DMR must report on what efforts they have made to hold directors and shareholders of Shiva and Mintails liable for the environmental debts of these failed ventures.
  • The DMR must actively ensure that the licensing of mines goes with responsibility and accountability.
  • The DMR should further explore the regulatory gaps resulting from the business rescue process and come up with regulations that will ensure full environmental compliance during the period when a mine is experiencing financial distress.
  • The DMR should design and implement standardized approach when dealing with the relaxation of environmental financial provisions for mines that are undergoing business rescue process.


Report to be considered.



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