DMRE & MHSC 2022/23 Annual Performance Plans

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Mineral Resources and Energy

03 May 2022
Chairperson: Mr S Luzipo (ANC)
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Meeting Summary

Mineral Resource and Energy
Mine Health and Safety Council  

In a virtual meeting, the Department of Mineral Resources and Energy and the Mine Health and Safety Council briefed the Committee on their Annual Performance Plans and budgets for 2022/23.

The Department presented its annual priorities for the year and budget. The presentation focused on the Department’s programmes, purposes, functions, and 2022/2023 budget allocations.

The Mine Health and Safety Council (MHSC) also briefed the Committee on its 2022/23

annual performance and budget. It highlighted its focus areas: the prevention of falls of the ground, prevention of accidents, noise-induced hearing loss, and the prevention of occupational diseases.

Among other questions, Members asked the Department about improving the turnaround time on licensing and whether there was a date on when the Department was to clear the mining licensing backlog. Members also asked what was done to promote SA as a mining investment destination.

Members asked the Council about the composition of the MHSC mining summit and how it would make sure the workers' voices were taking centre stage in the summits.

Meeting report

Department of Mineral Resources and Energy (DMRE) Annual Performance Plan 2022/23

Ms Pat Gamede, Deputy Director-General (DDG): Corporate Services, DMRE, led the presentation on behalf of the Department. She was accompanied by Mr Lucas Mulaudzi, Head of Strategy, and Ms Yvonne Chetty, Chief Financial Officer (CFO).

The presentation focused on the Department’s key priority areas, the annual performance plan (APP), and the budget allocations of the Department's programmes.

(Please refer to the DMRE’s presentation for more details on the key objectives of each programme.)

 Mine Health and Safety Council (MHSC) Annual Performance Plan and budget 2022/23

Mr David Mamphitha, Chief Executive Officer (CEO), MHSC, led the presentation. He was accompanied by Mr Dumisani Dlamini, Chief Financial Officer.

 

The presentation highlighted the mandate, vision, mission, goals, and values of the Council. It focused on the tripartite partnership, the APP, and the focus areas for 2023, which were the prevention of falls of the ground, the prevention of accidents, noise-induced hearing loss, and the prevention of occupational diseases.

 

(Please refer to the MHSC’s presentation for more details.)

Discussion

The Chairperson raised concern that the Department had not introduced the Mine Health and Safety Council CEO. It was common courtesy to introduce the person so the Committee could welcome them.

Mr J Lorimer (DA) asked about improving the turnaround time on licensing and if there was a date by which the Department would clear the mine licensing backlog. Was this contingent on getting a new catestry system, and when was its deadline? He asked for further information regarding the one mine water management plan implementation. What was the plan for the small-scale miners and ten women-owned small-scale miners, and where would it take them? How much would it cost? What was the process of selecting the miners? He asked about the status of the exploration strategy and the next planned steps.

Ms V Malinga (ANC) asked why the INF master plan was developed for only six provinces. She welcomed the information that development funds would be going to the Council for Geoscience (CGS), the Nuclear Energy Corporation of South Africa (NECSA), Mintek and the MHSC. Regarding the women's summits, she asked what the MHSC aimed to see happen to women in mining.

Ms P Madokwe (EFF) asked for the report on the targets that the Committee had previously requested and why they were not able to meet them. Had the targets been rolled over to the current report? Were there any consequences for all the entities that had failed to account for their money properly? Regarding the Department’ intensifying its oversight of state-owned enterprises (SOEs), what were the plans for intervening in SOEs that were barely surviving? What would be done differently to make sure they had the necessary support? What was the backlog regarding mining rights and permits?

What was done to promote SA as a mining investment destination? Regarding the involvement of women in the mining sector, what was the current intervention, since the Department was still drafting the implementation plan? How were the ten small-scale miners chosen, given the prioritisation of provinces? Were there plans to make sure all the provinces were considered? What would the proportion of women-owned mines be? On the MHSC mining summit, what was the composition of people, apart from the unions? What was going to be done to ensure that the women's voices were taking centre stage at the summit?

Mr K Mileham (DA) asked what the contingency plans were to address the situation of fuel at O R Tambo airport due to the national state of disaster. What was the Department doing to ensure a process underway to update the Integrated Resource Plan (IRP)? Did it have any plans to review the cause of the decline of SA as a mining investment destination? He asked if the Department could include the fuel pricing review and the target to address the fuelling models in their APP. He asked for further information about the new agreement mentioned in the presentation, which he found vague.

He noticed there was no conclusion about the Risk Mitigation Independent Power Procurement Programme (RMIPPP) -- why had it not been included, and why had the financial clause been pushed out? He asked whether the DMRE had discussed with the Department of Trade and Industry (DTI) the localisation requirements in the RIMPPP. Two bidders were willing to purchase from local manufacturers but had been unable to obtain the product because the suppliers did not have the necessary components, particularly in the solar component manufacturing sector, hence creating a problem in terms of the financial clause. Have there been any discussions regarding localisation or amending the localisation requirements?

He asked about the 16.5% increase in administration costs driven by leases and office accommodation, given that people were working from home. He requested that figures be provided for comparative purposes and questioned why the Department transferred R2.4 million to households.

The Chairperson commented that the assumption was that the Department would spend less due to the merger of the two departments. One could assume that they had consolidated their offices.

Responses

DMRE

Mr Tseliso Maqubela, DDG: Minerals and Petroleum Regulation, DMRE, responded that the Department could not give a definite date for clearing the backlog. It had set a target of the end of the financial year. Some of the delays were because of appeals from applicants. The appeals were affecting the investment in mining, and it was worth investigating. The focus was on clearing the mining rights applications, even those not backlogged. The tender was issued regarding the cadastral system, and the process was with the State Information Technology Agency (SITA). The Department was waiting for them to return to it regarding the valuation. He explained that the figure of 120 was for social and labour plan (SLP) development projects and not for applications.

The jet fuel faced a challenge because the rail link was washed away -- the oil tankers were in KwaZulu-Natal (KZN) and could not bring fuel to O R Tambo. The Department had found other areas of supply; there was fuel from Matola in Mozambique and an injection of jet fuel into the pipeline. Fuel at O R Tambo had not dropped below 2.9 days' supply -- it was just that certain oil companies could not supply their customers. Regarding the fuel price review, the Department had an operational plan apart from the APP; therefore, the regulatory accounting system would review it in the operation plan. It was an area of priority in the current year.

Regarding attractiveness of SA as a mining destination, the Department engaged with the Fraser Alexander institution because the CEOs of mining companies did not understand how such a conclusion was reached. The July unrest in the previous year had contributed and the appeals. The Department had to investigate discouraging frivolous appeals from investors, especially those bordering on criminality, where appellants would demand money to drop the appeals.

Mr Jacob Mbele, DDG: Programmes and Projects, DMRE, responded to the criteria that informed the selection of small-scale miners. The Department had a process where small-scale miners would apply. A committee would consider the applications and make recommendations to the Industrial Development Corporation (IDC), which administers the grant for the Department. It would also check if the money was used for its intended purposes. Regarding the targets, these were informed by the budget. The inclusion of women was to make sure that the Department was actively empowering women, youth and the disabled. Regarding the provinces, the selection was based on where the applications were coming from.

The Ingress project involved the investigation of sites, a water quality assessment and dual environment characterisation, and the design of a passive treatment system. The Department was working on this with the CGS. 

Regarding the master plans, the provinces indicated were those for which the Department had planned to complete master plans for the year. In the detailed APP, under the medium term expenditure framework (MTEF), the rest of the provinces had been scheduled for 2023/24. This had been dictated by the budget and the procurement plan they were using. The Department prioritised those with a huge backlog of unconnected households.

Regarding risk mitigation, the request for proposals (RFPs) for the projects had already been issued. What was pending was for Eskom to sign the contracts with the independent power producers (IPPs). Both programmes had been delayed. The Department scheduled a signing ceremony with risk mitigation for the end of March, but this was postponed at the request of Eskom, which had raised several issues that it wanted to go through. The new deadline was the end of May. The signing of the contracts was mainly between Eskom and the IPPs -- the Department could only wait. Bid Window 5 was also delayed because many bidders had not received the budget codes from Eskom and, therefore, could not finalise their bids. The new timeline was to align with Eskom giving the codes to the IPPs.

Regarding the requirements for localisation, the Department had had ongoing discussions with the Department of Trade, Industry and Competition (DTIC) and was speaking to specific bidders for projects. There was a process in place if any of the bidders ran into a challenge.

Ms Chetty responded to the substantial increase in Programme one (Administration). The amount included additional allocations for information communication technology (ICT), including the mining application system worth R84 million. There was an increase in leases, but where possible, offices were merged and others were planned to be merged. Working from home was no longer applicable to the DMRE due to the revised regulations, as all employees were back to work full-time. The increase in the lease accommodation was that private leases from the former DMR had not gone via the Department of Public Works and Infrastructure (DPWI), and the cost of private leases was much higher.

Regarding the question on "households" under Programme One, this was just a naming convention that they had received from National Treasury. The funds were used for gratuity pay-outs and early retirement and resignation benefits.

Ms Gamede explained that the housing allowances were Treasury benefits provided to employees who had bonds on their properties.

MHSC

Mr Xolile Mbonambi, MHSC Council member, apologised for failing to introduce the CEO.

He responded on the issue of personal protective equipment (PPE), saying that the Department had prioritised the matter due to complaints received from female employees. The PPEs provided had not been suitable for female employees, and the entity had needed to make sure that they were comfortable at work.

The Council collaborated with its stakeholders in establishing women’s structures in all the provinces to ensure that all issues relating to women’s health and safety were enhanced in mining. It had established a women in mining advisory committee to focus on the health and safety of women. The stakeholders had also agreed that there was a need to implement the five priority areas, which included issues of sexual harassment, wellness, PPE, and structured career progression. The Council would do so through dedicated campaigns and customised programmes. It had noted that with the promulgation of the Mineral and Petroleum Resources Development Act (MPRDA) amended regulations, several women could not work in the mines. There were areas to work on to ensure that women were accommodated in career progression. 

Regarding the management of gender-based violence and femicide (GBVF) and the issue of women’s security, there had been concerns that in the underground setup, women were harassed by their fellow employees. The guidelines would assist everyone to respect women in the workspace.

Regarding the summit and its composition, the summit was informed by the Mine Health and Safety Act, which required the Council to arrange a tripartite summit at least once every two years to review the state of health in the mines. It ensured that the core workers were part of the discussions to get their views and concerns.  

Further discussion

The Chairperson said that in the last quarter, the Committee raised concerns that the Department lacked specifics in its presentation, and some issues did not seem to be addressed in the APP. Regarding the scientific method in the programme, he asked for further clarification on the exclusion of certain provinces.

Mr Mileham said that his question on updating the IRP had not been responded to. He had also asked what the Department was doing to make SA a more attractive mining investment destination. Regarding the new agreement the Department was looking to sign, he asked what agreement it was. He asked about the line item for households and the transfers to entities and whether they were not supposed to have been included under the compensation line item.

Mr Lorimer commented regarding the response given on the Fraser Alexander conclusion and said that there was nothing wrong with their method but with the country’s legislative environment. He asked for a response to his question on the mining exploration strategy.

The Chairperson suggested that within a month from the meeting date, the Department had to explain the process followed during the merger at a structural level. What were the cost implications of the merger? How many people performed the licensing tasks? He wanted specific information to assure him that the APP and the DMRE's budget and targets were a true reflection of reality. There was a need to make sure people were working before receiving pay at the end of the month. There was a need for daily and hourly targets to meet the annual targets. The Committee had to weigh whether their target for creating jobs was below par. He had asked the Department for the total cost of its risk management exercise so the Committee would know that what it proposed was informed by the budget.  

He found it hard to understand the inspections because the Committee did know the specific number of petroleum inspectors. It could not verify the annual performance and targets in both entities. He was worried that there were no specifics in areas of prioritisation in the presentations. He was concerned that the Committee would approve something that was not intended. Regarding the Department's failure to introduce the CEO, he said that such courtesy was important because it improved their relationships.

Ms Ntokozo Ngcwabe, DDG: Mining, Minerals, and Energy, DMRE, responded that the exploration strategy had been taken to Cabinet in February, and the Council had been given approval to gazette the strategy. There had been challenges with the gazetting because the Government Printing Works (GPW) had been down for a long time. The document had been published on their website while it waited for the GPW.

Regarding the attraction of mining investment, the Department would continue to implement its strategy in partnerships with Mintek. It would also continue consulting sister departments such as the DTIC to participate in its investment promotion events to ensure that it attracted investments and drove exploration initiatives into SA.

Mr Mbele responded that all nine provinces were going to have master plans. The grouping was a function of the budget per annum, and the six provinces prioritised had a big backlog of houses without electricity.

Ms Ngcwabe said it was not possible to update the IRP every year because it involved a lot of background work. There were a lot of numbers, and modelling was needed to develop it. The target set was one for every second year so that they could continue modelling until a point was reached where resources would allow it to be done on an ongoing basis. They did not have the capacity but had employed two modellers who were working on a master plan and would then move on to the IRP. The Department was confident that it would get more capacity with completing the start-up structure.

Ms Chetty responded that the transfers under households were a standard chart of accounts issued by National Treasury. All departments followed this process, so they could not put them under the compensation of employees. Households included all those exiting and those with gratuities and resignation benefits.

Mr Lorimer asked about the exploration strategy. What was the status of the policy, and what was going to follow -- regulation or legislation?

Ms Ngcwabe said the next thing to follow was implementation. Legislation for exploration was covered under the MPRDA. The DMRE was going to go on the various international platforms to engage with potential investors, support the CGS, and publish what had been de-risked on their platform and website. This was so that investors would have easy access to the information on what minerals they could get involved with. It was also going to support CGS as they began to explore areas such as battery minerals and draw investors' attention to these areas.

The Chairperson asked if the service charter could be linked to the exploration strategy.

 

Adoption of minutes

The minutes of 1 April 2022 were adopted.

The meeting was adjourned.

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