Department of Mineral Resources on the 3 & 4 Quarter 2015/16 & 1 Quarter 2016/17 performance

Meeting report

Department of Mineral Resources 3rd and 4th quarter 2015/16 reports: Departmental briefing
Mr David Msiza, Acting Director General, Department of Mineral Resources, first drew attention to the improving commodity prices, which would assist the mining sector in the medium to long term and said it was encouraging that stakeholders were creating jobs. He said the Department of Mineral Resources (DMR or the Department) was finalising the Mining Charter. Health and safety was important to the Department and especially to the Minister, so the Department was constantly encouraging the mining sector to prevent harm to its workers. It was working with stakeholders on illegal mining. A task team had been set up to monitor the work on shale gas initiatives, and in due course a further report would be presented to the Committee.  DMR was currently fine tuning the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill legislation and he said the Bill promoted transformation.

Ms Irene Singo, Chief Financial Officer, DMR, summarised that the Department’s budget for 2015/16 was R1.6 billion. Transfer payments accounted for 50% of the budget, compensation of employees represented 33%, goods and services represented 15% and capital expenditure represented 1%. At the end of the third quarter 79% of the budget had been spent and this was in line with forecasts. She said there had been indications that the budget would be cut because of economic conditions and that this would have implications on the effectiveness of mine health and safety programmes. She said the Department wanted to reduce the time taken to pay invoices from 30 days to 25 days.

Mr Joel Raphela, Deputy Director-General: Mineral  Regulation, DMR, said that the Department was streamlining section 189 of the Labour Relations Act (LRA) to manage downscaling within the industry. He said the Department was tackling illegal mining in collaboration with other law enforcement agencies and stakeholders and a number of joint operations had taken place in the Northern Cape against illegal diamond mines.

Mr Mosa Mabuza, Deputy Director General: Mineral Policy and Promotion Mine Health and Safety, DMR, said eight consultations had taken place on shale gas.

First Quarter 2016/17

Ms Singo said the 2016/17 budget totalled R1.7 billion and that at 30 June 2016, 27% had been spent. She reported that all invoices were being paid within 25 days.

Mr Pieter Alberts, Head of Legal Services, DMR, listed the court cases in which the Department had been involved, detailing those in which decisions had been handed down already, and those where decisions were pending. He said the AgriSA case was the most important, because it dealt with the expropriation nature of the MPRDA bill. In the Sishen case, the State was confirmed as custodian of the land and of allocation rights. The Macssand case dealt with government authority on land use and on the Department’s authority on mineral extraction. The Palala Resources and Mawetse cases dealt with the commencement dates of prospecting and extraction rights. The VDH case was on illegal mining.

With regard to pending cases, he said the Chamber of Mines case sought clarity on ownership equity requirements. The Treasure the Karoo Action Group and the John Stern and Others cases were on the issue of shale gas mining. The Earthlife Africa and the West Coast Environmental Protection Association cases dealt with the interpretation of the role of various Departments. The AMCU/ Two Rivers case was on national interest policy.

Mr Mabuza said that ten derelict and owner-less mine sites had been rehabilitated. He said the target number of sites had to be downscaled because of fiscal constraints. He said the focus areas for the year would be on the MPRDA Amendment Bill, the Mining Charter Review and the State-owned Mining Company (SOMCO) Bill. He said mining resource diplomacy was becoming more important.

Mr Msiza said the minerals and petroleum sectors remained key to the economy. He said that, notwithstanding the challenges, investors had still invested the previous year and created 6 000 jobs. He said the sector was worth R3 trillion and the country's total resources were estimated at R50 trillion. The budget had been cut, but an increase in its budget could unlock value in the economy. He said shale gas remained a game changer.

Discussion

The Chairperson said that the statistics mentioned by Mr Raphela were not in the presentation notes and these should be sent to the Committee in writing, to avoid confusion about which numbers were the correct numbers.

Mr M Matlala (ANC) asked how much was transferred to Mintek for use on derelict and owner-less mines. He wanted a breakdown of the R28m spent on researching regulatory requirements for shale gas.

Mr I Pikanini (ANC) said the presentation did not say much about the rehabilitation programme and he wanted an update on that programme. He wanted a report on how far the Department had come regarding shale gas exploration. He said there was a need for the families of ex miners to benefit from any financial resources due to ex miners. He said safety could not just be a compliance issue, there had to be a strategy to reduce fatalities.

Mr J Lorimer (DA) said that it might be better to get the total number of accidents involving fatalities and injuries rather than getting the number of fatalities and injuries only. He asked whether Environmental Mineral Resource Inspectors (EMRIs) had achieved their qualifications. He also asked if mines were closed when closure certificates were issued and if prospecting rights were withdrawn when rights holders without adequate financial provision were issued with notices. He asked what was the total amount of rights/permits issued. What was meant by ‘engagements with communities’ in the case of Steelpoort and Xolobeni? What did ‘consultation’ mean in terms of shale gas exploration and what was the next step in this process? What was the coal strategy?

Ms M Mafolo (ANC) asked whether the 7 500 companies where inspections were done were compliant and if not, what was being done as a follow up? She asked what could be put in place to reduce fatalities? What was the outcome of the verification inspections? What was the outcome of the small scale mining workshops? How often were SMMEs monitored?

Mr Msiza said the shale gas regulations were promulgated the previous year and the Department had received five applications and was processing them and embarking on engagements with stakeholders and affected communities on the benefits and risks of shale gas exploration. The Department had gone to Canada and the USA to learn from their experience. The government had formed a committee comprising the Departments of Energy, Environmental Affairs, Water and Sanitation, Science and Technology and Mineral Resources. He said it was fundamental to do proper research before doing exploration and mining. He said it was important that the research outcomes were adopted.

He said the Deputy Minister was leading a process regarding ex miners including the fast tracking of payments through the establishment of a one stop shop.

Mr Msiza confirmed that in future the Department’s reports would carry the total number of accidents.

The Department had been in engagements regarding Xolobeni and there was still interest shown by the applicant.

Mr Raphela said the statistics requested would be provided to the Committee, including the total number of accidents involving fatalities or injuries.

He confirmed that the closure certificates did cover permits and mining rights. He confirmed that prospecting rights were withdrawn when notices were issued to mining rights holders who did not have adequate financial provision.

Mr Raphela spoke to the question on the quality of training, and said DMR was implementing an integrated permit system. Officials doing inspections needed new skills. Emergency Management and Research Institute (EMRI) training was given for officials to qualify them for the certificate.

He said there was no mining at the moment taking place at Xolobeni and it would be premature to state whether mining would continue to take place there.

He said the situation at Steelpoort had been solved. The Department was working with local government but some complex issues needed to be solved.

He said the outcome of the verification inspections where rights holders were not complying were that notices were issued and the rights could get refused when the time came for renewal.

Mr Mabuza spoke to the question around shale gas research and said that  he had attended a conference recently which had made him very confident regarding the technical capabilities in South Africa. He said the scientific approach was the correct approach. The Council for Geoscience study was sampling the Karoo Basin for a geo-chemical analysis and this study was important. In regard to shale gas exploration, he said the Department was waiting for the MPRDA bill to be finalised. The petroleum companies with whom the Department was engaging on the matter were ready to do the exploration.

In relation to the rehabilitation of mines programme, he said the Department was developing a strategy on rehabilitation with an implementation plan. The most important point was a risk ranking mechanism. The highest priority was asbestos mines. He said some of these mines were huge and would require huge investment. It was not practical to do this in one financial year and therefore the study needed to be done over several years. The second priority was some mineshafts in the Johannesburg area that were unsafe, where people could fall down holes and shafts.

He said the coal strategy was finalised and the Department was taking this out to stakeholders for discussion and comment. It would be presented to Parliament in due course.

The Department had held workshops on small scale mining which were spread around the country and were targeting the poorer communities. The Department had approached financial institutions to help SMMEs with skills development where they could. One immediate outcome of the workshops had been that the workshops had assisted with the legalisation of illegal mining, especially illegal diamond mining. The Department wanted to expand that benefit throughout the country.

Mr Xolile Mbonambi, Deputy Chief Inspector, DMR, answered the questions on ex mine workers, and said that the Department looked at the quality of the research being done on health and safety and its impact. The Department had decided to improve research and ensure that the outcomes of the research were being implemented by the mines. He said the DMR had also launched initiatives to improve and transform the health and safety culture amongst mine workers. Supervisors needed to have a government certificate of competency and there had been an outcry because of poor passes rates. The Department had developed a model where the Department, together with industry, provided assistance for supervisors to attain the certificate.

In regard to compliance, he said that the mine inspectors had the power to stop operations at the workplace.

Regarding the learners, he said that there had been an initial 50 learners. Five had resigned to take up job opportunities. 38 learners had received certificates and seven went on to complete their B Tech degree.

He said the Department was concerned about fatalities and injuries, especially at gold and platinum mines. It had written letters to the gold and platinum mining companies which had suffered a large number of fatalities and injuries. In February the Department had gazetted guidelines to all miners, and in future they would be able to refuse to do dangerous work.

Ms Singo said the amount transferred to Mintek was R84m in 2015/16 and was for project based work. Mintek had spent R58m on asbestos mine rehabilitation. The shale gas allocation was R21.6m.

Mr Lorimer asked if responsibility for shale gas would be moved to the Department of Energy. He asked if the three holes being drilled in the Karoo Basin were enough. He said the cancellation of prospecting rights due to inadequate financial provision meant that the rights were probably being issued too easily and this was likely to result in speculation in prospecting rights.

Mr Lorimer asked when the DMR would present the coal strategy to the Committee.

Mr Msiza replied that the Department of Mineral Resources saw itself as part of one government and worked together with other departments, so that at this stage there was not a specific intention to move shale gas.

Mr Mabuza said the three holes already drilled were a start. The estimated cost for drilling one kilometre down was R7m to R8m. The purpose of the drilling was to get a better understanding of the Karoo Basin.

He said the Department wanted time to first engage with stakeholders on the coal strategy, and the Department would be stretched to achieve this before the end of the financial year.

Mr Raphela said the Department did not encourage speculation in prospecting rights and at renewal this would be taken into account and the rights could be revoked.

Adv H Schmidt (DA) said the Department should answer the questions on the legal cases in writing and that the Department should make a presentation on this at another time.

The Chairperson said that pending cases could be prejudiced by presentations being given, and he would meet with Mr Schmidt to discuss the matter.

Mr Schmidt said it was not about the cases but rather about the accountability of the Department. In cases that had been decided, a court might have advised what had to be done and had the Department implemented these recommendations.

Mr Lorimer asked if heads of argument had been filed on the Scholes case.

Mr Alberts confirmed that heads of argument had been filed, and the Department awaited a date on the court roll.

The Chairperson said he was worried about the high expenditure on corporate services and a way had to be found to reduce these costs. He said there was no justification for the reduction in expenditure on mine health and safety. He said the Auditor-General had been concerned about the management of illegal and derelict and owner-less mines and that a Bloemfontein judgement had said there might be a need for stricter legislation. He said that derelict and owner-less and illegal mining needed to be looked at by the Committee.

Mr Schmidt added that this was why his request for a presentation by the Department on its legal cases was important.

The meeting was adjourned.