Department of Mineral Resources on its Annual Report 2010/11

Meeting report

Opening remarks
Mr Thibedi Ramontja, DMR Director General, apologised for the absence of the Minister and Deputy Minister who were attending other government engagements. He said the DMR’s qualified audit report was not desirable for any accounting officer, least of all if he was only 15 days into the job. DMR had developed a plan to identify the root causes for the qualified audit opinion. It was also important to note topical issues in the mining sector and, despite reductions in fatalities, safety remained a concern to DMR. Accumulation of profit could not be above human life. It was important for all stakeholders to address mine safety and health. A summit would be held on 17 and 18 November 2011 to deliberate on the challenges of safety in the mines.

In the previous year, DMR had announced a strategy for improving South Africa’s competitiveness in the mining industry. Elements of the strategy aimed at projecting the industry along a new trajectory for sustainable growth. This work needed to address issues of constrained growth like infrastructure and mineral regulation. As a result, the streamlining of the administrative processes led to the development of the new mineral regulations.

Mr Ramontja said there was a need for transparency; demystifying the availability of resources; broadening access to the application process; uniform adjudication for resource allocation and accountability for decisions. Mining was identified as key in the New Growth Path and there was a commitment to create 140 000 new jobs by 2020. Mechanisms had been put in place to ensure that the commitment was realised. To reach the target, DMR would have to address binding constraints including rail infrastructure. The Department had drawn a review process to look at issues of consultation and interpretation and mining of associated minerals. Extensive consultation would be undertaken in the development of the review. The programme to rehabilitate derelict mines was continuing and progress was being made. This issue was historic and the rehabilitation of the mines would take a while, as the problem had been inherited from previous administrations.

Value addition to SA’s minerals had been identified as a mechanism to develop the economy and for job creation. In this regard the Department had developed a beneficiation strategy approved by Cabinet in May 2011. The Department had commenced with the development of five value chains. These were platinum auto catalyst; iron ore and steel; energy; jewellery and pigments. Implementation plans of two of these value chains – iron ore and energy – had already been approved by Cabinet. The beneficiation strategy would provide a framework within which orderly development of the country’s mineral value chain would occur.

Mr Ramontja said the presentation was structured according to the Department’s programmes: Administration; Finances; Mine Health and Safety; Regulation and Mineral Policy and Promotion. He handed over to the Chief Financial Officer.

DMR Financial Report
Mr Ntupheni Ragimana, DMR CFO, said the Department had received R995 million for 2010/11, and had spent R994 million. This left DMR with a less than a percentage under-spending of R1.145 million. The Department would continue on this trend in managing the budget, and ensure there were no roll-overs. They would have loved to appear before the Committee with a zero under-spending, but that was not always easy. The R1.145 million under expenditure was as a result of services already rendered but payment had not been finalised. There were instances where the Department had ordered goods but payments could not be finalised by the end of the financial year.

Mr Ragimana said the Annual Report was the first to be presented by DMR as a standalone department. Under expenditure had remained very low even when the Department was still with the Department of Energy. The Department needed to spend time looking at this issue in terms of day to day cash flow management. DMR was dealing with a very tight budget that needed to be managed carefully, and that impacted on the mandate of the Department. There was a 16% decline in salary payments, and this was attributable to staff who normally would be paid from the departmental budget, but had moved to the Department of Energy. This applied to periodic payments and pension as these were part of the service benefits that employees were entitled to. The decline of 58% on goods and services was as a result of cost-cutting measures that were implemented two years before. DMR looked at using free venues for holding meetings. Those interventions were beginning to bear fruit, and drops of around 50% were recorded in that type of expenditure. The Department took a decision to advertise positions below director level in the government circular. Most applications on these posts were received from government employees. DMR was still able to reach its target market without having to spend on newspaper adverts. As a result, there was a noticeable decrease on advertisement expenditure. Another area was travelling. The Department was very prescriptive in terms of overseas delegations that accompanied the Minister. The one area that DMR had seen increased expenditure from R34 million to R64 million was operating leases of furniture and office space. A number of offices had relocated after contracts had expired. A lot of ex-employees had complained about working conditions and the Department had to look at improving this aspect. Some of the buildings that DMR had been renting were not, for example, accessible to disabled persons. The Department’s ability to spend had improved compared to last year. In 2009/10 under-spending stood at R192 million, but this year it had gone down to R37 million. Members needed not to wonder about the R37 million; it was generated from revenue collection. DMR collected revenue on behalf of the National Revenue Fund in the form of royalties and prospecting rights.

Mr Ragimana said there had been a drop of 99% on prepayments and advances. This had to do with the transfer that was done to Mintek, in respect of ownerless and derelict mines. This could not be recognised as expenditure until the project was finalised. There had been a 41% increase on the receivables. DMR had collected R51 million as royalties but this could not be processed through to the National Revenue Fund. It was unfortunate that DMR had received a qualified audit report. DMR would have preferred a clean audit. However there were realities that faced the Department. The Auditor General’s report identified two key issues – receivables and contingency liability – that were a challenge. The AG found receivables did not confirm the completeness of the balances that DMR had disclosed. This unfortunately affected three other account balances. An audit action plan would address these four items. The contingency liability concerned the rehabilitation of ownerless and derelict mines. The AG was unhappy with the Department’s inability to put a figure on how much the state would want to provide as a liability in relation to the ownerless and derelict mines. A while back a figure of R30 billion had been put on the table. This was a rough estimate, based on a number of assumptions. Unfortunately this would not pass the audit to go through as a provisional amount. There was work that the Department was doing to address that.

Mr Ragimana said when the Department was split from Energy in 2009/10; it made a number of commitments in its then audit action plan. The issue of receivables had been raised. According to the Action Plan, DMR said it would review the revenue register on a monthly basis; conduct review sessions; appoint staff with financial background at all regional offices; and develop a revenue management system. With the implementation of these things, DMR had been able to address one part of the issue. The only issue that had not been finalised was the revenue management system, but by the end of the year the Department would have moved information to the new system. The reason this was not finalised was because DMR shifted priority and focussed on the licensing system. Licensing was complete and the Department was now moving to the outstanding modules.

The Department was going to centralise the process of receiving invoices and review the process of confirming payments. All these action plans were implemented but there were instances where some invoices went over the 30-day payment period as required by the Public Finance Management Act (PFMA). Unfortunately when it came to compliance issues one had to get a 100%. The process of expediting invoices needed a relook and the Department had found a way to half the time to 15 days.

Mr Ragimana said last year there had been a finding of irregular expenditure that was not reported but that had since been dropped.

The Department had resolved that the Council for Geosciences would be instrumental in assisting with the quantification of the priority derelict mine sites and the costing. The Council would prepare the database of ownerless and derelict mines. The Department was at an advanced stage in finalising the work on this process.

The Department would continue to push for additional funding, and had thus forwarded a submission in July, and was expecting feedback before the end of November.

Administration
Ms Irene Tshifura, DMR Chief Director, said the Department had made achievements in transformation, but there were areas that needed to be improved on. The Department exceeded targets on Employment Equity by 7% and had registered 337 Historically Disadvantaged South Africans (HDSA) on its procurement database.

DMR reviewed its internal processes following the move from the Department of Minerals and Energy. Five needed to improve. She said a 17% cost savings was realised against the target of 5% on areas like printing. The Department had improved management capabilities and had capacitated Previously Disadvantaged Persons. Workshops had been conducted to instil the culture of what the Department was about; and that afforded DMR an opportunity to promote its core values.

The Department had to align the budget to strategy to ensure spending plans were correctly aligned. This was the main area that, if DMR failed on, could lead to irregular and wasteful expenditure. The work of managing cost-effectiveness was ongoing. DMR had complied with all the Human Resources policies on corporate governance.

Ms Tshifura said challenges included adherence to service level agreements but the Department was developing a checklist of areas that needed closer monitoring. Another challenge was adherence to turn-around times. This was one area DMR lacked, as a result of not having an implementable service catalogue. Absence of the service catalogue caused some branches to fail in adhering to turn-around times.

There were problems as well on adherence to turn-around times of filling vacant posts. This was even more so in the first two quarters of the year. Given the split of the Department, it became difficult to fast-track all those processes. That, coupled with late and inadequate funding, led to delays in filling these positions. The Department was now well resourced and could place adverts within two weeks of termination notice.

There was an increase in the number of ICT related complaints as a result of capacity constraints within the chief directorate of information management. A helpdesk had been established to address this challenge, and there was a system to record and monitor incidents. The Department would overcome the challenge.

Ms Tshifura said DMR had sent four managers to courses as an attempt to equip them. The number was supposed to be seven, but was reduced due to inadequate funding. The 360 degree measure would be replaced by annual performance assessments.

In view of the sensitivity of the field, the Department was prompted to have identified staff vetted. The Department had identified and submitted the names of those who needed to be vetted to the directorate dealing with this. But due to capacity problems the directorate could not vet all the officials, but it was in the process of finalising the process in this financial year.

The Department was challenged in reducing irregular and wasteful expenditure. The AG raised issues such as the Public Works funds that were not paid in full due to delays in invoices at the end of 2010/11. The Department would make sure that it updated department policies so that they were aligned at all times. It would continually monitor the identification and reporting of wasteful expenditure and align spending in the manner that National Treasury had specified. DMR would monitor the implementation plans for fraud prevention and Enterprise Risk Management. It had started developing the monitoring and implementation plan to fully address the findings of the AG.

Corporate services
Ms Patricia Gamede, DDG: Corporate Services DMR, said there had been success in all four directorates – communication, human resources, special projects and legal services – under corporate services. The communication strategy had finally been approved and there were successful engagements with stakeholders throughout the year.

Human Resources filled all funded vacant positions in the Department. The Department had a staff complement of 1 041 out of a possible 1 183, and was hopeful it would fill all positions by the end of the year. Vacancies were ongoing and the Department could never have a scenario of zero vacancies, but nevertheless it tried to fill within four months as opposed to the stipulated within-six months period. The retention of employees was satisfactory except in Mine Health and Safety. The Department faced a challenge of poaching by the industry.

The Department had secured bursaries through the Mining Qualifications Authority (MQA) which were extended to all provinces. The highest number of the bursaries was awarded to Limpopo (17). None went to the Western Cape because all three universities in the province did not respond to a request to forward names of needy students. The Department worked with the University of the Witwatersrand and had 43 managers enrolled in the past financial year. Under special projects, DMR provided career guidance to students. Projects were run with vulnerable groups (women and youths). In July, a bursary programme for girl learners was launched and 21 students were already signed up. The focus week in Limpopo was successful but the Department hoped to increase the number of learners who came to the event.

Other successful projects were Women in Mining (ingxoxo); and in March 2011, DMR handed over a science laboratory to Nombuso High School. The Umtha Welanga Jewellery project was launched; and also a brick-making project was facilitated in Engcobo with Lafarge. Some of the projects that the Department was busy with would be reported on next year.

Ms Gamede said the Department dealt with a lot of litigation. The legal services directorate was split into two branches – mine health and safety; and regulation.
There were challenges of human resource capacity, but these were more as a result of lack of funds. The Department would have loved to conduct an opinion survey but was unable to secure funds. Information was scattered on what stakeholders thought of the Department. Another challenge was concluding cases that came through the Presidential Hotline. The communication breakdown always happened at regional level, where managers struggled to get adequate information out of complainants. Consequently, DMR was unable to close such cases but it tried its best to assist regions.

Mine Health and Safety
Mr David Msiza, DMR Chief Inspector, said the purpose of this branch was to safeguard the welfare of mining employees, and reduce mining related deaths. Fatalities had been reduced by 24% overall, but the Department was still concerned by the loss of life. All enquiries had been completed into the fatalities, and there was a 96% progress in investigations. The Department had reviewed the enforcement guidelines that would ensure a transparent approach on how DMR conducted its work. The training of inspectors was ongoing to enhance the quality of work they did; and 83 inspectors had attended Wits University training. The training varied on fields of inspections; investigations, auditing and other related legal matters. 34 officials attended other administrative, technical and health associated courses.

Mines were required by law, to forward Annual Reports on the occupational health of their employees to DMR. There had not been an improvement on diseases in the past two years, as a result of exposure to dust. Pulmonary TB was the most prevalent disease in mines, and was exacerbated by HIV/Aids. This was further aggravated by poor living conditions, as most miners were accommodated in the congested hostel-system. The Department would host an HIV/TB summit, starting on 18 November 2011.

Mr Msiza said fatalities were common in the North West and Gauteng provinces. Last year, 109 people lost their lives in the mines but the number was the lowest ever in the country. Most fatalities and injuries occurred between 10am and 12 noon. This was an irony, as a number of supervisors were underground during this time. The Department believed living conditions contributed to this occurrence. Workers woke at 2am which impacted on their eating patterns and led to lapses in concentration and fatigue around midday. DMR had established a chief directorate on health, and this was operational. The directorate would lead an initiative on improving living conditions within the sector. Previously, focus had been given to safety. The mines were expected to forward occupational hygiene measurement results. The accuracy of these results was concerning to the Department. The health directorate would need to verify these.

There was still a concern with mine safety and the Department had taken a stand that until such time that a mine could give guarantees, it could not operate. By end of October, 608 stoppage instructions had been issued against 1 421 reported transgressions. The harsh stance by the Department had resulted in a significant drop in mine related accidents and also a change in attitude by CEOs. Once their bonuses and production had been affected, these CEOs came up with effective measures for improving health and safety. On Thursday, 17 November 2011, DMR would hold a Mine Health & Safety Summit.

Mr Msiza said by setting minimum health standards there would be improvements. DMR was looking at prescribing safety nets, that prevented ground from falling, as a legal requirement. All mines were now required to submit quarterly reports, and some boards and CEOs were engaged on this aspect. There would be group audits between now and the end of the financial year at priority mines, as this was a period that saw a rise in mine deaths. The Department had appointed 19 learner inspectors that were undergoing two-year practical training. The North West had been split into two separate regions as it was leading in deaths. Also, DMR had appointed legal advisors at the regional offices to assist the inspectors.

Mineral Regulation
Mr Joel Raphela, DDG: Mineral Regulation DMR, said the unit wanted to transform the minerals sector, and ensure its contribution towards sustainable development. Economic development through mining had increased and 625 mining rights had been issued since 2004, and 435 of these had already started operations. DMR exceeded targets on jobs created through the social and labour plan programme.

The Department also exceeded targets in granting mining rights to previously disadvantaged groups and women-led companies. Although there were capacity constraints, targets on inspections were exceeded. There were about 114 posts at the unit that remained unfunded. DMR was unable to process applications in the prescribed timeframes, because resources had to be diverted. Some right holders were found to be non-compliant.

The number of complaints from communities about mining companies had increased in the previous financial year. Also, in-fighting among communities about implementation of local economic development (LED) and social labour plan (SLP) initiatives was a challenge. Recommendations arising from oversights visits by the parliamentary committee were being implemented.

Mr Raphela said DMR had done volumetric studies that backed up the need to be provided with additional funds, and the Department was in talks with National Treasury. The Department was also looking at implementing a new electronic system for lodgement and an efficient administration. DMR was re-deploying some of the chief directors to regional offices in an attempt to strengthen capacity, and had thus created additional chief director posts. The Department placed a premium on compliance inspection and balancing it with licensing. Historically, DMR used to focus only on adjudication of applications.

Mining Policy
Mr Tseko Nell, Acting DDG Mineral Policy DMR, said the unit made policies to promote the industry to potential investors. Research was core, in an attempt to ensure global competitiveness. Over the past year, the Department had finalised the Geoscience Amendment Act which sought to align the work of the Geoscience Institute with demands from municipalities. The Mining Industry Growth Development Employment Task Team (MIGDETT) signed a declaration on sustainable growth and meaningful transformation of the industry. The Department had moved from the adversarial relationship with the industry to a collaborative one. There were engagements with both the industry and organised labour on how mining could be used to improve the quality of life.

The Mining Charter was reviewed and a mining sector strategy, based on it, was crafted. The Charter would be strengthened to ensure transformation in the sector. A beneficiation strategy had been developed, although incomplete, it had been adopted by Cabinet. Advocacy work around the strategy was continuing in an attempt to lure those who would be impacted by it.

The Department contributed to skills development, and was supporting 82 small and medium enterprises that were in mining. Work needed to be done on the small scale mining strategy, especially as it pertained to environmental compliance and funding of small scale miners. DMR had successfully rehabilitated five asbestos projects in the Northern Cape, and was in discussions with National Treasury about getting additional funds for this work.

The Cabinet had approved usage of African Exploration Mining Finance Corporation (AEMFC) to be a nucleus for the establishment of a state-owned mining company. The Department hosted the African Diamond Association Council of Ministers, and SA’s Minister, Susan Shabangu, was the Chair. The Department collaborated with research institutions such as the Bureau of Economic Research and the Raw Materials Group, who assisted with data used during policy making.

Mr Nell said challenges included slow progress in passing the Minerals Petroleum Resources Development Amendment Bill. Consultation was still ongoing with relevant government departments and other affected parties. The Department had received a submission from the state law advisors on how to fast-track the Minerals Petroleum Resources Development Amendment Bill.

Discussion
Mr K Sinclair (Cope; Northern Cape) said the presentation was fine, but lacked substance. He understood the challenges of personnel but this was no excuse for non-delivery. How long must the country take to ensure small scale mining companies got the support they needed in order to benefit from the mineral wealth. The Committee expected better than this.

Mr Ramontja replied that small scale mining and its strategy had always been a challenge. DMR drew up a strategy but there were so many challenges and its success rate was low. It agreed that a review was needed. This was linked to the issue of mining being a very risky environment and one needed geological knowledge to even contemplate it. There was a team looking at this matter, and hopefully by next year a strategy would have been implemented. The strategy would still involve the institutions DMR worked with.

Mr Sinclair said it worried him that the State Diamond Trader was housed in Gauteng and not in Kimberley. The Department needed to re-look at this issue. Given the dynamics of the Northern Cape in terms of development, the Department needed to look at opening a satellite or regional office there. There were 26 active mines in the area, but roads were inaccessible; Northern Cape should be the priority for the Department. He wanted to know about the funding model for the State Trader.

Mr Ramontja said DMR needed to look at the viability of a satellite office in the Northern Cape. Government had always said it needed to be closer to the people; DMR would look into that and see if it was affordable. DMR had recognised that its offices were too far from the people in that province.

Mr Ragimana replied that the Diamond Trader was a relatively old issue. The reason a funding model could not be finalised was because of the processes that had to be followed when establishing entities. Treasury had approved a temporary listing of the Trader on the basis that there would be a review after a year.

The Chairperson interjected and said the Minister had already given a reply to Mr Sinclair on the issue. He did not want the CFO to contradict the Minister. That was a policy matter that had to be decided by the Cabinet; just steer away from there. The Minister had given reasons to this Committee and in the House why the Trader was housed in Johannesburg.

Mr Sinclair said there were two elements to his question. He understood that the Trader would remain in Johannesburg, but he would not let the officials off the hook until they brought the Trader to Kimberley. The other issue was the funding model and it was proper that the CFO responded to it. This had nothing to do with policy but the model the Department wanted to use.

Mr Ragimana said a state business case had been developed but discussions between DMR and the Trader had not been finalised. The business case informed the funding model. The Trader was classified as a state-owned enterprise that had to be self-sustaining. When DMR had to list, it had to say what would be the state contribution; the Department was engaging National Treasury on this. The stakeholders were closer to finding a common ground.

Mr Sinclair said there was a better way to deal with the African Exploration Mining and Finance Company. Establishing a state owned mining company would be disastrous, and an example of this was Alexkor in the Northern Cape. Everybody was trying to save Alexkor but the company was self-destructing.

Mr Ramontja said there was debate on African Exploration. It was a government policy decision and it needed space and time, and it would succeed. If a government had mineral resources, then it needed to use various models to ensure guaranteed security of supply. African Exploration could play an important role when it came to this.

Mr Sinclair asked if the Department used consultants at all, and why was this not reflected in the Annual Report. There was no reference to consultants and the Committee was always adamant that the expertise should be within the Department.

Mr Ragimana replied that the use of consultants by the Department was low. The majority of the work on the Annual Report was produced internally. The only instance the Department used consultants was for rehabilitation. The financial statement would not reflect expenditure on consultants because transfers were made to Mintek’s account which hired on behalf of the Department. The Department would never have the ability to recruit those skills permanently into its employ.

Mr Sinclair asked about the impact of nationalisation on investment. He had a suspicion that the whole debate about nationalisation (raised by the ANC Youth League) was having a negative effect on the confidence of investors. One of the reasons why Moody’s downgraded SA was the sustained talk of nationalisation. This was a policy issue, but officials needed to pronounce on it.

Mr Ramontja replied that the Minister’s views on nationalisation as a policy were known. There was a process currently underway on this aspect, and the impact of it on investors needed to be quantified by scientific data.

Mr Sinclair said, given the mineral wealth of the country, it was important that mining was instrumental in the economic development of areas like the Northern Cape. Areas where there were mines, needed to be special economic zones, that linked development of smaller towns like Upington with the rest of the province. He wanted to know what the Department was doing to enhance the mineral wealth in SA.

Mr Raphela replied the process of finalisation of the Social & Labour Plan (SPL) was aligned to the IDPs of municipalities, and as a result the Department ensured there were engagements on projects that were implemented. Economic development was identified in the DMR plan. Travelling was costing the Department a lot in both monetary terms and productivity. Growth points were also challenged in other provinces as well, and the Department needed to ensure a presence in areas like Soutpansberg in Limpopo and the Greater Sekhukune. In addressing infrastructure, the Department had been putting into the Transnet Infrastructure Expansion programme.

Mr D Gamede (ANC; KZN) said it was not a good sign that the Department got a qualified audit opinion on its first year as a standalone ministry. The CFO was brave enough in saying the qualification was as a result of accounting issues; the fact of the matter was that they led to a qualification. He wanted to know the departmental turn-around time when it came to attending to payments and invoices.

Mr Ramontja said the qualified audit opinion was unfortunate. Finances of the Department needed to be properly managed. The Department had taken note of that, and had thus put in place systems to address that. This was always on the departmental weekly meeting agenda, and DMR was confident that by next year it would have been resolved.

Mr Ragimana replied that the turn-around time for payment of invoices was 23 days. The Department monitored closely the payment process.

Mr Gamede said operating leases were too high compared to when the Department was part of DME. Government needed to buy properties instead of leasing as it would still be around in the next 100 years. It would be good to get the breakdown of the Employment Equity, to understand how people with disability benefited, and at what value, from the Department.

Ms B Abrahams (DA; Gauteng) said although she welcomed the reduction in the statistics of mine deaths it was still too high. She wanted to echo what was said by Mr Gamede on people with disability. There surely was space and place for them in the mining sector.

Mr Ragimana said the operating lease prices appeared high because office space, furniture, computers, photocopiers, etc. were classified under operating lease expenditure. The reason the number appeared even higher than when the Department was still with Energy was because the split coincided with DMR’s relocation. There was a need to refresh the departmental infrastructure and that meant an increase in cost. Most organisations would go for leasing when it came to IT equipment, because technology changed and lost value so fast. Leasing as opposed to buying by departments was a policy issue that government needed to look at. Departments were only able to lease under the current framework. It was difficult to answer the question on how many HDSAs out of the 227 had benefited from the listing process. DMR used a rotational system and service providers were approached on this basis. The Department always asked for three quotations, and if a service provider was forever more expensive than others, a year could pass without it ever benefiting. At the end of the financial year, 37% of HDSAs had benefited. This was very low, and had to be moved higher.

Ms Gamede said on employment equity, as it pertained to people with disability, the national target was 10%, and DMR was sitting at 0.06%. There were more females and the Department struggled with coloured people and those of Indian origin. The Department had resolved to head-hunt these groups, because the application route did not yield positive results.

Mr Gamede said it was discomforting to note that the Department surpassed all targets in all programmes, because targets were tied to cost. Where did DMR get funds for the targets that it did not cost. It was not realistic to hit, let alone exceed, targets like that. He wanted to know if the budget spoke to the backlog the Department had, as it was claiming that the budget was aligned to strategy. He asked what would happen, in the vetting process, if an employee who was already in the employment of the Department was not cleared. He wanted to know the number of Presidential Hotline queries the Department had received in 2010/11.

Mr Ramontja said although the Department had a very good staff complement, it needed to look at its targets to see if they were appropriate in terms of performance management. If there were problems with vetting, DMR would have to follow the Labour Relations and the Public Service Administration Acts to address the problem of non-clearance. The Department would have to address everything with regards to the rights of the employee concerned.

Ms Zingaphi Jakaju, DMR Director of Communications, said the Department was the best performing in attending to Presidential Hotline queries. There were 60 calls for the financial year 2010/11 and most of those were closed. The departmental approach was to close a call within the space of a week, unless there were technical issues that required research and expertise.

Mr Gamede asked if establishing an internal legal unit was more costly than hiring a private legal representative as and when the Department went to court. By nature of what the Department was doing, it needed a dedicated legal unit because every day it took someone, or was taken, to court.

Mr Ramontja agreed with the assertion by the Members that Department would always be in court. DMR was flooded with legal issues, and had as a result agreed that it needed to beef up its legal unit and have it operate internally. While the Department might need to use the state law advisers from time to time, it needed a full legal team. This service was not only needed when issuing the rights but also around inspections. DMR needed to put together a strategy that would comprehensively address the challenge of legal issues.

Mr Gamede said it would be good, when the Department came to present next time, to separate the number of mine fatalities from those that were health-related. The Department needed to research the irony that between 9am and10am was the safest time underground, while 10am to 12 noon was the most unsafe. This was a contradiction and was hard to believe.

Mr Msiza said the timing of accidents had a lot to do with the phases of mining during the day. The industry employed close to 500 000 people. Travelling and examination were the first phases of going into the mine and were not high risk. The high risk was the drilling and the charging of explosives. It was noticeable in gold and platinum mines that digging happened a bit further from the shafts. Fatigue set in at around ten to 12 noon, and this was the high activity period. The Department believed diet was also a contributing factor. There needed to be proper nutrition and improved living conditions.

The Occupational Diseases Mines and Works Act required that cardiovascular organs of a dead mine worker be sent to the National Institute for Occupational Health (NIOH) for evaluation of occupational diseases. This was also used for compensation purposes. The number of people who succumb to silicosis was four times higher than those killed in mine accidents. That was the reason the Department had begun putting emphasis on health as well, to balance this aspect with mine safety.

Mr Gamede asked if the LED programmes talked to the Integrated Development Plans. Mining houses came to communities and decided what to build for the locals without really looking at the needs of the people. He was concerned that the DG had been fingered by the report as inactive when it came to taking action when things went wrong. What remedial steps would the new DG take to rectify this.

Mr Ramontja said DMR had to develop a new strategy with stakeholders. The strategy would look at the whole value chain in the mining process. Some aspects of this were already addressed in the beneficiation strategy that the Department was working on. The Department was happy with the contribution it made on economic development and job creation. The challenge was attracting investors into exploration and the mining side, but a task team had been assembled to look at how to increase investment. Mining was impossible if new mines and a geological infrastructure were not created.

Ms M Dikgale (ANC Limpopo) said she was concerned by the in-fighting of communities, mentioned as a challenge in the awarding of licences. The Committee discovered there was a fight between communities and traditional leaders when it went to do oversight at Sekhukhune. A steering committee was established to deal with the quarrel. But when the Committee went back, nothing had happened. She was not sure how DMR’s regulation unit worked. The steering committee had told the Committee that a trust had been opened on behalf of the community, but could not account for the funds. Also, chiefs in the area were neither consulted nor invited to the meetings.

Mr Raphela said the Department was aware of the community squabbles, including Sekhukune, and had held several meetings with that community. DMR had visited the area and called a couple of meetings with senior executives, community representatives as well as the groups concerned. A programme of action was agreed upon; and had resulted in the election of a democratic structure, as well as the social labour project by the mine. Over 500 people who were retrenched, were rehired, and there was constant monitoring of the project. The Minister would also be visiting the area soon.

Follow-up discussion
Mr Sinclair said the Department needed to allude to the issue of acid mine drainage as there was very little on it in the presentation. There needed to be a balance between local economic development and social labour. He cited the example of Kumba, which was so powerful that it dictated to the local municipality. This went against the objectives of the Mining Charter. The Department must strike a balance between SLPs and LEDs and other role players. SA needed to exploit the rise of new mines and establish a modern mining environment. The Northern Cape reeled from the effects of asbestosis that happened 30 years ago. He asked if there was a legislative framework that dealt with asbestosis.

Mr B Mnguni (ANC; Free State) wanted to know if DMR had done any research on mine safety as it pertained to nightshift staff. He asked if the Department had legislation that regulated mining of low grade areas when commodity prices increased on the stock market. Mixing of the grade kept many companies afloat without impacting the bottom-line, and they employed more staff in the process.

The Chairperson said mining houses were clever. They had agreements with municipalities and that was not enough. The mining houses did not uplift local communities. He requested a written reply on the question of where the agreements had been signed with towns and the SIPs of the mines. The Committee wanted to know prior to conducting mine visits with the Department of Cooperative Governance and Traditional Affairs, which mines had not met the agreements on LEDs.

Mr Ramontja replied that DMR inherited the problem of acid mines and had acknowledged that it was a problem. A task team was established to determine the extent of the problem. The process was led by the Department of Water Affairs.

Mr Henk Coetzee, Specialist Scientist, Council for Geoscience, said reports on mine acid drainage were exaggerated. A team of experts was looking into the matter and a lot was done and planned. The critical area in terms of acid mine drainage was around Krugersdorp in Gauteng, where there was decadent and uncontrolled acid mine water above the land surface. There were emergency and short-term plans in place and these would kick in around February. The situation was being monitored very closely, and ownerless and derelict mines were receiving attention.

Mr Msiza said the issue of asbestosis was a legacy one. There was a drive by the Department to amalgamate the two pieces of legislation that were there. That process was driven by the Department of Labour, but DMR supported it. Night-shift was a high risk to safety, but there were few employees working at night and they were restricted only to cleaning and scrapping. Some gold mines were chasing production at all cost, and in the process were risking the lives of employees because of the gold price that had surpassed platinum for the first time this year. These were mining in dangerous areas, and some were mining the shaft pillars as well. This had led to an increase in transport accidents. The Department needed to have a holistic approach on enforcement, and not only look at compliance issues.

Mr Ramontja said DMR did not have legislation to regulate mining activity in relation to commodity prices, but it was something that needed to be looked into. If the Department were to regulate, it would need resources.

Mr Herman Cornelissen, Mintek Researcher, said there was a distinction between the environmental nature and sources of asbestosis pollution. The Committee needed to be clear on the source of illnesses. Mintek had rehabilitated four mines in the Northern Cape and a further five were targeted this year. The point sources of asbestosis that related to mining had already been rehabilitated in the Northern Cape, and Mintek was looking at communities living too close to point sources. There was grass-root support for a summit that would review the problem of asbestos in the country.

Mr Ramontja said the Department would address the issues raised. It would provide a written reply to issues it could not answer.

The meeting was adjourned.