Rheinmetal-Denel on safety of workers following the death of 8 workers in 2018 at Somerset West plant

NCOP Public Enterprises and Communication

18 November 2020
Chairperson: Mr T Matibe (ANC, Limpopo)
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Meeting Summary

Rheinmetall Denel Munition (RDM) presented on its business operations, the fire accident which took place on 3 September 2020, and what was done following the incident. Members were informed of the RDM’s shareholders, business situation over the past ten years, product portfolio, regulatory framework and operational safety management.

On 3 September 2018, an explosion occurred at 15h28 at the Somerset West site during the blending of CBI single base propellant at a blending facility, as part of the normal propellant production process. The blending facility was completely destroyed. Eight colleagues lost their lives. There was limited damage to the adjacent buildings, because of the prescribed safety distances. The RDM Emergency Response Procedure was activated and a Joint Operational Committee (JOC) was established. Excellent support was received from all spheres of government. An investigation lasted close to 12 months and concluded in October 2019 - the investigation established that during the mandatory routine testing of sub-lots in the course of the manufacturing process, it was found that one sub-lot did not meet the required quality standards. However, due process was not followed and, instead, an attempt to rework the material was made by adding extra graphite to the propellant. The following conclusion was reached:

-The most probable immediate cause of the explosion was electrostatic electricity build-up in a graphite cloud in the blender and a subsequent discharge with enough energy to ignite the suspended propellant in the blending drum. This ignited the other propellant which transitioned into a detonation.

-This was a previously unidentified and unforeseen hazard by RDM and as far as the team has been able to determine, across the industry internationally. It should be emphasised that it is not possible to determine with 100% certainty what exactly caused the Incident The above scenario is the most likely cause based on all known facts and analysis

Members asked questions about the practical prevention measures which RDM put in place to ensure a similar incident does not occur again; consequence management following the investigations of the accident; the role of unions after the incident; accountability to the community; if the Company identified any shortcoming in legislation to ensure a similar accident does not happen again and the support to families of the deceased, including university support for children of the deceased. Further questions probed RDM investment in women; Denel’s expansion strategy and plans to expand to other provinces; its exports to the African market and the partnership between Rheinmetall and Denel, considering Denel’s weak financial position.

Other Members felt the investigation was in favour of RDM as it initiated the investigation and therefore the findings would be in their favour, and the Committee would not be convinced that everything was in order regarding safety responsibility for the workers. It was said there must be consequences – if a person gets into an accident with someone or someone gets killed, there must be prosecution.  There is need for follow-up on the matter so the families also get closure for what happened. Since the Company said it cannot confirm 100%, it means the families are still wondering what really happened.

Meeting report

Apologies were received from the Minister, the Deputy Minister and Committee Members.  

The Chairperson apologised to Members for the delay in starting the meeting because of a technical difficulty, however, IT was able to sort it out on time. He welcomed Members and the delegation from Rheinmetall Denel Munition (RDM) to the meeting.

The team from RDM comprised of Mr Talib Sadik, Interim Group CEO, Denel, Mr Jan-Patrick Helmsen, CEO, RDM, and Mr Themba Zwelibanzi, Group Risk and Compliance Manager, Denel.

Rheinmetall Denel Munition (RDM) briefing

The presentation began with a description of RDM’s shareholders. It consists of Denel with 49% shares and Rheinmetall Defence with 51%.  RDM is a world leader in ammunition-based explosives material and long range artillery solutions. There has been worldwide growth of the RDM core products and the RDM is at the forefront of the artillery supercycle. RDM is a globally competitive and integrated South African Defence Industry company that supports the national interest of South Africa. It supports the national and development transformation agenda and develops and invests in strategic South African science, engineering and technology skills, capabilities and direct and indirect job creation

The presentation looked at RDM’s business situation over the past ten years in terms of sales and exports s well as investment and contribution towards infrastructure, technology and product development, training and bursaries, skills development levies and third party income tax.

RDM’s business is based on a strictly regulated explosives environment and is complaint with SA legislation and compliance licences and permits. There are regular compliance audits and inspections: there is an in-house safety team that is focused on ensuring RDM remains compliant, internal and third party audits and validation of compliance levels and legislated annual compliance audits/validation of compliance. As part of the regulatory framework, RDM interacts with the Department of Employment and Labour. There are also international industry norms and standards, as part of the worldwide explosives industry network, which the RDM complies with. The RDMs operational safety management is based on five key principles relating to infrastructure, recruitment, training, procedures and leadership.

The presentation addressed RDM’s operational safety plan – see presentation attached for details

On 3 September 2018, at the Somerset West Site, an explosion occurred at 15:28pm, during the blending of a CBI single base propellant at a blending facility, as part of the normal propellant production process. The building was completely destroyed, and eight lives of workers were lost.

The investigation lasted close to 12 months and was concluded in October 2019. The RDM investigation report as required by OHS Act (GAR9) was delivered to the Department of Labour in October 2019. The investigation established that during the mandatory routine testing of sub-lots in the course of the manufacturing process, it was found that one sub-lot did not meet the required quality standards. However, due process was not followed and, instead, an attempt to rework the material was made by adding extra graphite to the propellant. The following conclusion was reached:

-The most probable immediate cause of the explosion was electrostatic electricity build-up in a graphite cloud in the blender and a subsequent discharge with enough energy to ignite the suspended propellant in the blending drum. This ignited the other propellant which transitioned into a detonation.

-This was a previously unidentified and unforeseen hazard by RDM and as far as the team has been able to determine, across the industry internationally. It should be emphasised that it is not possible to determine with 100% certainty what exactly caused the Incident. The above scenario is the most likely cause based on all known facts and analysis

The presentation detailed the actions taken by RDM after the incident and the support provided to the bereaved families. The presentation also detailed RDM’s response to COVID19, corporate social responsibility and investments and BBBEE status - see presentation attached for details

Discussion

The Chairperson thanked RDM and said he allowed more time for the presentation because of the sensitivity of the matter, because he usually does not allow long presentations.

Ms L Bebee (ANC, KZN), thanked RDM for the presentation. She said she recognised the teamwork, as different team members took part in presenting. The presentation was very detailed, and she thanked the Chairperson for allowing more time so Members would understand what went wrong.

She appreciates the way RDM communicates with communities. She intended to ask about KwaZulu-Natal (KZN), but it was covered, since RDM adopted one of the schools in KZN and are doing the job in all spheres in government.

Since the tragic accident was due to a technical fault, she asked what practical measures RDM put in place as an employer, to ensure a similar incident does not happen again in the future.

She asked what role Unions played following the incident, to ensure safe working conditions for workers; and if it is satisfied with the measures put in place or not.

Mr M Nhanha (DA, Eastern Cape) commended RDM for a comprehensive presentation. While the presentation was about the accident, he wanted to ask other questions which were not part of the original brief. He apologised for asking questions outside of the presentation. He was pleased RDM went to great lengths to support families of victims. While he did not doubt what RDM presented, he said it would be interesting to hear from the unions, to get another opinion confirming all the good things presented to the Committee. Members are from provinces, and RDM’s footprint is mostly in two or three provinces/areas, the Western Cape, Gauteng, and Potchefstroom.

He asked if there are plans in RDM’s expansion strategy to expand the business to other provinces, such as new plants in other provinces for job creation. He asked about the African market, asking how far Denel went into Africa. The CEO said one of the key elements to its success is the export market - Mr Nhanha asked how far Denel went into the African continent; he asked how much of its ammunition was sent to tyrants such as the President of Zimbabwe; and asked how much of its ammunition was probably used to kill Nigerians in the last few weeks.

Mr A Arnolds (EFF, Western Cape) said the presentation was long. The brief requested by the Committee was regarding the incident which happened, where eight workers lost their lives in Somerset West. He said when the party implicated does its own investigation, the result will always be in one’s own favour. RDM came with a security team to convince the Committee everything was in order regarding safety responsibility for the workers who died in the disaster. When the incident happened, the community of Macassar, where RDM is located, asked it to explain its accountability to the community. It probably did this only once or not at all.

Mr Arnolds said he was also there at the time of the incident and he went to the company. The response from the Company was not good at all. The Company was slow to respond. It did not attend meetings where it needed to engage with the community.

Mr Arnolds asked if RDM is saying it has done enough for the families. It mentioned a ten-year investment in its presentation, noting a monthly contribution, Christmas lunch, and other things it has done.  He asked if RDM is saying it has done enough for workers who lost their lives. Since RDM said the workers and the supervisor were fully trained, he asked if there was something wrong with the training. Since RDM said the workers, team leader, and supervisor had extensive experience with the material and operations at the time of the incident, he asked why the Company is now absolving itself from the incident. He asked about the investigations. There must be consequences and the outcome needs to be seen. If a person gets into an accident with someone or someone gets killed, there must be prosecution.  There is need for follow-up on the matter so the families also get closure for what happened. Since the Company said it cannot confirm 100%, it means the families are still wondering what really happened.

Mr A Cloete (FF+, Free State) said it is important to differentiate between Denel, Rheinmetall Munitions, and Rheinmetall Defence Group, as three different companies which come together with Rheinmetall Denel Munitions in the middle. Considering the track record Rheinmetall Defence Group has, Mr Cloete asked if it experienced any other accident at any of the units elsewhere in the world, such as the incident which happened at Somerset West.

On the partnership between Rheinmetall Defence and Denel, he said Denel is in a weak financial position and is technically insolvent. Sometimes it is unable to pay salaries, sometimes it is unable to raise working capital, it is losing highly skilled engineers, the equity injection is not enough, and there are job cuts.

He asked if the CEO, as a professional, is concerned about the partnership with Denel, especially considering safety and the financial position of Denel. Considering Denel’s finances, and in light of how the year was affected by COVID-19, he asked how Denel managed to have such healthy funds, as shown at the start of the presentation.

Regarding the accident itself, Denel mentioned there was a component in the propellant mixing process which did not meet the required quality standards, and workers were trying to compensate for this by adding extra graphite to the propellant mixture. In light of this, Mr Cloete asked what standard operating procedure in the Company was. He also asked if Denel would have picked it up and stopped the workers from doing it because it is dangerous.

He wanted to know what advice was given to workers; if the CEO, as a professional, identified any shortcomings or defects in South African legislation to ensure this does not happen again; he asked what can be done in the future; and if there are regulatory and legislative changes which can be made.

Rheinmetall as a company seemed unprepared to take responsibility for the disaster. He noted doubt about what was presented by the Human Resources department, and said it appeared to be untrue. Community members say having a factory of such magnitude in the middle of the community puts lives at risk, and there is an investigation into it. He asked if the factory was put there while the community was there, or if the community developed next to it. It is important to know which one came first because it plays a role.

Ms W Ngwenya (ANC, Gauteng) asked if there were any incidents in the past year, similar to the September 2018 incident. She asked what the details of such incidents are if it indeed happened. She asked if there were any safety measures or prevention measures completed after the September 2018 incident, to avoid similar incidents from happening in RDM operations across the country.  She asked for more information, if this was done.

Ms Ngwenya asked the CEO to provide more information on what he meant when he said RDM received excellent support from all spheres of government.

Regarding support to families, while appreciating what was happening, she said page 24 of the presentation shows there is a good job being done. This was not enough, and she asked if there is a possibility of employing family members of the deceased in RDM operations across the country, and if not, why not. She asked if there are any efforts to assist children of the deceased with financial support to further their studies at university, or other tertiary institutions, and if not, why not. It is not enough to say school and day care were provided. She asked what will happen when the child goes to university.

Ms T Modise (ANC, North West) said the Company has a plant in Potchefstroom in the North West. However, when it presented on community development, she did not hear any mention of supporting the community of the North West, particularly in the rural areas. While welcoming the investment in youth as leaders of tomorrow, she wanted to know what about women. RDM must invest in women since women are the core of the nation. She asked if RDM has unions in the Somerset plant; how many unions representing workers at Somerset are recognised; and how many are not recognised.

The Chairperson said there was not much time left for the meeting and asked for brief answers to allow Members to ask follow-up questions.

Responses

Mr Jan-Patrick Helmsen (RDM CEO) appreciated the recognition on teamwork in the presentation because RDM is indeed a team.

On improvements, he said improvement is at the core of safety, and is an ongoing methodology daily, weekly, and monthly. RDM will continue improving in the next days, years, and decades. Slide nine showed improvement on infrastructure, recruitment, training, procedures, and leadership.

On infrastructure, RDM built a new plant where it invested approximately R100 million. This will be an automatic plant where there will be no operator in the loop. Recruitment and training were covered in its refresher trainings which it established immediately.

He said procedures are important but mean nothing, if it is just a piece of paper. What is important is to follow the procedures daily and hourly by applying general safety rules in the workplace. As mentioned in the presentation, audience management and the leadership team are completely committed to ensure safety first culture is adopted by all staff.  

RDM ensures leadership where there is responsibility by line manager function, not just for the CEO and General Manager, but also the Plant Manager, Shift Leader, and everyone in the hierarchy. The main task is to bring all the leaders empowerment and knowledge to execute the procedures. Since procedures are important, but are nothing if it is not followed, the first step is for everyone to be aware of procedures. These are copied and printed for everyone. Through training, RDM ensures all staff understand the written procedures, and RDM continues to educate staff to follow it.

It will work with young, and more experienced people, who may be reluctant to follow procedures because of working for many years. Procedures are sometimes uncomfortable and experienced people may want to fast-track, but RDM makes sure everyone follows all the procedures to ensure safety at work.

On the role of unions, he said there are six unions in RDM. In the last yearm as a CEO, he had a transparent relationship with the unions. Ms Duduzile Letseli (the HR Manager, Cape Town) is in charge. This transparent relationship is important to empower employees, ensure employees are given food, money, and work. There must be contracts. It does not want to have the unions on one side and the employer on the other side - it wants transparency and teamwork between the employer and the unions.

Ms Letseli said after the accident, RDM worked with all six unions, including Solidarity, and National Union of Metal Workers of South Africa (Numsa). The parties work together around the accident, and reported continuously to the labour forums, and reported on the investigation results.  On the day when the results were given to the company and the employees in October, the union’s officials were present, as officials were working with RDM and reporting continuously and consistently.  Importantly, the Western Cape Office of the Congress of South African Trade Unions (COSATU) continued to follow up on the issue even after the incident. Unions were informed and involved, including on matters related to the improvements being made on the premises for security and safety. There is also a reporting forum where RDM deals with the unions on a continuous basis.

Mr Helmsen replied on the question of business expansion, and said the current situation has a positive market environment. It will expand the customer base to produce more in South Africa in the next few years. There is no current plan for expanding within South Africa. It depends on decisions of RDM management and directors. The Board is business-driven and if this makes business sense with good business opportunities and ideas, RDM will expand. It wants to grow and have more market share.

On export to Africa, he said South Africa and Africa is a small portion of its annual sales.  Ten percent of annual sales are in Africa, while 90% are in Europe, Middle East, Asia, and United States America. It does not just decide which country to do business with. The decision is made by the National Conventional Arms Control Committee (NCACC), because it needs government approval. It is a strictly regulated environment because it sells weapons, and therefore it does not sell in embargoed countries based on the United Nations, nor any countries where the NCACC is not approved.

On the accident investigation he said, the investigation team was independent from the company. It followed the procedures based on the Occupational Safety and Health Act (OSH), and as such was obliged to do an investigation. The investigation was cross functional. He said RDM was mostly interested in the outcome of the investigation. When investigation was finalised, the report was handed over to the Department of Labour together with other reports from the police. The National Prosecuting Authority will have to assess the information and findings to determine the next steps. The Company will be transparent in sharing all the information as it did before.  Regarding if a similar incident happened before, he said he was not aware, but would ask the shareholder Rheinmetall, since he can only speak for RDM. It will return to the Committee with a response.

On the finance situation of Denel, he said he could not respond, but Mr Talib Sadik (Denel group cting CEO) would reply to it.

On deficits in the law and improvements which can be made, he said it can improve on a permanent basis.

Regarding if there was a similar incident as the accident, he said there was none. Denel monitors for any disabling injuries which may happen on a monthly basis. It measures monthly and yearly. In 2019, it had six disabling injuries where the people cannot go back to work after a car crash, while in 2020 it had one. The industry benchmark is 14, so it is under the benchmark.

On support from government after the incident, he said Denel received excellent support from all spheres of the government, especially from the City of Cape Town, Fire and Rescue Services, Department of Disaster Management, National Key Point Regulator (since all its sites are national key points), and the Minister of Public Enterprise. Most importantly was the commitment from Minister Gordhan, Denel Chairperson, Ms Monhla Hlahla, and the Rheinmetall Management Board chairperson, Mr Armin Papperger. Even if the times were not good the commitment was the most important thing.

Ms Letseli replied on supporting children of the affected families with attending university. She said RDM has an open bursary and the first call is for the children of employees. Children of the deceased are covered by the policy for tertiary education. There is no reason to give bursaries to people who have not worked with the company. There is commitment.

On support to the Potchefstroom community, she said the same model developed for Macassar is in the pipeline to be used for the Potchefstroom site. The employees at Potchefstroom are aware as it was marketed to there. It knows whatever is being done in the community will be extended to the site since it is one of the bigger plans of the company. In the meantime, it is working with smaller organisations in Potchefstroom, assisting annually. This year it could not be done because of COVID-19, but usually there is an event driven by the finance department, where the community, including the orphanage, are invited on site and are taken care of.

On support for women in the programme, she said six out of the ten companies which started ten years ago, six are black women owned companies. It started and still supports these companies. It has the interest of women at heart, with programmes which ensure black women are empowered in economic activities. It also encourages women in the bursary scheme, because it recognises these women will assist in transformation spheres in implementing employment equity.

Mr Helmsen replied to the question on what was founded first. He said he is not a historic expert, but he heard from an experienced person the site came first, and the community was built up more and more in the last 20 years. He said Mr Rob Keyser (RDM leader investigator) would be able to give more information, since he is more experienced and has lived in Somerset West for many decades.

Mr Keyser said the community of Macassar is a very old one, and technically, the community came first. However, the site was established next to what used to be the AECI dynamite factory, which was established more than 100 years ago. Therefore, the site was established there because it shared certain facilities. At the time, there were no towns around. Although there was already a community, the plant, just like the dynamite factory, was built far away from built-up area. Later, as urbanisation started and towns expanded, the towns moved closer to the facility.

Mr Helmsen said it presents no risk to the surrounding area in all its sites, especially in the township in Macassar and the communities. The site is safe because it complies with all required legislation, gets audited, and tested, by third parties, including government entities like the Department of Employment and Labour and the Department of Environmental Affairs. It is compliant with all requirements.

On the Company’s accountability to the community of Macassar, he said it did not subscribe to ‘family first’. This was related to the whole process of the report. In October 2019, which was his first month as a CEO, it informed the families of the deceased first about the incident. The family was informed by management and the CEO in Somerset West. Afterwards, it informed all employees at Somerset West in a face to face meeting, so everyone was aware about what was happening. There is full transparency. It informed all employees on the other sites, including shareholders Rheinmetall and Denel.  Recently, it also sent the report the Department of Labour.  He apologised for missing one question on his notes.

The Chairperson said the Secretariat would check all the questions which were not answered, so it can respond to the Committee in writing.

Input by the Department

Mr Kgathatso Tlhakudi, Director-General, Department of Public Enterprise, said when the Department started the relationship with Rheinmetall, the aim was to grow the business to an export-led business. This was achieved.  The accident is one black mark on its relationship. The Department has worked with Rheinmetall. The Minister flew from Japan just to be with Rheinmetall and the surrounding community in the Western Cape. After the investigations it awaited the formal report from the Department of Labour to get a clear picture, lessons going forward, accountability, and consequence management. The report from the Department of Labour would be authoritative to lead in this direction. But it was necessary for Rheinmetall to do its report, because one cannot have an incident in its yard and then be waiting for someone to conclude. One must have one’s own preliminary understanding of what happened, to prevent something similar in future. It is a continuous effort to improve operations going forward, so people are safe.

The Department will follow up on questions which need to be replied to, and ensure any further follow-ups are addressed.

The Chairperson thanked the CEO, the Director-General, and the team from the Department of Public Enterprises for a very comprehensive presentation. The Secretariat will look at other questions which were not replied to, so it can be put in writing.

The Chairperson excused the CEO and the team, so the Committee could deal with its internal matters.

Adoption of Committee Minutes

Committee minutes dated 4 November 2020 were adopted.

The meeting was adjourned.

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