Department of Mineral Resources on its 2014/15 Annual Report

Meeting report

Opening remarks:
The Chairperson greeted the Committee members and welcomed them back after the long break they had in preparation for the local government elections that took place on 03 August 2016, and he hoped all the politicians were satisfied with the results.

An apology was sent to the Chairperson from Mr E Mlambo (ANC, Gauteng) that he would not be able to attend the meeting. Ms Irene Singo, Chief Financial Officer, Department of Mineral Resources (DMR) acting on behalf of the Director General (DG) conveyed apologies on behalf of the Minister, Deputy Minister, and the DG for having not being able to attend the meeting.

Briefing by Department of Mineral Resources

Ms Singo emphasised the importance of the mining industry, and said that price trends during a particular period affected the DMR and the work they did through job creation, costing and increases in platinum and gold for trade. There had been a sharp increase in income with the introduction of the Mining Tax Revenue (MTR).
 
The Department continued to analyze the trends, even though from the mining industry it was evident that there was an upward trend from the 1994 period, and then it had fluctuated. It monitored these trends in order to implement an intervention when the trend went down. Mining changes a lot of lives through employment, so it was important to monitor the trends in the mining sector.

Monies collected went back to the National Revenue Fund. The DMR had estimated that they would collect R45.1 million during the period, and had ended up collecting R46.2 million, which was higher than the target. In the category of receipts, the main source of revenue had been the prospective fees income. The rest were administrative revenue in the form of income from penalties and disposal of capital assets. The Department had spent 99.97%, or R1.475 billion, of its R1.476 billion budget for the 2014/15  financial year. An amount of R384 000 had been surrendered back to the National Treasury as excess.  R484.619 million had been spent on the compensation of employees, and R252.262 million on goods and services. R723.733 million had been transferred to entities for their respective purposes. R14.543 million had been spent on payment for capital assets.

Ms Singo further added that finances for the 2014/15 financial year had been managed much better than in previous years, where the DMR had ended up in overdraft. The report of the Auditor General (AG) had been received and accepted by the Department, and measures were put in place to apply the recommendations made by the AG. The Department further aimed to improve the internal controls to ensure reliable financial reporting and compliance with legislation.

Performance Information
Ms Pat Gamede, Deputy Director General, Corporate Services, DMR stated that the programme was comprised of five chief directorates: Human Resources (HR), Communication, Legal, Special Projects, and Auxiliary Services.


Programme One: Corporate Services  

Corporate Services is comprised of five chief directorates: Human Resources (HR), Communication, Legal, Special Projects, and Auxiliary Services.

Achievements in Corporate Services included:
The communication of DMR programmes and policies through successful media briefings, public participation engagements and positive, balanced newsletters published and broadcast, as well as the implementation of an internal communication strategy.
Contribution toward skills development. 19 career awareness initiatives were held for communities and universities, and 23 bursaries were offered to youths studying toward mining related qualifications.
Sustainable development of vulnerable groups. Six projects had been facilitated for vulnerable groups identified in Mpumalanga, Northern Cape, Gauteng and Western Cape.
Develop and review internal processes, guidelines and policies. The Department had reviewed ten guidelines and mapped 15 business processes.
Ensure compliance with HR legislation. 100% of financial disclosures had been submitted within the prescribed time frames.
Ensure implementation of national vetting strategy. All new employees had been screened, as well as service providers and contractors. All health, safety and wellness programmes had been implemented.

Challenges under Corporate Services;
Attracting, developing and retaining skills. Employment equity targets for designated race groups were still a challenge, especially for coloured and Indian people. Measures had been put in place to attract as many people from the designated groups as possible, but for whatever the reason, the Department did not seem able to achieve its target. There was a high number of vacancies within the DMR, and they were trying to reduce this to at least a 10% vacancy rate.
Achievement of Employment Equity (EE) targets. Targeted recruitment and advertising would be used to attract designated groups to seek employment in the Department.
Retention of skills. Retention mechanisms would be put in place, such as communicating through workshops the benefits of working in the public service.
The Department had also struggled with accelerating the process to fill current vacancies.

Programme 1.1: Financial Administration
Ms Singo said that accomplishments in this programme had been achieved at a 99.5% success rate of system availability for the 2014/15 financial year, against a target of 95%. All of the planned targets of the master systems plan had been achieved. Improved cash flow management had resulted in the Department surrendering R384 000 in the 2014/15 financial year, compared to R6.6 million in the previous financial year. A thorough external audit had been conducted this time around, compared to the partial audit conducted in the previous financial year.

99.6% of invoices had been paid within 30 days. Corrective measures had been put in place to strengthen and minimize cases of late payments.

Programme Two: Mine Health and Safety
Mr K Mhlongo, Office of the DG, DMR was very proud of some of the achievements in the Mine Health and Safety programme.

Achievements under this programme were;
The promotion of health and safety. There had been a 26% improvement in the number of fatalities, from 96 in the 2013/14 financial year, to 71 in 2014/15. The 2014/15 financial year had recorded the lowest fatalities and injuries. 523 audits and 8 555 inspections had been conducted, and this gad well exceeded the targets. Of the targeted 40 tripartite workshops, 62 had been conducted. Since 2004, there had been a stead reduction of reported occupational diseases by the mining sector. Deaths caused by respiratory diseases were higher than those caused by the mining industry. This showed an improvement by the mining sector in providing healthy working conditions. The coal sector had shown the biggest improvement in terms of the fatality rate by commodity (gold, platinum, coal, etc.). Of the ten regional offices in each province, the Northern Cape, Western Cape and Eastern Cape stood out for having the lowest reported number of fatalities.
The Department continued to address illegal mining activities, particularly in Ekurhuleni, Gauteng, which was considered to be the hub of illicit activities. The Department had engaged with various stakeholders to implement measures to ultimately eradicate illegal mining operations, and the results were evident. Two suspects had been arrested in Kempton Park for being in possession of illegally mined gold. The strategy employed to address illegal mining was that of promoting legitimate mining, law enforcement, and rehabilitation and sealing of holes.

Programme 3: Mineral Regulation

Ms M Kobe, Chief Director, DMR stated that since the implementation of the ‘One Environmental System’ for mining, environment and water authorization in December 2014, the Minister of Mineral Resources had become the competent authority and the Minister of Environmental Affairs had become the appeal authority on mining-related environmental issues. The Departmental structure had therefore been reorganised to strengthen and give clear direction on the responsibilities within the DMR. Training on air quality and waste management, and Environmental Mineral Resource Inspectors (EMRI’s), was provided to 77 officials.

Geographic Information Systems (GIS) were added to the South African Mineral Resources Administration Database (SAMRAD). A total of 1 856 inspections on Mine Environment Management were conducted as part of monitoring and enforcing compliance, and 453 notices were issued to non-compliant mines. 263 consultations and engagements with communities were held to resolve matters between mining companies and their stakeholder communities across the country.

Job losses were managed and intervention mechanisms put in place. A need arose for an intervention to be made in the cases of fluctuating commodity prices that were often accompanied by job losses. A mining industry leadership stakeholder meeting was convened that led to the adoption of a ten point intervention plan to save jobs. A milestone implementation plan was also developed with clear time frames and was currently being implemented. Interventions on job losses included:
Delaying the implementation of retrenchments.
Enhancing productivity and managing cost pressures.
Accelerated concurrent rehabilitation activities to create alternative jobs for mineworkers.
Facilitating the sale of distressed and other mining assets.
Other alternatives to avoid job losses.
Support for mineworkers in the event that job losses could not be avoided.
Utilisation of the Multinational Companies (MNCs) procurement levy to also support employment opportunities for retrenched mineworkers.
Streamlining the processes for downscaling, updating the database, and exploring fiscal instruments.
Investment promotion and market development.
Communication and implementation.
In line with these proposed interventions, the Department was ensuring that it was aligned with section 52 of the Mineral and Petroleum Resources Development Act (MPRDA), and section 189 of the Labour Relations Act. Business process mapping had been finalised and forty CCMA (Commission for Conciliation, Mediation and Arbitration) facilitators had already been trained. 
The implementation of ‘Social Labour Plan’ (SLP) projects had enabled the construction of roads, schools, clinics and other critical infrastructure. 133 SLP projects had been implemented nationwide and had resulted in 5 338 new jobs.

Programme Four: Mineral Policy and Promotion

Ms Singo presented programme four, and in line with the promotion of sustainable resource use and management, the Department had developed a mining environmental management framework and had rehabilitated 50 mining sites in Limpopo, Gauteng, Mpumalanga and KwaZulu-Natal since the framework was implemented. Transformation within the sector was another achievement under programme four.

The Department had promoted investment in the mining sector by providing support to the framework agreement for a sustainable mining industry through monitoring the implementation of the framework agreement between business, labour and government. Strategic and technical partnerships had been established, such as a bilateral agreement with Canada. Publications were released regularly in an attempt to promote further investment in the mining sector. The target of assisting in 87 small, medium and micro enterprise (SMMEs) projects had been achieved across all the nine provinces, with Limpopo receiving the biggest support from the Department.

At the international level, the Department continued to participate in the Association of Diamond Producers of Africa (ADPA), as well as in the African Union (AU) through the ministerial forum. Other engagements include the Kimberley Process Certificate Scheme (KPCS); China/Africa Mining; Australia, Down Under; Prospectors Developers Association of Canada; World Economic Forum; International Geological Congress; and Mining Indaba.

In conclusion, the Department emphasised that it continued to implement some of the targets not achieved in the 2014/15  financial year into the 2015/16 year.

Discussion

Mr J Parkies (ANC, Free State) appreciated the presentation of the annual report, and was attracted by the last slide dealing with the policy achievements, and not the content in the presentation. This topic needed to be emphasised on a daily basis. These were the policy achievements on job creation, skills development, issues that pertained to the environment, monitoring the impact of loss on the ground, and the institutional capacity to enforce those laws. The view was that every time the Department came to the Committee, these issues were not always achieved to the maximum targeted, especially that of job creation, which was crucial for poverty reduction. The new growth path stated that by 2020, mining alone should create 140 000 jobs. Was the DMR in line to achieve this goal? How did the growth path translate to the layman who was poor, so that he/she did not have to live in poverty anymore? An explanation of the strategy in the ten-point plan relating to issues of environmental affairs was requested. He was outraged at low number of 23 bursaries offered in the entire country. He asked what the strategy on the retention of personnel in the Department was. How did the Department handle the issue of liquidation?

The Chairperson asked what consequences the Department could highlight regarding compliance and the closing up of mines,.

Ms C Labuschagne (DA, Western Cape) asked internal controls the Department had implemented since 2014 to ensure reliable financial reporting. The timeframe was not helping Committee Members to improve how they conducted oversight -- how could this be incorporated in the next financial year so that they could improve their oversight as well? What was the real reason the Department had not achieved its 2014/15 targets? What were the highlights of what had been done with regard to research and development? What had been the improvement since the 2014/15 report, as there were no exact measurements on environmental issues in the report? The use of percentages to highlight achievements did not help Committee Members to understand the situation on the ground – numbers were needed. Why had the National Qualifications Authority (NQA) discontinued the mining inspector project? What was the status of the mining inspector project? Had the Department established a baseline on the total number of occupational diseases? What was the timeline on the recommended mining and safety amendment bill? The annual report presented did not indicate the change in the policies on beneficiation. Could the Chairperson request that the Department to present on this, even though it now fell under the Department of Trade and Industry (DTI)?

Mr J Julius (DA, Gauteng) asked for a separate report on the impact of Acid Mine Drainage (AMD), and what the outcome had been where remedial steps had been taken. What had been the level of intervention and the impact on mining towns? What was happening in Merafong in terms of intervention by the Department, and what impact would this have?

Mr C Smit (DA, Limpopo) noted the importance of having more details on the specific provinces relating to the Committee members, especially on the notices issued to the provinces. With regard to the Volspruit mine in Limpopo, how did it happen that a prospecting licence had been issued to a mine in an ecologically sensitive area? With regard to the Social Labour Plan, what criteria had been used to determine whether it was sufficient? During oversight, Committee Members had found that municipal council areas were complaining. How would the Department ensure that mines established within municipalities were paying their dues, because this added an extra burden on the infrastructure of the area?

The Chairperson added that he was also representing the North West province. In the Social Labour Plan, was labour sending including in the social labour project mentioned? The success of the mining industry was through the blood and sweat of labourers coming from all areas of South Africa. How did the Department identify the possibility that rural areas within the province enjoyed the most support in terms of labour sending?

DMR response
Ms Singo responded that when one presented from an annual report perspective, it became difficult to zoom in on provinces specifically, so the Department’s focus was on what it had been asked to present. Perhaps Members could request specific presentations on provinces, and workshops could be held accordingly.

On the issue of the baseline, the annual performance plan had been tabled in line with the budget and the capacity of the Department.

With regard to skills and capacity building, the 23 bursaries had been reflected as a baseline that the Department had set. However, there were many skills development programmes that the Department had put in place, in consultation with the mining industry. For instance, it had put 15 learners in the inspectors’ programme, and they had been absorbed into the Department. This was not reflected, since the 2014/15 year was not over, but the number would surely increase. The Department had limited financial resources, but with the little there was, a lot was being done in line with capacity.

On the issue of beneficiation, part of the work had been done by the DTI. The Department ensured that all the bills in the pipeline were being implemented.

The DMR had identified that liquidation was an issue, and work was being done to make sure that the Department was brought on board early enough in the liquidation process in order to minimize losses.

On the Social and Labour Plan projects, the Department and other relevant stakeholders had been admitted and the realization was that working in silos would not assist the process. In order to contribute toward development in an integrated manner, the Department was working in conjunction with municipalities.

Ms Singo stated that a plan was in place on what needed to be monitored and enforced were measures in terms of non-compliance in specific areas. The Department monitored compliance on the issues of the environment and conducted hands-on inspection to avoid situations that left them to inherit environmental liabilities once a company was found to be non-compliant.

The 1 856 inspections included mining rights and prospects. The Department was expected to inspect all mines every year, but with limited capacity, it was unable to inspect all the mines every year, and that was why inspections were planned and prioritised.

On the issue of downscaling and job saving, the Department could come back and conduct a workshop with a detailed presentation and explanation of processes for Members.

The Department envisaged that companies were retrenching because of the pressures of commodity prices, and others could be releasing assets. A measure had been put in place to avoid job losses by conducting concurrent rehabilitations.

Mr Parkies commented that to say capacity was limited, was not sufficient. In circumstances of limited capacity, there should be measures in place to provide even more assistance.

The Department responded that, what they had meant to say was not that they did not have capacity, but that there were measures in place. Mr Parkies had raised a question on environmental compliance and the response had beeb that emphasis had been put on training people to counter capacity problems. The DMR had identified hotspot areas where there was a greater need to enforce compliance. They apologised for painting a picture that they did not have capacity, but rather that areas in dire need received the most attention and where capacity was an issue, measures had been put in place.

On the Mine Health and Safety Council (MHSC), the Department had engaged in an initiative on the security of women in mines, and research had been conducted. Based on guidelines from the research, women were offered special clothing that was suitable for them, and measures were in place to protect women in the mining sector, since this was a heavily male-dominated field.

With regard to section 54 and 55 not appearing in the presentation, the Department had been embarking on the notices that were applicable. This might not have appeared in the presentation, but a full detailed report could be given, should the Committee wish so.

The report on administrative fees detailed the fines that had been issued and recommended. Although the Department struggled to issue these fines, they then experienced challenges of being taken through legal processes, which then delayed the process of fines being paid.

Of the mines inspected, some had resulted in closures, and others had been rehabilitated.

Mr Mhlongo reminded Committee members that in terms of the law that required every employer to submit an annual report on medical diseases, the Department had not specified a baseline in the presentation because the majority of the mining companies were not reporting on TB and HIV/AIDS in mines. These diseases had never been regarded as occupational diseases, but now a request had been put in for companies to report these diseases, so a baseline would surely be established for the 2015/16 report.

The Chairperson said that he hoped the Committee members were happy with the responses. He expressed his wish to have the Minister of the Department present at a future meeting. He said that the local municipalities were a sphere of government, and this was where all the mining activities took place. He requested to see any sense of communication engaged with the local municipalities, since they could report on issues on the ground and give support to the Department.

Ms Singo responded that she would convey the message to the Minister and his Deputy, as well as the DG. She then reassured the Committee that the Department is committed to improving the lives of communities.


Adoption of minutes

Ms E Prins (ANC, Western Cape) moved the adoption of the minutes of 24 May, Mr Parkies  seconded, and the minutes were adopted.

Mr Parkies and Mr A Singh (ANC, KwaZulu-Natal) moved the adoption of the minutes of 25 May, Ms Prins  seconded, and the minutes were adopted.

The Chairperson adjourned the meeting.