Report of the Portfolio Committee on Public
Enterprises on an oversight visit to Alexkor dated 23
October 2008:
A. Introduction
1. The Portfolio
Committee on Public Enterprises (Portfolio
Committee) resolved to visit Alexkor, one of
our State Owned Enterprises (SOEs) in
2. The
delegation from the Portfolio Committee comprised of Hon. Ms F Chohan MP (Chairperson), Hon. Mr C L Gololo
MP, Hon. Mr S E Kholwane MP, Hon. Mr Z Kotwal MP, Hon. Mr R Z Nogumla
MP, Hon. Mr Y Wang MP, Hon. Mrs V Meruti MP, Ms R Fourie (Department of Public Enterprises – Parliament), Ms
O Siebritz (Committee Assistant) and Mr L A Brown
(Committee Secretary).
3. The
delegation from Alexkor included Ms K McClaine (Chairperson of the Board), Mr R Gaoraelwe (Company Secretary), Mr G Davies (Acting Mine
Manager), Mr S Laing (Security Manager), Mr P Cloete (Acting Engineering Manager), Mr C Matthews (PSJV),
Mr W Diergaardt (Director: PSJV), Mr P Cloete (RVC Agricultural Company), Mr J Joseph
(Chairperson: Richtersveld Environment and
Rehabilitation) and Ms I Pillay (Labour Consultant:
Resolve Workplace Solutions).
Logistics
Due
to inordinate flight delays on the part of Air
B. Background
1. The Land Claim
In 1998 the Richtersveld
Community (RVC) filed a land claim in terms of the Restitution of Land Rights
Act for a parcel of land situated in
·
Restoration to the
claimants of the land owned by Alexkor.
·
The mineral rights
in respect of the claimed land or, alternatively the rights to prospect and
mine under the Minerals and Petroleum Resources Development Act on land
belonging to Alexkor.
·
R1.5 billion as
compensation for the diamonds extracted since 1928.
·
Repair of the
environmental disturbance caused by the extraction of diamonds from claimed
land by the State and Alexkor or, alternatively R1.2
billion as compensation for the environmental disturbance.
·
R10 million as solatium
(inconvenience) for the dispossession of the land and mineral rights.
2. The Out of Court
Land Claim Settlement
On October 5, 2006 a Memorandum of Understanding outlining the
principles and undertakings of an out of court settlement between the
Department of Public Enterprises and the Richtersveld
Community was signed. By April 22, 2007 a final and binding Deed of Settlement
was signed and by October 9, 2007 the Deed of Settlement was made an Order of
Court.
3. Details of the Settlement
·
Restoration of the
land claimed. Portions of land will be transferred to the RVC by Alexkor and the State (Northern Cape Government).
·
Transfer of Alexkor’s land mining rights to the Richtersveld
Community. In the interim, a Pooling & Sharing Joint Venture (PSJV) will be
formed between Alexkor and the RVC. The State will
capitalise Alexkor for it to contribute R200 million
to the PSJV in order to construct a viable mining venture.
·
Transfer of Alexkor’s agricultural and maricultural
assets to the Richtersveld Community in order to
empower the RVC and to create a basis for future development and wealth
creation (Alexkor ordered to give effect to this).
·
R190 million as
extraordinary reparation to be paid to the Richtersveld
Community’s investment Holding Company in three equal instalments over three
years (The State through the Department of Land Affairs ordered to give effect
to this).
·
R50 million lump
sum development grant to the Richtersveld Investment
Holding company to be used for the recapitalisation
of the agricultural and maricultural enterprises (The
State and the Department of Land Affairs give effect to this).
·
R45 million to the Richtersveld Property Holding Company as compensation to
secure Alexkor’s right of occupation of the
transferred residential properties for a period of ten years.
·
Establishment of a
formal township in Alexander Bay in terms of the Northern Cape Planning and
Development Act, 1998 at Alexander Bay.
·
Provision for environmental rehabilitation and revision of the mine’s
Environmental management Programme.
·
Costs in connection with the implementation of the Settlement will be
settled ( paid) by the Department of Public Enterprises.
4. The Pooling
& Sharing Joint Venture (PSJV)
Details of the PSJV contains the following:
·
Alexkor will remain the
holder of its marine mining rights.
·
Richtersveld Mining Company
will remain the holder of its land mining rights.
·
Alexkor and Richtersveld Mining Company (RMC) will respectively put
their marine & land mining rights under full control of a joint Board of
the PSJV.
·
Alexkor will put its land
and marine mining assets under control of the Board of the PSJV.
·
Alexkor will have a 51% interest
(with 3 members on the Joint Board) in PSJV and RMC a 49% interest.
·
The Board of the
PSJV will appoint an Executive committee (Exco).
·
Exco shall oversee the conduct of
day to day operations
·
Exco will put in place a
development plan for viable mining ventures.
TOWN
PROCLAMATION
EXCO
CPA
CPA
INVESTMENT TRUST
COMMUNITY TRUST
INVESTMENT CO
SELF DEVCO HOLDING CO
190 MILLION REPARATION
TO
BE PAID IN
3 TRUCHES over 3 years
AGRI
PROP
51%
govt R90 million maintenance on
49% RMC for agricultural property and transfer
200
million to development of occupation by
PSJV for new paid to
the Alexkor
– R 45 million
mining venture
Trust by DLA
C. Objectives
Having
recently concluded the out of
court settlement with the RVC, government is in the process of executing some
of its obligations arising from the agreement. The focus of the oversight visit
was to identify the challenges during the early stages of implementing the
agreement. The Portfolio Committee wanted to get a better understanding of the activities
in respect of Alexkor’s
operations and the restructuring currently underway. It was also important for
the Portfolio Committee to get a sense of the social and labour consequences
arising from downscaling of operations
at Alexkor and the restructuring process. Another key
area of focus was the monitoring of the Alexkor
Township Development Programme currently underway.
D. The Visit to Alexkor
and
1. The
Parliamentary delegation was taken on a brief in-loco tour of the facilities
and mining operations at Alexkor. Mr Davies pointed
out various mining sites where operations had discontinued as well as some
mining sites currently in operation. He alluded to the fact that the Alexkor mining area produced high quality diamonds from the
bed-rock (where they are found) – but the quality diminished as one moved South
of Alexkor. He also mentioned that the volume of the
overburden (i.e. ground covering
the bed-rock) also increased as one moved South. This resulted in huge costs to
remove the overburden to extract the diamonds – which at times did not make
economic sense.
2. The
Portfolio Committee viewed a sifting mining facility and was given a briefing
on how the gravel received from the off-shore mining operations was brought to the facility for sifting. The process of
breaking-up the larger rocks and sifting continued until only those potentially
diamond-carrying stones are further processed to extract the diamonds.
3. The
delegation also stopped over at the harbour area where the off-shore mining vessels
were located. Mr Davies briefed
the Portfolio Committee on the off-shore mining activities which were conducted
by sub-contractors. During sea-days, divers moved their boats to a
pre-determined location where they effectively vacuumed/sucked the sea gravel
from the bottom of the sea through huge pipes onto a sifting machine positioned
on the boat. This machine returned the larger rocks and debris to the ocean –
bagging the potential diamond-carrying ore. These bags were then transported to
the sifting facilities on shore.
4. The
mining procedure created huge volumes of earth mounds (hills). Mr Davies
explained that they were in the process of rehabilitating these hills with
ground cover and vegetation to increase stability and to minimise dust
pollution.
5. The
Portfolio Committee also toured the central town area to get a sense of the
layout – i.e. the older, more established areas, the recently developed areas,
the police station, shopping centre, schools and the naval base. The delegation
also stopped over at the town’s hospital and was impressed with the fully
equipped and functional medical hospital styled on the medi-clinic
concept. The main challenge was that the town could not attract a full-time
doctor to service the area and was basically running on a skeleton staff. Due
to the remoteness of the area, medical professionals were unwilling to relocate
to
6. The
delegation proceeded with a tour of the farming area where the RVC Agricultural
Company mainly farmed with lucern and ostriches. Mr Cloete mentioned that because of a shortage of feed for the
birds, they would be slaughtering in the region of 700 to 800 ostriches. At
present all the birds need to be transported, by truck, to the Malmesbury abattoir. Mr Cloete
was of the view that farming with ostriches was not viable if you could not
produce your own feed. Future plans would include a tannery and an
abattoir. Members were taken into the
hatchery and given a broad overview of the processes involved and challenges
faced in rearing and farming ostriches.
E. Update
on Progress with Transitional Interventions with Alexkor
Staff Complement
1. The
current restructuring focus was on the people affected by the restructuring
initiatives. These included ensuring that employees are treated with fairness
and dignity. It was important to provide a financial package to ease the impact
on employees. There was a need to provide support initiatives such as training
to improve employability and transition support (assistance with seeking
alternative jobs)
2.
Ms Pillay also indicated that of the 196 positions at Alexkor, 116 positions have been ring fenced for care and
maintenance. Thirty-six (36) were retrenched (forced), 35 accepted voluntary
severance packages and 9 were placed on early retirement - with a voluntary
severance package.
3. Ms Pillay indicated that the restructuring at Alexkor had been completed and employees exited on the 30th
of June 2008. However, SARS tax directives have been taking a lot longer than
expected causing a delay in pay out. A percentage of the package was paid out
to ex-employees to limit their financial burden.
4.
Three people were
transferred to Richtersveld Agricultural Holding
Company (RAHC) while 73 employees took the Voluntary Severance Package (VSP). All but 2 employees – of those ex-employees -
were successfully placed in the new RAHC.
5.
On training and
career transition, Ms Pillay mentioned that four,
two-day workshops were held to assist retrenched employees with
career management skills, development of CV’s, networking skills, interview
skills and dealing with the emotional consequences of retrenchment. A total of
44 people were trained (76 were identified to receive the training) and found
the programme very useful. She mentioned that the bad turnout was a direct result
of poor motivation. The following
training programmes were currently being delivered:
·
Computer training (1 week in duration and 3rd course to date)
·
Bricklaying
·
Plumbing
·
Driver’s training (Code 10)
Programmes identified for the
forthcoming month included:
·
Rigging course
·
Operator training
·
Small business development
Many ex-employees had requested stand-ins to
take advantage of the skills development courses among younger members of their
families. This was being accommodated.
6. Ms Pillay also mentioned that
ex-employees have requested specialised training. Study
assistance up to the value of
R 15 000 would be offered, provided proof of costs were given. Monies would
then be paid directly to the service providers.
7. The transition office would run from July to August
2008 and aims to assist employees with preparation for job interviews,
identifying job opportunities, creating a network with other mines and businesses in the area. Of the 15 positions
already identified, 4 applications have been made and progress was being
monitored.
F. Pooling
and Sharing Joint Venture (PSJV)
1. Mr
Mathews and Mr Diergaardt gave the delegation a
summation of the challenges currently faced by the PSJV Board. Mr Mathews
mentioned that the Board consisted of 6 members – 3 appointed by the State and
3 appointed by the RVC. The Portfolio Committee received a breakdown of the 6
members appointed. With the settlement agreement concluded, the PSJV would be
allowed to mine the area. After a series of meetings certain goals were set –
one of which was the appointment of the Executive Committee (Exco). The most pressing issue for the Board was the
appointment of the Exco, but the Board has had
numerous difficulties in this regard. Not much progress has been made to date
as there were problems in appointing a project leader. Despite this, however,
Mr Mathew indicated that 3 people have been identified and would be interviewed
shortly. The Board has also been able to appoint a Geologist and a Financial
Manager.
2. The
Board meetings were held at least quarterly – but the Board met on an Adhoc basis as the need arise.
3. Other
challenges included the issue of skills transfer. The Board had proposed to the
Minister to bring in a contractor as a partner to render support. Mr Diergaardt
requested that the Portfolio Committee give support in respect of this
proposal. The idea was that the contractor would become a partner and that the
Board would decide to employ the contractor at a fixed rate. Before any further
action, the Department has requested that the Exco –
responsible for drawing-up the mining plan - be appointed. The Board agrees
that this was not an unreasonable request but was having difficulties getting
people appointed.
4. The
Board felt aggrieved that mining was still continuing at Alexkor
with the appointment of two new contractors. Mr Diergaardt
mentioned that although mining continued, the community was receiving no
benefit. There was also unhappiness with the Development Trust and that the
community was not benefiting. It is alleged that a large percentage of
contracts were currently white-owned.
5. The
Chairperson requested that the Board reduce specifics of their concerns, to
writing, and to forward them to the Portfolio Committee via the Secretary. The
Portfolio Committee would then decide on the type of intervention necessary.
The Chairperson was of the view that if there was no satisfactory outcome to
these issues that the Portfolio Committee would consider parliamentary hearings
on the matter. What was important was that the following occur:
·
The Board needed to comply with all
necessary requirements (e.g. appointment of Exco)
·
PSJV and Alexkor
to ensure that relevant obligations pertaining to the submission of Social
Plans, Environmental Rehabilitation Plans and a Mining Plan be met.
·
All concessions needed to be transferred
To date the Portfolio Committee is still awaiting the formal communiqué
from the Board of the PSJV; and will report on further developments at the
appropriate time.
G. Conclusion
The
proposal of a partner to the mining operations under the PSJV is of concern to
the Portfolio Committee as it has always envisaged the mining operations to
benefit the RVC in that it would be a source of not only wealth creation, but
employment and of re-investment into the town and people of the Richtersveld. However, it may be that business
considerations will require this route to be embarked upon in the future in
which case the Portfolio Committee urges caution and an adherence to the
underlying spirit of the Restitution Settlement, in that the various business
endeavours are to benefit the RVC for many generations to come to restore to
the RVC what was lost over successive generations in the past.
Report
to be considered.