DMRE Quarter 1, 2 & 3 2020/21 Performance & Implementation of Audit Improvement Plans; with Minister and Deputy Minister

Meeting report

Introductory Remarks

The Chairperson opened the virtual meeting, welcoming Members and Committee support staff. She acknowledged the presence of the Minister of Mineral Resources and Energy, Mr Gwede Mantashe, and the Deputy Minister, Dr Nobuhle Nkabane, leading the delegation from the Department of Mineral Resources and Energy.

The Secretariat confirmed that no apologies were received.

The Chairperson outlined the agenda shared on screen.

Mr T Langa (EFF) said that the vote of thanks would be at 13h00, as per the agenda. He reminded the Chairperson that some Members had to attend a sitting at 14h00 and would therefore leave the meeting early to accommodate for travel time.

Mr M Wolmarans (ANC) said Mr Langa had covered his concerns. He asked the Chairperson if the items could be curtailed to allow Members to travel for the sitting.

The Chairperson proposed that the DMRE should complete both presentations by 10h30. Members would then raise questions thereafter.  

Minister’s Opening Remarks

The Minister thanked the Committee for the invitation. The Director-General (DG) could not attend the meeting, as he had to attend to another commitment to undertake government business.

He noted he would occasionally add to the DMRE’s responses to refine the replies. He handed over to the Deputy Director-General (DDG) to lead the presentation.

DDG’s Opening Remarks

Mr Tseliso Maqubela, DDG: Minerals and Petroleum Regulation, DRME, said that the presentations were uncomplicated and fairly brief. The DMRE had included all other information as annexures on both presentations for the Committee to peruse.

The DMRE’s performance had improved in this financial year compared to 2019/20. This was partly because the pandemic did not negatively impact on performance, as it did in the previous financial year.

One of the disappointments that would be presented was the increase in mine fatalities. This was an issue the DMRE was currently seized with to ensure a turnaround.

The DMRE was currently working to fill vacancies. Due to the elaborate vetting process of qualifications and security, filling of vacancies tended to take longer.

The DMRE was disappointed about the slow pace of the Solar Water Heater (SWH) programme - also referred to as Solar Geysers. However, it was confident that this matter would turn around, as it had implemented a plan on this – including a change of personnel, which would be expanded on in the presentation.    

He handed over to Mr Lucas Mulaudzi, Head: Strategy and Risk, to take the Committee through the first presentation.

DMRE’s Performance Reports for 2021/22 First and Third Quarters

Summary of Performance Results

Mr Mulaudzi outlined the targets achieved for each quarter.

Quarter one had a total of 59 targets, of which 40 (68%) were achieved; 13 (22%) were partially achieved, and six (10%) targets were not achieved. Quarter two had a total of 70 targets, of which 47 (67%) were achieved; eight (12%) partially achieved, and 15 (21%) targets were not achieved.

The third quarter had a total of 67 targets, of which 43 (64%) were achieved; nine (14%) partially achieved, and 15 (22%) targets not achieved.

Quarter One Performance Highlights

A total of 10 000 households were electrified with grid.

A total of 1 508 jobs were created through issuing of mining rights, and 13 black industrialists were created through mining.

A total of 352 license applications were processed; there were 323 (91.76%) compliance to 50% Historically Disadvantaged South Africans (HDSA's) participation. A total of 37 mining rights and permits were issued to HDSA controlled entities.

About 70% of authorisation applications were processed; five nuclear safeguard and three nuclear security compliance reports were approved.

Out of 239 invoices received, 224 (94%) invoices were paid within 30 days.

Quarter One Performance Challenges

The Draft Mine Health and Safety Amendment Bill was not submitted to Cabinet due to challenges with information on public consultations.

Delays by branches in verifying and signing off invoices affected the 100% payment of suppliers within 30 days, as there was a co-dependency on branches to verify and sign off the invoices speedily for payment. The DMRE, Executive Committee (ExCo), and other structures within the DMRE were dealing with this to achieve the 100%.

There were 15 fatalities from April to June 2021, compared to nine fatalities in the same period during the previous financial year. More inspections, audits, tripartite meetings, and meetings with mine management and executives will be conducted in the next quarters to combat fatalities.

Quarter Two Performance Highlights

A report on stakeholder consultation on greenhouse gas assessment and reporting framework was produced. A total of 261 accident-initiated investigations were completed from April 2021 to September 2021. A whole 7 034 households connected to non-grid.

A total of 41 Nuclear Authorisation applications were received; 41 were processed and approved; 31 met turnaround time, and 10 did not meet the turnaround time. Percentage of performance was 75.6%.

Quarter Two Challenges

Nine out of eleven quarterly reports on the State-Owned Entities (SOEs) were finalised and submitted for approval. The Central Energy Fund (CEF) and South African Nuclear Energy Corporation’s (NECSA) reports still required in-depth analysis and more diligence, hence the delay. Management was, however, working on that.

There were 26 fatalities from April to September 2021, compared to 23 fatalities in the same period of the previous financial year. There were 1 005 injuries from April to September 2021, compared to 690 injuries in the same period of the previous financial year. A total of 615 occupational diseases were reported, compared to 293 cases reported during the same period in 2020/21.

Quarter Three Highlights

A total of 726 jobs were created through the issuing of mining rights; 1 188 jobs are to be created through petroleum licences.

A total of 63 nuclear authorisation applications were received; 63 were processed and approved. While 53 (84.13%) met turnaround time, only 10 did not meet the turnaround time. Ten nuclear safeguard compliance inspections reports were produced and approved by the DG on 22 December 2021 and five nuclear security compliance inspections reports were produced and approved by DG on 22 November 2021.

Quarter Three Challenges

A progress report on the implementation of interventions on analysis and support for Bojanala District Model was not done. Various interventions proposed were still under discussion amongst all stakeholders.

There were 55 (31%) fatalities from April to December 2021, compared to 42 fatalities in the same period of the previous financial year. There were 1 612 injuries from April to December 2021, compared to 1 287 injuries in the same period of the previous financial year;

During April 2021-Dec 2021, a total of 1 023 occupational diseases were reported compared to 767 cases reported during the same period in 2020/21.

Financial Performance for 2021/22 Quarter One to Three, ending 31 December 2021

Ms Yvonne Chetty, Chief Financial Officer (CFO), presented the financial performance for the full financial year for all the programmes.

The budget at 31 December 2021 was R7.4bn and the DMRE spent R6.9bn, with an underspend of R482.1 million, as indicated in the year-to-date column on Slide 22.

Financial performance per programme on Slide 22: Ms Chetty highlighted the underspending in administration; minerals and petroleum regulation; mining, minerals and energy policy development; mine health and safety inspectorate; programmes and projects; nuclear energy regulation and management.

Compensation of Employees (CoE); Goods and Services; as well as Transfers and Subsidies contributed to the underspending of R482.1 million, as indicated on Slide 23.

Reasons for Variances

The reasons for the variances were outlined on Slides 24-27. On the CoE, Ms Chetty added that the DMRE recently received communication from the Minister of Finance that Senior Management Service (SMS) members would receive a salary adjustment that would be processed centrally by National Treasury. The DMRE hoped this adjustment would take place before 31 March 2022 to help reduce the overspend.

The ‘Agency and Support Services’ item under ‘Goods and Services’ showed underspending of about R8.52 million. The process around SWH to procure additional installation kits was taking longer than anticipated.

Transfer payments had the biggest under-spend mainly due to the following:

-The Integrated National Electrification Programme (INEP) Municipal Grant had R159.27 million underspending due to the pending re-gazetting approval from Treasury. The DMRE would reconcile what was being transferred to the deliverables that were meant to be received in instances of slow delivery from municipalities or reports submitted late. The DMRE then considers reallocating the funds if these did not move according to plan, and the re-gazetting through Treasury would be expected to be done.

-Underspending in transfer payments was also due to INEP non-grid households: R11.08 million underspending due to the delayed finalisation of procurement processes. Ms Chetty confirmed that this had been rectified.

-Employee social benefits: R3.83 million overspending due to an increase in leave gratuity payments because of increased service terminations and higher than anticipated leave liability payable to ex-staff members.

Public Entities’ Variances

Ms Chetty explained the underspending in the three entities on Slide 28. While the slide indicated an underspending for the Council for Geoscience (CGS), Mintek, and the Petroleum Agency of South Africa (PASA), this was indeed not an underspending but rather an alignment of the budget. The DMRE would take the budget from the ‘Transfers’ category and move it to ‘Goods and Services’.

She confirmed that all of the entities were spending the money. However, this was spent under the category of ‘Goods and Services’. It was simply the alignment of the budget that had to take place, but this would be corrected in February 2022. All entities’ budgets and transfers would be synchronised by close of the financial year on 31 March 2022.

DMRE and its Entities: Implementation Action Plan to address the AGSA Audit Findings and Recommendations

Opening Remarks

Mr Maqubela said the Committee’s focus on these matters also helped to improve the audit outcomes, including the performance in both the DMRE and the entities.

The DMRE identified improvements. For example, Nuclear Energy Corporation of South Africa (NECSA) had 63 findings which was a huge improvement from the 161 in the 2019/20 financial year. While it was work in progress, the focus on improving governance was starting to produce dividends.   

DMRE’s Executive Summary

Mr Mulaudzi took the Committee through the presentation.

The DMRE obtained an unqualified opinion from the AG, with findings in both 2020/21 and 2019/20 financial years. There was a total of 68 findings, of which 51 was implemented; 12 findings were in progress, but management was working to mitigate those risks to improve the control environment; five findings were not yet due, as the DMRE had an agreement with the AGSA that, while it was working on solutions to the findings by improving the controls, its due date would be as at 31 March 2022 - at the end of the financial year.

There were no findings that were not implemented.

SOEs Executive Summary

The National Radioactive Waste Disposal Institute (NRWDI) received a consecutive clean audit, NECSA group received another disclaimer, while the CEF group audit was outstanding because the AGSA was still working on the audit.

Of the 10 AGSA audited entities, the NRWDI; the State Diamond Trader (SDT); and the South African National Energy Development Institute (SANEDI) had no material errors. Six of these entities had material misstatements, which were subsequently corrected. However, NECSA, the South African Diamond & Precious Metals Regulator (SADPMR) and the SDT corrected some of the material findings.  

Conclusion

Mr Maqubela said that hard work was being done under the leadership of the various SOE Boards. The improvements in the finalisation of some of the audit findings were testimony to the DMRE’s leadership. The DMRE appreciated accounting to the Committee, as this helped to continuously improve its performance. It expected better audit outcomes at the end of this current financial year.

The Minister noted the presenters had reported on the full account of the DMRE.

The Chairperson opened the floor for Members to engage the presentations.

Discussion

Mr K Mileham (DA) noted that the first-, second-and third-quarter report mentioned the cleaner fuel standards, but there was no mention of the International Maritime Organisation (IMO) 2020 standards to which South Africa (SA) is a signatory. What progress is being made to roll out that standard in SA?

On the 63 nuclear authorisations: what do these authorisations entail?

The report did not mention the RMIPP (Risk Mitigation in Independent Power Producers) programme, nor of the continued delays in meeting financial close on that programme. Why was that not included in the performance report?

On the performance report, it appeared that the targets from Q1, for example, that were not achieved do not get rolled over into Q2 or Q3. Some of it has cumulative targets but others seemed to fall off the report card in Q2 and Q3, although it was not achieved back in Q1 or Q2. Could the DMRE provide clarity on that?

Ms V Malinga (ANC) raised concerns on the Mine Health and Safety Council (MHSC). It was concerning when one division that usually performed well started to faulter. On the increase in fatalities in mines, what were the MHSC’s mitigation strategies to curb further fatalities in the mining sector?

She was concerned about the underspending in the transfers category. The accounting officer had not signed out to the SOEs. What was the delay to add this signature? She was confused as the CFO indicated “underspent” but had explained this as an alignment of the budget. What did that mean? Was it underspending or alignment of the budget?

Ms P Madokwe (EFF) said that Ms Malinga covered her on the issue of fatalities, but there was also an increase in occupational diseases. What were those increases in fatalities and occupational diseases attributed to? What were the DMRE’s mitigating measures?

On the issuing of mining licenses and mining rights, what was the proportion of the progress versus the backlog?

On environmental inspections and retail site inspections, what were the overall outcomes? What were the mitigating factors on some of the concerning findings? The Committee does receive stats on the inspections that had been done, but it did not have an understanding of the outcomes.

On the issue of unresolved and partially resolved findings, was there a timeline for when those would be completed? What would be the implications for the accounting officers if those targets were not met?

Mr M Mahlaule (ANC) noted Ms Malinga and Ms Madokwe covered his questions on fatalities, injuries, and occupational diseases.

On employees’ social benefits: The leave liability payable to ex-staff members was one of the components that resulted in overspending on employee social benefits. Did the leave liability include ex-staff members who may have left the Department to avoid consequence management of forensic investigations that were conducted over previous financial years?

On the INEP for non-grid households: This was an interim solution, not a permanent one, for energy injustice in remote rural areas. The INEP should therefore be rolled out without interruptions. However, there has been underspending of about R11 million on the INEP due to delayed finalisations of procurement processes, contractual issues, and so forth. What was the DMRE doing to overcome these delays, particularly involving procurement processes, given the importance and magnitude of the INEP to resolve the energy injustice in the country?

The procurement of the installation materials for SWH was partly responsible for the underspending of about R8.5 million on agency and support services. The rollout of this was a very daunting challenge to the DMRE. Was there any robust plan intended to address this? The Committee was informed that there had been plans but this problem still continued.

On the procurement framework for the nuclear programme: The country’s energy availability factor was below 64%, but additional capacity for nuclear power has the potential to increase this concerning percentage. How would the DMRE expand the nuclear power programme at a pace and scale that addresses the growing electricity demand?

He asked the DMRE to demystify or prove correct the issue of nuclear as a non-solution to the country’s energy problem, as there was an increasing tendency to exclude nuclear as a solution from the energy mix of the country. The DMRE must confirm the concerns of those opposed to nuclear power, or provide a clear indication if the country could afford to go that route to resolve its energy crisis.

The underspending on CoE was mainly attributed to delays in filling vacant funded positions. What was the optimal level of employees at the DMRE?

DMRE’s Responses

The Minister asked the DMRE team to respond to the questions before he addressed specific concerns raised by Members.

Mr Maqubela handed over to the team to address Members’ questions. He noted he would address the issues on the backlog and the environmental outcomes. 

Ms Ntokozo Ngcwabe, DDG: Mining, Minerals and Energy, DMRE, responded to Mr Mileham on the IMO standards and the progress of the DMRE’s implementation thereof. She responded that she was unsure if the DMRE should respond to this question because the IMO is the International Maritime Organisation and the IMO 2020 was the latest standard it had issued, which dealt with the reduction of sulphur content in marine fuels. However, in the case of SA’s petroleum sector, the DMRE gazetted the Clean Fuels II Regulations in 2021 which emanated from the prohibition pronounced around 2005/6 for the elimination of lead in all fuel/petrol grades, including the reduction in sulphur content. This was when it moved from 3 000 to 500 parts per million (ppm) with diesel. It had now moved to 50 ppm, but the new regulations would indicate that everyone should match the Sasol standard at 10 ppm. Since the 2021 gazetting of the regulations, the DMRE continued to engage with industry on how to successfully achieve this. This included finalising an implementation date by the industry, as it must invest huge investments into its refineries to meet the required standards around the regulations that the DMRE gazetted.

Mr Jacob Mbele, DDG: Programmes and Projects, DMRE, responded to the question on the RMIPP. He said that the target for Q3, which was December 2021, was to sign the Power Purchase Agreements (PPA). The financial close, which enabled the signing of these agreements, was delayed a few times mainly because of approvals that were beyond the DMRE’s control.

On the programmes undertaken by the DMRE around procurement of capacity, Eskom was the buyer. Once the DMRE announced the preferred bidders, it would communicate the information to Eskom – which would undergo its own internal processes to undertake the approvals. There were challenges with the approvals as Eskom required clarity on several issues. However, the DMRE managed to address many of those raised by Eskom. The DMRE received correspondence from the Eskom Committee to ensure it undertook the work that would enable DMRE to meet the latest commitment to reach financial close by 31 March 2022. Based on the DMRE’s current commitment from Eskom, it expected to close the RMIPP and to have the PPA signed within this financial year.

On the matter of transfers due to the accounting officers: he assumed that the information covered in the briefing did not cover the full context in the interest of minimising the information included in the presentation.

What delayed the process? In line with some of the AG’s findings on the DMRE’s standard operating processes, the DMRE delayed the process of allocating the required money to the entities for the pumping of accessible water to the public. The delay was due to the introduction of a phase where the DMRE had to include a process of public announcement to inform the public that funding was available to assist in this. The issue on the accounting officer was at the time of reporting on Q3, but that process was concluded and was going through the DMRE’s approvals.

Mr Mbele agreed that Mr Mahlaule’s points on the non-grid were true, as the INEP was a critical programme. The DMRE experienced delays in the appointment of the panel of service providers in the 2020/21 financial year, but service providers were since appointed. The highlights reflected that, using the current budget in this financial year and the rollover received from Treasury, the DMRE had a target of 15 000 for the current financial year, but over 19 000 installations were already concluded. With the additional R11 million, the DMRE expected to exceed 19 000 installations. The only reason for the delay was due to the lag emanating from 2020/21, as the service providers on the panel were still busy with the allocations that were given to them. The allocation was done and the DMRE was confident that the R11 million in the budget would be spent in the current financial year.

On the SWH and the underspending on the agency support services: The CFO explained that some of the challenges experienced, specifically with the spending on the agency support services, were due to the training part of the programme for youth and locals on the installation of these SWH units. There was a commitment in the contracts with the suppliers of these units to cooperate with the DMRE and to provide training. Part of this money was used as a stipend for trainees and to pay for logistical costs of the service providers. Some of the manufacturers of the SWH were uncooperative with the DMRE, as they refused to provide training due to various demands. One of the biggest challenges between the DMRE and the service providers was that some of them made demands and refused to release some of the units. They would then attempt to get additional payments from the DMRE, as they claimed that they incurred additional storage costs but, the DMRE pushed back.

Does the DMRE have a radical plan to address this? The DMRE was taking legal action against all of these service providers. Fortunately, the contract required the DMRE and the service providers to go through arbitration first. All of those problematic service providers were handed over to the senior council appointed to deal with some of these matters. These steps had been a deterrent for some service providers to start cooperating, as the DMRE had seen some progress in this. The DMRE ensured there was focus on the programme. It concluded a recruitment process of a Chief Director to focus on ensuring that this programme was coordinated and that all the bottlenecks were unlocked to ensure the DMRE moved with speed and all units that had been procured are installed.

Mr Zizamele Mbambo, DDG: Nuclear, DMRE, addressed Mr Mileham’s question on the 63 nuclear authorisations for nuclear material. He said that it was important to provide the Committee with a perspective on nuclear technology, which played a very important role in SA’s economy. This technology was highly regulated because the country was a signatory to the Non-Proliferation Treaty. The DMRE must comply with the country’s international obligations to the Treaty to ensure that the material is used for peaceful purposes and for socio-economic development. Locally, this was also regulated in the Nuclear Energy Act 46 of 1999, and the National Nuclear Regulator Act of 47 of 1999. The Nuclear Energy Act regulated the use and the various applications of nuclear technology, which ranged from applications in the mining industry, the petrol chemical industry, logistics industry, and various applications in the research institutions that utilise this material for various applications. Section 34(1) of this Act prescribes that no person or institution could be in possession or use the nuclear material without a written authorisation issued by the Minister of Mineral Resources and Energy. The DMRE was tracking the Department Performance Standard to ensure that its service delivery to the public was efficient. It had set a standard where if it received an application for authorisation, acquisitions, or for various applications, that application for authorisation would be processed and approved within six-eight weeks. The DMRE was continuously monitoring this performance standard to ensure that nuclear technology and material contributed to the country’s economy. This was the reason and the rationale for the various nuclear authorisations issued by the DMRE.

In response to Mr Mahlaule on the role of nuclear in SA: Nuclear formed an integral part of SA’s energy mix. The Kruger Nuclear Power Station situated in the Western Cape provided about five percent of clean baseload electricity into the grid, and it produced one of the cheapest electricity within the Eskom fleet of power stations. The cost of generating electricity from Koeberg was 40 cents per kilowatt, which was the cheapest amongst the fleet of power stations. This issue of cost as the inhibiting factor on nuclear power had been overemphasised. The DMRE maintained that this technology was affordable and had various cost and economic benefits to the country. It had issued a request for information in June 2020, and the market’s response indicated nuclear power was comparable with other baseload electricity generating technologies in terms of cost. The added advantage of nuclear was that it involved technology that had a long lead infrastructural development project, as the design life of nuclear power plants was designed for up to 60 years - which could also be extended to an additional 20 years. This was an asset that had at least 80 years of economic value added to power generation. For example, the asset and return on investment could be paid off within 20 years, and the rest of the 60 years of the life of the plant becomes a money-maker. This was a very important reason for nuclear to be a part of the energy mix, as it provided very clean, affordable electricity to the public.

Given the country’s commitment to the Paris Agreement, the DMRE noted the current global consensus to include gas and nuclear as sustainable green energy by the European Union (EU) Commission. This meant that investments could now be targeted towards gas and nuclear as part of critical clean energy technologies that would ensure that SA achieves the Paris agreement global objectives to reduce greenhouse gas emissions. SA’s Nuclear Energy Policy provides that nuclear should be part of governments strategy to mitigate the impact of climate change. Nuclear plays a pivotal role in the energy sector and provides clean baseload energy to ensure that the country could mitigate against the energy security supply challenges. The country requires more nuclear and, moving forward, the DMRE would be commissioning large baseloads coming from coal-fired power plants to complement the country’s energy system and its stability into the grid.

Ms Chetty responded to Ms Malinga’s question on the delayed transfer. She confirmed that the administrative process had some delays, but the authorisation by the DG would be done in February 2022 and will be concluded.

Were the transfers an underspend or an alignment? At face value, this looked like an underspending of the budget, but it was simply an alignment, as the budget needed to be moved. It was therefore an alignment of the budget that should be moved from the Transfer category to Goods and Services.

On the issue of non-grids on the procurement delays: There were compliance issues on tax affairs with the service providers that responded to this bid. The DMRE had to afford service providers a specific timeframe to clear up their tax affairs before it could proceed. Another issue on the non-grid households was that there appeared to be collusion amongst two service providers, which required an investigation. This was currently with the DMRE’s legal department – which was also part of the reason for the procurement delays.

Mr Xolile Mbonambi, Deputy Chief Inspector of Mines, DMRE, said that the Department was extremely saddened and disappointed with the recent increase in fatalities, injuries, and diseases in the mining sector. These areas showed an encouraging improvement over the period of 10 years, between 2009 and 2019. In particular, fatalities had about 69% improvement, from 167 fatalities in 2009 to 51 fatalities in 2019. Some regression, however, started in 2020 and continued in 2021. The DMRE noticed that falls of ground, together with transport and mining, were the major contributors to fatalities in the sector. It also noted the increase in the number of miscellaneous types of accidents in these past two years. For example, a miner would collapse underground but the cause might be unknown when an investigation is done. The post-mortem certificate would then indicate that some of these were either associated with health issues of a particular individual.

What has the DMRE done since this regression has not improved? Around 60 fatalities were reported in 2020 and, unfortunately, this number increased to about 70 at the end of 2021. Before the close of 2021, the DMRE convened a Mine Safety Summit with all stakeholders in the sector to raise these concerns and to establish the causes of it, as the DMRE presumed it was on track with these issues. The commencement of Covid-19 resulted in a natural shift, which compelled employers to refocus on curbing the spread of the virus in the mining sector. Unfortunately, this shift was at the detriment of occupational health and safety, as there was less focus on this area. Concerns about mining as a very labour-intensive sector were raised during this Summit, and the dangers of assisting miners to return to work would be dire if measures to limit exposure to Covid-19 were not emphasised. With the rollout of vaccination programmes, however, there has been improvement in the infection rate.

The DMRE has recommitted to considering how to address issues of health and safety moving forward. Commitments that were made during the summit, between all the stakeholders, were to ensure the adoption of safe leading practices such as collision prevention systems to address transport-related risks, and mining with nets and bolts to address falls of ground.

It committed to the adoption of technologies such as faster rock drills to shorten the mining site and to reduce the risk to operators, and less time spent on the face. The employers made commitments to the investments on the implementation of the Falls of Ground Action Plan, which was launched in July 2021. About R46 million was reserved for the implementation of this plan, as this area required more focus to improve.

Safe mining practices were another commitment made during the summit, including the use of safety equipment to favourably respond to divergent challenges experienced by some mining operators – for example, the diminishing of ore reserves, aging of infrastructure, unfavourable commodity prices, and long-distance travelling to the working areas. A focus on issues of safety campaigns is needed to maintain the commitment for transformation on health and safety. There would be safety campaigns between the DMRE, the unions, and the employers who would visit the mines to engage directly with mineworkers about concerns in the sector. This would lead to improvements, as it demonstrates the DMRE’s no-tolerance for unsafe behaviour, and encourages mineworkers to be extra vigilant. It assists with the implementation of strategies to ensure mineworkers have skills and support to exercise their right to refuse to work under dangerous conditions.

The DMRE identified that effective supervision from employers should be enhanced in areas where people are responsible for these working areas.

There has already been an improvement in the decrease in fatalities since the Summit. A decrease of about five to two was recorded in January 2022 in comparison to 2021, and a decrease from two to one in February 2022 versus 2021.

The DMRE claimed that the disadvantage of quarterly performance reporting was also attributed to the increase in fatalities. There were fewer activities during 2020 and therefore diseases and injuries were reported compared to when there were more activities when the sector returned to full operational capacity. Despite these challenges, however, the DMRE confirmed the issue with fatalities was greater than it intended to achieve, as the goal was to reduce fatalities at least by 10%; this was not accomplished.

Moving forward with the commitments and the strategies, the DMRE had embarked on with its stakeholders; it was confident that the situation would improve and that it would continue to improve as it did in the past.   

Mr Maqubela said that the DMRE reported in March 2021 on its significant backlog when it appeared before the Committee, but it had since addressed a huge portion of this. In the nine months to December 2021, the DMRE adjudicated 1 011 prospecting rights and over 303 mining rights. While the backlog was still being addressed, this was significantly reduced on the mining side, and the reported backlog on the petroleum side had since been eradicated. On the petroleum wholesale licenses, the DMRE was now back to the 90 days required by legislation.

On the outcomes of inspections: The DMRE was confident that the level of compliance was generally high, as it did not issue many Section 93s to stop operations to ensure non-compliances were addressed. One area that required focus, not only on environmental compliance, was also compliance with Social and Labour Plans (SLPs). This was an area the DMRE would focus on going forward, especially those areas that could make a huge difference to communities.

In response to Mr Mileham’s issue on the DMRE’s reporting: this issue could be confusing, but no target falls off. If a target was not met in the first quarter, there should be a catch-up plan in quarter two. If this is insufficient, the relevant Branch Head should establish a plan to address this. There is no room for catch-up at the end of the financial year. Where a target had not been achieved, the relevant Branch Head would have to account. The DMRE was confident that it would have better outcomes in 2022 than the year when it experienced huge disruptions in meeting the targets.

Minister’s Responses

The Minister said that the deeper and the older the mines are, the more dangerous they become, with more prevalence of rock falls, as evident in the statistics. Many of the fatalities were from older mines that are deep, including mining pillars. The DMRE was focusing on this to reduce the number of fatalities.

The Chairperson opened for Members to raise follow-up questions and concerns on the implementation plan.

Follow-up Discussion

Mr Mileham asked Mr Mbambo a follow-up question about the role of nuclear in SA. Could the DMRE provide a bold estimation on how much it would cost and how long would it take to build a 2 500 MW nuclear power plant?

He noted that Mr Mbambo referred to the recent EU Commission taxonomy on the classification of nuclear as green power. He, however, believed that it was disingenuous to rely on that. Mr Mbambo said it was a global trend/indicator but this was false, as it was only one region of the world that had made a recommendation for nuclear to be considered green. The taxonomy carefully stated that a nuclear plant would only be considered green if the site could safely dispose of high-level waste permanently. Currently, there was no permanent waste disposal site anywhere in the world, and Vaalputs is only scheduled to accept high-level waste in 2050. The interpretation of this taxonomy was concerning, as nuclear power is not green. The EU taxonomy had not been approved yet and accepted by the EU Parliament, but rather proposed. There was strong opposition from several EU member countries, including Germany, Denmark, Norway, Sweden, and Austria. Caution should therefore be taken when making claims about nuclear as a global indicator when this was false.

On the AG implementation reports and the actions that had been taken: Despite the fact that it was recorded in this report, the Committee had not yet seen NECSA’s latest audit report for 2019/20. It was difficult for the Committee to comment on the implementation plan against the audit report when it was unaware of the issues in that audit report. The Committee should urge the Minister to table that report in Parliament as a matter of extreme urgency so that it could do effective oversight.

The Committee could not conduct oversight over NECSA when it had not seen the Annual Performance Plan (APP) and budget proposals. It had no clarity about where the money was spent, and it was unaware of NECSA’s plans for the year ahead. Minister [of Transport] Mbalula announced some weeks ago that the Strategic Fuel Fund (SFF) would install a regasification plant at a cost of R1bn. Mr Mileham said Minister Mbalula’s announcement was the first time he heard about this plan, yet this was an issue that this Committee should analyse as part of its Budget Review and Recommendations Reports (BRRR) and its oversight mechanism when it undertakes the budget planning.

Mr Wolmarans said that the DMRE did not speak on the SWH programme and the previous link with the municipalities. With the district model, this juncture presented an opportunity to eradicate this programme and to move forward. He asked for clarity on the implementation of interventions where the presentation mentioned the Bojanala District interventions.

On the AG’s findings and the issues that were still unresolved: he said that the DMRE oversees the 11 SOEs and the two in the main were in the red. Although NECSA previously had about 160 in the 2019/20 findings, obtaining 63 in 2020/21 was a huge improvement, although it was still in the red. The presentation indicated six unresolved findings by 31 December 2021, but there was no indication if the DMRE was currently addressing this. With the AG’s report, what would the impact be on this in the current situation as well as in the future? How and when would this be resolved? If it was resolved, would this result in a positive AG report or a positive direction for NECSA?  

He agreed with Mr Mileham that it was difficult to scrutinise the entities without the necessary details and information.

Ms Malinga thanked the Minister for simplifying the issue of fatalities in the mines. However, she was unsatisfied that employees were not required to work in a dangerous environment. How was this possible with the high rate of employment in SA? She questioned if a mineworker who was a breadwinner could refuse to work when their employers instructed them to work in a dangerous mine. She believed that this was an incorrect presumption.

She was still confused about Ms Chetty’s explanation on the underspending. When something is aligned, it is made to be coherent. However, underspending was a different concept. The narrative and the wording presented indicated that the CGS and Mintek under-spent. The wording should specify what each entity under-spent on, instead of implying that it was aligning the Transfers – as this meant two different things to her. This incorrect wording in the DMRE’s explanation on the monies spent and how it dealt with its finances could be attributed to the unqualified findings for three consecutive years.

She noted Mr Mulaudzi noted three entities, SDT, SANEDI, and NRWDI, received clean audits. The Committee should commend this achievement.  

Ms Malinga concurred with Mr Mileham and Mr Wolmarans on the issue of NECSA. Could the Committee receive that audit outcome so that it could do proper oversight on NECSA?

The Chairperson said that the Committee should agree that the issue of CEF’s outstanding audit outcomes in both presentations by the AG, the two entities, and the DMRE, were in the Committee’s programme and were adopted. Members’ reasons for parking some of the issues on the two entities were justified because those issues could only be contextualised when the Committee deals with the audit outcomes, including the outstanding issues on turnaround strategies and the processes towards the measures. The Committee would address those issues when it deals with the programme and the issues it identified in this.  

He informed the Minister that he was unsure if the issues raised could be finalised in this meeting. Even if these issues would not be resolved by the end of this day, the DMRE and the Committee should establish a way to communicate to finalise these issues. The Committee has a duty to minerals and petroleum regulations, which meant development of regulations. In view of this, the Committee is at risk of overlooking issues if it does not undertake its work.

He referred to the summary of performance results on Slide 4 of the presentation. Quarter one indicated 12 on mineral regulations and one for corporate services. Quarterly achievement was zero, and one was partially achieved. What do these numbers mean? Does the ‘one’ refer to appointments or something different that the Committee does not understand? What does the mineral regulation column mean? What type of regulations would constitute 12, with a target met of seven and five partially achieved? On the mineral and energy policy development column: does the ‘nine’ refer to the constitution of newly developed policies/regulations or an amendment to policies? The Committee required the explanations on this information to do its oversight work.

If a total of 10 000 households were electrified, he assumed this should specify within the grid. The information should clearly state which areas constituted the 10 000 households, as this would not be clear to someone who resided for example in KwaZulu-Natal (KZN). It is a duty and responsibility to be aware of the nature of that electrification to the grid and the form that it takes. This would avoid assumptions that this 10 000 was only in one province. For example, if it indicated this was in KZN or the Eastern Cape, there should be a breakdown according to the districts and to the municipalities. This is the type of detail that the Committee should receive.

Quarter-one 2021/22 performance highlights on Slide six indicated that 1 508 jobs were created through issuing of mining rights, and 13 black industrialists were created through mining. How did this happen within a quarter? This report should indicate where this number was derived from. He could not understand if those 1 508 jobs were created due to the issuing of mining rights by a certain number of employers in a particular nature, and so forth, in order to arrive at that number. The report does not refute the interpretations of these numbers. How and where were 13 black industrialists created, and in what field? Was the total of 352 license applications that were processed related to the 1 508 jobs created? If so, in which areas were these in? A total of 37 mining rights and permits were issued to HDSA. Were the 37 mining rights and permits linked to the 352? If so, why does it indicate 323, which constitutes 91.76% compliance to HDSA participation? Could the DMRE clarify this?

Slide seven indicated 70% of authorisation applications processed. What is this 70% related to? Out of 239 invoices received, 224 (94%) invoices were paid within 30 days. What was the nature of that payment?

On Quarter-one 2021/22 performance challenges, on slide eight: The draft Mine Health and Safety Amendment Bill was not submitted to Cabinet due to challenges of information on public consultation. As he recalled, this Bill had gone through all the stages, including Cabinet. While he was unsure, he recalled that it had gone through the National Economic Development and Labour Council (Nedlac), which provided its own opinion. It also had to go through the committee of DGs, which would then be referred to Parliament. Could the DMRE provide clarity on this issue? If the Bill was not submitted to Cabinet, what would be done to achieve this? What were the next processes thereafter? The Chairperson explained that he had raised this issue in the context of the increasing fatalities in the industry.

The Chairperson said that he had spoken to the Municipal Manager (MM), Dr Ray Ngcobo, about the uMgungundlovu District. Dr Ngcobo had informed him that MMs were unaware of Eskom plans because they undertook this project in their own areas of supply and were therefore unable to confirm what was happening. The Chairperson questioned if the issue was due to Eskom providing information that was irrelevant to what was happening in the municipalities. What were the roles of those municipalities? In his view, the problem of silo working would continue, as there was no direct relationship between the DMRE, Eskom, and District Municipalities. Perhaps the Committee should return to this as an oversight exercise.

He noted that Mr Mbele said a Chief Director would be appointed to fast-track the process of the SWH programme. He disagreed with this as fast-tracking this process was the duty of the officials of the DMRE. What would happen to the Chief Director once this programme was completed? The Committee should establish a way to examine each point to improve what the Chairperson believed was a good service delivery exercise.

The Chairperson was concerned that Quarter one to Quarter three did not mention the licensing chain, particularly the South African Mineral Resources Administration System (Samrad). The report noted an improvement, yet there were constant changes in the Samrad system and delays in various processes. He questioned if this improvement instead referred to the Samrad system doing very well. If not, where was this process at? On the issues of the targets on licensing, what were the intended targets for this?

On the Samrad system: very little was mentioned about the quattro system – such as how it operated, its quattro allocations, how it performed, what needed to be improved, and the challenges with this.   

The Chairperson said the Minister could respond to these issues if they could be addressed and finalised in this meeting. He recognised that Members and the DMRE may be under pressure to attend to other commitments. He proposed that the Committee should reconsider these issues for another time so that Members could have a broader engagement and agree on how these could be addressed.

Minister’s Responses

In response to the Chairperson’s final comments, the DMRE should understand the Committee’s need for a detailed report instead of a summarised report contained in the PowerPoint presentation, as it would cover most of the concerns raised by Members.

The difference between HDSA participation and controlled is that HDSA participation referred to the Broad-Based Black Economic Empowerment (B-BBEE) status of a company, which was predominantly not HDSA. When it is HDSA controlled, this meant the ownership was predominantly HDSA.

The DMRE would provide a detailed report on these issues, including an explanation of how it operated the INEP programme on Eskom and municipalities.

In response to the Chairperson’s comment on MMs who were unaware of Eskom plans and the irrelevance of information: that was mischief because Eskom provides services in municipal areas. Those municipalities have a responsibility of service delivery.  

In response to Mr Mileham’s question on the estimation of building a nuclear power plant: The Minister refrained from describing it as disingenuous, but he did not understand this. The DMRE firstly issues a request for information then a request for proposals (RFP) when a programme is undertaken in the Department. This is to test the appetite of society and the market on a programme, and the costs would then be established for that particular programme. When the DMRE approved the Fifth Bid Window, it got an average of 47 cents. The DMRE took the least cost applicants based on the RFPs from the many applications that were received. The Minister questioned why the DMRE should follow a different process for the building of a nuclear plant just to give a bold cost estimate before it started this process. He said Mr Mileham’s question was hostile, as it displayed his hostility to nuclear as a technology – which was a dangerous approach for the political leadership in SA.

Mr Mileham called a point of order. He said his question could not be considered hostile as he intended to seek clarity. The Minister was out of line to define it, as hostile as the question was to get an estimate of building costs and lead times – which were easily verifiable from average costs around the world. He said the Minister’s definition cast an aspersion on himself as a Member, which was unacceptable.

The Chairperson clarified that, in his view, the Minister simply viewed his opinion on the question. If Mr Mileham believed that the question was not hostile then the matter was closed, as this was a difference of opinions.

The Minister said the reality was that, when the DMRE started the nuclear programme, it would issue RFPs and various bidders would then bid for it. It would only be at this point when the costs of building a nuclear plant could be established. A general estimation based on average costs around the world was a different matter, but building a nuclear plant in SA would be preceded by a RFP that would include the costs.

On the EU recommendation, the Minister explained that the EU labelled nuclear and gas as part of the green transition. Germany rejected this, but France announced its build programme for nuclear. There was global engagement on the energy policy, but understanding the different views without polarising it would lead to more results, as there would always be countries that are reluctant to this.

On the SFF, the Minister said that it would be unfair of the DMRE to respond to questions on behalf of Minister Mbalula. The same processes of the RFP and environmental assessment would be followed if the SFF intended to build any programme. The DMRE announced that it intended to build a Liquefied Natural Gas complex in Coega. But, despite the issue that Minister Mbalula announced thiore the Committee, this announcement should give Members hope that the LNG complex would be fulfilled.

On the SWHs: The Minister said that the DMRE should consistently include the numbers in its reports, such as the number of SWHs that were on rooftops, as this was a key question in departmental meetings. The DMRE inherited 87 000 SWH in storage, but it stated that any other well-written proposal would not resolve the issue if it did not quantify the number of SWH on rooftops.

The Chief Director who initially ran the SWH programme had resigned. The Minister said this post should be filled, as it was a funded post that existed in the DMRE, and it was not created for the purpose of this programme.

On the issue of the mining right to refuse to enter a dangerous work environment: The Minister reminded the Committee that, in 1985, the workers refused to enter the Driefontein gold mine because it was a dangerous work environment. Those workers were all fired in a mass dismissal, which led to a massive strike where the workers demanded the right to refuse to enter dangerous working environments. This right was put into one of the first legislations by the African National Congress (ANC) led government. In the Minister’s view, this was a major breakdown that should not be devalued based on fear, as legislation was an important empowering piece of work – which could help reduce fatalities. The number of fatalities would continuously fluctuate, but the DMRE’s intention was to break the record of 51 fatalities per annum that was achieved two years ago. Zero harm was the DMRE’s ultimate goal.

DMRE’s Responses

Mr Maqubela confirmed the DMRE would come back with a detailed report on each target that was also in the APP. In the interest of time management, it attached the annexure to the report that contained detailed performance information with the targets and achievements for each quarter. The DMRE presumed that outlining that information would impact the time allocated for Members to raise questions. He assured the Members that the reports presented before the Committee were all audited both by the DMRE’s monitoring and evaluation, which required a portfolio of evidence before it was signed off – including its internal audit. The AG relied on those reports, and everything the DMRE reported on performance information would go through the audit committee at the end of the financial year.

He confirmed the NECSA report was finalised. However, he did not want to go discuss the findings since it had not been tabled before the Committee.  

The DMRE noted the issue of mine health and safety. The Minister had addressed this but the DMRE could respond in writing to any issue that was not covered in this meeting, before the end of this week.

The Chairperson proposed that the Committee would forward the DMRE specific questions on the Q1-Q3 reports, including issues on the implementation plan regarding the AG’s recommendations. The Committee would reschedule the meeting to address those issues on the DMRE and its entities. It would also address the issues on the two entities according to the programme tabled before it. If Members thought there were other issues to consider, the Committee would deal with those when it addresses the matters arising in the next Committee meeting. He asked Members if they were in agreement with this proposal.

Mr Wolmarans agreed with the Chairperson’s proposal.

Ms Madokwe seconded the proposal.

The Chairperson noted the support. He invited the DM and the Minister to make closing remarks.

Deputy Minister’s Closing Remarks

Dr Nkabane said that the DMRE was committed to the Committee’s decisions. It was looking forward to receive Members’ questions to provide the Committee with the necessary details as per its request.

Minister’s Closing Remarks

The Minister said that the DM has a responsibility in the Ministry to monitor performance. The DMRE’s commitment was therefore the DM’s duty to follow through, but this would be done as a team.

He was happy to present before the Committee and he believed that better results could be achieved with a proper schedule.

The Minister said that Mr Mbonambi could explain that, when mining stick sides – the pillars that were left when mining – the risk of rockfalls were higher.

The Chairperson released the Minister and his team. He asked Mr Maqubela to remain behind, as he needed to address an issue after the Committee dealt with its outstanding minutes.

Consideration and adoption of outstanding minutes: 08 February 2022

The Chairperson asked Members to move for the adoption of the minutes.

Mr Wolmarans moved for the adoption.

Mr Mahlaule seconded the adoption.

Matters Arising: Request for an Evidence Leader

The Chairperson recalled there was an issue with this, as some Members did not agree and others were not opposed to needing an Evidence Leader.

The Secretariat read the section on this to the Committee.

The Chairperson asked Members to advise on this matter.

Mr Mileham said that the Committee should follow up on this. He said he had not seen the date of that letter, but the Committee should also follow up with the Parliamentary Legal Advisor to determine the progress or direction that would be taken since the inquiry was scheduled.

The Chairperson was unsure about the process. He questioned if the Committee should forward the letter to Legal Services to get their opinion on this and to provide a direct response to the Committee within the next week. In his view, this matter was the responsibility of the Parliamentary Legal Service.

Mr Mileham was happy with the Chairperson’s approach.

Mr Mahlaule agreed with the Chairperson.

The Chairperson asked the Secretariat to send the letter to Legal Services after this meeting to request a response on this matter as a matter of urgency. Legal Services could then brief the Committee to explain what role, legal guidance, or assistance they could provide the Committee, as it undertakes its responsibility of inquiry. He asked Members if they agreed with this proposal.

Mr Wolmarans agreed.

On the issue of the physical and costs: The Chairperson said that although the Committee was unaware of the nature of the inquiry, it took a principle decision that the inquiry should be physical. It was uninformed about the number of people required as witnesses. Most of the things raised at face value happened in Gauteng. Therefore, any other initiatives that would be taken would mostly be in Gauteng. The Committee’s principle decision was to take the most cost effective but valuable exercise according to Parliament. He asked that the Committee receive some latitude to address the cost issue according to Legal Services and the House Chairperson, and it would thereafter consider where costs could be saved.     

Ms Malinga agreed.

Mr Wolmarans seconded.

Concluding Remarks by the Chairperson

The Chairperson explained that he had asked Mr Maqubela to remain to appeal for the DMRE to consider the Committee’s concerns. Concerns from Members and the public were raised with an expectation that they could be addressed by the DMRE. The Department should therefore try to respond to this.

The standard rules of a virtual meeting included switching off the camera and microphone when not speaking, as there should not be any disturbances in the background when an official or Members of Parliament presented before the Committee. He explained a situation that interrupted a virtual meeting last week as an official did not follow the rules. He urged Mr Maqubela to restrain staff members and officials to respect the Committee’s meetings and the Members as officials of Parliament.

Mr Maqubela apologised to the Chairperson. He would address the matter, as the individual was fortunately identified. This was a matter that would be discussed with the DMRE management and its SOEs, particularly the conduct of officials when they presented before the Committee.

He noted that the DMRE should improve on its responses to matters raised by the Committee. He would report this to the DG and the necessary infrastructure would be implemented in the DMRE to specifically focus on those matters.

The Chairperson accepted Mr Maqubela’s apology. He thanked everyone for attending.

The meeting was adjourned.