Impact and interventions relating to illegal mining: Harmony Gold briefing

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Mineral Resources and Energy

28 October 2020
Chairperson: Mr S Luzipo (ANC)
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Meeting Summary

In a virtual meeting, the Committee was briefed by Harmony Gold on the impact of illegal mining on its business, as well as the interventions it had introduced to curb illegal mining activities.

The Committee was told that the illegal mining industry was dominated by foreign nationals. A demographic breakdown of those involved revealed that Zimbabwe contributed the highest percentage of foreign illegal miners, followed by Lesotho and Mozambique.

Harmony Gold said that illegal mining cost the state and mining houses approximately R11 billion in taxes, and R7 billion in revenue. The fight against illegal mining was becoming difficult due to corruption. The lucrative cash benefits arising from illegal mining resulted in the collusion of South African Police Service (SAPS) members, security officials, employees and community members with the illegal miners, which promoted a lawless and fearful environment. Moreover, the bribery of the national prosecuting authority (NPA) resulted in minimal arrests. The light sentences that illegal miners received from the criminal justice system did not act as a deterrent.

The Committee asked what interventions the Department of Mineral Resources and Energy (DMRE) and Harmony Gold had taken to curb illegal mining. The mining company said it had implemented a project called “Operation Knockout,” which had resulted in a decrease of illegal mining. It also asserted that legitimate licensed dealers purchased illegal gold, and therefore encouraged illegal mining, but conceded that it was difficult to arrest and prosecute the licensed dealers as there was usually no evidence of an exchange of the illegal gold with the illegal miners.

Harmony Gold had dealt with 1 163 cases of injured illegal miners and 641 cases of deceased illegal miners. Individuals who first discovered the bodies had to contact Harmony Gold’s security department, which then contacted the South African Police Service (SAPS). SAPS would open a case before allowing the injured illegal miners to be sent to hospital to get medical treatment.

The Committee asked what assistance was required in order to intensify the fight against illegal mining. Harmony Gold proposed institutionalising the multi-disciplinary task team that was responsible for Operation Knockout, which could be deployed to other mines dealing with the problem of illegal miners. It also asked the Department to assist with the reinforcement of immigration laws in order to curb the return of deported illegal miners to South Africa. From the justice delivery system, it wanted dedicated prosecutors and harsher sentences for illegal miners.

Meeting report

Briefing by Harmony Gold

Overview

Mr Harry Mashego, Executive Director: Corporate Affairs, Harmony Gold, took the Committee through a presentation detailing the impact of illegal mining on the company and the interventions that it had taken to curb this.

He gave an overview of the illegal mining industry and how it was becoming difficult to combat it. The illegal mining industry was dominated by illegal immigrants. The influx of illegal immigrants settling in local communities resulted in human trafficking, and child and forced labour. The fight against illegal mining was becoming difficult due to corruption. The lucrative cash benefits arising from illegal mining resulted in the collusion of South African Police Service (SAPS) members, security officials, employees and community members with the illegal miners, which promoted a lawless and fearful environment. Moreover, the bribery of the national prosecuting authority (NPA) resulted in minimal arrests. The sentences that illegal miners received from the criminal justice system did not act as a deterrent to illegal mining. Illegal mining cost the state and mining houses approximately R11 billion in taxes and R7 billion in revenue losses which could have benefited local communities. (See presentation for more details).

Interventions

Mr Mashego briefed the Committee on the interventions that Harmony Gold had put in place in order to curb illegal mining. These included the closing of shaft banks with Clearview fencing, and the installation of cameras within the shafts and lamp room areas. The mine had also conducted a review of its security procedures and policies. For example, all employees were required to go through a security clearance. The entity had also set up a whistle-blower hotline number.

A project called Operation Knockout had been implemented to curb crime in the Matjhabeng district. The project had been a major success, as there had been a decrease from December 2019 to October this year, in instances of illegal mining (from 107 to 12), general bribery (38 to four) and corruption (11 to nine). One of the major success stories of Operation Knockout had been the arrest of the notorious zama zama kingpin, Eric David Dumisani Ndlovu. (See presentation for more details).

Harmony Gold had closed some shafts in the Free State. The closing process had involved filling the shafts to block access to the underground workings.

Mr Mashego told the Committee that the illegal miners had discovered some “rich” deposits in the trenches at the redundant Vaal River East Gold Acid and Flotation (EGAF) plant. He showed pictures of some contraband, including food, firearms and gold that had been seized at the location.

He said that illegal miners accessed the mine tunnels through ventilation shafts. The provision of food and other stuff requested by the illegal miners was also done through the ventilation shafts. Employees also smuggled food wrapped on their bodies into the mines. (See presentation for details.)

Discussion

The Chairperson said that in his experience, the situation with illegal mining was worse than had been presented. He invited questions from Members.

Ms C Phillips (DA) asked whether Harmony Gold was collaborating with other mining houses. What assistance did Harmony Gold require from the Committee?

Ms V Malinga (ANC) thanked the Chairperson for communicating the problems that Harmony Gold was facing to the Portfolio Committees on Police, and Justice and Correctional Services.

She said Mr Mashego had told the Committee about a number of illegal miners that Harmony Gold had found injured on their mines. Did Harmony Gold call the SAPS and other security services before obtaining medical assistance for the illegal miners?

How was the DMRE dealing with legitimate, licensed dealers who were buying illegally obtained gold? Had these dealers’ licences been revoked?

Mr Mashego had told the Committee that illegal miners set booby traps for security personnel, so what safety standards and measures had Harmony Gold put in place to protect its employees?

The presentation had shown images of illegal miners entering into the mining tunnels through ventilation shafts. Mr Mashego had told the Committee that this amounted to a human rights violation. He had to explain whether some of these miners had been forced or coerced to enter the shafts.

Mr K Mileham (DA) asked whether Harmony Gold had considered closing or filling the tunnels that remained open after they sealed a mining shaft. This was important, considering the fact that the illegal miners were never short of ideas on how to gain entry to the tunnels.

The number of illegal miners that Harmony Gold had reported to have had arrested and sentenced was concerning. Did the arrested illegal miners post bail? What were the chances of having the illegal miners successfully prosecuted after they posted bail? In cases where illegal miners were successfully prosecuted and sentenced, how long were they sentenced for? Short sentences of one year, for example, potentially resulted in the courts having to deal with repeated offenders.

Mr M Wolmarans (ANC) said the presentation was insightful and had painted a gruesome picture of the battle that Harmony Gold faced with illegal miners. He passed his condolences to the families of the security personnel and mine managers who had lost their lives to illegal miners.

The collaboration that Harmony Gold had with the Directorate for Priority Crime Investigation (DCPI), the provincial and local SAPS, and the anti-corruption unit under the project “Operation Gold” was commendable. The Department had always emphasised the importance of collaboration with regard to combating crime. It was important for Harmony Gold to share this lesson with the other mining companies.

How was aiding and abetting illicit mining, through the provision of food and other necessities, a punishable offence?

The presentation had talked about the influx of foreign nationals into the illegal mining business. How many of these foreign nationals had been arrested, and what had happened to them following the arrests?

Mr S Kula (ANC) conveyed his condolences on the passing of Mr Simphiwe Kubheka, the regional general manager of Harmony Gold, who had been shot and killed while driving home in 2017.

It was concerning that the Department had lost approximately R11 billion in taxes, and R7 billion in revenue. This money could have been used to eradicate poverty in South Africa.

What percentage of South Africans were involved in illegal mining?

The participation of different law enforcement agencies in the Operation Knockout project was invaluable. This had helped to tackle the illegal mining problem.

Were local municipalities and other local governance structures involved in the efforts to combat illegal mining?

The arrest of Eric Ndlovu had been a victorious development on the part of Harmony Gold. He hoped this would discourage other “kingpins” from illegal mining.

On 23 October, SAPS had conducted a stop and search procedure for all cars passing the Vaal River area. There was need for more procedures similarly situated to this in order to curb the problem of illegal mining.

The presentation had indicated that Harmony Gold had dismissed all employees who had been found to be involved in the illegal mining business. Had the dismissed employees been able to get employment somewhere else?

The Operation Knockout program had successfully eradicated illegal mining, as evidenced by the statistics of 2019/20 compared to those of 2017/18.

The fact that illegal miners were perceived as heroes in communities was concerning. Had Harmony Gold considered organising an awareness programme to educate communities about the dangers of illegal mining? He added that illegal miners exacerbated some of the problems that communities were battling with, including prostitution and rape.

Ms N Hlonyana (EFF) asked whether the existing legislation effectively combated illegal mining, or if there was a need for improvement.

Harmony Gold’s response

 

Mr Mashego said Harmony Gold was collaborating with other mines through the Minerals Council. The Department of Mineral Resources and Energy (DMRE) had also sponsored collaboration amongst the mines in the Free State. There had also been collaboration between Harmony Gold and Sibanye.

 

Harmony Gold had dealt with 1 163 cases of injured illegal miners and 641 cases of deceased illegal miners. The reporting procedure for the discovery of injured and deceased illegal miners recognised Harmony Gold’s security department as the first point of contact. The department was responsible for contacting SAPS. In most cases, SAPS arrived before the injured or deceased illegal miners were brought to the surface. However, SAPS did not immediately arrest the injured illegal miners, who were first taken to the hospital to get medical treatment. Harmony Gold had also received support and guidance from the mining regulator. In most cases, the regulator was expected to be strict on enforcing the Mining Health and Safety Standard Act. In the case of illegal mining, the regulator understood the challenge with which the mining houses had to deal. 

On how the DMRE dealt with accredited gold dealers that were dealing in illegally obtained gold, Mr Mashego said that in Harmony Gold’s experience, this was difficult since there was usually no evidence of an exchange of gold between the accredited dealers and the illegal gold miners. The DMRE had said that it handed over known cases.

On safety measures and standards, Mr Mashego said the Harmony Gold security personnel conducted random underground searches. It was Harmony Gold’s responsibility to protect all miners from illegal miners. It took advantage of the hotline system to identify the underground locations of illegal miners and their access points. Subsequent to ensuring that all the legitimated miners were safe and far from the illegal miners, it would send security personnel and SAPS to apprehend the illegal miners.

The Committee had asked Harmony Gold to explain how the illegal miners’ entry through ventilation shafts amounted to a human rights violation. Mr Mashego said the people who entered the mines through the ventilation shafts were being forced to do so. The people would have been brought to the mines under a false promise of employment. Immediately after they got to the mines, their documentation was seized by the handlers employed by “kingpins.” From this narrative, the illegal mining industry had elements of human trafficking, which amounted to human rights violations.

The fight against illegal mining was a game of cat and mouse between the illegal miners and employees. The illegal miners were always thinking of new ideas to stay ahead of Harmony Gold security. Be that as it may, Operation Knockout had allowed Harmony Gold to gain considerable ground and stay ahead.

Regarding the backfilling of old mining shafts and tunnels, Mr Mashego confirmed that Harmony Gold did this with lime and cement, as well as rubble. Some employees at Harmony Gold had been attacked by illegal miners while they were in the process of backfilling. However, there were tunnels that had remained open underground as they were difficult to reach. These were the tunnels that some illegal miners were forced to access through ventilation shafts.

On the prosecution and sentencing of illegal miners, he said that prior to the Chairperson’s communication with the Chairpersons from the PCs on Police and Justice, the prosecution and sentencing of illegal miners had not been meaningful. Most of the illegal miners were charged with trespassing, and posted bail amounts of R100. Immediately after their release from police custody, the illegal miners returned to the ground. However, after the intervention of the Chairperson, the arrests had become meaningful. The illegal miners were no longer posting bail. They had also started receiving sentences ranging between six and 24 months in prison. In cases where the illegal miners were foreigners, they were deported back to their countries upon release from prison. Be that as it may, most of the foreign illegal miners found their way back to South Africa and the mines.

The Committee had asked how those found to be aiding and abetting illicit mining through the provision of food, sex and other services, such as drilling, were punished. He said the police and justice delivery system applied a one-size-fits-all approach. This meant these people were considered as illegal miners, and were punished as such.

Regarding the numbers of South Africans and foreign nationals involved in the illegal mining industry, Mr Mashego provided the Committee with the numbers from the different countries in 2017. These were:

South Africa 397,

Unknown 450,

Zimbabwe 3 066,

Lesotho 1 143,

Mozambique 864,

Swaziland two

Congo seven

Nigeria two.

 

On whether local government structures such as the municipalities were involved in the fight against illegal mining, Mr Mashego told the Committee that they were not involved. This had to do with the fact that some officials within these departments had been rumored to be involved in the illegal mining industry. For this reason, Harmony Gold did not get local government structures involved in its security programmes, including Operation Knockout. Previously, Harmony Gold had discussed plans to raid G Hostel in Welkom, but the information had been leaked and compromised the raid.

Regarding the future employment of individuals that would have been dismissed on the grounds of aiding and abetting illicit mining, Mr Mashego said Harmony Gold had a database system for all employees. The dismissed individuals were blacklisted from employment at all Harmony Gold mines. However, the individuals were likely to get employment somewhere else as long as they did not have a criminal record.

The Committee had asked whether Harmony Gold had thought of introducing awareness campaigns to educate community members on the dangers of illegal mining.  Mr Mashego said this was a bad idea, as it would backfire on the mining company. Instead of gaining knowledge of the dangers of illegal mining, the community members were likely to start formulating methods on how to overcome the dangers, and get involved in the illegal mining industry.

Regarding whether Harmony Gold required legislative or any other form of assistance in its fight against illegal mining, Mr Mashego proposed institutionalising the multi-disciplinary task team that was responsible for Operation Knockout. The task team would be deployed to other mines dealing with the problem of illegal miners.

Mr Mashego asked the Department to assist with the reinforcement of immigration laws in order to curb the return of deported illegal miners back to South Africa. From the justice delivery system, Harmony Gold wanted dedicated prosecutors. In the Free State, Harmony Gold had conducted site visits with prosecutors so that they got a better understanding of the crimes committed by illegal miners. The site visits had helped to improve the sentencing of illegal miners. However, there was still a need for harsher sentences, as a sentence of six months was nothing but a light slap on the wrist.

The Chairperson said the delegates had painted a gruesome picture. The work they were doing to combat illegal mining was invaluable and greatly appreciated. He asked the delegates to share more details on their approach to injured and deceased illegal miners. To date, how many bodies had Harmony Gold collected on a single day, and on what dates had it collected these bodies?

Mr Mashego replied that in 2009, Harmony Gold had collected 78 bodies of deceased illegal miners at the Eland shaft. This was the highest number of bodies that they had collected on a single day.

The causes of deaths of illegal miners included murder, hunger, dehydration and suffocation from methane gas.

Further discussion

The Chairperson asked how Harmony Gold had dealt with the cases of employee intimidation by illegal miners. Did it still have such cases?

Mr Mashego replied that there had been a decrease in the number of intimidation cases on both the surface and underground since the beginning of Operation Knockout. Also, Harmony Gold no longer provided the names of officials handling or investigating cases of illegal miners, since these officials became targets of intimidation.

The Chairperson said it appeared as if the underground trade went beyond food and other basic commodities. How was the trade really conducted?

The DMRE had to update the Committee on the Kempton Park case to do with an individual who had been found in possession of illegally obtained gold that was worth millions of rands.

Corruption had become the order of the day. There had been news of two station commanders who had been arrested on allegations of corruption. It was little wonder that Harmony Gold was reluctant to get officials from local government structures involved in their security programmes.

Harmony Gold spent millions of dollars on security. As had been said by Mr Kula, this money could have been spent on addressing other serious and pressing economic and social issues.

Had the DMRE considered classifying gold as a special commodity, whose trade could be limited to a few individuals? Was it also possible to quantify gold from the point of extraction so this could later be reconciled with the amount of gold that would have been traded both locally and internationally?

Mr Mashego replied that refineries -- for example, the Rand Refinery -- had a formula or method of measuring the amount of gold that it received from the different mines for refining. However, it had what it called scrap gold, and it was this gold that made its way into the black market. Moreover, illegal miners used the services of small independent refineries to refine illegally obtained gold.

The Chairperson said the fact that foreigners contributed the highest percentage of illegal miners was unacceptable. The Committee was going to find a way to deal with this.

Ms Malinga asked Harmony Gold to furnish reasons why community members perceived illegal gold miners as heroes. Did this have to do with the fact that Harmony Gold did not employ locals, and was not contributing in terms of a social and labour plan?

Did Harmony Gold provide counseling for employees who discovered dead bodies?

Mr Mashego replied that historically, mining houses got their labour from labour-sending areas, including the Eastern Cape and Lesotho. Harmony Gold had introduced a new policy to employ locals. It had even opened a training centre for the local youth. It had also been contributing in terms of social and labour plans (SLPs) and corporate social responsibility. The problem with the communities seeing illegal miners as heroes had nothing to do with Harmony Gold. Given the rate of unemployment in South Africa, young people were quick to admire and emulate those who made money through illegal means.

He confirmed that employees who discovered dead bodies did receive counselling.

The DMRE had said in a meeting with the Minerals Council, that it had identified illegal mining as a major challenge that required immediate attention. It was going to engage the security cluster and other relevant departments to deal with the issue of illegal mining.

Mr T Langa (EFF) asked Mr Mashego to provide a detailed breakdown of the R1.7 billion it had spent on security.

Mr Mashego replied that Harmony Gold had spent R1.7 billion on security over a period of eight years since 2012. The breakdown was:

  • 2012-R120 million
  • 2013-R166 million
  • 2014-R164 million
  • 2015-R191 million
  • 2016-R215 million
  • 2017-R245 million
  • 2018-R278 million
  • 2019-R322 million

The money had been spent on the procurement of vehicles, security cameras, security personnel and the erection of security walls and fences.

The Chairperson made some closing remarks.

The meeting was adjourned.

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