Mintek and Department of Minerals and Energy Annual Reports: briefings

Meeting report

MINERALS AND ENERGY PORTFOLIO COMMITTEE
16 November 2005
MINTEK AND DEPARTMENT OF MINERALS AND ENERGY ANNUAL REPORTS: BRIEFINGS

Chairperson: Mr. E. Mthethwa (ANC)

Documents handed out:
Mintek Annual Report 2005 [available at www.mintek.co.za]
Mintek Allocation of Scivote (Parliamentary Grant) Projects per Division
Department of Minerals and Energy Annual Report 2004/ 05
Department of Minerals and Energy power point presentation

SUMMARY
MINTEK briefed the Committee on their 2004 Annual Report and outlined their research and development highlights, commercial activity, mineral policy and sustainable development, employment equity, human resources development, bursary programme, financial summary and plans for 2005 - 2006.

Members asked questions about market-related salaries, creation of a list of minerals for beneficiation, the end use of uranium, scientists who had worked for the Atomic Energy Corporation, the balance of income derived from commercial ventures and state funding, MINTEK’s relationship with the Department of Minerals and Energy, how customer satisfaction was measured and the reasons for the SAP crash delaying financial reports.

The Director General of the Department of Minerals and Energy briefed the Committee on its Annual Report for 2004 / 05. He presented an overview, in which he outlined financial performance, highlights and challenges and performance against targets of Administration, Promotion of Mine Health and Safety, Mineral Development and Energy Management branches. Due to time constraints, questions and answers were postponed to a later date.

MINUTES

MINTEK Annual Report briefing

The CEO of MINTEK Dr. P. Jourdan highlighted MINTEK's achievements and its financial statements as well as future plans.

MINTEK’s mission was to serve South Africa by promoting technology, industrial growth and human development. It had numerous research and development highlights in the gold industry; some were Project Autek, cyanide monitoring on gold plants and a project on environmental aspects of cyanide usage.

Highlights in R& D on the platinum side were a project to investigate PGM smelting, jewelry applications and recovery of PGMs from revert tailings. Highlights in ferrous metals were smelting test work for the Shevchenko ferronickel project, industrial-scale trials of low-nickel stainless steel and the introduction of a "smart" rock bolt in the mining industry. Highlights in non-ferrous metals included bioleaching work for the European Union’s Bio mine project, thermal magnesium process development, and R & D for copper-cobalt projects in Zambia and the Democratic Republic of Congo. Highlights in R & D for industrial minerals were investigations into two uranium projects in South Africa and one in Namibia, evaluation of manganese ore samples from Gabon, and sample characterisation on kimberlite ores.

MINTEK participated in several commercial activities and foreign partnerships in technology alliances with Belarus, Chile, India and international universities. MINTEK was also involved in mapping out the options for strategic development of the Southern African Development Community (SADC0 and continental mineral resources. They supported small-scale mining and provided research and development, skills and access to finance.

On the Human Resources level, MINTEK promoted science, engineering and technology, and had an internship-training program. The MINTEK bursary scheme was providing bursaries for 160 people. MINTEK had an operating surplus of R 5, 795 million out of its income of R 254, 897 million. Staff productivity had almost doubled per staff member and the lost time injury frequency rate was 0.95%.

MINTEK had experienced a hardware failure of their primary server in the SAP system and therefore the sign-off on financials was delayed by about three months.

MINTEK’s plans for 2005 /06 included optimising the balance between commercial and R & D activities, emphasising research as a core competency, retaining the MINTEK brand with respect to research and products, and including the refining stages of the mineral value chain and environmental protection sustainability as a core competency. They also planned on doing a comprehensive evaluation of the Southern African mining scene that would provide a basis for setting national long-term research priorities.

Discussion

Mr. C. Kekana (ANC) stated that the presentation was impressive and for the first time since the colonial era, local people were really benefiting from down-streaming and the beneficiation of minerals. He requested that MINTEK should streamline things and give government a list of the top ten minerals together with an estimate of how many potential jobs could be created from each. This was a priority because it was going to create jobs, which was in the national interest. He said that once minerals were discovered and there was potential then big business would come in and grab the opportunity only to make a profit and this was not always in the national interest.

Mr. E. Lucas (IFP) also thanked MINTEK for the presentation and said that the issue of market related salaries for MINTEK employees must be attended to otherwise they would not retain and attract good people.

Ms. N Mathibela (ANC) asked what was the impact of MINTEK'S bursary scheme on the economy and she requested clarity on the resource constraints at the Auditor General and at MINTEK.

Professor I Mohammed (ANC) wanted to know for what purpose was uranium being produced for, and whether any of this uranium was being produced for the Pebble-bed Modular Reactor (PBMR). He wanted to know whether any of the scientists who had lost their jobs when the Atomic Energy Corporation (AEC) shut down had moved over to MINTEK, and how they measured the MINTEK client dissatisfaction frequency rate. Professor Mohammed said there was a declining rate in white bursaries and he wanted to know if other people were funding them or were they leaving the universities and going abroad to seek funding. He stated that most of the Science Councils were placing a lot of emphasis on their own income and he felt strongly that government should fund the greater proportion of R & D expenditure for the Science Councils.
Professor Mohammed stated that, with reference to the delay in signing off of the financial report, he did not understand the reference to the SAP crash.

Mr. Mthethwa (ANC) said that it should now be accepted that the PBMR was a government programme. He was happy that MINTEK's human resources development program covered all the provinces and requested that a breakdown per province be provided to assist them in terms of their own constituency work.

He wanted clarity on whether Science, Engineering and Technology promotion was covered by a bursary programme and why did MINTEK have to strive for a robust relationship with the Department of Minerals and Energy?

Department of Minerals and Energy (DME) Annual Report briefing.

Adv. S. Nogxina, Director General briefed the Committee on the annual report and financial statements of the Department for the year 2004 /05. The Department's strategic direction over the past ten years was mainly focused on the development of policy in line with the transformation agenda of Government. The Department identified the need to refocus their efforts on the implementation of the existing policies. In line with this strategy they had focussed on growing the economy, skills development, closing the gap between the first and second economies and job creation and poverty alleviation.

The Department had been at the helm of 5 major policy implementation initiatives: The Precious Metals and Diamonds Amendment Bill, the Minerals and Energy Laws Amendment Bill, the National Energy Regulator of South Africa Bill, the Petroleum Products Amendment Act and new electricity generation capacity.

The Auditor General's Report raised the issues of a need for improvement in asset management, revenue management and the management of rehabilitation funds. The budget for the Department was R 1, 945 billion and the total amount spent at year-end was R 1, 859 billion (96%)

The restructuring of the Mineral Development Branch into two separate branches was effected to address the implementation of the Minerals and Petroleum Resources Development Act (MPRDA) and improvement of service delivery.

The Finance component and the Information Technology and Information Management components were also restructured. Employment Equity at the end of the year was 67% Black and 33% White, and in terms of gender this was 42% males and 58% females.

The Department had developed a comprehensive strategy to recruit and retain scarce skills and a performance management and development system had been implemented.

With regard to Mine Health and Safety, data collection was a concern, and fatality rates were improving steadily but not fast enough. There had been an overall decrease of 14% in fatalities and 7% in disabling injuries. 79% of system audits on health and safety were conducted; a shortfall of 1% against the target of 80%.

Other highlights of the Department included the restructuring of the electricity industry and the launch of the first Regional Electricity Distributor on 1 July 2005. The EDI Restructuring Bill would be tabled in Parliament in March 2006.

The Minerals and Petroleum Resources Development Act came into effect on 1 May 2005 and plans for the establishment of the South African National Energy Regulator (NERSA) were at an advanced stage. Progress on the New Generation Capacity Project was at the critical stage of inviting expressions of interest by potential suppliers.

The Designated National Authority was established in 2004 for the implementation of the provisions of the Kyoto Protocol and the United Nations Framework Convention on Climate Change.

The Department was providing ongoing technical support to Municipalities to roll out free basic electricity. On nuclear power, a radioactive waste management policy and strategy had been published.

The need for more effective physical security of nuclear installations was identified as a source of concern and more effective security measures were to be undertaken. The Department had drafted a National Nuclear Disaster Management Plan and they continued to Chair the Emergency Planning Steering and Oversight Committee at the Koeberg Nuclear Power Station.

Discussion
Mr. Mthethwa (ANC) informed the Committee that since it was the last day of Parliament they had planned for caucuses and he asked the Members to give him guidance. He added that there were no slides for the annual report so it was difficult for Members to follow.

Mr. Molefe (ANC) expressed his frustration with the DME in that they had not distributed the document that the Director General had discussed. He said that they had similar problems in the past with the Department not providing them with the necessary documentation. He felt that they were unable to do the necessary justice to the presentation and proposed that they either get permission to use another venue, or postpone the questions and answers to a later date.

Adv. Schmidt (DA) stated that the Department was not to blame only because the attendance of the Members was not what it was supposed to be. He found the Department’s presentation substandard when compared with the briefing of the Department of Defence. He felt that the Committee was not properly represented and that there was no purpose in postponing the matter as they would only resume in March 2006, when the first item on the agenda was the local government elections.

Mr. Mthethwa (ANC) stated that there was a proposal to postpone the matter to a later date, but the other side of the coin was that what had been said by the Director General was not new if the Members had read the Annual Report. He said that the Members should not use bad practice as an excuse for not going through the Annual Report and he wanted the Members to agree on the way forward.

Mr. Kekana (ANC) stated that they had only 20 minutes left and should allow Dr Jourdan to respond to questions and then let the Members raise questions to the Department.

Mr. E. Lucas (IFP) said that he agreed with the proposal for postponement. The Department had taken the majority of South Africans who had been disadvantaged forward. He gave the Department full marks for this. He said that the unfortunate thing was that the South Africans who had money were not investing, and when you talk about investors, they were looking at people outside the country.

Adv. Nogxina said he was surprised and a little bit disappointed by the attitude of some of the Members as he was following the prescribed format and the presentation contained facts that were included in the Department’s Annual Report, which had been distributed a few weeks ago. He said that they needed to agree on the format of the presentation of the Annual Report.

Mr. Mthethwa (ANC) agreed with Adv. Nogxina’s sentiments and felt that the report was not sub-standard.

Adv. Schmidt (DA) stated that if this was the standard of presentation, then the bar had just been lowered.

Mr. Mthethwa (ANC) said that the Committee was planning a health and safety summit in terms of which there would be some challenges for the Mine Health and Safety Inspectorate and that other stakeholders must get involved.

He requested that Dr. Jourdan from MINTEK respond to Members’ questions in writing due time constraints.

On the second issue, he said that the Committee would be scheduling a question and answer session on the Department’s Annual Report at a later stage.

The meeting was adjourned.