Department Of Mineral Resources Mining Charter
Department Of Mineral Resources Mining Charter, The Department of Mineral Resources had assessed the impact of the Mining Charter 2004, and the results had been made public. The Committee had observed from the findings very little transformation in the mining industry. The Department had therefore embarked on amendments – hence the Amended Mining Charter 2010. Some 28 organisations had responded to the Committee’s call for submissions on whether stakeholders felt the impact of the Mining Charter and understood that there was an amended version.
After the hearings, the Committee would deliberate and decide whether the amended version of the Charter went far enough to address ever-rising poverty levels, inequality, achieving transformation, and high unemployment. The mining industry had played a pivotal role in South Africa’s industrialisation but it had to be asked if natural resources could be used differently and if the mining industry could contribute to the national goal of creating five million jobs.
The Department of Mineral Resources reviewed the new elements inserted into the amended Charter, sustainable development, the revised scorecard, the reporting templates, and the Department’s views on how to ensure compliance. In 2008 the Department had appointed an independent service provider to assess progress on the Mining Charter. The Department described the assessment’s results as to levels of beneficiation, employment equity plans, mine community and rural development, housing and living conditions, procurement, ownership and joint ventures, and human resource development – in which there was a disconnection between the plans submitted to the Department and actual implementation.
The Amended Mining Charter 2010 sought to strengthen and sharpen the Charter’s effectiveness in driving transformation and competitiveness in the mining sector through implementation of the following nine elements: ownership, procurement, and enterprise development, beneficiation, employment equity, human resource development, mine community development, housing and living conditions, sustainable development and growth in the mining industry, and reporting (monitoring and evaluation).
The Department concluded that a monitoring and evaluation module was to be developed to ensure higher levels of compliance; companies must report levels of compliance annually; and there must be a review of the Act to increase penalty provisions for non-compliance.
A Democratic Alliance Member asked what guarantee there was that the Department’s figures from an independent service provider were correct and acceptable to all concerned? An African National Congress Member found the Department ‘very depressed’ as if ‘suspicious’ about something, asked for details of specific changes to the scorecard and their impact, how the social fund would be used, noted the demographic targets set, which appeared to be ‘low and slow’, and reminded the Department that the Skills Development Act 1998 had already been implemented.
How far had the Department progressed? A second African National Congress Member noted that the presentation indicated that little progress had been made, and asked why. A third African National Congress Member asked if the reviewed Mining Charter was still a concept or if it had been implemented already, and if the Department had capacity to follow-up on reports. The Chairperson wanted the Department to avoid chasing moving targets and asked if it could quantify on procurement. As Parliament would be conducting public hearings on the beneficiation strategy, he would not ask the Department much about it at this stage.
He asked if the targets that the Department had set for employment equity were in line with, for example, the Department of Trade and Industry codes. He asked how the Department would manage the fund for human resources development while noting that there were Sector Education and Training Authorities, well-funded but with roll-overs. Members were much concerned about mining community development and depressed because before you entered a mine, you walked through ‘a sea of poverty’. The Department had not implemented its social and labour plans. Mining communities lamented that they extracted the wealth of the country but did not themselves receive ‘a drop’ of this wealth.
Business Unity South Africa submitted that its Transformation Policy Committee promoted broad-based Black Economic Empowerment. The organisation believed that the mining industry would continue to be an important pillar of the South African economy for the foreseeable future. The organisation described the evolution of the Charter from the initial charter of 2002 to the Revised Charter of 2010, which was, however, not aligned to the Broad Based Black Economic Empowerment Codes of Good Practice.
This entailed some companies having to double-report, but had the advantage that the Charter was more specific to mining. There was no requirement to verify the scorecard by an independent body. That reporting was now done annually was a positive development. The New Growth Path had specifically identified mining as one of the main economic sectors with a high potential for creating jobs. Discussion of the Charter should be in line with the objectives of the Path.
Other factors impacted on the mining industry, such as transport and infrastructure. Mining was an industry with a long lead time on investment decisions. Rules must be consistent and given enough time for implementation before being changed. The organisation remained optimistic that the mining and other sectors would meet their transformation targets.
He commended the example of South Korea, whose workforce was more expensive than South Africa’s, but more than doubly productive. African National Congress Members asked for precise figures on how mining contributed to South African society, what a ‘decent job’ as provided by mining was, how mining compared, as the fifth largest contributor to formal employment, with other forms of employment, how the loss of R50 billion because the draft Charter was leaked had occurred, and for the organisation’s opinion on the establishment of the state-owned mining company.
The Chairperson agreed with Members who said that the organisation was too general as to the information that it had given. He wondered if that was by design, since the Chamber of Mines was present. He asked the organisation for its understanding of the energy supply situation and the drive of the mining industry, as documented by the mining companies’ annual reports, to export high-grade coal, instead of supplying that coal to Eskom.
He also wondered if the business community was leaning towards disregarding the rights of workers. Was the profit motive the major drive as opposed to the protection of workers’ rights? If BUSA did not want rules to change, this would create more problems. Rules must be reviewed. This barrage of questions had arisen because its document was almost empty in terms of the Committee’s expectations.
The Chamber of Mines of South Africa submitted on progress with the implementation of the Mining Charter. It reviewed firstly the Revised Mining Charter September 2010, as to which there had been substantial agreement, but all parties had to compromise. Stakeholders had agreed to retain the principle of a special instrument for mining. The Chamber noted changes and new and improved targets in the Revised Charter.
These included strengthened annual reporting and a proper scorecard, with provisions to deal with non-compliant companies. Secondly, the Chamber reported on progress and challenges with implementation. Mining companies could and should have learned more under the previous Charter. The Chamber commented on the Industry Progress Report based on company reports submitted to the Department. Thirdly, the Chamber reported on progress with implementation as to ownership, procurement, skills development, employment equity, community development, accommodation, health and safety, environment, and reporting. Fourthly, the Chamber suggested how the Charter could be further improved.
It wanted opportunity for the revised Charter to show results, rapid feedback from the Department, a guidance document, and alignment with, for example, the BBBEE Code on procurement, and independent verification. Fifthly, the Chamber gave a detailed progress report, together with challenges, on ownership, procurement, skills development, employment equity, community development, accommodation, health and safety, environment, and reporting. It claimed that no Chamber member was at less than 15% on ownership, measured according to the Charter.
There was a weighted average of 28%. Challenges as to ownership included the need to ensure that future deals were sufficiently broad-based. It noted that, as far as it could determine, all its members had reported, and emphasised that speedy feedback from the Department would be very important.
A Democratic Alliance Member thought much of the criticism on lack of transformation in the mining industry stemmed from the Chairperson’s opening statement – one visited a mine and found it surrounded by poverty. However, the Member was all in favour of community involvement and benefits, together with employee share schemes, but wanted facts and evidence. He was concerned at the unrealistic levels of expectation.
Were there empirical studies of what the mines had done? African National Congress Members said that mining as a sector needed to make a serious contribution to our society, noted that the Chamber had suggested that the revised Charter should be given a chance to prove itself, appreciated that the Chamber needed feedback from the Department since thereby it was challenging the regulatory body, queried the need for a guidance document over and above the revised Charter, noted that the Chamber supported the amendments in the Charter, and asked if the Chamber had had to summon any of its member companies.
The Chairperson said that the picture presented by the Chamber was completely different from that of the Department, which was the Chamber’s regulator. This was highly confusing. He wanted the Chamber to be upfront. Indeed there had been an acknowledgement from the Chamber that the Charter had not been implemented in accordance with expectations. It had acknowledged that there had been lack of progress. The Committee wanted to verify the status of the Chamber’s report and the 2011 figures. He could not believe that within two years the Chamber had taken a giant leap forward.