Select Committee for Land and

Mineral Resources: Orientation

JULY 2014

Research overview of Committee Activities

At a national level, research into the various departments housed within the Select Committee for Land and Mineral Resources, will likely remain linkages with other departments are seldom brought to the attention of the Committee. For the purposes of this presentation, I would like to take from the orientation document as many of the linkages within the portfolio and emphasise these in the slides to follow. For a more complete overview, the orientation document can be studied in conjunction with this presentation

The MPRDA shifted the custodianship of the mineral wealth of SA into the care of the State. Mining companies were granted security of tenure, provided they complied with the terms of the new law. A key requirement was that historically disadvantaged South Africans “were to benefit from the exploitation of the mining and mineral resources and the beneficiation of such mineral resources.”  The MPRDA introduced Social and Labour Plans (SLPs) and negotiated the Mining Charter with stakeholders bound to specific targets and time tables. The aim of these interventions was to ensure that holders of mining rights contribute towards the socio-economic development of the areas in which they are operating, and to effect the entry into and active participation of historically disadvantaged South Africans into the mining industry.  Transformation still lags behind despite a decade of the Mining Charter. The rights to minerals held by companies that have not met the terms of the Mining Charter can, in principle, be revoked by the Minister.

Auditor General finding: A material proportion of mining companies were not reporting on the extent of compliance with social and labour plans.

The DMR is required under section 28 of the MPRDA to ensure that holders of mining rights and permits submit a number of regular reports on their activities. Without submissions, the DMR cannot form a proper view on whether the transformation goals set in the MPRDA are being met.

According to law, no person or company may operate a mine in South Africa unless an SLP has been submitted to DMR. Once submitted, a SLP may not be amended or varied without the consent of the Minister after the granting of the mining right to which such social and labour plan pertains.

The DMR received an adverse finding by the Auditor General in 2013 indicating that a material proportion of the required reports had not been received by the DMR. The DMR had failed to enforce compliance with section 28 (2) of the act, as required by section 93 of the MPRDA, in 2012/13.

Most of South Africa’s mineral wealth is exported in a raw or semi-processed form. SA could gain enormous benefit from the development of downstream industries to beneficiate our mineral wealth. The 2014 amendments to the MPRDA include specific features intended to give the government more powerful levers to encourage mineral beneficiation.

The NDP is supportive of beneficiation, but only in its Second Phase (2018 – 2023). Critical factors that are required for beneficiation to succeed is improved energy supply (reliable and cost-effective) and the development of the required skill base.

Additionally improvements in productive infrastructure – roads, rail, harbours are needed. The extent of beneficiation in SA has declined since 1994, with many products that were formerly manufactured here being imported and significant semi-beneficiated exports. South African mining companies appear to be reluctant to get involved in beneficiation, claiming that mining is their core business. As a result, improvements in the degree of beneficiation will require the DMR to work better with the DTI and to align itself with the IPAP.

Since 1999, the scale and intensity of illegal mining has only increased. Presently, illegal mining activities have assumed serious proportions, with an estimated 6 000 people involved in illegal underground mining and another 8 000 in illegal surface mining. In 2011 alone, it was estimated that illegal mining subtracted about R6-billion from the country’s fiscus. Illegal mining and theft or destruction of mining assets have also jeopardised or prevented the re-opening of dormant mines. Illegal mining is also associated with increased environmental harm.

Presently, there is no law regulating the illegal mining activities. The most the State can charge illegal miners with is Trespass and Theft or Attempted Theft. The DMR has met with local stakeholders including unions, mining industry players, the Metro Police, the South African Police Service and the Department of Home Affairs in order to address the problem.

The DMR intends to work with the Council for Geoscience to develop better methods of shutting down areas which are no longer in use, so that illegal miners cannot gain access.

Significant petroleum resources may be present both onshore and offshore in South Africa. The partial or total replacement of petroleum import costs could drastically reduce the balance of payments and improve energy security. Onshore, the focus is on exploration for shale gas using hydraulic fracturing (fracking). Offshore, there is interest in deep-water wells following discoveries of undersea petroleum under the ocean off Mozambique, Namibia and the Northern Cape.

There are major environmental concerns associated with exploration of petroleum resources. In the Karoo, a water-stressed region, the reliance of fracking technology on large volumes of water and the potential for ground water contamination is a grave concern. Oil exploration and exploitation can also have negative impacts, ranging from the effects of sonar mapping on marine mammals to the risk of oil spills.

In terms of both resources, there is pressure on government from investment and exploration companies to limit the impact of recent amendments to the MPRDA affecting the petroleum sector.*

Fracking timeline: Cabinet approved the report of the Task Team on Shale Gas in 2012. It recommends that fracking be allowed only after appropriate safeguards had been incorporated into regulations and under the “strict supervision” of a monitoring committee.

Oil and gas timeline: the Petroleum Agency of South Africa (PASA) has improved South Africa’s profile with explorers and in recent years its activities have greatly increased the percentage of acreage either under license or application.

The NDP recommends that South Africa should seek to develop its shale gas resources, if available, but recognises that this will still be a need for debate on trade-off decisions, based on a set of criteria and indicators that include environmental and socioeconomic factors. The MPRDA requires a 20 per cent “free carried interest” to which the state will be entitled, combined with black economic empowerment (BEE) obligations and the new right of the state to purchase petroleum operations (or parts of them) at “an agreed price”. These conditions are not supported by many foreign interests, but local beneficiation from oil and gas resources is an important consideration for South Africa.

A draft Mine Health and Safety Amendment Bill was published for comment on 15 November 2013, and it is likely that amendments to the Bill will follow shortly;

The Farlam Commission is scheduled to complete its investigations into the “tragic incidents at or near the” Marikana Mine in Rustenburg in August 2012, by 31 July 2014 and to report to the President by 11 September 2014;

Technical regulations for the exploration for and production of shale gas in South Africa are to be published soon. The proposed regulations were published for comment on 25 October 2013, under the MPRDA;

Two significant government entities are due to be shifted to the DMR following Cabinet decisions. African Exploration Mining and Finance Corporation (SOC) Limited

(AEMFC) [also known as the state mining company]. South African Agency for Promotion of Petroleum Exploration and

Exploitation (SOC) Limited (PASA).

Unanswered questions:

•Over 11 million child grants – impact of agriculture?•Current state of infrastructure?•Measurement of impact?•Food production of commercial gain – shift in focus?

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Growth in expenditure: Food security

Ncera Farms CASP Ilema Letsema LandCare

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Growth in expenditure: Food security

Ncera Farms CASP Ilema Letsema LandCare

Food security intervention vs. commercial agriculture development.

The Department’s programmes appear to create an environment where efforts are funded to alleviate food security, but in two opposing directions which often compete with each other. Smallholder farmers often struggle with extension support in terms of availability as well as focus (commercial methodologies). Farmers are encouraged to form part of co-operatives even though these are poorly supported with business planning and marketing support. The outcome appears to be poorly measured:

•Hectares planted•Crop yields•Sustainability

Food security from an established commercial agriculture perspective:

•Losses in employment opportunities since 1994 – evictions and job losses.•Shrinkage in number of commercial farmers, trend towards labour reducing practices such as using seasonal workers and mechanisation.•Shift in farming activity and focus resulting in a declining contribution in GDP*•Struggling emerging commercial sector affected by matters such as capacity development and the centralised market characteristics.

* Diversification of SA’s GDP also potentially responsible for this

Food security from an small-scale agriculture perspective:

•Land ownership and access to funding challenges•Inability to access markets – marketing as well as market volumes, consistent quality demands•History of shifts is funding focus without clarity on the impacts of these on existing small scale farmers•Evidence of poor service from extension officers•Evidence of a pro-commercial focus from Department and extension officers

• At provincial level, merged departments often operate in provinces

• No clear distinction between food security and agriculture projects initiated and supported by the two National Departments

• During oversight, DAFF and DRDLR officials contradict each other regarding roles and responsibilities

• During oversight and Parliamentary meetings, there appear to be duplication of activities between Departments: example “million Hectares under cultivation”

• Medium term fishing rights not allocated on an annual basis, but on all occasions, small-scale fishers did not feel satisfied with transformation of the industry

• Current legislation has resulted in transformation in many of the boat-based fisheries, but transformation has been in non-small-scale sectors

• Court action resulted in Department facing court-imposed deadline to review access to resources for small-scale fishing communities

• Revision of relevant legislation not performed in time for new fisheries rights allocation process, resulting in current situation

• Long-term history of attempts to enter commercial fisheries since 1994 as highlighted above

• Strong association with coastal fisheries and deep dependence

• Severe depletion of many resource types associated with this sector – abalone, West Coast rock lobster, line fishery species, beach seine fishery species

• Court action mentioned in introduction need to be balanced with the lack of capacity within the sector for new entrants and the need to conserve and restore key fishery resources

• Most fishery resources accessible to the small-scale fishery community severely over-exploited, collapsed or in need of restrictive regulations in order to ensure sustainable exploitation

• Established fishers in the sector (commercial, recreational) resist any loss of their fishing rights ion order to make way for new entrants in the various sectors earmarked for small-scale fishery development

• Conservation requirements and multi-lateral agreements detail ecosystem-level conservation requirements within much of the area of access for West- and North Coast small-scale fishers

• Recently emerging trend in stock shifts of economically important species

• Research in early stage, but potentially, the changes are attributed to temperature changes in ocean, driving changes in preferred areas of distribution, and/or reproductive behaviour

• Long-term impact of these changes not yet fully understood, but very likely to impact species with limited distribution ranges

• Very likely to affect locally positioned fishers such as small-scale fishers

• Committee briefed on a number of occasion about problematic matters that have arisen post-settlement:

• Strive within CPA/Beneficiary group• Sell-off of infrastructure or the use of the

acquired land as security for commercial loans in stead of utilising Government support

• “Mentors” providing poor business advice or promoting private in stead of Government business support

• Restituted/redistributed land ending in liquidation or being sold

• The committee has not been briefed on the progress of CRDP for some time

• Departmental documentation refers to all activities performed to date as if these are fully functional and sustainable

• Oversight experience (Muyexe Village) have indicated a wide divergence between claimed and observed achievements

• Oversight and reporting required on current status rather than total to-date expenditure and perceived benefits

• Concerns expressed at Land Reform Workshop regarding the quality of land acquired for land reform purposes

• Prolonged period between claim finalisation and occupation/post settlement support

• Concerns regarding the initial successes of RADP when compared to more recent attempts to provide a more “holistic” approach to post settlement support, including effective mentorship received from the commercial sector

• Lingering questions regarding the Department’s capacity with regards to agriculture development – DAFF/DTI expertise?

• Sustainability• Linkages to Fetsa Tlala?

• Community expectations vs. Departmental planning

• Conflicts between CPA’s and traditional leadership in terms of communal land ownership and control

• Mineral rights confusion• Access to water and water rights• Business planning support• Market access and marketing

• Commercial agriculture focus? What about claimants that do not wish to form part of a CPA or Cooperative?

• Concerns raised during Land Reform workshop

• DAFF/DRDLR competency overlap• Delays in support and problems with the

mentorship programme

• The progress of the current cycle of Land Claim finalisation has been slow and targets have been shifted on numerous occasions

• Large burden on Department to maintain the staff component required to manage research and public access points for claim submissions

• Clarity around the fate of current claims during second cycle of land claims?

• Commitment around staff component and timelines?

• Links between settled claims and targets set by government? Impact of financial compensation on transformation targets?

• Rhino and elephant poaching regional characteristics

• Current approach inadequate or misinformed?• Abalone• Plant species such as succulents and cycads

• Aquaculture development constraints• Mining in Mpumalanga / Limpopo overlapping

with important grassland habitats and watersheds / catchments

• Fisheries needs compared to signed multi-lateral agreements regarding the conservation of Benguela Current species

• Fisheries and NEMBA• Mining wastes and Acid Mine Drainage – an

ecological challenge that has to be rectified by the mining industry.

• Natural gas and oil exploration – the need for alternative energy sources

• The over-arching theme of WATER