ANNUAL REPORT PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC DEVELOPMENT:

FINANCIAL YEAR (2012/2013)

Date: Tuesday 22 October 2013 Venue: Taj Hotel, Corner of St Georges and Wale Street,

Cape Town

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Presentation outline

1.Vision and Mission2.Annual Financial Statements3.Branch Performance Information 4.Conclusions

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Vision and MissionVision 2014

– A globally competitive, sustainable and meaningfully transformed mining and minerals sector

Vision 2025– A leader in the transformation of South Africa’s economic

growth and sustainable development by 2025

Mission– Promote and Regulate the Minerals and Mining sector for

transformation, growth, development and ensure all South Africans derive sustainable benefit from the country’s mineral wealth.

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Financial Performance

Annual Financial Statements

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Overall Financial Performance1. The budget for the department was R1.176 billion for the

2012/2013 financial year , of which R1.173 billion or 99.4% was spent. – R395.914 million or 99.6% of the compensation of employees budget was

spent.– R 228.084 million or 99.9% of the allocated goods and services budget was

spent.– R525.110 million transfer to entities was fully spent in line with its purpose.– R24.556 million allocated towards capital assets was fully spent.

2. In relation to issues raised by the Auditor General , the department has developed and is implementing an action plan to address the route cause of the problem and this will be monitored closely.

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Expenditure per economic classification

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Transfer Payment to Entities

Purpose of transfer• R454.2 million was transferred

in terms of the establishing act of the entities.

• R18.3 million was for research to prevent ingress of water into underground

• R50 Million was transferred for Mine Rehabilitation projects

Recipient

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Expenditure per programme

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Statement of Financial Position

Economic Classification

2012/13

R’000

2011/12

R’000

Variance

R’000

Variance Explanation

Current Assets 15,241 28,456 -13 215

The asset base decreased by 46.44% from last year and is attributable to the reduction in the bank balance and the receivables.

Current Liabilities 12,871 26,327 -13 456The decrease by 50.94% in liabilities is due to decrease to voted funds to be surrendered to the National Revenue Fund and decrease in transactions that has not yet gone through the bank at year end.

Net Assets 2,370 2,129 241

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Performance per Branch

Performance Information

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Overview of Performance Information1. The activities of the Department Of Mineral

Resources are organised in the following four programmes: – Programme 1: Administration – Programme 2: Promotion of Mine Health and Safety– Programme 3: Mineral Regulation– Programme 4: Mineral Policy and Promotion

2. The achievements, challenges and corrective measures are outlined from pages 13 to 68 of the annual report.

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Programme 1Financial Administration Branch

Purpose: To provide strategic and administrative support services to the Ministry and the Department

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Key Achievements

1. Improve services delivery and the turnaround times for processing transactions

– Customer satisfaction index of 3.35 was achieved.– 72 Defined turnaround targets were achieved

2. Provide reliable and timely information—Reporting calendar was developed and all reports

were submitted within the prescribed timeframes.

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Key Challenges1. Educate and empower stakeholders– The department still need to improve on the

irregular expenditure. The department’s approach is to have a zero level of irregular expenditure.

– 94.97% of the invoices were paid within 30 days, the department intend to improve this to 100%.

2. Filling of vacancies– Key senior management posts became vacant

during the year under review

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Corrective Measures1. Educate and empower stakeholders– The Department will continue to raise awareness on

internal control processes to improve compliance with laws and regulations.

– Sanctions are being imposed on transgressions with processes

2. Filling of vacancies– CFO post has since been filled, and other remaining

posts are being filled.

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Programme 1Corporate Services Branch

Purpose: To provide strategic and administrative support services to the Ministry and the Department

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Key Achievements

1. Communicate DMR programmes and policies– Website and intranet updated in a timely manner and current– Successful Media briefings, public participation engagements and

positive and balanced newsletters published and broadcast– Approval of internal communication strategy

2. Contribute to skills development– 16 mining career awareness initiatives were held for communities

and universities.– The 58 bursaries offered in 2011/2012 to study towards mining

related qualifications were sustained during the reporting period.

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Key Achievements

3. Develop and review internal processes, guidelines and policies

– Reviewed 17 policies and mapped 19 business

processes.

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Key Achievements

5. Ensure compliance with HR legislation

– Financial disclosures submitted within prescribed time frames

6. Ensure Implementation of National Vetting Strategy

– All new employees were screened as well as service providers and target for vetting was also exceeded

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Key Challenges1. Contribute to skills development–Prospective bursary holders were turned down by prospective funders because among other things they did not meet the entrance requirements. 2. Attract, develop and retain skills–% Reduction in Staff Turnover – Target not achieved due to retirements, transfers and promotions to other departments and organisations.–Inability to retain and attract inspectors3. Ensure compliance with HR legislation–Performance Agreement submitted within prescribed time frames

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Corrective Measures1. Attract, develop and retain skills–We are currently finalising the review of the department retention strategy in order to deal with the high turnover rate. –The department has embarked on a learner inspector programme where 50 graduates will be placed at different mines to undergo experiential training which will result in fully qualified inspectors.

2. Contribute to skills development–Increase awareness in relation to processes to be followed by bursary applicant.

3. Improved turnaround times(Deadlines)–The department will strive hard to meet deadlines of submissions of Performance Agreements and Financial Disclosure Forms–Improve turnaround time in filling vacant posts.

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MHSI MANDATE AND MISSION

Purpose

To execute the Department’s mandate to safeguard the health and safety of mine employees and people affected by mining activities.

Objective

The MHSI strives towards a safe and healthy mining industry. This is to be achieved by reducing mining related deaths, injuries and ill health through the formulation of national policy and legislation, the provision of advice, and the application of systems that monitor and enforce compliance with the law in the mining sector.

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Key Achievements1. Promote Health and Safety

– 9% improvement in all fatalities from 123 in 2011 to 112 in 2012, which is the lowest fatalities ever reported.

– Platinum and coal sectors have, for the first time in two years, recorded a reduction in fatalities, of 24% and 8% respectively.

– 35% reduction in fall of ground (FOG) fatalities from 40 in 2011 to 26 in 2012. The coal sector went, for the first time ever, for more than twelve months without a FOG fatality.

– Transport and mining fatalities decreased by 24%, from 38 in 2011 to 29 during 2012.

1. 7% reduction in occupational diseases reported by the mines.

– Audits and Inspections were exceeded by 6% and 8% respectively.

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Key Achievements2. Develop and review internal processes

– Reviewed the South African Mines Reportable Accidents Statistical System (SAMRASS) codebook and guideline for mining within 100 meters of structures, buildings etc. which may require protection.

– Developed the Conveyor Belt Guideline and Fatal Ruling Procedure.

3. Human Resource Development – 14 assistant Inspectors are undergoing inspector training at

various regional offices.

– 5 learner inspectors, who have been recruited as bursary holders, have been placed at a mine for experiential training.

– 71 officials attended technical and administrative courses.

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Occupational Safety

Fatalities Rate Fatalities Rate

Gold 51 0.17 53 0.18 4Platinum 37 0.09 28 0.07 -24Coal 12 0.07 11 0.06 -8Other 23 0.11 20 0.08 -13Total 123 0.10 112 0.10 -9

1 Jan - 31 Dec 2011

1 Jan - 31 Dec 2012

% Change in actual FatalitiesSector

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Regions 2011 rates 2012 rates % ChangeGauteng 29 0.14 31 0.16 7NW - Klerksdorp 11 0.07 9 0.08 -18NW - Rustenburg 34 0.14 25 0.11 -26Free State 17 0.21 12 0.15 -29Mpumalanga 18 0.10 14 0.07 -22Limpopo 9 0.08 15 0.13 67KwaZulu- Natal 2 0.08 1 0.03 -50Northern Cape 3 0.04 3 0.04 0Western Cape 0 0.00 2 0.14 100Eastern Cape 0 0.00 0 0.00 0All Mines 123 0.11 112 0.10 -9

Actual Fatalities and Rates per Region

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1 Jan - 30 Sept 2012

1 Jan - 30 Sept

2013Gold 37 29 -22Platinum 22 21 -5Coal 8 5 -38Other 11 12 9Total 78 67 -14

Fatalities*Commodity

% Change in actual Fatalities

Occupational Safety

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1 Jan - 30 Sept 2012

1 Jan - 30 Sept

2013Gold 1236 811 -34Platinum 1023 982 -4Coal 200 176 -12Other 217 159 -27Total 2676 2128 -20

Injuries*Commodity

% Change in actual Injuries

Occupational Safety

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Key Challenges

1. Occupational Safety.2. Occupational Health.3. Skills Development.4. Illegal mining.

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Corrective Measures

1. Occupational Safety.– Monitor compliance and implement enforcement measures

where necessary in line with the legislation and enforcement guideline.

– Encourage mines to implement measures to protect women’s safety and security.

– Arrange regional quarterly tripartite forum meetings to share on health and safety information.

– Monitor the implementation of 2011 Summit commitments on elimination of fatalities and injuries.

– Encourage mines to be more vigilante during fourth quarter of the calendar year.

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Corrective Measures

2. Occupational Health.– Implement the strategy for enhancing the health

of workers including on TB, HIV, Aids and non-communicable diseases.

– Collaborate with social partners in monitoring the implementation of 2011 Summit commitments on elimination of silicosis and NIHL.

– Conduct verification of mine sampling on dust measurements and results.

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Corrective Measures3. Skills Development

– Collaborate with MQA to enhance skills development including on ABET, bursaries, artisans, artisan aides and jewelry making.

– The MQA has established regional offices in rural FET colleges in the Northern Cape, Free State, Mpumalanga, North West, Limpopo and Eastern Cape.

– Implement the Certificate of Competency Examination model.

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Corrective Measures4. Illegal mining.

– Stakeholder Forums, established by the Minister, continue to implement measures to combat the illegal mining activities in the respective provinces.

– Minister convened stakeholder meetings and site visits to draw the public’s attention to the extent of illegal mining activities in the Roodepoort area and ensure that measures are implemented to ultimately eliminate the illicit activities.

– Collaborate with the relevant law enforcement agencies to ensure that there is a national effort to combat illegal activities.

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Programme 3Mineral Regulation

PurposeTo regulate the mineral and mining sector to ensure economic development, employment and ensure transformation and environmental compliance.

ObjectiveTo transform the mineral and mining sector into one that competitively contributes to the sustainable development in the country.

Key Achievements1. Promote Job creation

– Implemented 41 Small Medium Micro Enterprise(SMME) development projects. These projects were implemented in rural areas where mines operate

– Implemented 94 Local Economic Development (LED) projects towards sustainable job creation

2. Implement transformation policies/legislation– The department continued with consultations /engagements with

communities and held industry workshops.– Approved a total number of 56 new mining projects with a

potential to create 11052 number of long term core mining jobs with a projected expenditure mines of R 7 272 billion.

3. Monitor and enforce compliance– 2 595 different types of inspections were done to monitor and

enforce compliance

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Key Achievementsbreakdown per province

REGIONS NW GP FS NC WC KZN EC LP MP TOTAL

No. of consultation/Engagement /industry workshops 9 7 13 10 4 16 37 24 29 120

No. of inspections 361 182 246 280 237 209 133 458 438 2 544

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Key AchievementsInterventions to address socio economic issues in provinces: –Free State: Finalised the implementation of community infrastructure projects which includes among others the crèche in Zamdela.–N Cape: Intervened in community conflicts within Schmidsdrift, Namaqualand as well bulk infrastructure projects within Joe Morolong municipality. Also new Manganese projects including Kudumane, with great potential for job creation and injection of further investment into the N Cape economy. –N West: Launched infrastructure projects within the Bojanala district (Rustenburg) – schools, platinum housing projects. Supporting government in implementation of the Presidential package. Resolved a number of challenges facing Taung – their Prospecting Right issues, etc.

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Key AchievementsInterventions to address socio economic issues in provinces: –KZN: Established a task team that works on the RBM issues. Situation stabilised and socio economic projects launched. The recent ones being housing projects at four communities of Mbonambi, Sokhulu, Dube and Mkhwanazi.

–Mpumalanga: Held a successful Mining Lekgotla in November 2012, comprising stakeholders in Mpumalanga.

• A pledge was signed by stakeholders and implementation is ongoing.

• One key outcome of this Lekgotla was a need to coordinate implementation of SLPs at a district level, as well as strengthening consultation and participation of traditional leaders in mining issues.

–Limpopo: Conducted several community engagements with traditional leaders within greater Sekhukhune, to address ongoing mining and community conflicts and to also implement the socio economic development interventions in support of the Presidential package.

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Key AchievementsInterventions to address socio economic issues in provinces: –Gauteng: Launched a number of socio economic projects as well as approval of some clay, gold and gravel mining projects. –Western Cape: Worked with provincial government and City of Cape Town in addressing Land Use Provincial Ordinance(LUPO) challenges faced by mines. Put in place a Task Team and developed proposals on mapping the LUPO process as well as approval of some new mining projects with job creation and economic potential. –Eastern Cape: Fast tracked the Implementation of SLP project within Mbizana, which was launched during October 2013 as well as others within Libode , which are labour sending areas. –The Department continued to work with all the Stakeholders in the mining industry to avoid job losses.

Key AchievementsProgress with the streamlining of administrative processes: –SAMRAD was commissioned in April 2011, with a view of ensuring transparency, and accountability in decision making–Development of the system is an ongoing, and critical for strategic mineral resources management. –Improvements and challenges are being addressed on an ongoing basis.–The system was initially launched as an application platform, and got upgraded to include application modules for Mining Rights, ancillary applications such as Section 11, 102, etc.

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Key AchievementsProgress with the streamlining of administrative processes: –System has addressed three critical risks to the integrity of regulatory framework, and perceptions of impropriety:

• Perception of tampering with records by officials• Order of receipt of applications• Land availability, which is freely available at time of application. • Modules to enable project mineral resources management,

including project management of a Right or Permit. –Challenges faced by small operators around access to system from rural and remote areas- being attended to, through use of stand alone computer at regional offices as well as community workshops on licensing.

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Key Challenges

1. The continuous need to increase capacity to enforce compliance at all mines.

2. Global economic challenges and the industrial relations challenges resulted in fewer jobs created.

3. Few applications from HDSA controlled entities as a result of among others , the barriers of entry such as funding .

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Corrective Measures1. Strengthening capacity of regional offices in respect of:

– Social and Labour Plans(SLP), – Mine Economics, – Transformation components and monitoring and evaluation units.

• Further development of SAMRAD to improve efficiency. This will include alignment with other IT systems, including revenue management and statistics collection.

• Increase the rate of enforcement and compliance inspections and impose statutory notices where companies are found to be non –compliant

• Create capacity in anticipation to implement the integrated licensing system in respect of mining , environment and water authorisation , to improve the ease of doing business.

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Programme 4Mineral Policy & Promotion

Purpose To formulate mineral-related policies and promote the

mining and minerals industry of South Africa, making it attractive to investors.

ObjectiveThrough research, provide relevant information to enhance global competitiveness, review policies and formulate legislation to achieve transformation and attract new investment into South Africa’s minerals industry.

Key Achievement1. Ensure transformation in the sector

– MPRDA and MHSA Bills drafted and certified2. Promote investment in the mining sector

– Strategic and technical partnerships established( e.g. Russia MOU on Platinum Group Metals development).

– Continuation of promotional activities e.g. Publications– Streamlining of licensing processes incl. DMR, DEA and

DWA.– Established the Platinum Task Team to jointly respond on

the challenges facing the sector. – Undertook a Policy Impacts study for investment in

mining.

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Key Achievements

3. Promote sustainable resource use and management

– Rehabilitated 13 derelict and ownerless mine sites

– Completed the strategy for management of mine residue deposits

– Completed the construction of the Florida Lake Canal in respect of ingress control for AMD

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Key challenge

The key challenge is to to attract and retain skills

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Corrective Measure

Collaborate with HR and industry to introduce innovative skills development programmes and also attracting the relevant categories of skills

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Concluding remarks1. The Department assisted by the Audit

committee will monitor closely the implementation of management action plan to resolve the Auditor General findings.

2. In addition to the programmes that have been highlighted, there are other projects that the department is involved in to pursue government and national objectives.

3. These projects include among others:

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Concluding remarks– Initiatives to stabilise the mining industry( peace

and stability framework as well as the Deputy President led framework for sustainable mining industry)

– Support to the Presidential package in respect of improving housing and living conditions of mine workers and improving socio-economic conditions around mining communities.

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Concluding remarks– Shale Gas: A report on the potential , as well as the

socio-economic and environmental impact assessment was concluded. Regulations were approved by cabinet for public comments.

– Coal resources and reserves study was completed– South Africa as Chair of the Kimberly Process.– Preparations to host the International Geological

Congress.

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Concluding remarks3. The Department would like to thank

Honourable Members for bringing to our attention, issues as raised during oversight visits, and we would like to assure Honourable Members that these will continue to receive our priority in our activities.

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THANK YOU.

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