PRESENTATION OF THE DEPARTMENT OF MINERALS AND ENERGY'S 2004/5 ANNUAL REPORT AND FINANCIAL STATEMENTS
SLIDE 1 AND 2 - WELCOME
SLIDE 3 - PRESENTATION OUTLINE
SLIDE 4 - INTRODUCTION OF THE TEAM
SLIDE 5 - DIRECTOR-GENERAL'S OVERVIEW
The Department's strategic direction.
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. As at the beginning of the year under review, a need was identified to refocus our efforts on the implementation of the existing policies.
In November 2004, the above strategy was reviewed to ensure alignment with Government priorities. This process took into account a call from Government for macro-economic reform policies focussing on:
As a result, the Department engaged in the process of aligning its structures, systems and processes to the new strategy.
Policy Implementation Initiatives
1. The Precious Metals and Diamond Amendment Bill
2. The Minerals and Energy Amendment Bill
3. The National Energy Regulator of South Africa (NERSA)
4. Petroleum Products Amendment Act
5. New Generation Capacity
2004/5 Financial Performance
The budget for the year was R1,945bn and the total amount spent at year end was R1,859bn (96%).
% of budget
2. Promotion of Mine Health and Safety
3. Mineral Development
4. Energy Management
5. Transfers to Public Entities
Transfers to Public entities included R1,260bn for the Electrification programme.
The Auditor-General's report
The report was not qualified. Attention has been given to areas raised as emphasis of matter. These include improvement on: asset management, revenue management (collection of revenue/royalties) and the management of rehabilitation funds.
The process of transferring the LMT assets to National Treasury is at the final stage. The transfer will be effected at the February 2006. The net worth of LMT is around R220m.
Improving on service delivery
The restructuring of the Mineral Development Branch into two separate branches was effected during the year to address the implementation of the MPRDA and improvement of service delivery.
Other areas of restructuring were the Finance component and the consolidation of the Information Technology and Information Management components.
SLIDE 6 - ADMINISTRATION
Total Budget spent for the year:
Bursaries R3 332 772
Short Courses R2 843 174
Computer Courses R1 706 820
ABET R 1800
Interns employed in the Department:
Total enrolled 230
Permanent positions in the DME 58
On contract in DME 23
Employment elsewhere 41
As at the end of the year under review, employment equity in terms of race stood at 67% Black and 33% White compared to 24% Black and 75% White in the year 1994. In terms of gender, Males represent 42% and Females 58% compared to 61% and 39% respectively in 1994.
At senior and middle management level, Female representation stood at 24% against 0% in 1994.
Scarce skills strategy
The Department has developed a comprehensive strategy to recruit and retain scarce skills. This includes payment of scarce skill allowance to certain categories of skills and the creation of professional post coupled specific training interventions to address skills shortages in the Department.
Performance management and development
A performance management and development systems has been implemented in line with the strategic objectives of the Department with the view of improving service delivery.
SLIDE 7 - PROMOTION OF MINE HEALTH AND SAFETY
Policy and legislative framework
The Inspectorate continues to give support to the Mine Health and Safety Council and its committees to develop subordinate legislation for the Mine Health and Safety Act. To date, 875 project milestones out of 922 identified have been finalised, which reflects an achievement of 95%. The process of completing this sub-ordinate legislation initially scheduled for March 2005 was postponed to June 2005 due to consultative processes taking longer than expected.
With regard to occupational Health, data collection and analysis is still a concern, control at source is a major challenge.
However, best practice/benchmarking information is starting to emerge with more visible commitments to addressing health issues.
Fatality rates are improving steadily but not fast enough. Injury data on serious accidents is made available in less than 14 days.
Monitoring - performance against targets
The industry met the safety performance targets during the 2004 calendar year, with results that reflect an overall annual decrease of 14% for fatalities and 7% for disabling injuries.
Audits and Inspections:
Mines are audited in order to determine the effectiveness of their safety and health management systems. A total of 3311 system audits were conducted representing 79% of the planned 4190 ( a shortfall of 1% on the 80% target).
In order to monitor compliance to safety and health requirements, the inspectorate conducts inspections of operations. A total of 11 380 inspections were conducted (representing 88% target achievement against the planned 80%).
The major problem identified through the audits and inspections is poor or lack of implementation measures necessary to safeguard safety and health at mines, ill discipline and a poor safety and health culture.
SLIDE 8 - MINERAL DEVELOPMENT
Implementation of the MPRDA
The MPRDA was successfully implemented on the 1 ' May 2004. However, when this new dispensation was there was slow progress mainly in the conversion of mining rights due to non-adherence of companies to the requirements of the law that is inclusive of the Broad Based Socio-Economic Empowerment Charter. The DME is presently finalizing technical amendments to the MPRDA in order to iron out some of the issues that are seen as hampering the
interpretation of the Act.
Management of mine environment and rehabilitation
95% of licensed mines are operating with approved environmental management programs. The remaining 5% are in the process of being finalized.
The database for all known ownerless and derelict gold and asbestos mines is completed. CSIR Miningtek was contracted to fast track the finalization of the database for the other derelict mines. Specifications are being developed that will help in the identification of high priority target areas that will need to be rehabilitated first. Three public institutions, namely, the Council for Geoscience, Mintek and CSIR-Miningtek are contracted as per their expertise to help the DME in resolving the legacies and at the same time investigate and implement pro-active methods in avoiding the mining sector in creating more legacies. Affected local governments are now being involved in these endeavours.
Facilitation of integrated rural development and urban renewal
Starting 1st May 2004 the MPRDA compels all new applicants to align their socio-economic developments with integrated development plans (IDP's) when converting their mining rights. This is ongoing, but the impact will only be felt as more companies convert their rights within the prescribed 5-year implementation period.
An efficient regulatory and registration system is in place and all conversions of old order rights are being processed
Enhance global competitiveness, and attract new investments in to the country's mineral industry
Ten directories specifying contact details of investors in the South African Mining industries per commodities were completed and circulated to interested parties. Seventeen commodity specific reports that encourage investment and also state the current production trends were also finalized and published.
Development of the National Mining Promotion System
Phase II, which is the integration of mineral development's databases into the NMPS was delayed in order to complete all amendments to Phase I and for also the inclusion of a tracking system. Funding necessary for Phase II was partly used for these above amendments.
Challenges in the participation of HDSAs in the industry
Six new projects were initiated during the financial year and a further support was given to 9 existing projects which were at different levels of operation. One project, Mzintlava in the Eastern Cape is now fully operational.
SLIDE 9 - ENERGY MANAGEMENT
(Electricity, Nuclear, Hydrocarbons and Energy Planning)
A draft Renewable Energy Strategy, incorporating the Subsidy Scheme has been compiled, taking into account the financing mechanisms, and cabinet decision on the way forward with biofuels. It is envisaged that the strategy will be finalised by the end of the 2005/6 financial year.
Darling National Demonstration Wind Farm
The Environmental Impact Assessment has now been finalised with the Minister of Environmental Affairs and Tourism who upheld the positive Record of Decision. The Swartland Municipality has approved the change of land use and Eskom and Darling Wind Power have signed the Power Wheeling Agreement. The City of Cape Town and RED 1 are preparing the Power Purchase Agreement for ratification by the City of Cape Town by December 2005.
The Designated National Authority (DNA)
The DNA was established in 2004 for the implementation of the provisions of the Kyoto Protocol and the United Nations Framework Convention on Climate Change. Its main function is to regulate Clean Development Mechanism (CDM) activities in South Africa
Licencing framework for the petroleum industry
The liquid fuel industry will for the first time be licensed. The objective of the licensing framework as detailed in the Petroleum Products Amendment Act, 2003 is the promotion of an efficient manufacturing, wholesaling and retailing petroleum industry.
Integrated National Electrification Programme (INEP)
Total spent on Grid and non-grid electrification was R1, 066bn and R236 916.00 respectively against a budget of R833 312 and R237 000.
Security of Supply
To ensure the security of supply in the Electricity Supply Industry, the DME is procuring 1000 MW Open Cycle Gas Turbines (OCGTs) peaking power plant. These power plants will be commissioned in the last quarter of 2008. The Request for Qualification (RfQ) was issued and followed by the bidders conference, which was also successful. Eleven bids were received and five were short-listed. The Request for Proposals is currently being finalised and will only be issued to the short listed bidders. The Environmental Impact Assessment for both sites (Kwa- Zulu Natal and Eastern Cape provinces) is underway.
Restructuring of the electricity industry
The schedule set out in the Blue Print of establishing wall to wall six financial viable REDs was well on track, with all REDs launched their RED Committees by March 2005 in order to meet the 2007 deadline. RED 1, anchored by the City of Cape Town was successfully formed on the 1st July 2005 as planned.
Strategy to deal with problem of maintenance in the EDI and backlog was developed and some interventions were suggested on how to overcome these challenges including funding plan to improved quality of supply in EDI.
Legislation relating to Electricity Regulation and EDI Restructuring
Legislation regulating Electricity Industry i.e. Electricity Regulation Bill is at the Parliamentary Process for deliberation and approval. In terms of sequencing, it was decided that the Electricity Regulation Bill will need to be passed first, in order to clarify definitions, among others definition of reticulation. In terms of the Constitution, the electricity reticulation is a municipal function, over which the municipalities have executive authority. The Electricity Regulation Bill attempts to define reticulation, as it is applied to the electricity regulation.
The Department has commenced consultation process with stakeholders on the framework of the EDI Restructuring Bill.
The EDI Restructuring Bill is expected to be finalized and tabled in Parliament in March 2006.
Free basic electricity
The Department provides ongoing technical support to Municipalities to roll out free basic electricity, particularly in rural areas.
Radioactive waste management policy and strategy
Following publication for comments, eight nuclear capacity building workshops were planned for April/May 2005. These workshops were not part of the original schedule and as such, finalisation of the Policy and Strategy was delayed. The purpose of the Radioactive Waste Management Policy and Strategy is to establish a comprehensive radioactive waste governance framework according to national and international principles.
Physical security of nuclear installations
Nuclear Security has been a major concern since 9/11 that required enhancement of security for Nuclear Installations, Nuclear material in storage, use and transit as well as the related technology. Consequently, the need was identified to develop more effective security measures for all nuclear installations and material to protect them against adversaries.
The Department of Minerals and Energy's draft National Nuclear Disaster Management Plan has been prepared. This plan addresses all aspects and responsibilities of the DME as required by the Disaster Management Act (Act No. 57 of 2002). The Department continued to chair the Emergency Planning Steering and Oversight Committee at the Koeberg Nuclear Power Station.