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Briefing to the Portfolio Committee on Mineral Resources 2014/15 Annual Report

Briefing to the Portfolio Committee on Mineral Resources 2014/15 Annual Report Date: Wednesday, 14 October 2015 Time: 09h00 – 17h00. PRESENTATION OUTLINE. Mandate Vision, mission and values Structure of the Department Current Status of the Mining I ndustry P erformance

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Briefing to the Portfolio Committee on Mineral Resources 2014/15 Annual Report

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  1. Briefing to the Portfolio Committeeon Mineral Resources 2014/15 Annual Report Date: Wednesday, 14 October 2015 Time: 09h00 – 17h00

  2. PRESENTATION OUTLINE • Mandate • Vision, mission and values • Structure of the Department • Current Status of the Mining Industry Performance • Annual Financial Statements • Programme Performance • Programme 1: Corporate Services • Programme 1.1: Financial Administration • Programme 2: Mine Health and Safety • Programme 3: Mineral Regulation • Programme 4: Mineral Policy and Promotion

  3. MANDATE Constitutional mandate The Departments mandate is found in section 24 of the Constitution of South Africa (Act No. 108 of 1996). Legislative mandate Key legislation include Mineral and Petroleum Resources Development Act (Act No. 28 of 2002) and the Mine Health and Safety Act (Act No. 29 of 1996) which provide the regulatory framework for the promotion and regulation of the industry, as well as the equitable access to and the sustainable development of the nation’s mineral resources and related matters.

  4. VISION Vision 2019 A globally competitive, sustainable and meaningfully transformed mining and minerals sector. Vision 2030 A leader in the transformation of South Africa through economic growth and sustainable development by 2030.

  5. MISSION AND VALUES Mission Promote and regulate the minerals and mining sector for transformation, growth and development, and ensure that all South Africans derive sustainable benefit from the country’s mineral wealth. Values • Batho Pele (people first) • Ethics • Honesty • Integrity • Accountability • Professionalism • Ubuntu

  6. DMR STRUCTURE

  7. CURRENT STATUS OF THE MINING INDUSTRY : SELECTED MINERAL COMMODITY PRICES 1994-2015 • There was sustained increase in prices from 2005- 2011/2012. • Since then prices of key commodities have been declining. • From November 2013 to April 2015: • Iron ore price fell 62% • Coal price fell 30% • Platinum price fell 19% • Gold price fell 6% Source: TIPS

  8. CURRENT STATUS OF THE MINING INDUSTRY PERFORMANCE The Rand has recently depreciated against the US Dollar and Euro. The depreciation of the rand has to some extent offset the declining commodity prices.

  9. CURRENT STATUS OF THE MINING INDUSTRY : MINING (TAX) REVENUE CIT- Corporate Income Tax • Post 2008, mining tax revenue has been fluctuating but it seems to average R20 billion per year. • Mineral and petroleum royalties for the first quarter of the 2015/16 fiscal year amounted to R1.5 billion. That is R1.4 billion, or 49.2 per cent lower than the same quarter in the 2014/15 fiscal year.

  10. CURRENT STATUS OF THE MINING INDUSTRY PERFORMANCE

  11. CURRENT STATUS OF THE SOUTH AFRICAN MINING INDUSTRY Since 2004 there has been a steady increase in mining contribution to GDP

  12. CURRENT STATUS OF THE MINING INDUSTRY PERFORMANCE

  13. ANNUAL FINANCIAL STATEMENT This section can be read in conjunction with pages 86 to 138 of the tabled Annual Report

  14. DEPARTMENTAL RECEIPTS

  15. DEPARTMENTAL RECEIPTS Revenue collection amounted to R46.2 million against the estimated R45.1 million for the 2014/15 financial year. • Included in interest, dividends and rent on land is the revenue from prospecting fees which amount to R31.8 million and constitute 69% of total revenue received. The amount under this item reduced by R73 million from 2013/14 because the Department no longer collects royalties revenue. • Over collection of R1.094 million is attributed to disposal of capital assets that was not anticipated when the revenue estimates were concluded. • The Department has continued to improve systems to ensure more efficient and effective collection. The implementation of the revenue management system will ensure achievement of the goal.

  16. APPROPRIATION STATEMENT – OVERALL EXPENDITURE • The Department spent R1.475 billion or 99.97% of the adjusted appropriation of R1.476 billion for 2014/15 financial year. • An amount of R384 000 was surrendered to National Treasury at the end of the financial year.

  17. APPROPRIATION STATEMENT – PROGRAMME EXPENDITURE

  18. APPROPRIATION STATEMENT – ECONOMIC CLASSIFICATION EXPENDITURE

  19. APPROPRIATION STATEMENT – PROGRAMME EXPENDITURE The Department spent R1.475 billion or 99.97% of the adjusted appropriation of R1.476 billion for 2013/14 financial year. An amount of R384 thousands was surrendered to National Treasury at the end of the financial year: • R484.619 million was spent on compensation of employees • R252.262 million was spent on goods and services. • R723.733 million transfer to entities was fully spent in line with its purpose. • R14.543 million was spent on payments for capital assets.

  20. COMPENSATION OF EMPLOYEES • Compensation of employees is comprised of salaries and related benefits. • The expenditure increased from R435.251 million in 2013/2014to R484.619 million in 2014/2015. • The main reasons for the increase include normal salary adjustments.

  21. GOODS AND SERVICES • Goods and Services comprise capital assets less than five thousand rands, computer services and other operational costs. • The expenditure increased from R249.551 million in 2013/14to R252.262 million in 2014/15 mainly due to inflationary adjustments. • The cost drivers under goods and services are: • Operating lease • Travel and subsistence • Expenditure on the following items reduced as compared to 2013/14 due to cost containment measures applied in the Department: • Travel and subsistence • Catering • Consultants • Stationary

  22. TRANSFERS TO ENTITIES

  23. STATEMENT OF FINANCIAL POSITION

  24. STATEMENT OF FINANCIAL POSITION • A decrease on current assets is attributed to the balance on cash and cash equivalents: - Cash not cleared at the end of 2013/14 was cleared in the 2014/15. • A decrease in liabilities is ascribed to: • Unspent funds to be surrendered to the Revenue Fund were less as compared to the previous financial year; and • Most of the revenue collected in 2014/15 was paid over to National Revenue Fund (NRF) whereas in the 2013/14 there was a large amount under revenue and receipts that was not paid over to NRF.

  25. AUDITOR GENERAL REPORT • The report of the Auditor General was received and accepted by the Department. • The Department has successfully implemented the recommendations of the Auditor General from the previous financial year. • The Department will continue to improve the internal controls to ensure reliable financial reporting and compliance with legislation.

  26. AUDITOR GENERAL REPORT • Issue: Material misstatements of revenue, lease commitments and leave provisions. Improvement plans: • Revenue: Full implementation of the new revenue management system. • Lease commitments: Lease commitments will be accounted for as per the modified cash basis standard. • Leave provisions: Quarterly reconciliation of leave credits.

  27. AUDITOR GENERAL REPORT Progress on action plan: • There are delays in the implementation of the revenue management system due to challenges experienced on the calculation of interest, once the problem is resolved the system will go live. • Lease commitments are updated as per the modified cash basis standard. • Reconciliation of leave credits were done for the past two quarters of the current financial year.

  28. AUDITOR GENERAL REPORT 2. Issue: The preference point system was not applied in some procurement of goods and services above R30 000. Improvement plans: • Strengthen controls on procurement of goods and services including pre-approved contracts. Progress on action plan: • Procurement of goods and services is subjected to thorough assessment, including pre-approved contracts.

  29. PERFORMANCE INFORMATION PROGRAMMES 1 - 4

  30. CORPORATE SERVICES Purpose To enable the Department to deliver on its mandate, by providing strategic support, management services and administrative support to the Department and Ministry.

  31. PROGRAMME 1 CORPORATE SERVICES This section may be read in conjunction with pages 24 to 33 of the tabled Annual Report

  32. CORPORATE SERVICES ACHIEVEMENTS Communicate DMR programmes and policies • Successful media briefings, public participation engagements and positive and balanced newsletters published and broadcast. • Implementation of internal communication strategy. Contribute to skills development • 19 mining career awareness initiatives were held for communities and universities. • 23 bursaries were acquired for youth to study towards mining related qualifications.

  33. CORPORATE SERVICES ACHIEVEMENTS … Sustainably develop vulnerable groups • 6Projects have been facilitated for vulnerable groups Develop and review internal processes, guidelines and policies • Reviewed 10 guidelines / policies / Operational Level Agreement and mapped 15 business processes. Ensure compliance with HR legislation • 100% Financial disclosures submitted within prescribed time frames Ensure Implementation of National Vetting Strategy • All new employees were screened as well as service providers and contractors. Target for vetting of files was also exceeded • All Health, Safety and Wellness programmes were implemented.

  34. CORPORATE SERVICES ACHIEVEMENTS … Deputy Minister (DMR), Premier (Northern Cape) and Chairperson (Kalagadi Manganese) handing over a house to Gogo Minah Seatlhodi on 21 August 2014 in Kathu, Northern Cape Launch of DMR and SASOL Artisan Learnership Project in Secunda

  35. CORPORATE SERVICES ACHIEVEMENTS … Launch and awarding of certificates to the Women led Cooperative, Kathu, Northern Cape

  36. CORPORATE SERVICES CHALLENGES Attract, develop and retain skills • Employment Equity targets for designated groups still a challenge. • Retention of skills still a challenge. • Vacancy rate of 10% not achieved.

  37. CORRECTIVE MEASURES Achievement of EE targets: • Targeted recruitment and advertising will be used to attract designated groups. • Retention of Skills: • Retention mechanisms will be put in place e.g. communicate the benefit of working in the Public Service through workshops. • Accelerate the filling of posts.

  38. PROGRAMME 1.1FINANCIAL ADMINISTRATION This section may be read in conjunction with pages 33 to 35 of the tabled Annual Report

  39. FINANCIAL ADMINISTRATION Purpose To enable the Department to deliver on its mandate by providing strategic support management services and administrative support to the Department and the Ministry.

  40. FINANCIAL ADMINISTRATION ACHIEVEMENTS • Provide efficient services to internal and external customers: • 99.5% achievement of system availability in 2014/15 against a target of 95%. • 97.9% achievement of defined turnaround times against a target of 90%. • Implement processes and systems: • 100% achievement of planned targets of the Master Systems Plan.

  41. FINANCIAL ADMINISTRATION ACHIEVEMENTS • Manage financial resources: • Improved cash flow management resulting in the Department surrendering R384 000.00 in 2014/15 compared to R6.6 million in 2013/14. • Promote corporate governance: • Achieved 100% implementation of external audit as compared to 69% in the 2013/ 14.

  42. FINANCIAL ADMINISTRATION CHALLENGES • Provide efficient services to internal and external customers; • 99.6% invoices were paid within 30 days. Corrective measures: • Controls have been strengthened to minimise cases of late payments.

  43. PROGRAMME 2 MINE HEALTH AND SAFETY (MHSI) This section may be read in conjunction with pages 36 to 41 of the tabled Annual Report

  44. MINE HEALTH AND SAFETY Purpose To execute the Department’s mandate to safeguard the Health and safety of mine employees and people affected by mining activities.

  45. MHSI ACHIEVEMENTS • Promote Health and Safety • 26% improvement in all fatalities from 96 in 2013/2014 to 71 in 2014/2015. • Lowest fatalities and injuries ever recorded during 2014/2015. • Platinum and other sectors have recorded a reduction in fatalities of 41% and 32% respectively. • 40% and 22% reduction in trackless mobile machinery and fall of ground fatalities respectively. • No disaster-type accidents were reported during the 2014/2015 reporting period.

  46. MHSI ACHIEVEMENTS… Promote Health and Safety… • Occupational diseases reported by coal and gold sectors reduced by 17% and 15% respectively. • Silico-Tubercolosis, silicosis and coal workers pneumoconiosis (CWP) have reduced by 27, 26% and 25% respectively. • 523 audits conducted and 8 555 inspections conducted, exceeded set targets. • 62 tripartite workshops conducted, target was 40. • Hosted the Mine Health and Safety Tripartite Summit in collaboration with Mine Health and Safety Council.

  47. MHSI ACHIEVEMENTS… • Human Resource Development • 7 assistant inspectors are undergoing inspector training at various regional offices. Two attained their Government Certificate of Competency (GCC) and have been absorbed as qualified inspectors. • 47 learner inspectors placed at mines, in collaboration with Mining Qualifications Authority (MQA), for experiential training. • 27 students issued with bursaries to study for mining, electrical, mechanical engineering and mine surveying qualifications. • 51 officials attended technical and administrative courses.

  48. NIOH – National Institute of Occupational Health.

  49. OCCUPATIONAL SAFETY

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