ANNUAL REPORT PRESENTATION TO THE PORTFOLIO COMMITTEE FINANCIAL YEAR (2012/2013)

1. ANNUAL REPORT PRESENTATION TO THE PORTFOLIO COMMITTEEFINANCIAL YEAR (2012/2013) Date: Wednesday, 16 October 2013 Venue: 90 Plein Street, Cape Town

2. Presentation outline • Vision and Mission • Annual Financial Statements • Branch Performance Information • Conclusion

3. Vision and Mission Vision 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.

4. Annual Financial Statements Financial Performance

5. Overall Financial Performance • 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 • Since 2010/2011 the amount not spent has been consistently below 1%, the variance relates to vacancies as at year end.

8. Compensation of Employees • Staff cost increased by 8.6% from R352.5 million in 2011/2012 to R395.9 in 2012/2013 • These also represents an increase at an average rate of 10.6% over the years from R326.5 million in 2010/11. • The main reason for the increase is the normal salary adjustments as well as the filling of posts.

9. Goods and Services • Goods and Services expenditure increased from R200 million in 2010/11 to R227.9 million in 2012/13 at an average rate of 6.7% as a result of inflationary adjustments. • Travel costs have increased compared to 2011/12 as a result of increased compliance inspections .

10. Transfer Payment to Entities Purpose of transfer Recipient • 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

11. Statement of Financial Position

12. Statement of Financial Position • The asset base decreased by 46.44% from last year and is attributable to the reduction in the bank balance and the receivables. • The 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.

13. Annual Financial Statements Response to the Report of the Auditor General

14. Report of the Auditor General • The report of the Auditor General was received and accepted by the department. • Action plan was put in place and the issues identified will be addressed in the following categories as outlined in the report. • Report of the Financial Statements • Report on other legal and Regulatory Requirements • Other Reports

15. Report of the Financial Statements • Departmental Revenue receivable • Revenue comprise of royalties and prospecting fees. • The Department continued to collect royalties from the holder of old mining rights or unconverted used old order rights. The responsibility to collect royalties in terms of the new order rights is with South African Revenue Services (SARS) . • All money collected were recorded as revenue and disclosed appropriately in the financial statements. • The department could however not disclose the correct amount outstanding from the holders of rights. • The route cause ranges from human resources capacity, accountability and system related issues. A short term, medium to long term solution is sought to improve the processes .

16. Report of the Financial Statements • Departmental Revenue receivable • Short term • Documenting all standard internal control processes. • Defining roles and responsibilities. • Daily and monthly reconciliations. • Obtaining capacity to correct the balances. • Improved accountability mechanism • Medium to long term • Increasing and building capacity in financial management. • Integrated systems.

17. Report on other Legal and Regulatory Requirements • Pre-determined Objectives • The Department will strive to achieve 100% of its targets • Improvement in Financial Reporting • Internal control processes for the disclosure note will be documented and reconciled on a monthly basis • Human Resource Management • New processes were put in place to deal with payment of overtime that exceed the prescribed threshold. • The department has a challenge of high turnover rate. The department will continue to fill the vacant posts. The post of CFO has since been filled and other posts are being filled • Enforcement of compliance to the MPRDA • Increase the rate of enforcement and compliance inspections and impose statutory notices where companies are found to be non –compliant

18. Other reports Investigations • Outcome of the investigation completed in relation to irregular and fruitless expenditure was handed over to the competent authority for further action.

19. Performance Information Performance per Branch

20. Overview of Performance Information • 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 • The achievements, challenges and corrective measures are outlined from pages 13 to 68 of the annual report.

21. Programme 1Financial Administration Branch Purpose: To provide strategic and administrative support services to the Ministry and the Department

22. 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.

23. Key Challenges • Educate and empower stakeholders • Although in monetary terms the irregular expenditure has decreased by 61% , the department still need to improve on the matter especially the number of cases reported. • 94.97% of the invoices were paid within 30 days, the department intend to improve this to 100%. • Filling of vacancies • Key senior management posts became vacant during the year under review

24. Corrective Measures • Educate and empower stakeholders • The Department will continue to raise awareness on internal control processes to improve compliance with laws and regulations. • Sanctions will be imposed on transgressions with processes • Filling of vacancies • CFO posts has since been filled, and other remaining posts are being filled.

25. Programme 1Corporate Services Branch Purpose: To provide strategic and administrative support services to the Ministry and the Department

26. Key Achievements • 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.

27. Key Achievements 3. Develop and review internal processes, guidelines and policies • Reviewed 17 policies and mapped 19 business processes.

28. 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

29. Key Challenges 1. 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 inspectors 3. Ensure compliance with HR legislation • Financial disclosures submitted within prescribed time frames

30. Corrective Measures 1. 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.

31. 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.

32. Key Achievements • 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. • 7% reduction in occupational diseases reported by the mines. • Audits and Inspections were exceeded by 6% and 8% respectively.

33. Key Achievements 2. 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.

36. Occupational Safety

37. Occupational Safety

38. Occupational Safety

39. Key Challenges • Occupational Safety. • Occupational Health. • Skills Development. • Illegal mining.

40. Corrective Measures • 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.

41. 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.

42. Corrective Measures 3. Skills Development • Collaborate with MQA to enhance skills development including on ABET, bursaries, artisans, artisan aides and jewelry making. • Implement the Certificate of Competency Examination model.

43. Corrective Measures 4. 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.

44. Programme 3Mineral Regulation Purpose To regulate the mineral and mining sector to ensure economic development, employment and ensure transformation and environmental compliance. Objective To transform the mineral and mining sector into one that competitively contributes to the sustainable development in the country.

45. Key Achievements • Promote Job creation • Implemented 41 Small Medium Micro Enterprise(SMME) development projects • Implemented 94 Local Economic Development (LED) projects towards sustainable job creation • Implement transformation policies/legislation • The department continued with consultations /engagements with communities and held industry workshops. • Monitor and enforce compliance • 2 595 different types of inspections were done to monitor and enforce compliance

46. Key Challenges • The continuous need to increase capacity to enforce compliance at all mines. • Global economic challenges and the industrial relations challenges resulted in fewer jobs created. • Less applications from HDSA controlled entities as a result of among others , the barriers of entry such as funding .

47. Corrective Measures • Strengthening capacity of regional offices in respect of: • all Social and Labour Plans(SLP), • Mine Economics, • Transformation components and monitoring and evaluation units. • Further develop SAMRAD to improve efficiency • 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.

48. 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. Objective Through 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.

49. Key Achievement • Ensure transformation in the sector • MPRDA and MHSA Bills drafted and certified • 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.

50. 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