PRESENTATION TO THE PORTFOLIO COMMITTEE Wednesday, 19 March 2003 DEPARTMENT OF MINERALS AND ENERGY Minerals and Energy for Development and Prosperity PRESENTATION TO THE PORTFOLIO COMMITTEE Wednesday, 19 March 2003 PRESENTATION BY: Ms M Hermanus Acting Director-General

SUMMARY OF THE PRESENTATION Slogan of DME. Mandate of DME Vision of DME Mission of DME 2002/03 Key Strategic Objectives. Mine Health and Safety Mineral Development Hydrocarbons and Energy Planning Electricity and Nuclear. Minerals and Energy Budget. Restructuring of the Department. Conclusion. End. Department of Minerals and Energy Minerals and Energy for Prosperity and Development 2

“MINERALS AND ENERGY FOR DEVELOPMENT AND PROSPERITY” SLOGAN “MINERALS AND ENERGY FOR DEVELOPMENT AND PROSPERITY” Minerals and Energy for Prosperity and Development Department of Minerals and Energy 3

MANDATE Minerals and Energy for Prosperity and Development PROVISION OF SERVICES FOR EFFECTUAL TRANSFORMATION AND GOVERNANCE OF MINERALS AND ENERGY SECTORS, FOR SUSTAINABLE DEVELOPMENT THEREBY IMPROVING THE QUALITY OF LIFE. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 4

VISION Minerals and Energy for Prosperity and Development SUSTAINABLE DEVELOPMENT AND GROWTH THROUGH MINERALS AND ENERGY RESOURCES FOR THE BENEFIT OF ALL SOUTH AFRICANS. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 5

MISSION Minerals and Energy for Prosperity and Development TO ENSURE RESPONSIBLE EXPLORATION, DEVELOPMENT, PROCESSING, UTILITSATION AND MANAGEMENT OF MINERALS AND ENERGY RESOURCES. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 6

Department of Minerals and Energy 2002/03 KEY STRATEGIC OBJECTIVES Position Minerals and Energy industry for global competitiveness. Contribute towards effectual and sustainable development of Minerals and Energy Resources. Govern these industries to be safe and healthy working environments. Address past imbalances to promote equitable redistribution of benefits from exploitation of Minerals and Energy Resources. Formulate and implement an overall minerals and energy policy to ensure optimum utilisation of minerals and energy resources. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 7

MINE HEALTH AND SAFETY MS HERMANUS CHIEF INSPECTOR OF MINES Minerals and Energy for Prosperity and Development Department of Minerals and Energy 8

MAJOR ACHIEVEMENTS IN 2002/03 Implementation of Public Service Regulations. Implementation of the Minimum Information and Security Standard (MISS). Alignment of structure with objectives and priorities of the Department. Developing and maintaining effective policy, legislation and enforcement capacity in the Mine Health and Safety Inspectorate. Reducing occupational injuries and ill health. Limiting the impact of HIV/Aids in the Mining industry. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 9

STRATEGIC OBJECTIVES AND PRIORITIES 2003/04 Establish national policy, legislation and systems to regulate, monitor, audit, train and provide technical support to ensure health and safety in the mining industry. Comprehensive policy and legislative framework to support the Mine Health and Safety Act. Implement strategy to address current occupational health and safety concerns. Mining Qualifications Authority outputs support health and safety, human resource development and transformation of the mining sector. Improve health and safety in the mining sector. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 10

Minerals and Energy for Prosperity and Development MAJOR PROJECTS FOR 2003/04 Continued protection of employees and public from hazards associated with mining – Inspectorate – R92,085 mil. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 11

MINERAL DEVELOPMENT MR MOLOI DEPUTY DIRECTOR GENERAL Minerals and Energy for Prosperity and Development Department of Minerals and Energy 1 2

MAJOR ACHIEVEMENTS IN 2002/03 National Mining Promotion system. Mineral and Petroleum Resources Development Act signed. Mining Industry agreed on a Broad – Based Socio-Economic Empowerment Charter Improving mining information management and access to information. Administrative component of NMPS in place. Environmental management mechanisms fully tested and existing. Social plan programme capacity installed. Broad Based Socio Economic Empowerment Charter Finalised. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 13

OBJECTIVES NOT FULLY ACHIEVED Essential outstanding requirements to fully implement Mineral and Petroleum Resources Development Act: - Money Bill. - Regulations. - Mining Titles Registration Bill. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 14

STRATEGIC OBJECTIVES AND PRIORITIES 2003/04 Research and provide relevant information that will enhance global competitiveness and attract new investment into SA Mineral and Beneficiation Industry. Effectively manage and control mineral resource utilization to contribute to the sustainable socio-economic development of the country. Promote mineral development opportunities through SMME’s. Successfully implement the new Minerals and Petroleum Resources Development Act. Integrate targets of the Broad Based Socio Economic Empowerment Charter with regulatory process. Integrate mineral resource utilization with local economic development (rural development, urban renewal, poverty alleviation). Minerals and Energy for Prosperity and Development Department of Minerals and Energy 15

Minerals and Energy for Prosperity and Development MAJOR PROJECTS FOR 2003/04 Implement Minerals and Petroleum Resources Development Act including: Implementation of Social Plan – R4,410 mil. Develop and support of SMME’s. Regeneration of local economies and rural development. Small-scale mining and promotion of beneficiation: New Directorate to provide economic and technical advice – R18,717 mil Small-scale mining projects – R15,1 mil. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 16

ROLE PUBLIC ENTITIES PLAY IN SUPPORT OF DME COUNCIL FOR GEOSCIENCE PREPARING FOR MINERAL DEVELOPMENT BILL IMPLEMENTATION Amended business plan to develop logistical and physical infrastructure for implementation of bill. Developed physical infrastructure and bibliographic reports database for management of exploration reports and access systems to the reports. Exploitation data is validated from technical and financial viewpoint. National Geoscience Database will incorporate the exploration data and information of such data. Development of exploration target identification and project profiles will be major planning activity. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 17

ROLE PUBLIC ENTITIES PLAY IN SUPPORT OF DME MINTEK Minister of DME and Mintek CEO signed a compact which outlined Mintek’s deliverables. These included: Beneficiation of minerals and other commodities. Regional strategies for Mineral Processing Sectors. Development of SMME’s. Export of mineral technologies, capital goods and services. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 18

ENERGY MANAGEMENT DR CROMPTON DEPUTY DIRECTOR GENERAL: HYDROCARBONS AND ENERGY PLANNING Minerals and Energy for Prosperity and Development Department of Minerals and Energy 1 9

MAJOR ACHIEVEMENTS IN 2002/03 Petroleum Pipelines Bill approved and Gas Money Act passed. Petro SA formally launched. Draft White Paper on Renewable Energy. Integrated Energy Plan. Energy Bill. WSSD Participation. Annual Petroleum Industry survey, charter implementation – Empowerment reaches 13,8%. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 20

OBJECTIVES NOT FULLY ACHIEVED Petroleum Products Act Amendment Bill delayed. LPG regulation delayed. Non-cooperation from Coal Mines and Eskom on low smoke fuels. Kudu gas field – geological disappointment. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 21

STRATEGIC OBJECTIVES AND PRIORITIES 2003/04 Petroleum Products Amendment Act and Regulations. Petroleum Pipelines Act and Regulations. Poverty Alleviation: Regulation of Paraffin and LPG prices. Gas Act Regulations. Renewable energy strategy. Energy information management system. Energy efficiency strategy. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 22

ENERGY MANAGEMENT MS MAGUBANE DEPUTY DIRECTOR GENERAL: ELECTRICITY AND NUCLEAR Minerals and Energy for Prosperity and Development Department of Minerals and Energy 2 3

MAJOR ACHIEVEMENTS IN 2002/03 Continued implementation of Integrated National Electrification Programme. Continued restructuring of the electricity distribution industry. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 24

OBJECTIVES NOT FULLY ACHIEVED ESI Regulatory Bill – Process slower than expected. EDI Restructuring Bill – Process slower than expected. Free Basic Electricity Policy – To gain insight into self targeting option, Minister approved extension of EBSST projects. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 25

STRATEGIC OBJECTIVES AND PRIORITIES 2003/04 Integrated National Electrification programme. ESI and EDI Restructuring Bill. Electricity Supply Industry Restructuring. Radioactive Waste Management. Restructuring of NECSA. Pebble Bed Modular Reactor. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 26

Minerals and Energy for Prosperity and Development MAJOR PROJECTS FOR 2003/04 Continued implementation of Integrated National Electrification Programme: Universal household access to basic electricity services within 10 years – R1,062 billion. Establish EDI Holdings Company to enable creation of REDs – R45 mil. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 27

INTEGRATED NATIONAL ELECTRIFICATION PROGRAMME CONNECTIONS FOR 2002/3 (UN-AUDITED) HOUSEHOLDS SCHOOLS CLINICS PLANNED ACTUAL Eskom 175 441 180 763 838 906 Municipalities 81 864 57 138 - TOTAL 257 305 237 901 9 Total number of houses electrified 7 456 889 69,2% Houses still to be electrified 3 314 086 30,8% Minerals and Energy for Prosperity and Development Department of Minerals and Energy 28

INTEGRATED NATIONAL ELECTRIFICATION PROGRAMME (continues) INEP BUDGET 2003/04 R’000 2004/05 2005/06 National (Eskom) 822 000 843 956 889 273 Local (Municipalities) 240 000 245 000 258 000 TOTAL 1 062 000 1 088 956 1 147 273 Average number of connections per year over the MTEF Period: 243 000 grid and 13 900 non-grid households 1 349 schools and clinics. Priority areas to be electrified are Eastern Cape, KwaZulu-Natal and Limpopo Province. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 29

CHIEF FINANCIAL OFFICER MS PITYANA CHIEF FINANCIAL OFFICER Minerals and Energy for Prosperity and Development Department of Minerals and Energy 30

MINERALS AND ENERGY BUDGET PROGRAMMES 2002/03 R’000 2003/04 % CHANGE Administration 72 963 91 575 25,5 Promotion of Mine Safety and Health 86 361 92 085 6,6 Mineral Development 94 219 114 883 21,9 Energy Management 1 013 874 1 154 354 13,8 Associated Services 605 201 354 917* (41,4) Mintek 76 410 82 439 7,9 Nuclear Energy 424 947 161 190* (62) National Nuclear Regulator 7 282 7 610 4,5 Geoscience 66 384 72 019 8,5 Assistance to Mines 28 9116 31 100 7,5 Cahora Bassa Audit fees 312 349 11,9 Government Motor Transport 950 210 (77,9) TOTAL 1 872 618 1 807 814 (3,5) *Decrease in strategic loans of NECSA from R265,548 million to R1,407 million. Department of Minerals and Energy Minerals and Energy for Prosperity and Development 31

MINERALS AND ENERGY BUDGET (continues) STANDARD ITEMS 2002/03 R’000 2003/04 % CHANGE Personnel 153 503 178 039 15,9 Administrative 56 567 66 296 17,2 Inventories 5 165 5 001 (3,2) Equipment 10 753 19 353 79,9 Land and buildings 1 - Professional and special services 63 569 58 566 (7,9) Transfer payments 1 582 960 1 480 458* (6,5) Miscellaneous 100 TOTAL 1 872 618 1 807 814 (3,5) *Decrease in strategic loans of NECSA from R265,548 million to R1,407 million. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 32

Minerals and Energy for Prosperity and Development MINERALS AND ENERGY BUDGET (continues) ALLOCATIONS ABOVE BASELINE ALLOCATION FOR 2003/04 R’000 2003/04 Baseline 1 592 329 Changes to baseline 200 365 Expanded post structure 12 000 INEP (Output tax – Vat) 117 000 EDI Holdings company 45 000 Tripartite Mining HIV/AIDS Committee 945 Infrastructure and development 21 400 Mintek 1 528 Geoscience 1 992 Inflation related adjustments 15 120 Department (Salaries and related expenditure) 12 232 1 548 1 340 TOTAL MTEF ALLOCATION 1 807 814 Minerals and Energy for Prosperity and Development Department of Minerals and Energy 33

RESTRUCTURING OF THE DEPARTMENT NUMBER OF NEW POSTS CREATED SENIOR MANAGE-MENT MIDDLE MANAGE-MENT OTHER POSTS TOTAL Administration 6 21 14 41 Mine Health and Safety - 17 2 19 Mineral Development 55 26 87 Energy Management 7 34 47 99 76 194 Minerals and Energy for Prosperity and Development Department of Minerals and Energy 34

Minerals and Energy for Prosperity and Development RESTRUCTURING OF THE DEPARTMENT (continues) FUNDING FOR NEW POSTS IN 2002/03 R’000 MTEF allocation 10 000 Reprioritization 11 588 TOTAL 21 588 Minerals and Energy for Prosperity and Development Department of Minerals and Energy 35

Minerals and Energy for Prosperity and Development RESTRUCTURING OF THE DEPARTMENT (continues) NUMBER OF NEW FUNDED POSTS IN 2002/03 SENIOR MANAGE-MENT MIDDLE MANAGE-MENT OTHER POSTS TOTAL Administration 4 7 5 16 Mine Health and Safety 3 - Mineral Development 39 8 52 Energy Management 2 19 48 20 87 Minerals and Energy for Prosperity and Development Department of Minerals and Energy 36

Minerals and Energy for Prosperity and Development RESTRUCTURING OF THE DEPARTMENT (continues) FUNDING FOR NEW POSTS IN 2003/04 R’000 MTEF Request 22 742 Additional MTEF allocation 12 500 Included in baseline 5 000 TOTAL MTEF ALLOCATION 17 500 Minerals and Energy for Prosperity and Development Department of Minerals and Energy 37

Minerals and Energy for Prosperity and Development RESTRUCTURING OF THE DEPARTMENT (continues) NUMBER OF POSTS TO BE FILLED IN 2003/04 SENIOR MANAGE-MENT MIDDLE MANAGE-MENT OTHER POSTS TOTAL 2 27 34 63 36,5% of the posts will be allocated to Mineral Development for the implementation of the Mineral and Petroleum Resources Development Act. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 38

Minerals and Energy for Prosperity and Development CONCLUSION Commitment of the Department to achieve its Vision and Mission and fulfill its Mandate. Challenge to meet the commitment with limited resources. Track record of spending our budget is a good indication of delivering on our mandate. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 39

Minerals and Energy for Prosperity and Development END QUESTIONS. Minerals and Energy for Prosperity and Development Department of Minerals and Energy 40