1. Vote 29: DMR, APP and Budget 2017
Draft prepared for the Portfolio Committee on Mineral Resources (PCMR), March 2017 – now deferred to May 2017
Based on:
Nicol, M. (2017) Vote 29 Mineral Resources. Research Unit, Parliament. 07 March. <Analysis of Budget 2017> 0365
Nicol, M. (2017) Possible questions on the Department of Mineral Resources Annual Performance Plan 2017/18. Research Unit, Parliament. 23 March. 0372
Nicol, M. (2017) DMR budget and government revenue from mining, 2009 to Research Unit, Parliament. 04 April. 0374
Vote 29: DMR, APP and Budget 2017
03 May 2017

2. Presentation on Vote 29: 2017 and the 2017/18 Annual Performance Plan of the Department of Mineral Resources (DMR)
Prepared for the Portfolio Committee on Mineral Resources
Martin Nicol, Research Unit – Parliament
03 May 2017
See 0365 and 0372 and 0374
Vote 29: Department of Mineral Resources
Martin Nicol and Nkosinathi Kweyama – Parliament
The budget and APP of the Department of Mineral Resources

3. Reference Points DMR APP 2017/18 Vote 29 2017 Mineral Resources
[Unabridged]
Reference Points
Parliament (2016) Budgetary Review and Recommendation Report of the Portfolio Committee on Mineral Resources, dated 19 October ATC October. Pages 7-31.
DMR (2017a) Annual Performance Plan of the Department of Mineral Resources for 2017 / RP
Department of Mineral Resources (DMR) (2014a) Department of Mineral Resources Strategic Plan
National Treasury (2017a) Budget 2017: Estimates of National Expenditure - Vote 29: Mineral Resources. RP: 09/2017. [unabridged]. Available at: < [Accessed 23-Feb-17].
National Treasury (2017a). Estimates of National Expenditure RP:09/2017.
DMR Strategic Plan 2014/19
PCMR BRRR 2016

4. Contents BRRR 2016 and the APP and Budget 2017
Progress with legislation and policy
Other issues in the Budget
Contributions to national revenue from mining as shown in the Budget Review

5. BRRR 2016 and the APP and Budget 2017
Recommendations to National Treasury not acted upon
Substantial investment in the Council for Geoscience mapping and research programmes
Recommendations to DMR not acted upon
The development of an annual report for the new Environmental Mineral Resource Inspectorate (EMRI).
Appropriate performance measures that reflect on the role of the SA Mineral Resource Administrative Database (SAMRAD).
The finalization and implementation of the Women in Mining Strategy.

6. But 31 March publication promise was missed
Financial Provision regulations Nov-15
Progress impression - legislation and policy for mineral resources
October 2015 to
March 2017
MPRDA with NCOP
Charter in progress
2 new bills to Parliament in 2017/18:
Health and MinCo
But 31 March publication promise was missed
Progress impression - legislation and policy for mineral resources from 0243 used in 0370
Source: 0226 and 0227 D:\MNWDx\Mar15x\MN2015\[0132 BRRR input information 2015 current.xlsx]Progress_15
Nicol, M. (2015) Vote 32: Department of Mineral Resources—Research Inputs for the 2015 Budgetary Review and Recommendation Report (BRRR): Assessment of progress with Legislative amendments and policy development for mineral resources – October Research Unit, Parliament. 12 October [0226]
Progress indicator Issue / law 1 One Environmental system for mining 1.5 Ex-mineworkers 5 Amendments to the MPRDA 6 Women in mining strategy 6 Amendments to the Mine Health and Safety Act 7 Mining Charter 7 SOMCO legislative framework 8 Amendments to the Diamond Act 9 Illegal mining (law) 9 Regulations for the Geoscience Amendment Act 9 Inferior compensation for mineworkers with lung disease 10 Liquidation of mines 10 Amendments to the Mintek Act 10 Amendments to the Precious Metals Act 11 Consequences for mining of SPLUMA 11 Beneficiation

7. Performance Measures for DMR
More measures on environmental management and on investment promotion

8. 3 Comments
SLPs: By 1 July 2017, the DMR will ensure that “100 per cent of approved Social and Labour Plans” are accessible to the public.
Errors and inconsistencies in the 2017/18 APPs of the DMR entities and the 2017 ENE
The Coal Policy, due for completion in 2015/16 was deferred to 2016/17 and is still not published
Unachieved performance targets in one year are regularly dropped from inclusion in the next. Once a target is set, it should not be retired – or delayed - without a full explanation.
Mr R A Moatshe Acting DDG: Mineral Policy and Promotion, DMR told the PCMR on 11 October 2016 that “the plan to finalise additional stakeholder consultations was underway to allow finalization of the Coal Policy in the 2016/17 financial year”. Minutes of the Portfolio Committee on Mineral Resources, 11 October 2016.
DMR (2015a:47). APP 2015/2016 – the development of the coal policy was also part of the Medium Term Strategic Framework (MTSF). See RSA (2014).

9. Other issues in the Budget on mining
The tax problems for mines arising from NEMA will be addressed.
The Davis Tax Committee submitted its final report on mining tax in December 2016 (not yet released) –
the draft proposals of 2015 were controversial and would impact negatively on mining investment
A discussion paper on options to address Acid Mine Drainage will be released in mid 2017.
Revised Carbon Tax proposals will be tabled
No effect on electricity price until 2020.
in the Budget review there are promises that tax problems for mines from NEMA will be addressed (page 142); they are still working on the Acid Mine Drainage tax (P.49) and the Carbon tax is another issue (p.48)

10. DMR budget vs revenue collected from mining
The DMR has convinced the PCMR (but not the Treasury) that it is underfunded in at least three respects:
Council for Geoscience (mandate under the Act and R1-billion needed for mapping)
Environmental inspectorate (new responsibilities have not come with adequate resources)
SAMRAD (the DMR lacks the funds for a world class database on the identity of rightholders and where rights have been granted).
This expenditure is needed because of the role of DMR as the custodian of the mineral wealth.

11. Royalties In nominal terms (does not take account of inflation)
5-Mar-17 Downloaded from tables to the Budget Review 2017
From 0365 National Treasury (2017b). Budget 2017 Budget Review. RP:10/ February.
Statistical Annexure: Table 3 Main budget: estimates of national revenue Detailed classification of revenue
Research Unit source file: C:\Users\mnicol\Documents\WFiles\Years\MN2017\[0369 Table 3 - Main budget estimates of national revenue 2009 to 2018.xlsx]Index
DMR Budget R1.8-bn
Data source: Budget Review page 208/9 and Treasury website
An indicator of the health of the mining sector, but not a simple indicator of DMR performance because it depends on many external economic factors.

12. Company Income Tax CIT on mines >R10-bn DMR Budget R1.8-bn
C:\Users\mnicol\Documents\WFiles\Years\MN2017\[0369 Table 3 - Main budget estimates of national revenue 2009 to 2018.xlsx]Sheet2 - For Graph called Chart1 (2)
DMR Budget R1.8-bn
Data sources: SARS Tax Statistics 2016; plausible forecasts and ENEs from Treasury website

13. DMR Budget R1.8-bn
C:\Users\mnicol\Documents\WFiles\Years\MN2017\[0369 Table 3 - Main budget estimates of national revenue 2009 to 2018.xlsx]Revenue2 - For Graph called Chart2 (2)
Data sources: IMF (2015b) report for the Davis Tax Committee, with plausible projections from SARS tax statistics

14. DMR budget vs revenue collected from mining
C:\Users\mnicol\Documents\WFiles\Years\MN2017\[0369 Table 3 - Main budget estimates of national revenue 2009 to 2018.xlsx]Revenue2 - For Graph called Chart4
Data sources: IMF (2015b) report for the Davis Tax Committee, with plausible projections from SARS tax statistics

15. What should the budget allocation for DMR be?
There is no suggestion that all the revenue collected from mining should go to the DMR.
Mineral wealth is a wasting asset – once it is mined, it is gone.
Mining is “sustainable” when the wealth it creates is re-invested for the good of the nation, not simply consumed
Infrastructure (new productive assets)
Education (new human capital) …
AND public investments, policies, transformation to replace mined-out deposits with discoveries for new mines.
Has the Treasury got the balance right?
Should the ”missing investment” go to Mining Phakisa projects, rather than to the budget of DMR?

16. References
Department of Mineral Resources (2014a) Department of Mineral Resources Strategic Plan
Parliament (2016) Budgetary Review and Recommendation Report of the Portfolio Committee on Mineral Resources, dated 19 October ATC October. Pages 7-31.
IMF (SA) (2015b) Fiscal Regimes for Mining and Petroleum: Opportunities and Challenges - Analysis Supplement to IMF (SA) (2015a). Available at: < >. [Accessed 17-Aug-15]. Figure A2. Mining and Quarrying Sector Contribution to Total Government Revenue: 2008/9 to 2013/14
National Treasury (2017) Budget Review 2017 – Statistical annexure Table 3 - Main budget estimates of national revenue Table 3.
SARS Tax Statistics 2016 Table A3.2.1: Companies: Provisional tax payments by sector, 2011/12 – 2015/16.
National Treasury website: < > ENE Table 3 Expenditure by national vote.
Nicol, M. (2017a) Vote 29 Mineral Resources. Research Unit, Parliament. 07 March. <Analysis of Budget 2017> 0365
Nicol, M. (2017b) Possible questions on the Department of Mineral Resources Annual Performance Plan 2017/18. Research Unit, Parliament. 23 March. 0372
Nicol, M. (2017c) DMR budget and government revenue from mining, 2009 to Research Unit, Parliament. 04 April. 0374
Nicol, M. (2017) Vote 29 Mineral Resources. Research Unit, Parliament. 07 March. <Analysis of Budget 2017> 0365
Nicol, M. (2017) Possible questions on the Department of Mineral Resources Annual Performance Plan 2017/18. Research Unit, Parliament. 23 March. 0372
Nicol, M. (2017) DMR budget and government revenue from mining, 2009 to Research Unit, Parliament. 04 April. 0374