Niël Pretorius, CEO of gold producer DRDGold, has likened the onerous process of applying for water use licences to setting tax money on fire after the company almost took a R300m knock due to application delays.
The miner, a specialist in metal recovery from surface tailings retreatment, said it experienced delays in obtaining authorisation from the department of water & sanitation.
It was required to amend the design of its emergency spillage dam at Rooikraal on the East Rand before the licence was issued, resulting in the site renovations starting several months later than planned.
Pretorius told Business Times the delays almost had an impact of close to R300m, but this was offset by the performance of the group’s other sites. “If you look at it in isolation there is R300m worth of revenue lost to this economy, of which a significant proportion would have been income tax. It is like setting fire to tax,” he said.
“We have some headroom and there is flexibility, and we could go to other sites and to an extent soften the impact of the delay. But if this was all we had and we did not have any other options, DRDGold would have been down R300m because of the delay in the issuance, not because an official was not doing their job but because the process is so burdensome.”
The company posted a 14% rise in headline earnings per share as a higher gold price outweighed low production. It declared a dividend of 65c per share, bringing the total declared dividend for the financial year to 85c per share. In the year under review, gold production dropped 8% while revenue was up 7% to R5.5bn on the back of a higher average rand gold price received. This boosted operating profit to R1.8bn.
Companies are required to apply for water use licences from the department of water & sanitation if their activities will affect water resources.
In numerous state of the nation addresses, President Cyril Ramaphosa has said he wants to reduce the turnaround times for water use licence applications from 300 days to 90. A specialised unit at the National Treasury, Operation Vulindlela, has made this one of its priorities.
In a water-scarce country such as South Africa, it is very important that we take very good care of our water resources, and that we ensure that there are no intended or unintended negative consequences of water use
— Wisane Mavasa, spokesperson for the water & sanitation department
Pretorius said the application rules for water were too cumbersome for an emerging economy.
“What we are finding is that even for small pieces of infrastructure, almost borderline inconspicuous pieces of infrastructure, something not much bigger than the size of a large swimming pool, these officials have to read through hundreds of pages of submissions, and they need to tick a thousand boxes before they can issue these water usage licences. The unfortunate reality is that the workload is such that they typically deal with these things at the eleventh hour.
“Unfortunately, it is a set of regulations that runs on its own logic. I am not suggesting the logic is flawed or necessarily wrong, but it is an absolute exclusive logic, it does not entertain data or science that is not consistent with that logic.”
Wisane Mavasa, spokesperson for the water & sanitation department, said the water use licence process was designed to be as user-friendly as possible. But it must ensure that water resources and the environment were protected and used efficiently, she said.
“In a water-scarce country such as South Africa, it is very important that we take very good care of our water resources, and that we ensure that there are no … negative consequences of water use. This often requires a thorough analysis of engineering, hydrological, environmental, geological and environmental impacts of proposed water use.”
Mavasa said there was a backlog of 45 applications exceeding the 90-day approval period. “This constitutes an improvement as compared to previous years where the backlogs at any time exceeded 1,000 applications,” she added.
Pretorius said crime was one of the biggest threats to the mining industry, while the inability of the government to rein in taxi cartels affected employees.
“In the far West Rand, these taxis have a monopoly over certain routes. These routes are agreed to between taxi associations. It is uncompetitive and inconsistent with anti-competition legislation, but it is not being monitored. Unfortunately, the competition authorities are too busy regulating internet retail as opposed to something that affects the lives of hundreds of thousands of commuters every day.”
He said cartels pulled aside people who were carpooling to work, holding them at gunpoint and forcing them to make use of taxis.
“When we stood up against this and brought charges against these cartels and against people wielding clearly unlicensed firearms — these are the enforcers for these cartels — the response from the police in Carletonville was very disappointing. They would not open a docket, they would not investigate these cases. We assume it is because most of them live in Carletonville, so you open a docket now and tomorrow your body is found somewhere in the veld.”
He said the authorities were powerless against taxi cartels and did not offer any support to the private sector or to citizens who chose not to use taxis to get to work. “We think we are a long way from finding a solution to this because I don’t think there is capacity within the government to regulate these cartels.”
DRDGold is a subsidiary of diversified giant Sibanye-Stillwater, and has expanded from being an exclusively underground mining company to a surface gold miner.
Asked whether DRDGold would diversify into processing platinum tailings, Pretorius said the company was keen to become prominent in Sibanye’s activities. “As a subsidiary, it is a case of being granted the opportunity to do that. I think that is what we are waiting for, the chance to be given that opportunity.”
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