[miningmx.com] — THE department of mineral resources on Wednesday dismissed allegations that it owed Aurora Empowerment Systems money in the form of a water pumping subsidy.
“The (water pumping) subsidy is not an entitlement. The department does not owe anybody money,” acting director general Ntokozo Ngwabe told the Parliamentary Portfolio Committee on Mineral Resources.
She was briefing the committee after Aurora’s director Zodwa Mandela told members that some of the company’s cash flow problems resulted from the department’s termination of the subsidy.
The subsidy was terminated in 2009 because Aurora was carrying out maintenance on the Grootvlei mine, instead of “strict” mining activity.
Mandela told the committee that despite the termination, the company continued to pump water at a cost of R6m a month.
“This affected our cash flow as we had included the subsidy amount in our cash flow projections and whilst we continued negotiations with Dwaf (the department of water affairs) we began to fall behind in the pumping of water.”
Ngwabe said she found it “very disturbing” that the subsidy amount had been built into Aurora’s business plan.
“I find it puzzling that how does one get into a business and budget on a subsidy from the government, which subsidy is not even an entitlement?”
She said the subsidy was meant for mines facing a short-term crisis, but which were inherently sustainable and not dependent on state aid for their survival.
She said mines applying for the subsidy had to be operational.
“And we all know that Grootvlei had not been operational since last year.”
Ngwabe said the Grootvlei mine, which was wholly-owned by Pamodzi Gold, had started experiencing “serious cash flow challenges” in 2009 and had been under provisional liquidation since then.
Aurora was appointed by the liquidator on a management contract to operate the mine until cash to take over the mine was secured.
The department was then informed that the liquidators and the management contractor could not meet any of the mine’s financial obligations and a recommendation was made to place the mine on care and maintenance.
Ngwabe told the committee that water levels at the mine were now under control.
She said that since the passing of the rainy season, the rate at which the water levels rose had slowed down. Water was now rising at 400 millilitres to 500 millilitres a day.
She said the water quality at the mine was not initially up to standard, but that measures had been taken to correct it.
Problems were also experienced with the pumping station which was below ground, but the station had since been moved to a level above the water table to correct these problems.
Chief Inspector of Mines David Msiza said the financial problems at the mine had compromised its capacity to mine safely.
He said inspections and audits had been conducted, but that the safety of persons at the mine could not be assured.
“Vital infrastructure… could not be maintained.”
Msiza said the mine was still under care and maintenance.
Last year, Aurora announced it had secured enough funding to buy from the liquidators Pamodzi’s Grootvlei (Springs) and Orkney mines, which at that stage employed some 5 000 workers.
However, miners went unpaid and mine operations ground to a halt amid red tape and empty promises.
The High Court in Pretoria has given politically-connected Aurora Empowerment Systems – whose directors include Mandela, the grandson of former president Nelson Mandela, and President Jacob Zuma’s nephew Khulubuse – until August to obtain financing for the Grootvlei and Orkney mines.
