Parliament, Thursday, 28 May 2020 – The Portfolio Committee on Public Enterprises and the Select Committee on Public Enterprises and Communications were briefed by Alexkor Administrator, Mr Loyd Mcpatie, who was appointed to develop a turnaround plan for Alexkor and the Pooling and Sharing Joint Venture (PSJV).

Mr Mcpatie told the committees that he was given terms of reference by the Department of Public Enterprises, which included an extensive review of and proposed solutions for the mining contract and revenue sharing models between the Alexkor Richtersveld Mining Company (RMC) PSJV and the contractors. He was also to review Alexkor and the Alexkor RMC PSJV’s cost structure to ensure that procurement of goods and services is at fair value and warranted.

His other terms of reference included reviewing duplicated functions at Alexkor head office and at Alexkor RMC PSJV, paying particular attention to executive and overhead expenses; to implement other remedial and cost reduction intervention plans; to launch an investigation into any contractual impropriety; to terminate marketing and sales contract with Scarlet Sky Investments (SSI) if necessary; and, lastly, to propose solutions on the establishment of the State Diamond Trader diamond marketing and sales channel.

The committees welcomed the administrator’s presentation and proposal to remove duplicate functions at Alexkor head office, to close down the Johannesburg office and relocate the Alexkor’s Chief Executive Officer (CEO) to Alexander Bay, as the mine cannot afford a second office in its current financial position. Moving the head office will save Alexkor R2.3 million.

The committees expressed concern over the capacity of the department to process the administrator’s report. The department assured the committees that it is well resourced to deal with Alexkor. Furthermore, the department’s Acting Director-General, Mr Kgathatso Tlhakudi said, they are trying to get to grips with the issues within the entities. “Although the damage done in the entities is horrendous, the department has dealt with the governance challenges and is currently dealing with operational wheels of performance of the entities,” he added.

On administrator’s proposal regarding Alexkor’s future, the department told the committees that it prefers that the remaining deed of settlement obligations be transferred to the department. These obligations include the rehabilitation of old mines and the transfer of residential properties, accompanied by the payment of R45 million to the community.

Responding to questions from the committees on the turnaround strategy, Mr Tlhakudi, said the appointment of people with sector-specific knowledge has proven to be one of the key solutions to turnaround state owned-companies. “We need a hybrid model, as the private model is not a solution to all the problems. We need a model which is tailored for specific challenges,” said Mr Tlhakudi.

ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES BEHALF OF THE CHAIRPERSON OF THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES, MR KHAYA MAGAXA, AND THE CHAIRPERSON OF THE SELECT COMMITTEE ON PUBLIC ENTERPRISES AND COMMUNICATIONS, MR TSHITEREKE MATIBE.

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