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Manufacturing Enterprises

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Manufacturing Enterprises

Strategic objectives

To ensure alignment in shareholder strategic intent in relation to SOC roles in achieving objectives in the defence, mining and forestry sectors by annually reviewing enterprise strategies and mandates in the context of political and sectoral policy shifts and alerting the enterprise boards to material deviations.

To support the SOC in delivering their outcomes as set out in the shareholder compacts and corporate plans by identifying appropriate target benchmarks for key performance measures and by analysing quarterly and annual reports.


  • Define Denel’s future role and strategic mandate by:
    • Developing the defence industry stakeholder framework with industry enablers to support Denel’s business sustainability by 2012/13.
    • Developing a business model to support Denel’s growth by 2012/13.
    • Reviewing the impact of the current strategic equity partnership on Denel’s sustainability by 2012/13.
  • Contribute to the socio-economic development of the region by implementing Alexkor’s strategy to ensure
    the company’s long-term viability, and address its environmental rehabilitation and other liabilities by
  • Maintain the sustainability of Alexkor by:
    • Developing an evaluation framework and alternative funding mechanisms for Alexkor’s new mining
      ventures and beneficiation initiatives to guide investment decisions by 2012/13.
    • Expanding the Alexkor board to its full complement and ensuring it has the requisite skills, experience
      and expertise by 2012/13.
  • Implement the Richtersveld deed of settlement by:
    • Monitoring the performance of the pooling and sharing joint venture between Alexkor and the Richtersveld Mining Company, including the prospecting work programme and mining plans.
    • Monitoring the Alexander Bay township infrastructure upgrade and transferring outstanding assets to
      the Richtersveld community.
  • Strengthen the institutional format and operations of the SAFCOL by:
    • Defining its role and its contribution to rural development and the forestry industry.
    • Reviewing the SAFCOL board to its full complement and ensuring it has the requisite skills, experience
      and expertise.
    • Reviewing the SOC and SAFCOL group structure to ensure the best possible company structure
      that will create value and achieve greater business efficiency, functionality and accountability, while
      minimising costs and duplication.
    • Developing a settlement model to address land claims against Komatiland Forests by 2012/13.

Strategic objectives and key achievements


The Department continued to monitor and oversee the execution of the activities linked to the DoS. These included:

  • The upgrade of Alexander Bay. The infrastructure upgrade was completed in March 2013.
  • Capacitation of the Pooling and Sharing Joint Venture. Alexkor’s focus going forward is to ensure the PSJV,
    which is a joint venture with the Richtersveld Mining Corporation (RMC), is brought to a sustainable carat
    production level.
  • Facilitate the transfer of residential properties to the Richtersveld community, which is planned for the 2nd
    quarter of 2013/14 financial year.

In line with its enabling legislation, Alexkor is developing a strategy to access opportunities beyond alluvial diamond mining. The process will be concluded in the second quarter of the 2013/14 financial year. The strategy will seek to balance the company’s long-term viability against contributing to the socio-economic upliftment and development of the Richtersveld and Namaqualand regions. In the current reporting period, the Department submitted a request for R350 million to National Treasury. It was approved to address the following obligations and liabilities: an environmental rehabilitation liability at Alexander Bay mine, payment to the Richtersveld Property Holding Company to secure Alexkor’s right of occupation of the transferred residential properties for a period of 10 years, and a post retirement medical aid liability.


The Department monitored and had oversight of the development and Cabinet approval of the turnaround plan for the SOC. The turnaround plan implementation is showing satisfactory outcomes with the SOC recording positive financial results. The projection is that this trend will be maintained. Despite the challenging trading environment, the business outlook is positive. Denel is pursuing a strategy of forming strategic collaborations and joint ventures with local and international companies in the defence sector. The R700-million recapitalisation of the company has improved its gearing ratio. The Department has directed the SOC to improve investment in technology development to ensure a sustainable product portfolio in future. The expenditure will further enable Denel to attract bright young minds, which is critical to the sustainability of the business. The core technical expertise is ageing due to lack of investment in talent development.


The Department finalised the new role for the SOC. It is due to be presented to Cabinet during the first quarter of the 2013/14 financial year. To execute the State Owned Companies new role and enable effective oversight, its board of directors has been augmented with the requisite skills. The SOC will be repositioned to be an agent for rural economic development in the parts of Limpopo, Mpumalanga and Northern Kwazulu-Natal where it has its operations.

The Department continued to engage the Department of Rural Development and Land Reform (DRDLR) to ensure the resolution of land claims on SAFCOL’s land. Some 61% of the forestry plantations are subject to land claims, a situation that is hampering the SOC’s long-term planning. In the interim, SAFCOL is positioning itself as a preferred development partner for claimant communities to ensure the land is not lost to other forms of agriculture.

In addition, the Department continued to engage with DRDLR regarding the transfer from SAFCOL of minority shareholdings. DRDLR remains the destination of the shareholding and needs to develop the capacity to warehouse the shares, which is expected to be transferred during the 2013/14 financial year. The Department has engaged with other stakeholders to find an interim solution, as the shareholding is proving to be a liability for SAFCOL.