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