The Department of Water Affairs, a global economic meltdown, illegal mining and heavy rains were responsible for Aurora's financial woes, Zondwa Mandela told parliament's portfolio committee on mineral resources yesterday. Mandela, grandson of former president Nelson Mandela and director of Aurora Empowerment Systems, was called to parliament to account for problems at the company's two gold mines.
Mandela, who heads the company with President Jacob Zuma's nephew, Khulubuse, said they had been trying since 2009 to raise money to acquire the provisionally liquidated mines of Pamodzi Gold - Grootvlei in Springs on the East Rand and Orkney in North West - through Aurora. Their failure hasled to workers at the mines not being paid since early last year.
Khulubuse Zuma, who reportedly pledged to donate R1-million to the ANC last week, did not attend the briefing.
Mandela said the department initially gave Grootvlei a R1-million monthly subsidy to help pump out acid mine water. In August 2009, the department increased the subsidy to R3-million a month but discontinued it that October.
Mandela told parliamentarians that the department's decision to withdraw the subsidy had a negative impact on the company because it had been part of its cash flow projections. Water pumping costs, he said, had escalated to R6-million a month.
"How does one get into a business and budget on a subsidy?" chief director of policy Ntokozo Ngcwabe wanted to know. "The subsidy is not an entitlement," she added.
Ngwabe said the subsidy was meant for mines that were inherently sustainable and not dependent on state aid for their survival but facing a short-term crisis.
Solidarity's Gideon du Plessis painted a bleak picture of Aurora's operations: unpaid employees, lost jobs and dilapidated mine shafts. He said since Aurora's takeover of the mines in 2009 it had destroyed 5300 jobs, empoverished 42000 people, polluted wetlands and owed employees more than R12-million.
Joe Mantisetse from the National Union of Mineworkers told the committee that the union discovered in April last year that Aurora "fraudulently" deducted pension and provident fund contributions but did not pay the money over to insurance companies.
He also detailed a litany of other financial irregularities by the company's management.
Mandela said Aurora was a BEE company that had been formed by a group of young entrepreneurs who wanted to harness opportunities in the resource sector.
"Funding [for the mines] posed a greater challenge, like in any emerging black entity," he said.
"Aurora was reliant on raising capital either from a state-owned entity such as the Industrial Development Corporation, which had previously funded the Pamodzi operation at Orkney, or [from] private capital locally or abroad."
Aurora has until August 14 to find finance for the purchase of the two mines.
