Bridgette Radebe

Bridgette Radebe “Changes in the SA Mining Industry and the relevance for doing business in South Africa” EXECUTIVE CHAIRPERSON: MMAKAU MINING (PTY.) LTD. PRESIDENT: SOUTH AFRICAN MINING DEVELOPMENT ASSOCIATION (SAMDA) VICE PRESIDENT: DME MINISTERIAL ADVISORY BOARD 9 July 2008

Robust Growth Opportunities in the South African Mining Industry Total Direct and Indirect Contribution of Mining: GDP: R246-billion or 16% Jobs: 1 260 000 (25% of total employment) 2005 2005 2

Total Contribution of Mining to the South African Economy (2005 data estimate) • GDP: 16% of total (7.5% direct and 8.5% indirect) amounting R246-billion • Jobs: 1 260 00 (25% of total employment 3

Mining’s Direct and Indirect Contributionto SA Economy (2005 data estimate) • 16% of GDP (directly and indirectly) • 33% of the market value of the JSE • 12% of fixed investment (directly and indirectly) • 20% of formal sector employment (directly and indirectly) • 16% of electricity demand • 93% of electricity generation via coal power plants • About 30% of liquid fuels (coal conversion) • 50% of merchandise exports (primary and beneficiated minerals) • 50% of national rail and ports. 4

Robust Growth Opportunities in theSouth African Mining Industry (2006/2007data estimate) • Mining Accounts for 7% of the GDP (Directly) • Current GDP (at 5% annual increase) = R258 Billion • Mining accounts for 18% of the GDP (Directly and Indirectly) 2005 5

Total Contribution of Mining to the South African Economy (2006/2007data estimate) • Directly : 492 000 workers employed : 5% of total formal sector employment • Directly and indirectly: Approximately 1million workers employed • Approximately 12% of formal working sector influenced by mining sector 6

Mining’s Direct Contribution to SA Economy (2006 / 2007) • 32% of merchandise exports (primary and beneficiated mineral exports) • 8.3% of fixed investment (directly) • 18% of fixed investment (directly and indirectly) • 35% of the market capital the JSE • 12% of formal sector employment (directly and indirectly) • 50% of volume of Transnet’s rail and ports • 93% of electricity generation via coal power plants • 15% of electricity demand • About 30% of liquid fuels via SASOL use of coal, etc 7

State is custodian of Mineral Rights – access to all Investors Prospecting rights: May 2004 – August 2007 8

State is custodian of Mineral Rights – access to all investors Mining rights: May 2004 – August 2007

State is custodian of Mineral Rights – access to all investors Mining Permits: May 2004 – August 2007

Uplifting Communities throughMining Equity 11

The Minerals and Mining Development Board • Background: • The Board was established in terms of Section 57 of the Mineral and Petroleum Resources Development Act to: • Advise the Minister on: • Any matter which must be referred to the Board by or under the Act: • The Sustainable development of the nation’s mineral resources • The transformation and downscaling of the minerals and mining industry • Dispute resolution • Must in consultation with the Mining Qualifications Authority ensure the promotion of human resources development in the minerals and mining industry.

The Minerals and Mining Development Board • Representation on the Board • Representation on the Board is in terms of Section 59 of the Act and is as follows: • 3.1 Government represented by: • 3.1.1 Department of Minerals and Energy • 3.1.2 Department of Trade and Industry • 3.1.3 Department of Environmental Affairs and Tourism • 3.2 OrganisedLabour represented by: • 3.2.1 National Union of Mineworkers • 3.2.2 United Association of South Africa • 3.3 Organised Business represented by: • 3.3.1 Chamber of Mines • 3.3.2 South African Mining Development Association • 3.4 Community Based Organisation represented by: • 3.4.1 Congress of Traditional Leaders • 3.5 Non-Governmental Organisation represented by • 3.5.1 South African Women in Mining • 3.6 Three indepented persons with experience, expertise or skills to enhance the • Board’s capability of performing its functions more effectively

The Minerals and Mining Development Board

Mining continues to uplift rural communities • Marula Platinum example - a useful multi-community equity investment model: • Dividends fund the sustainable futures of these rural communities • The new South African Mining investment model: • Investors graduate from: to: • Department of Minerals and Energy and the Minerals and Mining Development Board are designing benefits and equity guidelines for mining communities. 73% 9% 9% 9% Explore, Extract, Exploit, Export = Ghost Towns Compassionate Capitalism 15

BEE Success Story - Royal Bafokeng Nation • Most mines situated in rural areas • Mining is a catalysts for rural development • Royal Bafokeng Nation an excellent model: • Market cap: 28.9 billion • Dividends invested in rural renewal projects • In past 10yrs over R2 billion invested in clinics, education, public utilities • Great mentorship to other tribal communities. Source RBN financial report : 2006 BEE – Black Economic Empowerment RBN – Royal Bafokeng Nation 16

Uplifting Rural Communities through ProducersForums and Integrated Development Models IDP – Integrated Development Plans LUMS - Land Use Management Scheme PMU – Project Management Units 17

41 000 suppliers (2500 Narrow Based HDSAs 500 BBEE) Total annual procurement budget – estimated at R60 billion 2 1 3 33 mining houses; 15 venues; 6 provincial governments Approximately R6 billion to HDSA500 Buyers 4 Procurement an Engine for Economic Growth 2006 • Develop BEE mining support industries Source: SAMPPF - 2006 18

Total annual procurement budget – estimated at R95 billion 47 000suppliers 2 1 3 Approximately R9.5 billion to HDSA600 Buyers at 52 operations 4 52 mining houses Procurement an Engine for Economic Growth2007 • Develop BEE mining support industries Source: Previously: SAMPPF Currently: DECTI 19

Creating a Sustainable Environment for Mining The Eastern Limb as a Case Study 20

Index 1. Introduction 2. The Challenge 3. Legislative Environment 4. Municipalities in Context 5. The Mining Industry in Context 6. The Eastern Limb 7. The Realities 8. The Integrated Solution Model 9. The Established Structures 10. Progress to Date 11. The Future – The Developmental State 12. Conclusion 21

1. Introduction Stating the obvious: 1.1 The world of mining in the RSA changed dramatically in recent years because of: • The Minerals Act • The National Water Act • Various other agreements/policies/the Mining Charter 1.2 Previously mines were in charge/possession of their own investments and environment; now they are part of a broad family 1.3 Hopes and expectations from Government, communities and the Nation are high in terms of the Mining Sector 1.4 The Mining world is: • Competitive • Uncertain • A long term business 22

2. The Challenge 2.1 How to balance: • Profitability and shareholder expectations with expectations from workers, communities and Government 2.2 How to: • Create safe working conditions • Within a sustainable environment 2.3 To be responsible and caring corporate citizens 23

3. Legislative Environment 3.1 The Minerals and Petroleum Resources Development Act (MPRDA) 3.2 The National Water Act 3.3 Municipal Acts: • The Systems Act • The Structures Act • The Municipal Finance Management Act 3.4 Municipal Integrated Development Plans and Sector Plans 3.5 The Mining Charter 3.6 Local and Provincial Spatial Frameworks 3.7 Local and Provincial Local Economic Development Plans 3.8 National Environmental Management Act (NEMA) South African parliament in Cape Town 24

4. Municipalities in Context 25

5. The Mining Industry in Context SLP – Social Labour Plan LED – Local Economic Development 26

LEGEND EXISTING BULK WATER PIPELINES ORWRDP BULK WATER PIPELINES ESKOM PSS INFRASTUCTURE 6. The Eastern Limb POLOKWANE MOKOPANE Olifant Sand Transfer LEBOWAKGOMO Lebalelo MOOIHOEK Olifants River BURGERS-FORT JANE FURSE STEEL-POORT TOWN FLAG BOSHIELO DAM DE HOOP DAM SteelpoortRiver EPSS ORWRDP: Portfolio Committee visit 27 27

6. The Eastern Limb 28

7. The Realities 7.1 Many mines on Tribal areas 7.2 The competition for and cost of water 7.3 Housing for workers 7.4 Services 7.5 Transportation 7.6 Electricity supply 7.7 Spatial planning and control 7.8 Community/Municipal Expectations 7.9 Municipal Capacity 7.10 Development Facilitation by Government Sectors 7.11 Poverty 29

8. The Integrated Solution Model 30

9. The Established Structures 9.1 Forums: • The Steelpoort Valley Producers Forum • The Economic Sector Forum of Mogalakwena • The Joint Water Forum for the Olifants River • The Mogalakwena Joint Water Forum 9.2 Membership list (on one or more of the Forums) 31

9. The Established Structures 9.3 Between 2 and 8 years old 9.4 All Forums formally established with: • Constitutions • Budgets • EXCO’s • Appointed Project Managers • Appointed Specialist Service Providers 9.5 Strategic Objectives: • Create environment to operate in • One voice to outside (Government, etc.) • Lobby Government • Plan holistically • Provide strategic input in Municipal IDP and other plans • Facilitate implementation and funding options 32

10. Progress to Date 10.1 The Steelpoort Valley Producers Forum (Last 8 years) • Support Tubatse and other Municipalities • Capacity Building and Project Management programmes • Co-funding of projects 10.2 The Economic Sector Forum of Mogalakwena (Last 6 years) • Assist with planning (spatial, transport, water, institutional) • Neighbourhood Development programme • Co-funding of projects 10.3 The Olifants River Joint Water Forum (Last 4 years) • Strategy to ensure interim and long term water provision to members • Facilitated a MOA between DWAF and 21 Mining Companies • Participate in DWAF planning and implementation structures 10.4 The Pruissen Joint Water Forum (1 year) • Sub structure of the JWF for the Mogalakwena area 33

11. The Future – the Developmental State 11.1 RSA is a typical Developmental State where: • Government directs the economy • Government lacks capacity (manpower and funding) 11.2 There is a conscious commitment and focus on addressing the following: • Infrastructure Development • Economic Development • Job creation • Poverty alleviation 11.3 A partnership between Government and the Private Sector continues to be developed (Organised Mining) 11.4 To participate effectively mines should: • Organise themselves in Formalised Structures • Identify and Align their needs • Take cognisance of the roles and needs of Government 34

12. Conclusion 12.1 Real trust was developed amongst • Various mining companies • Mines, Municipalities and Government 12.2 Strategic objectives of role players are aligned 12.3 Duplication is minimized 12.4 Extensive savings were facilitated 12.5 A sustainable mining economy is cultivated and pursued 12.6 A lot still to be done BUT THE MODEL IS EFFECTIVE 35

This land must be healed In conclusion we say… This land, the whole land Will be healed, must be healed These brazen cities, the swollen mines The mineral of our sweat The teeming ghetto, the dormitory cells In towns and squalid squatter camps Where hope smothers in a tyre These furnaces of human indifference must incinerate With all the heat of a healing fire Those were the dark ages of mining And now the winds of change are blowing A brighter new future our way- A future of Global Mining Transformation A future of the paradigm shift This land, the whole land Will be healed, must be healed - Don Matera 36

Bridgette Radebe