WORKSHOP ON BLACK ECONOMIC EMPOWERMENT IN THE ENERGY AND MINING SECTORS 5 September 2001

FRAMEWORK A. HISTORICAL ANALYSIS. B. PARAMETRES FOR GUIDANCE IN THE MINING SECTOR. C. WHAT DOES THE BEE REPORT SAY ON: Definition of BEE? Mining sector? WILL THE REPORT SET THE RIGHT CLIMATE TO TAKE US FORWARD? E. BAKUBUNG INITIATIVE. F. ARM’S INITIATIVES ON BEE. G. CONCLUDING REMARKS.

A. HISTORICAL ANALYSIS Mining sector dominated by white Conglomerates. Constraints for black entrants into the mining industry: - Access to sustainable ore-bodies - Lack of access to finance - Lack of enabling legislation Lack of operational, mining and managerial skills and expertise

Was this black economic empowerment? A. HISTORICAL ANALYSIS Black business initiatives in the mining sector In the late 80’s & early 90’s vigorous discussions began between Conglomerates & Black Business (NAFCOC) regarding BEE in mining industry and this resulted in Black Business becoming significant players in Small Scale and Contract Mining. BEE= Contract Mining. Small Scale Mining Was this black economic empowerment?

PARAMETRES FOR GUIDANCE IN THE MINING SECTOR There is a need by government to set a percentage and timeframe on black ownership like it has done in the fuel and petroleum industry. Currently only 2% of the mining industry belongs to Black Business. What influences this percentage and timeframe? How do we ensure that BEE is fast tracked in the mining industry?

Fundamental factors to be considered: Minerals Bill instrumental in creating an enabling and favourable environment. b. Access to quality and competitive mineral resources: - High grade - Low cost - Long life orebodies c. Availability of funding: - Debt - Equity - Facilitation.

Fundamental factors to be considered: d. Availability of highly skilled competitive management e. Risks associated with mining: - Price cycles - Technical risk - Financial risk - Seismicity risk f. Need for an aggressive employment equity programme for the provision of skills and expertise to young black management and employees in the mining industry.

INDUSTRY QUOTES AND TRENDS “BEE are bottom feeders”. “This shaft has reached the last stage of LOM, it is now good for BEE”. “BEE are bottom feeders”. Trends in the mining industry: - selling mines with predominantly old areas remaining. - selling mines or portions thereof that are high risk areas.

WHAT DOES THE BEE REPORT SAY ON? Definition of BEE “It is an integrated and coherent socio-economic process and located within the country’s national transformation programme, namely the RDP. It is aimed at addressing the imbalance of the past by seeking substantially and equitably transfer and confer the ownership, management and control of SA’s financial and economic resources to the majority of its citizens. It seeks to ensure broader and meaningful participation in the economy by black people to achieve sustainable development and prosperity.”

C. WHAT DOES THE BEE REPORT SAY ON? Definition of BEE “Accordingly BEE should be viewed within the broader scope of empowerment processes including, amongst others: job creation, rural development urban renewal, poverty alleviation, land ownership, specific measures to empower black women, skills and management development, education, ownership, and access to finance for households and for the purpose of conducting business.”

C. WHAT DOES THE BEE REPORT SAY ON? 2. Mining Sector Very little is covered by this report. 1999 statistics for management profiles indicate: African 4% Asian 1% Coloured 1% White 94% Female 5% Male 95%

WILL THE REPORT SET THE RIGHT CLIMATE? Provides clear guidelines on the broader empowerment processes. Timing important since the available ore resources are being depleted. More sector related research required. Harmonization of supportive legislation with the Bill.

E. OTHER BEE INITIATIVES BAKUBUNG INITIATIVE Ingredients for small scale mining to succeed: Grade and size of Mineral Resource Base to be acceptable Cost to be appropriate Must have a market Must have the applicable management skills Timing critical (in quickly, out quickly)

F. ARM’S BEE INITIATIVES PLATINUM AND GOLD OPERATIONS Inclusive consultative, educational and communication processes with all stakeholders. Community participation (shareholding- Section 21 companies) Development companies (contracts) Masojane labour brokers (job creation – local labour) ARM Rural Development Trust ARM Community Upliftment Trust

F. ARM’S BEE INITIATIVES PLATINUM AND GOLD OPERATIONS ARM Warehousing Trust Water and electricity Infrastructure development Assessment, training and education (leadership programme) Secondment leadership, transfer of skills and expertise Aggressive employment equity programme Extensive recruitment of black graduates Business opportunities to BEE companies Facilitating the creation of Small Medium and Micro Enterprises

G. CONCLUDING REMARKS BEE is not about Black Business! - Black communal upliftment - Black Business powerful tool towards black community upliftment.

JOINT VENTURE STRUCTURE ARM MINING CONSORTIUM 50% Anglo Platinum 50%

JOINT VENTURE Anglo Platinum ARM Mining Consortium R37.5m R90m R22.5m Sect 21 Co. Matimatjatji Sect 21 Co. Mampudima ARM Rural Development Trust Other Participants Mpumalanga, N Prov. National ARM Warehousing Trust 60% 5% 12% 3% 10% 10% Anglo Platinum ARM Mining Consortium JOINT VENTURE

ARM Community Upliftment Trust Matimatjatji Section 21 Co. Mampudima Dev.Co. Mampudima Section 21 Co. Matimatjatji Dev. Co. Matimatjatji Section 21 Co. Services Company 36% 52% 12%

ARM Community Upliftment Trust Matimatjatji Section 21 Co. Mampudima Dev.Co. Mampudima Section 21 Co. Matimatjatji Dev. Co. Matimatjatji Section 21 Co. Services Company Masojane Labour Brokers Mpsika Accommodation & Catering Leahlaba Building & Construction Thakgaletswalo Concrete Works Tsidintsi Security Services 36% 52% 12%

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