1 BACKGROUND TO RECENT JOB TRENDS IN MINING JUNE 2015

Background to recent job trends in mining Presentation prepared for the Portfolio Committee on Mineral Resources Martin Nicol and Nkosinathi Kweyama – Parliament 03 June

Outline How many people work in mining? What are the latest trends in employment? Mitigation measures in place Why are jobs under pressure?: economic context Outlook for jobs 3

OTHER Manganese Chromite Diamonds Iron ore Co al Gold PGMs How many people work in mining?

Latest trends in employment? Total industry employment in the mining sector dropped to from during the financial year 5 Mine job losses in 2014Jan-2014Dec-2014Job lossPercent fall Gold (labour in service) % PGMs (labour in service) % TOTAL industry %

Recent announcements 6 CompanyCommodity EmploymentJob cuts LonminPGM present employment 35,000  Possible job cuts 3,500 Anglo American Platinum PGM (biggest employer)  Job cuts 474 (more possible) HarmonyGold present employment 34,686  Doornkop restructuring may cost 3,000 jobs – 29 May;  400 job cuts announced (Masimong – 11-May);  jobs cut in Feb-15 (Kusasalethu) SibanyeGold employment 36,274  430 jobs cut in Feb-15

Mitigating the impact The loss of jobs is distressing It undercuts the predicted increases in mine employment in the National Development Plan But mining is always prone to fluctuations Mining has a tradition of negotiation around economic realities Strong provisions are also there in the law – in the Labour Relations Act and the MPRDA 7

MPRDA A social and labour plan (SLP) has to be in place for every mine in South Africa This has to provide for managing and sharing the burdens of “downscaling and retrenchment”. Every mine has to have a plan for downscaling, just as every mine has to have a plan to spread the benefits of mineral wealth more widely when it is profitable. 8

Why are mining jobs under pressure?: The economic context Wold Economy still Recovering from 2008 GDP Growth in 2014 (3.4%) expected (3.5%) in 2015 (IMF) Chinese growth has decelerated (7% vs 10%) EU showing marginal improvement (0.4%) US shrank (-0.7) Major trading partners growth not convincing 9

Outlook for jobs in mining Chinese, EU and US PMI (50,52 and 51) Positive outlook require (Moody's) PMI to exceed 55 for three consecutive months (China, EU and US) IMF GDP world growth forecast of 4% Given current conditions labour market in the industry is expected to remain tight Depreciating local currency support local industry 10

Jobs Outlook for Gold mines 2015 to 2025: Chamber of Mines 11 Present employment 119, ,000 80,000 68,000 Need to replace employment lost in gold with new mines in other sectors: need for more investment and for exploration.

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