1. 1 PRESENTATION TO THE SELECT COMMITTEE ON: FRAMEWORK AGREEMENT FOR A SUSTAINABLE MINING INDUSTRY 22 September 2015

2. TABLE OF CONTENTS 2

3. 1. BACKGROUND: FRAMEWORK AGREEMENT FOR A SUSTAINABLE MINING INDUSTRY 3

4. 1. Framework Agreement for a Sustainable Mining Industry  In July 2013 the Framework Agreement for a Sustainable Mining Industry was developed  The Stakeholders are:  Government  Labour: (NUM, AMCU, UASA and Solidarity, supported by their Federations: COSATU, NACTU and FEDUSA) and  Business: Chamber of Mines (CoM) and South African Mining Development Association (SAMDA)  An action plan was developed and consists of the following 5 objectives :  Ensuring the rule of law, peace and stability  Strengthening labour relations  Improving living and working conditions of mineworkers  Providing short to medium term measures to support growth and stability  Identifying long-term measures to support growth and stability 4

5. 2. REPORT ON PROGRESS, CHALLENGES AND INTERVENTIONS 5

6. 2.1. OBJECTIVE 1: ENSURING THE RULE OF LAW, PEACE AND STABILITY ACTIONS  Law enforcement  Enforce municipal by-laws  Establishment of Mine Crime Combating Forums (MCCFs)  Improve case management and capacity to speed up prosecutions  Denounce violence, taking active measures to eliminate violence and intimidation 6

7. Progress: Ensuring the Rule of Law, Peace and Stability Enforcement of the Law  Mine Crime Combating Forum (MCCFs) have been established in North West, Limpopo, Free State, Mpumalanga, Northern Cape and Gauteng  Monitoring of strikes and demonstrations in the mining sector with direct involvement of PROVJOCS and NATJOC continues  SAPS always enforce s205 of the Gathering Act 1993 to ensure the rule of law during strike action  Stakeholders continued to engage with employees to desist from violence and intimidation  SAPS, Mine Management, Mine Security and Unions are collaborating in implementing this framework agreement  Awareness campaigns as well as engagements with traditional leaders and mines are taking place 7

8. Progress: Ensuring the Rule of Law, Peace and Stability  The revitalisation of distressed mining communities programme is responding to the integrated development planning and implementation in prioritised mining communities and labour sending areas  Illegal Mining Stakeholder Forums have been established. Consists of mining company's, unions, and Government (SAPS - HAWKS, SANDF, DMR, Department of Home Affairs, Municipalities, etc.);  Forums have been established as follows: 1 in Mpumalanga, 2 in Gauteng, 1 in the Free State and 1 has been established in the Northern Cape to be fully operational by end of November 2015  DMR has initiated a programme to close and rehabilitate ownerless mines to address the issue of illegal mining. 8

9. Progress : Ensuring the Rule of Law, Peace and Stability: Case management since 2012 to date  4059 incidents were reported that led to the opening of case dockets, 761 people were arrested  Most of the cases are general crimes and include the illegal possession of gold and copper theft 9

10. Key Challenges: Ensuring the Rule of Law, Peace and Stability  Although there has been significant improvement in the working environment to promote peace and stability, there are a number of community challenges and they are being addressed as and when they occur through collaborative efforts  Illegal mining and theft of copper cables have been identified in certain areas  Inconsistent attendance at MCCFs meetings 10

11. Interventions: Ensuring the Rule of Law, Peace and Stability  Continue to strengthen monitoring capacity of any strike and protest actions in affected mining communities  Continue to engage with communities through various structures  Stakeholders will ensure that nominated officials to the MCCFs participate and provide reports to their respective principals on a quarterly basis  Continue support of initiatives to address illegal mining 11

12. 2.2. OBJECTIVE 2: STRENGTHENING LABOUR RELATIONS Actions  Develop a protocol for verification of union membership  Fast tracking resolutions of disputes over membership status, verification of membership figures, and recognition agreements  Re-evaluating the principles of majoriatarianism  Developing the capacity of union leaders and workers on labour relations matters  Mobilising technical expertise to identify and address basic factors underlying workplace conflict and improving negotiations structures at all levels 12

13. Key Progress: Strengthening Labour Relations  Develop a protocol for verification of union membership  Completed by the CCMA and is being used during this year  Fast tracking resolutions of disputes over membership status, verification of membership figures, and recognition agreements  CCMA gives priority to referrals from the mining industry and addresses the matters as and when they referred  Re-evaluating the principles of majoritarianism  The matter was referred to NEDLAC  NEDLAC agreed to the amendment of the Labour Relations Act  Labour Relations Act amendments came into operation on the 1st of January 2015  The amendments allows minority unions to have the opportunity to state their case directly to the CCMA.  The CCMA can now make a ruling whether or not the minority union can be allowed to have the necessary recognition rights. 13

14. Key Progress: Strengthening Labour Relations  Developing the capacity of union leaders and workers on labour relations matters  Capacity building courses for employees and managers are continuously provided by DOL (CCMA) and experts contracted in to provide the service, for example Best Practice workshop for supervisors on Managing Discipline and Incapacity for BECSA (BHP Billiton/South 32 Energy & Coal SA in Mpumalanga) took place  Training and outreach programs are continuously provided to union leadership and shop stewards eg. freedom of association and tolerance  Mobilising technical expertise to identify and address basic factors underlying workplace conflict and improving negotiations structures at all levels  Companies and the CCMA are bringing in experts to train different unions on how to deal with conflict and how to bring cases on behalf of union members 14

15. Key Progress: Strengthening Labour Relations  Labour Relations Indaba was held and agreed on the following resolutions:  The work of both the Minimum Wage Technical Task Team and the Labour Relations Technical Task team are being monitored by the Committee of Principals  This Committee, chaired by the Deputy President, brings together senior leadership of all the social partners which forms part of our social dialogue process under the auspices of the National Economic Development and Labour Advisory Council (NEDLAC) 15

16. Challenges: Strengthening Labour Relations  Stakeholders need to strengthen the full functionality of Future Forums to mitigate the negative impact of downscaling  In terms of management of retrenchments mining companies are required to submit notices to the DMR and the DOL (CCMA), in respect of the MPRDA section 52 and section 189 of the LRA;  There's a procedural challenge in that some mining companies experience challenges as to which comes first  Stakeholders have now agreed to develop a procedural framework to be completed by the end of September 2015. A workshop will be held by the second week of September 2015 16

17. Interventions: Strengthening Labour Relations  To continue emphasise efforts to promote a culture/environment of multi-unionism, to be explored within the context of the law  The 2014 Labour Indaba resolutions to be implemented and supported by stakeholders  Continue to implement capacity building programmes in labour relation matters for role-players in the mining industry 17

18. 2.3. OBJECTIVE 3: IMPROVING LIVING AND WORKING CONDITIONS OF MINEWORKERS Actions  Accelerate efforts to upgrade human settlement in mining towns (improve living working conditions)  Initiate a process to transform the migrant labour system  Assist workers with financial literacy and financial planning 18

19. Province & Municipality Total Number of Informal Settlements within Municipality NUSP Priority informal settlements Categorisation of the settlements after rapid assessments (March 2015) AB1B2Ctbc North West Rustenburg241018 1 Madibeng3028101343 Moses Kotane4421 1 Matlosana44 12 Free State Matjhabeng20 5114 Limpopo Greater Tubatse7731 3 Elias Motsoaledi5514 4 Lephalale221 1 Fetakgomo11 1 Mpumalanga Emalahleni12 39 8 Steve Tshwete88 8 Gauteng Westonaria76 213 Randfontein11 17 3 Merafong10 Mogale City87 1134681 Totals23221533552210117 Based on the rapid assessment informal settlements are categorised as follows: A:Full Upgrading = Rapid Formalisation, full services. B 1: Interim basic services = Provision of interim services leading to eventual formalisation B 2: Emergency basic services = Provision of emergency basic services BUT leading to eventual relocation C: Rapid relocation to a site which is already available or imminently available Progress: Accelerate efforts to upgrade human settlement in mining towns Informal Settlement Upgrading in the 15 prioritised mining towns 19

20. There is a strong correlation between the no. of households living in informal settlements & the no. of employees on LOA in the SPP municipalities Alignment of NDHS and DMR information on Informal Settlements and Housing options provided by Mining Companies as at 31 March 2015 SPP Provinces Total Number of Informal Settlements within SPP Municipalities in provinces Estimated no. of households in the informal settlements No. of employees on LOA (DMR) No. of employe es in hostels (DMR) No. of employee s staying in mine provided housing schemes (DMR) no. of employees on home ownership schemes (DMR) North West61800417022146087662915908 Free State206331124285720744726 Limpopo1511789103261949471947 Mpumalanga1630064717020516952 Gauteng11148 3161881016019159586324 Totals223149 483116 50268 02026 32931 857 Note: 40% of total workforce on LoA in SPP areas. Total workforce of 291 944. (DMR information) 20 Progress: Accelerate efforts to upgrade human settlement in mining

21. Progress: Accelerate efforts to upgrade human settlement in mining towns  In the 2014/15 financial year more than R419m was spent of the ring-fenced budget for informal settlement upgrading in prioritised mining towns in Free State, Mpumalanga and North West provinces  Overall over 5000 units have been delivered in the 15 prioritised mining towns  For 2015/16 financial year the Department of Human Settlements has aimed to improve this delivery figure and has ring-fenced R1 billion that is anticipated to deliver approximately 19 000 housing opportunities in mining towns 21

22. Progress: Accelerate efforts to upgrade human settlement in mining towns  Approximately 592 hectares of land has been acquired by municipalities supported by the DHS housing agency for the purposes of human settlement development in the prioritized mining towns  The majority of this land is in Limpopo (Fetakgomo) and North West (Rustenburg). A further 5,646 hectares has been identified for acquisition  In Marikana, two human settlement projects are being completed that will deliver over 500 units, built on land donated by Lonmin  The houses will cater for the community and mineworkers 22

23. Progress: Accelerate efforts to upgrade human settlement in mining towns. Marikana Ext. 2 as at the 4 th of Sep 2015 23

24. Progress: Accelerate efforts to upgrade human settlement in mining towns Marikana Ext. 2 as at the 4 th of Sep 2015

25. Progress: Accelerate efforts to upgrade human settlement in mining towns : Water and Sanitation  The Department of Water and Sanitation has through engagements with Municipalities and the Department of Cooperative Governance (DCoG) prepared high level water supply needs assessments for the 15 prioritised mining towns in the five provinces  In the North West Province their partnerships between government and mining companies through the SLP to develop water and sanitation infrastructure. The following mines are actively involved:  Lonmin, Samancor, IFM and Hernic Ferrochrome 25

26. Progress: Accelerate efforts to upgrade human settlement in mining towns : Economic Development  The DTI, Economic Development Department (EDD) and the Department of Small Business Development (DSBD) are facilitating both large and small scale industrial projects in the 15 mining towns and in the labour sending areas  These include:  North West and Limpopo: Interventions in Bojanala and the Greater Tubatse local municipalities for the establishment of a Platinum Group Metals (PGM) SEZ  Eastern Cape: The establishment of agro-processing SEZ in the labour sending area of OR Tambo District Municipality  Eastern Cape: The Vulindlela Industrial Park Revitalisation initiative in King Sabata Dalindyebo (KSD) Municipality 26

27. Progress: Health and Safety  The Department of Health (DoH) together with the Departments of Labour and Mineral Resources’ have been collaborating in establishing ONE STOP SERVICE CENTRES to assist ex mine workers with compensations, UIF and pension fund payments  One stop service centers have been established in Mthatha in the Eastern Cape and Carletonville in Gauteng  The Mthatha centre is fully funded by government and approximately 3 000 ex-mine workers have already made use of the centre’s services and over 1 500 have made use of the Carletonville centre’s services  More one stop service centres will be established in other provinces, beginning in the Northern Cape – Kuruman (2015/16) and Limpopo – Burgersfort (2015/16)  Health and Safety issues remain a priority for stakeholders  While there are still some challenges, there are signs of improvement in respect of safety in the mining industry 27

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29. Progress: Initiate a process to transform the migrant labour system  A Research team has finalised the Migrant Labour Study report  The Technical Task Team considered the report and agreed that a second phase should be undertaken to augment the report in order to include areas that were not addressed adequately, such as inclusion of impact of migration in neighbouring towns 29

30. Progress: Assist workers with financial literacy and financial planning : Financial literacy  STEPS TAKEN BY THE COMPANIES  A number of companies investigated the legality of Garnishing orders and actions have been taken by companies to address this matter  Example at Harmony, in December 2013 the number of emolument attachment orders against employees was 5113. This has been reduced to 4 981. At AngloGold Ashanti, there were 3110 orders and have since been reduced to 2514 by March 2015  A High Court case was instituted by one of the Chamber’s Platinum members against a large administrator in the Rustenburg area 30

31. Progress: Assist workers with financial literacy and financial planning : Financial literacy  EMPLOYEE FINANCIAL EDUCATION AND DEBT COUNSELLING  Assistance available to employees is published in a variety of ways; providing call centre numbers, help desks and referral agents to assist employees; providing financial education; providing on site tax service  Example of training: Harmony - The company had provided 7500 workers with financial training. The training was also made available to employees who have accepted voluntary separation packages.  REGULATORY DEVELOPMENTS  The National Treasury and National Credit Regulator have recently undertaken regulatory steps that aimed at addressing employee indebtedness.  The authorities were looking at: making it more difficult to obtain loans; stricter treatment of credit providers, particularly in respect of unsecured lending; debt collectors; and a code of practice for lawyers 31

32. Key Challenges: Improve Living and Working Conditions of Mineworkers  Housing for mineworkers remains a challenge although positive progress is being made to address housing and living conditions in the 15 prioritized mining towns – focus will have to be put on infrastructural bulk services  Access to mineworker information held by TEBA which is needed to be used to identify mineworkers eligible for compensation is still a challenge as TEBA is selling the information  Discussions with TEBA are ongoing on this matter 32

33. Interventions: Improve living and working conditions of mineworkers  Expansion of economic opportunities in the Labour Sending Areas (LSA’s)  Fast tracking of economic development and economic diversification projects in mining towns and labour sending areas e.g. SEZ’s  Mining companies to collaborate with government in the delivery of houses and water and sanitation infrastructure  The Government mineworker housing strategy is being developed to be linked with the housing subsidies and grants offered to mineworkers by the mining companies  Implement Mine Health and Safety Summit commitments  Development of a database of current and ex-mineworkers which will be accessible to stakeholders 33

34. 2.4. OBJECTIVE 4: PROVIDING SHORT TO MEDIUM TERM MEASURES TO SUPPORT GROWTH AND STABILITY Actions  Actively engage both local and foreign investors to ensure that South Africa remains an attractive investment destination  Ensure certainty in legislative and regulatory programmes  Assessment of economic and social conditions in surrounding and labour sending areas  Enforce and implement all elements and commitments of the Mining Charter  Ensure integration and implementation of Social and Labour Plans (SLP) and Integrated Development Plans (IDPs) in labour sending areas and mining areas  Develop and implement a communication strategy 34

35. Progress: Short to medium term measures to support growth and stability  Actively engage both local and foreign investors to ensure that South Africa remains an attractive investment destination  Stakeholders continue to engage with international and local investment community e.g. investor road shows and participation in international and local conferences  Plans for joined participation by stakeholders at major international mining forums  Ensure certainty in legislative and regulatory programmes  MPRDA Amendment Bill is still being reviewed by parliament, once finalised it will bring policy certainty  The Mining Phakisa discussion will also assist in resolving a number of mineral policy issues especially with regards to Mineral Beneficiation 35

36. Progress : Short to medium term measures to support growth and stability  Assessment of economic and social conditions in surrounding and labour sending areas  Socio economic diagnostic study was completed, and the study is assisting in the planning and implementation of developmental interventions  Enforce and implement all elements and commitments of the Mining Charter  Mining Charter Assessment for 2014 targets was completed and enforcement is taking place  To date a total of 463 orders have been issued in respect of the Mining Charter non-compliance  To date a total of 204 orders have been issued in respect of EMPs non-compliance  Ensure integration and implementation of Social and Labour Plans (SLP) and Integrated Development Plans (IDPs) in labour sending areas and mining areas  Ongoing MPRDA amendments also addresses strengthening of the integration  Develop and implement a communication strategy  Complete and to be implemented 36

37. Progress: Short to medium term measures to support growth and stability  Transfer Pricing : SARS and CoM made presentations on the Transfer Pricing to the Technical Task Team. The findings from SARS are as follows:  In the last five years, 28 audits were conducted and 7 were in the mining/extractive industry  The total value of the assessed audits was R20 billion. R9 billion of the assessment was from the (mining/extractive industry)  A total R5.8 billion was identified as Transfer mis-pricing which is regarded as an abuse of Transfer pricing. Out of the R5.8 billion, R3.4 billion was from (mining/extractive industry)  The analysis indicates that there is transfer mis-pricing within the mining and extractive industries  On the Mining Charter, there is currently a dispute on the notion of once empowered always empowered as well as the legality and constitutionality of the Mining Charter  Discussions with the Chamber of Mines have commenced to find resolutions on the matter

38. Key Challenges: Short to medium term measures to support growth and stability  Transfer pricing is a issues which the country needs to be continuously monitor  On the court case relating to the Mining Charter, the ownership issue remains a challenge- as stated earlier discussions have commenced with the Chamber to resolve the matter  Potential jobs losses is an emerging challenge which needs to be addressed.

39. Interventions: Short to medium term measures to support growth and stability  On transfer pricing, key recommendations from SARS were to:  Continue working with the World Bank to create an audit guide book which will assist Auditors to identify and audit transfer pricing in the mining sector  Built audit capacity to ensure that employees dealing with large business tax players are equipped to engage with the complexities of transfer pricing  On investment, stakeholders to continue promoting South Africa mining industry in respect of both international and local investors  Joined participation by stakeholders at major international forums such as China Mining and Canadian Mining Investment Forum (PDAC) 39

40. 40 Job losses: Intervention mechanism  In response to challenges relating to job losses, the Minister of Mineral Resources convened a mining leadership retreat of organised business; organised labour and Government (DMR and DoL) to address the potential job losses in the mining industry. ALL stakeholders (Government, National Union of Mineworkers, AMCU, Chamber of Mines, SAMDA, Solidarity and UASA) participated.  Stakeholders identified interventions that should be implemented to save jobs or minimise job losses, and to ameliorate impact on affected employees  The stakeholder declaration on the identified interventions was supported by all (including AMCU) and signed by all, except AMCU on 31st August 2015  A milestone plan is in place to implement the declaration - already being implemented

41. 41  Interventions Agreed upon by all Stakeholders are: 1.Delaying the implementation of retrenchments 2.Enhancing productivity and managing cost pressures 3.Accelerated concurrent rehabilitation activities to create alternative jobs for mineworkers 4.Facilitating sale of distressed and other mining assets 5.Other alternatives to avoid job losses 6.Support for mineworkers in the event that job losses cannot be avoided 7.Utilisation of the Multi National Companies’ procurement levy to also support employment opportunities for retrenched mineworkers 8.Streamlining the processes for downscaling, updating the database and exploring fiscal instruments 9.Investment promotion and market development 10. Communication and implementation plan Job losses: Intervention mechanism

42. 2.5. OBJECTIVE 5: IDENTIFYING LONG TERM MEASURE TO SUPPORT GROWTH AND STABILITY Actions  Reviewing of the long term Mining Strategy and supporting initiatives for restructuring, re-skilling to achieve competitiveness, sustainable growth and transformation is planned  Continue to promote development of infrastructure to unlock growth in mining industry and related sectors 42

43. Progress: on implementing long term measures to support growth and stability  Mining Phakisa has been formally announced by His Excellency President J.G Zuma. The outcomes of Mining Phakisa will be considered in the development of a long term strategy for the mining industry  Preparations for Mining Phakisa have commenced, and the Mining Phakisa will be held in October 2015 43

44. Challenges and Recommendations: long term measures to support growth and stability Challenges:  Need to enhance infrastructure to unlock the mineral development potential of the country Interventions:  All stakeholders to participate and support the upcoming Mining Phakisa 44

45. THANK YOU 45