Mining Industry Evolution in South Africa: A Comprehensive Overview

Background and Introductions SAIMM Mining Charter 2017 Breakfast Discussion 22 August 2017 Mr. Mpho Ronald Tlala Pr Eng, Bsc Eng, MEng Mining (Wits), MBL (UNISA), MPhil Ethics (Pretoria) Chairperson/Convenor SAIMM Mining Charter 2017 Breakfast Discussion

BACKGROUND INFORMATION The mining industry is still an important contributor to the economy of South Africa The finite nature of minerals makes them unique as compared to other industries There is increased awareness that the efficient management of mineral resources can make best use of the country s comparative advantage as well as to boost further export earnings and revenue generation towards economic and social transformation

The South African Mining Industry SA s Mineral Value: 6 main commodities PGM s: 254.3T produced in 2012, with Pt. accounting for 128.6T. #1 producer in the world, 2nd largest mineral export, 199215 employees. Gold: Manganese: 8.8MT produced in 2012, accounted for >20% of global production, 8646 employees. 167.2T produced in 2012, accounted for 6% of global production, ranked 6th largest in the world, largest component of mineral exports, 142193 employees. Diamonds: 7 million on carats produced in 2012, accounted for 12% of global production, 12081 employees Iron Ore: 67 MT produced in 2012, 4th largest component of mineral exports, 23368 employees. Coal: 258.6MT produced in 2012, largest part of mineral sales, 3rd largest component of mineral exports, 83245 employees. Source: Chamber of Mines

BACKGROUND INFORMATION (CONTINUED) Mining has evolved in the last two decades Increased corporate accountability and increased attention on the broader impacts of mining on society Several governments are reviewing their mining laws because of widespread perceptions they have not captured enough of the last decade s superprofits , e.g. in recent years Mexico, Australia, Zambia, Tanzania announced changes to their tax regimes aiming to capture more of the resource rent The mining laws and contracts in any country are similarly unique

Evolution of Mining Legislation in South Africa The Minerals Act (Act 50 of 1991) 1994: Election of the government 1996: Constitution of South Africa 1997: Green Paper on a Minerals and Mining Policy for S.A 1998: White Paper on a Minerals and Policy for S.A 2000: Draft Minerals Development Bill 2002: Mineral and Petroleum Resources Development Act 28 (MPRDA) 2002: Broad-Based Socio-Economic Empowerment Mining Charter 1 (On the 11th of October 2002, signed by then DME now DMR, with mining industry stakeholders, CoM, SAMDA, NUM) 2002: Draft Regulations under the Mineral and Petroleum Resources Development Act 2004: MPRDA was promulgated 2009: Mining Charter Impact Assessment Report by DMR (October 2009) 2010: Amendment of the Broad-Based Socio-Economic Empowerment for the South African Mining and Minerals Industry (September 2010) 2010: Royalty Act 2011: Beneficiation Strategy 2014: 8th of December 2014, changes were gazetted to the National Environmental Management Act, 1988 (NEMA) Environmental Impact Assessment (EIA) regulations, 2015: Assessment of the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry (Mining Charter), May 2015 2015: Amendments to the Minerals and Petroleum Resources Development Act, 2002 (MPRDA) were referred back to Parliament on the 16th of January 2015. 2017: Mining Charter 3 was released by the DMR on 15 June 2017

MPRD Act Main Objectives Recognise State custodianship of all mineral resources within the Republic of South Africa, Promote equitable access to the nation s mineral resources, especially among historically disadvantaged South Africans, Promote investment, growth and employment in the minerals industry thus contributing to the country s economic welfare, Provide for security of tenure in respect of existing prospecting and mining operations, Give effect to section 24 of the Constitution by ensuring that the nation s mineral resources are developed in an orderly and ecologically sustainable manner, and Ensure that holders of mining rights contribute towards the socio-economic development of the areas in which they are operating

Mining Charter Elements Human Resource Development (Skills Development Act 87 of 1998) Employment Equity (Employment Equity Act 55 of 1998) Migrant Labour (Immigration Act 13 of 2002) Mine Community Development Housing and Living Condition Procurement (Preferential Procurement Policy Framework Act 5 of 2000) Ownership and Joint Venture (Competition Act of 1998) Beneficiation

The African Mining Vision: Transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development Government in February 2009. The African Mining Vision (AMV) was adopted by African Heads of State and It represents a response by African Ministers to the paradox of living in a continent with huge natural resources that exist alongside pervasive poverty and disparities. It is innovative in that it goes beyond making improvements to mining regimes in countries, to establishing how mining can better and genuinely contribute to local, national and regional development. Locally, it considers how workers and communities can derive sustainable benefits from mining, while also protecting their environment. with companies to generate a fair source of revenues from resource extraction, and supports local procurement. At a national level, it considers how countries can better negotiate contracts Finally, it considers how mining can be better integrated into industrial and trade policy at a regional level.

Questions? Why there has been a reform of mining laws in the South African mining industry? Are the legislators over-doing the changes? If yes, why? What can we learn from the failures and successes achieved to date? What are the challenges towards the implementation of the current mining laws and their respective proposed amendments? How can all the stakeholders in the mining industry collaborate towards a sustainable mining industry with inclusive economic growth and job creation opportunities?

We thank you all for taking your time to engage on this important We thank you all for taking your time to engage on this important subject in the South African industry! subject in the South African industry! Mr Warren Beech and Hogan Mr Warren Beech and Hogan Lovells Mr Otsile Matlou and Mr Otsile Matlou and ENSafrica Mr Nic Mr Nic Roodtt Roodtt and and Fasken Ms Camielah Jardine and SAIMM staff members Ms Camielah Jardine and SAIMM staff members Mr Donovan Munro and Worley Parsons management and their staff Mr Donovan Munro and Worley Parsons management and their staff SAIMM Technical Advisory Programme members SAIMM Technical Advisory Programme members Lovells ENSafrica Fasken Martineau Martineau Mr Mpho Ronald Tlala Mr Mpho Ronald Tlala Chairman/ Chairman/ Convenor Convenor SAIMM Mining Charter 2017 Breakfast 2017 SAIMM Mining Charter 2017 Breakfast 2017 Pr Eng, Bsc Eng, MEng Mining (Wits), MBL (UNISA), MPhil Ethics (Pretoria) 082 883 5144 082 883 5144 mpho.tlala@mrtmining.co.za mpho.tlala@mrtmining.co.za