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PRESENTATION TO THE SELECT COMMITTEE ON: FRAMEWORK AGREEMENT FOR A SUSTAINABLE

MINING INDUSTRY

22 September 2015

TABLE OF CONTENTS

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1. BACKGROUND: FRAMEWORK

AGREEMENT FOR A SUSTAINABLE MINING

INDUSTRY

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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

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2. REPORT ON PROGRESS, CHALLENGES

AND INTERVENTIONS

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2.1. OBJECTIVE 1: ENSURING THE RULE OF LAW, PEACE AND STABILITY

ACTIONSLaw 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

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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

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.

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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

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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

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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 mining11

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 levels12

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

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

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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)

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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

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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

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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

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Province & Municipality

Total Number of Informal Settlements

within Municipality

NUSP Priority informal

settlements

Categorisation of the settlements after rapid assessments (March 2015)

A B1 B2 C tbcNorth West Rustenburg 24 10 1 8 1 Madibeng 30 28 10 13 4 3 Moses Kotane 4 4 2 1 1 Matlosana 4 4 1 2 Free State Matjhabeng 20 20 5 1 14 Limpopo Greater Tubatse 7 7 3 1 3 Elias Motsoaledi 5 5 1 4 4 Lephalale 2 2 1 1 Fetakgomo 1 1 1 Mpumalanga Emalahleni 12 12 3 9 8Steve Tshwete 8 8 8Gauteng Westonaria 7 6 2 1 3 Randfontein 11 11 1 7 3 Merafong 10 10 10 Mogale City 87 87 11 3 4 68 1Totals 232 215 33 55 22 101 17

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 townsInformal Settlement Upgrading in the 15 prioritised mining towns

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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 employees staying in mine

provided housing schemes (DMR)

no. of employees on

home ownership schemes (DMR)

North West 61 80041 70221 46087 6629 15908Free State 20 6331 12428 5720 744 726Limpopo 15 11789 10326 194 947 1947Mpumalanga 16 3006 4717 0 2051 6952Gauteng 111 48 316 18810 16019 15958 6324Totals 223 149 483 116 502 68 020 26 329 31 857Note: 40% of total workforce on LoA in SPP areas. Total workforce of 291 944. (DMR information)

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Progress: Accelerate efforts to upgrade human settlement in mining

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

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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

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

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

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

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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

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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

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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

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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

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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

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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

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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

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

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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

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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

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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

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.

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)

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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

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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 assets5. 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 development10. Communication and implementation plan

Job losses: Intervention mechanismJob losses: Intervention mechanism

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

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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

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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

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THANK YOU

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