Resources Progress report on the Mining Charter 9 November 2011
Objective To provide feedback to the Portfolio Committee on Mineral Resources with reference to progress being made on the Mining Charter and s strategy on youth development 2
Agenda Executive summary Progress on elements of the Mining Charter Scorecard MINING Reporting Human resource development Ownership Community development Housing and living conditions Procurement and enterprise development Sustainable development and growth Employment equity Beneficiation CHARTER Enterprise development strategy for youth (job creation) Conclusion 3
Executive summary Element Status 2010 Status 2014 Element Status 2010 Status 2014 1 Reporting 6 Human resource development 2 Ownership 7 Community development 3 Housing and living conditions 8 Sustainable development and growth 4 Procurement and enterprise development 9 Beneficiation 5 Employment equity LEGEND On track In progress At risk Back 4
Progress on elements of the Mining Charter Scorecard 5
Reporting Annually Submitted Submitted 1 Progress on the Mining Charter is reported on annually to the DMR and in s integrated annual report Back 6
Ownership Background 15% 28% 2010 55% 2 Eyesizwe 7
Ownership 15% 28% 2010 55% 2 Board of Directors Sipho Nkosi Wim de Klerk 67% of the Board are HDSA representatives Noluthando Langeni Zwelibanzi Mntambo Chris Griffith Jurie Geldenhuys Rick Mohring Nkunku Sowazi Ufikile Khumalo Len Konar Jeff van Rooyen Rain Zihlangu
Ownership BEE ownership 15% 28% 2010 55% 2 Coal Source : Annual Report 2010 Sands Base Metals and Industrial Minerals Sishen Iron Ore 9
Ownership BEE Benefit 15% 28% 2010 55% 2 Dividends paid over 4.5 year period - R2.86B Source : Annual Report 2010 10
Ownership Market capitalisation in hands of HDSA 15% 28% 2010 55% 2 R34.9 billion in HDSA s hands % HDSA 55% 70000 60000 50000 40000 30000 South African market capitalisation of company : R64 billion 33.1% 64 071 62.2% 39 505 2014 26% 20000 24.2% 15% 2010 10000 0 9 324 7 508 Turnover 3 205 2 408 Attributable Income Market Cap (ZARm) Actual Jun-11 Jun-10 % change BEE entrepreneurs (52.10%) + Employees (2.97%) = Percentage HDSA ownership (55.07%) is a new generation company which is HDSA owned, controlled and managed Note :The recently announced proposed transaction with Tronox will not impact Exxara s ownership Back 11
Housing and living conditions Housing Strategy = Baseline Baseline On target 3 Employees receive a housing or living-out allowance either as an allowance or part of inclusive package 232 employees benefit from a home ownership subsidy Home Ownership 83% = 9750 R137 million Employees Rent, company housing and selfprovided accommodation spent on housing allowances in 2010 Sharing hostel accommodation 0.25% 24 people at Tshikondeni Accommodation in single quarters 11.6% 1 person per room Negotiation category employees Family quarters /flats 5.05% Home owners (bought company property) Houses rented from company Self-provided accommodation 10.5% 52.88% 19.73% Note : Nutritious meals certified by dieticians at operations with hostels 12
Arnot Coal housing project Baseline Baseline On target 3 Family accommodation for employees Flats converted from hostels for employees 13
Housing and living conditions Baseline Baseline On target 3 Successes Eco-friendly housing in Lephalale 797 housing units designed using green design principles Aligned to the DOE energy efficiency goals received the Nedbank Green Mining Award in 2010 Optimum building orientation Grey-water recycling Evaporative cooling system 50-70% local labour 14
Lephalale eco-friendly housing Baseline Baseline On target 3 All future housing projects by will follow this model Back 15
Procurement and enterprise development 15% 40% 2010 34% 4 Preferential procurement from BEE entities Procurement of consumables Procurement of services Procurement of capital goods 5% 10% 25% 24% 30% 43% 0% 10% 20% 30% 40% 50% Actual 40% 50% Procurement from women enterprises = 3% Youth development strategy will address shortfall Focus on raising performance of services procurement 2014 = 70% 2014 Multinational suppliers contribution towards SED Systems and structures in place to receive contribution On track for 2014 Back 16
Employment equity 40% 41% 2010 51% 5 80% 70% 76% 60% 50% 40% 30% 20% 10% 50% 2014 37% 29% 30% 20% 20% 30% 42% 55% 40% 57% 15% n/a 46% 0% Top management Senior management Middle management Junior management Core and critical skills 2010 has exceeded 2010 and most 2014 Employment Equity targets Back 17
Employment Equity Women and People with disability Women Disability 10% 13.4% 2010 2% n/a 2010 14.7% 1.4% 5 13.4% 14.7% 10.0% 2.0% 1.4% Woman in Management People with Disability
Human resource development 3% 4.6% 2010 6.2% 6 Total HRD expenditure (R0.12b) Total annual payroll (R1.93b) = 6.2% 19
Human resource development 3% 4.6% 2010 6.2% 6 Artisan and learnerships R23.7m An average of 430 engineering learners receive training each month which makes up 5.4% of all learnerships in the mining sector even though employees only make up 2.5% of the industry For 2011, 76% of learner intake was black (HDSA) Over the last 5 years has qualified over 500 artisans and 108 engineers 20
Human resource development 3% 4.6% 2010 6.2% 6 ABET training 83% of all employees are functionally literate 156 employees are currently in the ABET training 83% average is 52% R5.3m Every employee has the opportunity to participate in ABET training at company cost 21
Human resource development 3% 4.6% 2010 6.2% 6 Bursaries and bridging school 103 bursars are studying full time at universities at a cost of R11 million per annum 88 Professionals in Training are participating in Internships at a cost of R40 million per annum 66% of Bursars are HDSA s 20% are Women 30 bursars in the bridging programme at a cost of R2,2 million per annum Total of 210 students to date 22
Human resource development 3% 4.6% 2010 6.2% 6 Other training initiatives R85.3m (since inception) Functional, Compliance and Individual Development Back 23
Community development 1% n/a NPAT 2.5% NPAT 7 Mid 2007 to September 2011 Community Development Total Spent: R222.9 million During 2010 R39 million was invested in socio-economic development which is 2.5% NPAT (Net Profit after Tax) For the period 2007- September 2011 the socioeconomic development spend was R222.9 million From s Social and Labour Plans over 670 jobs have been created which translates into an indirect benefit to 11 400 people from local communities Back 24
Sustainable development and growth Baseline n/a On target 8 Health and Safety LTIFR 70% of actions as per the targeted 2014 tripartite action plan for Health and Safety have been implemented All our employees and contractors undergo medicals in terms of occupational health The Voluntary Counseling and Testing (VCT) rate has increased from 36% in 2008 to 75% in 2011 R14.9 million has been invested in HIV/Aids Programmes between 2008-2010 0.33 0.46 0.33 0.25 0.15 2007 2008 2009 2010 2011 LTIFR has dropped from 0.46 in 2008 to 0.15 in 2011 due to the implementation of our safety programmes. Number of fatalities The mining industry has identified fall of ground as a major contributor towards fatalities. Resources volunteered to implement a pilot project at Arnot mine on early shift examination to reduce FOG. In addition Arnot is implementing a netting project to further manage the risk of FOG. These initiatives have proved very positive and will be rolled out to all underground mines. 5 4 3 3 2 2007 2008 2009 2010 2011 25
Sustainable development and growth Environment Baseline n/a On target 8 Fully compliant in terms of Environmental Management Plans We are focusing on ensuring that all our rehabilitation plans are up to date with the rehabilitation process All closure plans have been submitted and we are focusing on sustainable closure of operations Aspire to be compliant with all permit requirements, particularly water use licenses 16 water use licenses have been approved 4 remaining operations are awaiting approval has an Energy and Carbon Management Programme to manage and reduce our CO2 emissions as well as a Water Management Programme to reduce water usage and pollution 26
Sustainable development and growth Baseline n/a On target 8 Environment Chartered Secretaries/JSE annual report awards 1 st place Sappi award for best sustainability reporting Merit award in Top 40 category 6 th place Ernst & Young excellence in corporate reporting 2 nd place for sustainability for 2010 Business and Climate Change R7.5 million Global Change and Sustainability R12.6 million Association of Certified Chartered Accountants Biodiversity and Business R3.5 million sponsors three tertiary chairs as part of its research, tuition and advocacy initiatives in sustainability 27
Sustainable development and growth Baseline n/a On target 8 South African based research support has a research and development division Further R&D is commissioned through the departments of CSIR, Council for Geoscience, SAMMRI, Mintek and other South African based organisations has achieved the 2014 target of 100% South African based sampling Back 28
Beneficiation Partnership 9 Partnership with SAMMRI Conduct medium to long-term research in beneficiation Develop value-adding technologies and broaden the skills base in South Africa Thermal : Char = 1 : 5 Resulting in : Increased job creation Increased taxation has integrated beneficiation as part of its core business strategy in addressing business growth and industry transformation Reductants 140 000 tonnes of Char per annum Triple production by 2015 Feasibility studies to produce 450 000 tonnes of market coke per annum Mineral Sands Downstream beneficiation opportunities for titanium slag and zircon Local production facility has been established for new titanium metal production technologies 29
Beneficiation successes Partnership 9 Original Product Existing operations Coal small nuts Ilminite Volume (tonnes 000) 205 820 Projects under construction Semi soft coking coal Coal small nuts 752 350 Price (Rand per tonne) 500 1 106 995 650 Beneficiated product Char TIO2 Slag Low manganese pig iron Market coke Char Volume (tonnes 000) 128 400 280 326 222 Price (Rand per tonne) 2 347 3 234 3 559 3 789 3 672 Future potential TIO2 Slag 121 3 234 TIO2 Pigment 110 20 999 Back 30
Proposed strategy on job creation and youth development 31
Enterprise development strategy for youth (job creation) Education Ensure well functioning schools Professional career guidance Skills development Technical skills centres Tertiary Education Bridging programmes Bursaries Business Incubator Business Skills Development Mentorship and Coaching Procurement alignment Business Hubs 32
Enterprise development strategy for youth (job creation) The business hub will incubate 20 new enterprises per annum resulting in 100 new jobs 33
Enterprise development strategy for youth (job creation) Proposed implementation plan Year No of hubs Enterprises (20per Hub) Jobs to be created 2012 5 100 500 Cumulative planned job creation 2013 8 160 800 2014 10 200 1000 2015 15 300 1500 3800 Total 38 760 3800 500 1300 2300 2012 2013 2014 2015 It is envisaged that by 2015, 38 business hubs will be established thereby creating 760 enterprises. At a ratio of 5 jobs per enterprise this translates into the creation of 3 800 jobs 34
Grootegeluk Medupi Expansion Project The total project value of GMEP is R9,5 billion 4200 people received skills training and 11 470 job created during the construction phase has contributed more than R190.2 million to 490 permanent jobs will be created for the GMEP operation infrastructure development (roads, water, capacity building) through the Lephalale 42% of total spend has been to local business (120 companies) Development Forum Back 35
Conclusion is committed to the transformation objectives of government Whilst progress has been made, we are aware of the challenges we face and look forward to focusing on them in the short to medium term Back 36
Thank you