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ARM’s implementation of the Mining Charter
Presentation to the Portfolio Committee 9 November 2011
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Table of contents Page
ARM overview 2
Implementation of Mining Charter: 16
− Ownership 17
− Procurement and enterprise development 18
− Employment equity 20
− Human resource development 23
− Mine community development 30
− Housing and living conditions 31
− Sustainable development 32
ARM’s commitment to job creation 38
Conclusion 40
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1) The alleviation and eradication of poverty.
2) The creation of jobs and opportunities for all South Africans, in particular, marginalised and historically disadvantaged persons.
3) The provision of education, skills, business and other opportunities to:
a) Women
b) Youth
c) Disabled persons
African Rainbow Minerals (ARM)
ARM is a patriotic and proudly South African company that is committed to:
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4) The improvement in the living conditions and lifestyles of all our people living in the rural and poor urban areas.
5) Contributing to nation building and a common South Africanism amongst all our people.
African Rainbow Minerals (ARM)
ARM is a patriotic and proudly South African company that is committed to:
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ARM was founded by mining entrepreneur Patrice Motsepe in the early 1990s.
Patrice Motsepe started with contract mining in the early 90’s and then purchased old, marginal and some closed mines from Anglo Gold to create ARM Gold.
After a number of transactions ARM Gold was listed on the Johannesburg Stock Exchange in 2002.
ARM history
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In 2003 ARM Gold merged with Harmony in a transaction which also involved the take-over of Anglovaal Mining and the creation of ARM in its current form as a diversified mining company.
ARM paid market value and a significant premium to acquire all of its assets.
There were no discounts or assisted/ facilitated funding.
ARM history
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ARM group structure
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ARM ownership structure
African Rainbow Minerals
& Exploration Investments
(Pty) Limited (ARMI)
(Motsepe Family Trusts)
ARM Broad-Based
Empowerment Trust (ARM
BBEE Trust)
Free Float
41%
13%
46%
Denotes a 100% empowered entity
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Beneficiary trusts have been created for the purpose of uplifting and benefiting rural and poor urban communities in seven provinces in South Africa.
The provincial beneficiary trusts are led by trustees who are key leaders in their respective communities and provinces, to ensure effective partnership between the communities and the ARM BBEE Trust.
Some of the provincial trustees include respective traditional leaders who assist in identifying the needs of the communities to ensure that projects have maximum impact in the upliftment and development of the communities.
The ARM BBEE Trust
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Projects undertaken by the trusts include anti-poverty initiatives, with emphasis on the continuous development and self-help initiatives such as training in the communities, agricultural projects and other community-based projects.
Partnership with the community and other stakeholders is key to the success of each project.
A total of 73 projects has been completed over the last four years in various provinces amounting to R51 million.
The ARM BBEE upliftment trusts
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Education
New schools and creches, laboratories and bursaries
Health care
New clinics, hospitals and HIV AIDS prevention programmes
Welfare
Anti-poverty initiatives, construction of community centers, disaster relief program
Enterprise development
Providing funds, assets or other resources including training to small business
ARM BBEE rural trusts goals and objectives
The main goals and objectives of the rural upliftment trusts include:
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The Kwa-Zulu Natal Rural Upliftment Trust
The Limpopo Rural Upliftment Trust
The Eastern Cape Rural Upliftment Trust
The Northern Cape / Mpumalanga Rural Upliftment Trust
The North West / Free State Rural Upliftment Trust
The five rural upliftment trusts
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NEHAWU Investment Company (Pty) Ltd
SADTU investment Holdings (Pty) Ltd
National Women’s Upliftment Trust
Church Groups
Individuals, 158 respected community-based leaders have been identified throughout South Africa to be shareholders in the ARM BBEE Trust.
Other beneficiary trusts
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Net value of the Trust (before tax) Value per share Total Value
Bank debt owing R58 per share R1.2 billion
Net value R120 per share R2.5 billion
Net value of the Trust based on a share price of R178 per share
ARM BBEE Trust: Financial review*
*All information is as at 3 October 2011
Over the four years up to June 2010 the ARM BBEE Trust has distributed
R51 million to the trust beneficiaries
15 Edigang Primary School Project, Northern Cape where the ARM BBEE Trust built a school.
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The Imvelo Yomama Sewing Project, in Mpumalanga, sponsored by the ARM BBEE Trust
where women produce school tracksuits to be sold commercially.
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The ARM BBEE Trust sponsored 80 bicycles to enable school children in the Camden Village in
the Northern Cape to travel safely to school.
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Inkosi Ntshangase at the Mabophe Crop Production Project sponsored by the ARM BBEE Trust
in KwaZulu Natal.
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Modikwa Platinum Mine ownership
ARM Platinum (Pty)
Limited
Modikwa Local Community
Companies ARM Mining Consortium
Modikwa Platinum Mine
83% 17%
50%
100%
ARM assisted the Modikwa Local Community Companies with their contributions for the development of the mine
in the order of R300 million. When additional funding was required, ARM assisted the Modikwa Local Community
Companies. The value of the Modikwa Local Community Companies’ investment in the Modikwa Platinum Mine is
approximately R400 million.
Denotes an empowered entity
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All ARM operations individually submitted their Mining Charter reports to the respective regional Department of Mineral Resources (DMR) as required by legislation.
The DMR audited Khumani Iron Ore Mine on their submitted Mining Charter report in September 2011.
Copies were also submitted to the Chamber of Mines to enable them to consolidate the report on behalf of the industry.
The Mining Charter
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Meaningful economic
participation
Full shareholder rights
2010 Target Achieved 2010 Target Achieved
Beeshoek Iron Ore Mine 15% 41.41% 15% 41.41%
Khumani Iron Ore Mine 15% 41.41% 15% 41.41%
Black Rock Manganese Mines 15% 41.41% 15% 41.41%
Dwarsrivier Chrome Mine 15% 41.41% 15% 41.41%
Modikwa Platinum Mine 15% 31.95% 15% 31.95%
Two Rivers Platinum Mine 15% 36.03% 15% 36.03%
Nkomati Nickel Mine 15% 27.35% 15% 27.35%
Ownership
ARM has met and exceeded the 2014 Mining Charter targets for ownership.
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2010 Mining Charter F2010
actual
F2011
target
F2011
actual
F2014
target
BEE Capital Procurement n/a* 10% (DMR) 49% 40%
BEE Services Procurement n/a* 40% (DMR) 51% 70%
BEE Consumables
Procurement
n/a* 15% (DMR) 32% 50%
Social funding from
multinationals
n/a* 0.5% - 0.5%
Total BEE Procurement 52.5% 57.5% (own) 44.4% 60.0%
Procurement and enterprise development
* The split between capital, services and consumables was not a requirement prior to the revised Mining Charter which came
into effect in 2010.
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Procurement of
capital goods
Procurement of
services
Procurement of
consumables
2010
Target
Achieved 2010
Target
Achieved 2010
Target
Achieved
Beeshoek Iron Ore Mine 5% 47% 30% 15% 10% 22%
Khumani Iron Ore Mine 5% 52% 30% 13% 10% 17%
Black Rock Manganese
Mines
5% 27% 30% 28% 10% 25%
Dwarsrivier Chrome Mine 5% 31% 30% 46% 10% 28%
Modikwa Platinum Mine 5% 25% 30% 43% 10% 49%
Two Rivers Platinum Mine 5% 60% 30% 77% 10% 32%
Nkomati Nickel Mine 5% 37% 30% 69% 10% 16%
Procurement and enterprise development
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Employment equity
HDSA representation Charter target ARM (as at end June 2011)
Board members 47%
Black women on the Board 13%
Top management 20% 38%
Senior management 20% 40%
Middle management 30% 50%
Junior management 40% 69%
ARM’s Employment Equity report was submitted to the Department of Labour
on 28 September 2011 and complies with Section 21 of the Equity Act.
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Employment equity
6% 7% 10% 10%
12% 13% 14%
28% 26%
29% 33%
43% 42%
48%
0%
10%
20%
30%
40%
50%
60%
F2005 F2006 F2007 F2008 F2009 F2010 F2011
Female employees HDSA in management
Historically Disadvantaged South Africans (HDSA)
Of the 14% female employees in F2011 11% were black females and 3% white
females
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Top management Senior management Middle management Junior management Core skills
2010
Target
Achieved 2010
Target
Achieved 2010
Target
Achieved 2010
Target
Achieved 2010
Target
Achieved
Beeshoek Iron Ore
Mine
20% less than
10%
20% 50% 30% 41% 40% 54% 15% 48%
Modikwa Platinum
Mine
20% 54% 20% 25% 30% 47% 40% 69% 15% 94%
Two Rivers Platinum
Mine
20% 13% 20% 14% 30% 20% 40% 46% 15% 86%
Khumani Iron Ore
Mine
20% less than
10%
20% 27% 30% 28% 40% 56% 15% 56%
Nkomati Nickel Mine 20% 25% 20% 11% 30% 50% 40% 75% 15% 85%
Black Rock
Manganese Mines
20% less than
10%
20% 67% 30% 36% 40% 49% 15% 42%
Dwarsrivier Chrome
Mine
20% less than
10%
20% 40% 30% 42% 40% 44% 15% 76%
Employment equity
Joint venture
structures
On-mine
management
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Human resource development
% of payroll spent on employee training
3.3% 3.4%
7.5%
6.0%
3.6%
6.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
F2006 F2007 F2008 F2009 F2010 F2011
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Over R92 million was spent on training in the 2011 financial year representing over
R4 700 per employee.
R50 million was spent on training in the 2010 financial year.
We are in the process of establishing or have the following Learning Academies with capacity for:
- Leadership (Management and Supervisory) - 150 trainees;
- Mining (Shiftboss / Mine Overseer) – 50 trainees;
- SHERQ – 45 trainees;
- Engineering – 350 trainees; and
- Operator – 500 trainees.
Human resource development
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This will have a centralised e-learning component with practical training and evaluation.
Our training centers are MQA accredited in the mining, engineering and ABET disciplines.
Human resource development
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This represents 2% learnerships to all full time employees.
The bursary numbers include study assistance to own employees (120), bursaries
to children of employees and bursaries to community members.
2006 2007 2008 2009 2010 2011
Learnerships 175 257 286 204 216 231
Bursaries 84 49 281 283 124 220
0
50
100
150
200
250
300
350
Nu
mb
er
Number of learnerships and bursaries
Human resource development
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Human resource development expenditure as %
of payroll
2010 Target Achieved
Beeshoek Iron Ore Mine 3% 3.5%
Khumani Iron Ore Mine 3% 6.2%
Black Rock Manganese Mines 3% 2.9%
Dwarsrivier Chrome Mine 3% 3.4%
Modikwa Platinum Mine 3% 2.7%
Two Rivers Platinum Mine 3% 11.0%
Nkomati Nickel Mine 3% 3.4%
Human resource development
Most of the ARM operations have exceeded the 2010 target of 3%
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Support for SA based research and development: R1 047 409.
Minerals Education Trust Fund: R1 816 920.
External bursary support to individuals, NUM (JP Marks Fund) and NUMSA (NUMSA Education Fund): R1 798 882.
Talent development programmes such as internships, vacation work etc. R5 520 233
Over and above the training expenditure on our employees ARM has spent the
following on external training and development:
This is a total of R10 212 444 in additional training expenditure
Human resource development
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The graduate training programme is for people who have already graduated but have little or
no experience.
We currently have the following graduates in the system:
• 2 x Mining Engineers
• 2 x Mechanical Engineers
• 1 x Electrical Engineer
• 2 x Geologists
• 1 x Metallurgist.
We have appointed the following number of graduates at managerial levels:
• 5 x Engineers
• 2 x Geologists
• 2 x Surveyors
• 7 x Metallurgists
• 2 x Accountants
• 1 x HR Superintendent
• 1 x Mining Engineer
Our graduates comprise the following demographics: 13 Black males, 11 Black females,
1 Indian male, 2 White males
Human resource development
Graduate training programme
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ARM invests in surrounding communities through its Social Labour Plans (SLPs), Local Economic Development (LED), and the ARM Broad-Based Economic Empowerment Trust (the ARM BBEE Trust).
In the 2011 financial year ARM invested R142.5 million through SLPs, LED and the ARM BBEE Trust.
In the preceding 5 years ARM invested approximately R300 million in the upliftment of communities.
Mine community development
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ARM operations do not have hostels, except at the Black Rock Manganese Mines which will be fully converted by 2014.
ARM actively facilitates home ownership for its employees.
Housing and living conditions
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Improvement of
environmental
management
Improvement of
mine health and
safety standards
SA research and
laboratory facilities
Implementation of
approved EMPs
Implementation of
tripartite action on
safety
Percentage of
samples in SA
facilities
2010
Target
Achieved 2010
Target
Achieved 2010
Target
Achieved
Beeshoek Iron Ore Mine 100% 100% 100% 94% 100% 100%
Khumani Iron Ore Mine 100% 92% 100% 94% 100% 100%
Black Rock Manganese
Mines
100% 42% 100% 94% 100% 100%
Dwarsrivier Chrome Mine 100% 100% 100% 93% 100% 100%
Modikwa Platinum Mine 100% 92% 100% 94% 100% 100%
Two Rivers Platinum Mine 100% 83% 100% 93% 100% 100%
Nkomati Nickel Mine 100% 100% 100% 94% 100% 100%
Sustainable Development
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Focus on safety
1.2
1.3
0.9
1.2
0.7 0.8
0.4
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
F2005 F2006 F2007 F2008 F2009 F2010 F2011
Lost Time Injury Frequency Rate (LTIFR) per 200 000 hours worked
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ARM operations’ safety record
Operations as at 30 June
2011
Total Fatality Free
Shifts Worked
Date of Last Fatality
Modikwa Platinum Mine 8 031 723 April 2006
Two Rivers Platinum Mine 2 437 357 July 2007
Beeshoek Iron Ore Mine 1 857 443 March 2003
Nkomati Nickel Mine 1 736 437 September 2008
Khumani Iron Ore Mine 1 608 180 February 2009
Black Rock Manganese Mine 1 121 600 April 2009
Cato Ridge Smelter 964 089 February 2008
Dwarsrivier Chrome Mine 741 551 January 2009
Machadadorp Smelter 118 940 February 2011
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All mines have approved EMPRs.
All operations have drafted closure plans according to the conditions of their EMPRs.
Each operation has a Conservation Trust Fund.
Most operations are ISO 140001 certified and undergo annual systems audits as well as legal compliance audits by external specialists and the ISO certification body.
Sustainable development
Environmental management
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Good progress has been made in reducing the number of noise induced hearing loss cases submitted for compensation from 58 cases (0.15 % of total workforce) to 33 cases (0.08 % of total workforce).
Occupational health is included in induction training programmes. Occupational health risks are also discussed with employees during annual occupational health surveillance.
All employees and contractors undergo medical surveillance.
Sustainable development
Health
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Chronic diseases are monitored and treatment facilitated - the number of new Pulmonary TB cases has been reduced to 68 from 104 in the previous financial year.
ARM has developed a customised, detailed HIV & Aids induction programme and has peer education programmes at all operations. ARM's HIV & Aids programmes have been extended to the communities.
Sustainable development
Health
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ARM’s commitment to job creation
For the 2011 financial year we created 3 permanent position per calendar day within ARM.
During the last 5 financial years we have created an average of 2.5 permanent jobs per
calendar day. This is a total of 4 553 jobs.
It is ARM policy to recruit, as far as possible, from the surrounding communities to ensure
maximum impact with the unemployed figures in local areas.
11 805 13 632
17 936 16 777
22 776
28 704
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
F2006 F2007 F2008 F2009 F2010 F2011
Number of employees who work on our mines (on a 100% basis)
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ARM is a signatory to the National Skills Accord committing the organisation to increased numbers in learnerships, internships, bursaries and closer relations with further education and training institutes.
Once logistical constraints are resolved, we have significant volume growth which will create in excess of 10 000 jobs in the next 5 years
These positions will be filled mostly from communities surrounding our operations. .
This needs to be done as an imperative for ARM to achieve it’s growth strategy.
ARM’s commitment to job creation
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1) To continue to exceed the BEE and transformational requirements as stated in the Mining Charter or any other applicable codes or regulations.
2) To work in partnership with labour, government and community-based organisations to create thousands of new jobs and to ensure that as many of our people as possible participate and benefit in the development and growth of our economy.
Conclusion
ARM is committed:
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Please note that this presentation is available on the ARM website www.arm.co.za