Overview...Overview...

Corporate Profile

Financial activities

IDC’s BEE mandate

IDC’s position on Empowerment

IDC’s Empowerment policy

IDC’s Empowerment portfolio

Empowerment in mining

Future initiatives in mining

IDC’s role in IDC’s role in BEE Mining SectorBEE Mining Sector

Corporate Profile ...Corporate Profile ...

Self-financing state-owned development finance institution (Act No 22 of 1940)

Provides financing to entrepreneurs engaged in competitive industries

Follows normal company policy and procedures in its operations

Pays income tax at corporate rates and dividends to its shareholder

Independent Board of Directors

Reports on a fully consolidated basis, with its Annual Report freely available to the public

IDC Head OfficeSandton

Vision ...Vision ...

“To be the primary driving force of commercially sustainable industrial

development and innovation to the benefit of South and

southern Africa”

Mission ...Mission ...

Contribute to the generation of balanced, sustainable economic growth in South Africa and Africa

Economically empower the South Africa and African population

Promote entrepreneurship through the building of competitive industries and enterprises based on sound business principles

Core Strategies ...Core Strategies ...

Providing risk capital to widest range of industrial projects

Maintaining its financial independence• internal profitability• divestments from mature

assets• borrowings

Identifying and supporting

opportunities not yet addressed by the

market

Establishing local and global involvement &

partnerships in projects that are rooted in or

benefit SA and Africa

Building upon and investing in human capital in ways that systematically and increasingly reflect the

diversity of SA’s society

Financing Products ...Financing Products ...

Equity and Quasi equity

Venture Capital funds (egVenture Capital funds (egNew Africa Mining Fund)New Africa Mining Fund)

Commercial loans Commercial loans

Wholesale financeWholesale finance

Export/Import financeExport/Import finance

Share warehousingShare warehousing

Commercial GuaranteesCommercial Guarantees

Mostly combination of aboveMostly combination of above

Financing Criteria ...Financing Criteria ...

Greenfield projects, expansions & rehabilitations

Relatively sizeable

Economic merit (profitability & sustainability)

Fixed assets and the fixed portion of growth in working capital

Reasonable financial contribution from owners

Security

Environmental requirements

IDC’s BEE Mandate …IDC’s BEE Mandate …

The support of (BEE) process of the general

population through:

Continuing to implement procurement and

outsourcing policies and programs that

encourage the economic empowerment of the

historically disadvantaged people (HDP),

emerging businesses and entrepreneurs; and

Encouraging the entry of black empowerment

entrepreneurs into the new sectors of the

economy as well as the traditional industries and

sectors where entry barriers are noticeably high.

IDC’s position on empowerment…IDC’s position on empowerment…

The BEE policy was approved by the board and reflects IDC’s fundamental BEE funding practices and mandate

To augment these BEE objectives and remain a significant player in BEE funding, BEE must remain an overarching factor in all our funding activities

IDC’s Role , as SA’s largest DFI remains fundamental to the national agenda to realise BEE objectives (Skills and equity transfer)

Empowerment policy imperatives…Empowerment policy imperatives…

The IDC’s participation in BEE funding is guided by the following imperatives :

Creation of ownership of businesses for HDP’s;

Management capacity and entrepreneurship through transfer of skills

Advancement of HDP employees through share and/or profit participation; and

Adherence to the national BEE agenda affirmative action and procurement policies;

Empowerment funding guidelines…Empowerment funding guidelines…

BEE Funding at the IDC is limited to :

South African citizens and residents

Who (themselves or their parents) could

not vote prior to 27 April 1994; and

Who are essentially black, Indian and

coloured people..

A company or group of two or more

individuals or a consortium where:

The ultimate economic beneficiaries

and control include the racial categories defined.

Funding Considerations…Funding Considerations…

IDC takes risk primarily on the underlying operations, not on the BEE parties

BEE parties should demonstrate commitment through:

Cash contributions

Sureties/put options may be requested

Reasonable ability of BEE party to remain

a shareholder post IDC exit

Funding Considerations…Funding Considerations…

IDC’s role is limited to facilitation of

transaction where BEE company and

target company agreed to a deal

IDC prefers to warehouse shares on

behalf of BEE party and confer

shareholder rights during the period of

funding

During the term of funding IDC remains

significantly involved until shares are

beneficially transferred to the BEE

company

IDC’s Empowerment Portfolio…IDC’s Empowerment Portfolio…Number of approvalsNumber of approvals

27%73%

69%32%

19981999 2000

2001

Worth R 56.4m Worth R 62 m Worth R 322 m

Worth R 1.2 bn

14%86% 19%81%

37%63%

2002

Worth R 2 bn

Of the total number of approvals, 38.4% were empowerment deals

worth R5.1 billion between 1998 and 2002

In value terms these amounted to 25.4% the total value of approvals

Empowerment Trends in mining…Empowerment Trends in mining…IDC’s empowerment approvals in mining

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98/99 99/00 00/01 01/02

Financial Year

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In 2001/2002 IDC funded 12.5% of the total value of BEE deals in SA,

15% of which was in mining

Some recent BEE mining deals…Some recent BEE mining deals…

Kgumo Bathong Holdings acquires a warehoused majority stake worth R100 million in Crown Gold Recoveries - Feb 2002

Purchase of East Rand Proprietary Mines by Crown Gold Recoveries – Nov 2002

R24.3 million facilities for evaluation and exploitation of the Kamferdam Dumps, and R10 million facility for development of Schmidtdrift Mine to New Diamond Corporation- May/ June 2002

Some recent BEE mining deals cont…Some recent BEE mining deals cont…

R112 million participation in New Africa Mining Fund – May 2002

R85 million facility for purchase of CIL plant for Afrikaner Lease by the Afrikander Lease Employees Empowerment Trust – Nov 2002

Simane Security Investment purchased 10% warehoused stake of ordinary shares and preference shares in Harmony Gold Mining Company Ltd. – Mar 2001

R150 million participation in syndicated debt funding of ARM Mining Consortium’s participation in the Modikwa Platinum Project – Nov 2001

50 million preference share holding in ARM Mining Consortium for participation in the Modikwa Platinum Project – Nov 2001

Some recent BEE mining deals cont…Some recent BEE mining deals cont…

Future initiatives in the mining sector…Future initiatives in the mining sector…

IDC is working on a new strategy for

engagement with BEE partners in the

mining sector – in line with Government’s

the new mining charter

IDC will partner with mining companies,

financiers and international agencies in

realising effective empowerment in the

SA mining sector

IDC will endeavor to play a higher profile

and catalytic role in the mining sector

Concluding Remarks...Concluding Remarks...

Together we can turn big ideas into

big business!

Concluding Remarks...Concluding Remarks...

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