Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Crisis in the Platinum Sector Portfolio Committee on Mineral Resources 20 February 2013 Gideon du Plessis Solidarity

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Content 1.Impact of Lonmin Marikana crisis on platinum sector 2.Consequences of general instability in platinum sector 3.Migdett platinum stakeholders commitments 4.Factors that have a negative impact on the industry

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Impact of Marikana crisis on platinum and mining sector

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Background and build-up –Migdett Platinum Task Team established – June 2012 –Violence and intimidation at platinum mines from early 2012 Impala Platinum Mine Aquarius Platinum Lonmin Marikana –Spill over Anglo American Platinum Bokoni Platinum Mine

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum New extreme forms of power play

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Highest level of violence and intimidation

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Fatal police shootings

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Shock to the nation

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Marikana: A new labour dispensation –Dominance of non-employees and disgruntled people –High level of intimidation a test for the rule of law and IR –Violence and intimidation rewarded: union membership, attention, recognition and wage adjustments –Rise of opportunists and populists

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Observations (cont.) –Precedent set and expectations created –Clear signs of socio-economic pressure, worker frustration and indebtedness –Resolved as a labour dispute, but was it?

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Migrant labour system under spotlight

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Further underlying reasons for the unrest situation in the platinum sector

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Dual labour market Two-tier system - employees versus contractors Shift in union harmony High levels of intolerance Test for freedom of association Incident at Amplats’ Siphumelele shaft – 18 Feb Recognition criteria Industrial democracy in the spotlight Union representation thresholds under review

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Socio-economic Migrant labour dilemma - two households to maintain Informal settlements and incorrect use of housing allowance High density of workers/people and expectation from mines Media and communication High media profile increased violent incidents Instability and unrest – provides opportunists access to media and public opinion

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Consequences for labour relations

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Failure of collective bargaining structures and CB discipline Collective agreements not honoured Negotiation with splinter groups and worker committees Recognised trade unions side-lined Management’s alienation from entry-level workers Lack of efficient employee share scheme (except at Kumba Iron Ore) Labour relations

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Negative consequences Spill over of lawlessness to other sectors Unstable workplaces and fragile labour relations Culture of workplace anarchy Financial impact on employees Retrenchments and mechanisation Very negative for SA mining and business image abroad

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Impact on foreign investment

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Positive consequences Establishment of national platinum bargaining forum But slow progress: New concept to the industry Amcu not yet involved Thresholds obstacle Instability in platinum sector

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Migdett Platinum stakeholders’ commitments

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Migdett commitments Commitment 1 The parties commit to limiting job losses where possible and to implementing retrenchments only as a last resort. However, where retrenchments become inevitable, the parties commit to ensuring strict adherence to the letter and the spirit of the legislation and statutory requirements governing the retrenchment of employees for economic and operational reasons, and the institution of industrial action.

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Migdett commitments Commitment 1 – Industry failure 1.Not enough transparency from employers with regard to cost-cutting measures as alternative to retrenchments 2.Failure to initiate effective future forums as required by the MPRDA 3.Labour unrest

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Migdett commitments Commitment 2 The parties commit to limiting the number of jobs to be lost in the platinum mining industry and its value chain in the short term and laying the basis for long-term sustainable employment retention and growth. In this regard, the parties commit to exploring retrenchment avoidance mechanisms and to exploring job retention strategies such as a Training Layoff Scheme

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Migdett commitments Commitment 2 – Industry failure 1.Insufficient involvement and interest of government departments e.g. Department of Labour 2.Lack of detail in SLPs with regard to measures undertaken to alleviate the impact of job losses

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Migdett commitments Commitment 3 The parties commit to working together on innovative measures to help reduce costs in the short term for the purpose of improving the viability of the industry and to help protect jobs. The parties further commit to exploring all other cost drivers that have an impact on the short- and long-term viability of the sector. Given the stakeholders’ joint commitment to improving safety and health in the mining industry, the parties agree not to compromise safety and health standards in the processes focused on reducing costs.

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Migdett commitments Commitment 3 – Industry failure 1.Industry not responsive to joint measures to address industry cost drivers: electricity, steel prices, etc. 2.Not enough transparency regarding input costs from employers Industry success Industry safety improvement in challenging operating environment Lonmin – Marikana 6 million FFS; 14 million FOG FFS

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Migdett commitments Commitment 4 The parties commit to developing proposals for consideration by relevant institutions with regard to adopting platinum as a possible reserve asset and/or alternative investment options. Response: -No clear indication on progress -Could address short-term supply-demand imbalance

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Migdett commitments Commitment 5 The parties commit to supporting increased domestic beneficiation and downstream value addition of PGMs as a means of generating demand for platinum, while supporting the objectives of the national beneficiation strategy. The parties further commit to supporting R&D and the investigation of a materials lending facility. Comment: - Long-term initiative

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Migdett commitments Commitment 6 The parties commit to a joint long-term programme to investigate strategies for sustainable growth in the PGM industry to support the long-term creation and retention of jobs in the sector through skills development, diversification of PGM applications and increased demand for PGMs.

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Additional factors that have an impact on the platinum sector

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Immediate factors High input costs of PGM sector Supply and demand imbalance Uncompetitive price of PGMs Increasing threat of substitution Impact of recycling (scrap) Industry stability Policy uncertainty

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Immediate factors Input costs The rapid increase in “administered prices” such as electricity and water, diesel fuel and wages and salaries, and the import parity prices charged for inputs such as steel are key upward drivers of costs. In the past five years (2007 to 2012): Electricity prices to the mining sector have risen by 238% from 18 cents per kilowatt hour in 2007 to 61 cents per kilowatt hour in diesel costs have increased by 69.3% in the five-year period, or an average of 15.7% per annum, on the back of higher international oil prices. reinforcing steel prices have increased by 57.5%, or an average of 15.3% per annum in the same period; and Employee remuneration

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum Immediate factors Source: COM/ Statssa PPC mining 20/02/13

Titel van aanbieding – Subtitel van aanbieding Naam van aanbieder Plek, Datum