DMR PROGRAMMES SUPPORTIVE OF THE PRESIDENT’S STATE OF THE NATION ADDRESS – 10 FEBRUARY 2011

1. DMR PROGRAMMES SUPPORTIVE OF THE PRESIDENT’S STATE OF THE NATION ADDRESS – 10 FEBRUARY 2011 PRESENTATION TO PPC ON MINING 16TH FEBRUARY 2010 PARLIAMENT

2. Mining sector strategy • state owned mining company • beneficiation strategy presentation outline

3. THE MINING SECTOR STRATEGY • In responding to the implosion of the global economic and financial crisis during the fourth quarter of 2008, the DMR led establishment of the tripartite task team, viz. Mining Industry’s Growth, Development and Employment Task Team (MIGDETT), constituted by Government, organised business and organised labour. • MIGDETT was given a two-pronged mandate • To propose mechanisms of mitigating job losses in the mining sector, resultant from the impact of the global crisis, projected to be in excess of 100 000 in the first year of the crisis. As a result of the MIGDETT intervention, job-losses in the mining sector were contained below 40 000. • Given the cyclicity of economies, stakeholders anticipated the imminent recurrence of the global economy (and therefore the mining boom) and sought to develop a strategy that will position the mining industry along a sustainable growth path when the global economic upswing returns in the medium term.

4. THE MINING SECTOR STRATEGY (Cont..) • In June 2010 – stakeholders signed a declaration on the strategy for sustainable growth and meaningful transformation of South Africa’s mining industry • Sector strategy recognises inherent mineral wealth in South Africa, with an exploitable life of more 100 years • Further recognises the lost opportunity during the immediate past and longest synchronised commodities boom, with RSA mining sector contracting by 1% relative a 5% average growth rate experienced by its peer jurisdictions • Evaluates the binding constraints to growth of the sector and proposes solutions that will position the country’s mining sector along a sustainable growth trajectory, in recognition of the cyclicity of the economy.

5. THE MINING SECTOR STRATEGY (Cont..) • The strategy is imbued with elements of job creation, competitiveness and sustainable development an further emphasises the mutually reinforcing nature of competitive growth and transformation of the sector • The strategy is being considered by the Ministerial cluster on economic sectors and employment , after which it will be presented for adoption by Cabinet.

6. THE MINING SECTOR STRATEGY (Cont..) • The President articulates “We have introduced a New Growth Path that will guide our work in achieving these goals, working within the premise that the creation of decent work is at the centre of our economic policies. We urge every sector and every business entity, regardless of size, to focus on job creation. Every contribution counts in this national effort.” • To this extent, mining stakeholders, under the auspices of the Mining Industry’s Growth, Development and Employment Task Team (MIGDETT) have established a working group on jobs in the mining sector. • The working group will determine the growth potential espoused by the sector strategy to determine the actual employment absorptive capacity of the sector. • The outcome of the job creation potential will be released in March

7. State Owned Mining Company • The SONA States “To take advantage of that potential, government has endorsed the African Exploration, Mining and Finance Corporation as the State Owned Mining Company, that will undertake the mining of minerals of strategic significance.” • A Task team constituted by the DMR and Department of Energy (Shareholder of CEF, which in turn is a shareholder of AEMFC), has been established to develop and implement modalities of hiving off the AEMFC from the CEF and establish it as a stand-alone entity, which will form a nucleus around which the State Owned Mining Company will pivot. • The task team has already held three meetings to effect its mandate – it is hoped that that by the end of the second quarter • Transitionally, the AEMFC operates on a going concern, with the launch of its first mine scheduled within a month.

8. BASIS FOR MINERAL BENEFICIATION • President’s SONA – 10 February 2011 • “Research has indicated that we can create jobs in six priority areas. These are infrastructure development, agriculture, mining and beneficiation, manufacturing, the green economy and tourism. • “Experience shows that we succeed when we work together.” • “One of government’s priorities this year is also to finalise and adopt the beneficiation strategy as the official policy of government, so that we can start reaping the full benefits of our commodities.”

9. BASIS FOR MINERAL BENEFICIATION (Cont...) DRAFT POLICY ON MINERAL BENEFICIATION AND DOMESTIC RAW MATERIAL PRICING [NOVEMBER 1994] “Today South Africa can broadly be defined as a minerals economy with low levels of mineral fabrication in that most minerals are exported as ores, alloys or metals rather than high value intermediate or finished products. South Africa is exceptionally well-endowed with mineral resources and possesses almost all the minerals necessary for a mineral-based industrialisation…….. A considerable amount of South Africa's mineral resources are exported as raw ores or only partially processed. South Africa has steadily improved its ratio of beneficiated to primary products exported since the 1970s, but these ratios are still well below the potential suggested by the quality and quantity of its mineral resources………”

10. BASIS FOR MINERAL BENEFICIATION (Cont...) White Paper: A Minerals and Mining Policy for South Africa, October 1998 “The aim of the policy will be to develop South Africa’s mineral wealth to its full potential and to the maximum benefit of the entire population. Government, therefore, will promote the establishment of secondary and tertiary mineral-based industries aimed at adding maximum value to raw materials.” Section 26, MPRDA, 2002 The Minister may initiate or prescribe incentives to promote beneficiation of minerals in the Republic

11. BASIS FOR MINERAL BENEFICIATION (Cont...) • THE NEW GROWTH PATH • Sets a target of creating 5 million jobs in 10 years • Identifies structural challenges that impede desired growth rates, including • Logistics, energy infrastructure and skills, which raise costs • Economic concentration and price collusion in key parts of the economy, which raise costs and limit innovation and new enterprise development • An uncompetitive currency that limits employment growth in manufacturing, mining, etc. • A persistent balance-of-trade deficit funded with short-term capital flows attracted largely at high interest by international standards • Seeks to place the economy on a production-led trajectory with growth targeted in 10 ‘job drivers’, including, inter alia: • The mining value chain, with a particular emphasis on mineral beneficiation as well as on increasing the rate of mineral extraction

12. MINERAL BENEFICIATION (Cont...) • Beneficiation strategy - developed • Consultations with stakeholders concluded • Final documentation prepared for tabling before Cabinet in order to adopt the strategy as policy • Policy provisions being strengthened to enable effective implementation of the strategy

13. DMR Vacancies – all official * Although it is the intention to fill all vacancies, in Mine Health and Safety the target may not necessarily be achieved due to the prevailing attraction and retention challenges.

14. DMR Vacancies – sms level

15. ENDS