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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