“Long Cold winters and Short beautiful summers”

1. “Long Cold winters and Short beautiful summers” This is the Mining Industry Delivered by: Mr. Mike Teke

2. Today’s conversation… This too will Pass! The Global Mining space The State of South African Mining The Impact of recent Labour Issues How do we stabilise the industry?

3. PWC Annual Mining Report Titles • 2005 “Enter the Dragon” • 2007 “Riding the wave” • 2008 “as good as it gets” • 2009 “When the going gets tough” • 2010 “Back to the Boom” • 2011 “The game has changed” • 2012 “The Growing Disconnect” • 2013 “A Confidence Crisis” • “This Too will Pass!”

4. Today’s conversation… This too will Pass! The Global Mining space The State of South African Mining The Impact of recent Labour Issues How do we stabilise the industry

5. The Global Mining Space • Shifting Risks at the Global Level: The Game is Changing (E&Y) • (Countries want a bigger share) 2008 • Skills shortage • Industry consolidation • Infrastructure access • Maintaining a social license to operate • Climate change concerns • Rising costs (cost inflation) • Pipeline shrinkage • Resource nationalism • Access to secure energy • Increased regulation • 2013 • Resource nationalism • Skills shortage • Infrastructure access • Cost inflation • Capital project execution • Maintaining a social license to operate • Price and currency volatility • Capital management & access • Sharing the benefits • Fraud and corruption Source: “Business Risks Facing Mining and Metals, 2012-2013, Ernest & Young

6. Changing World markets…. • Since 2008, the global commodities markets have • been hit by the multiple effects of : • The slide into recession in Europe due to the sovereign debt crisis (a critically important market for platinum), • The slowdown in economic growth in China (from >10%p.a. in 2008 to 7.7% now), • The continued below potential growth performance of the US economy, • The global sovereign debt crisis (especially in developed markets – EU, USA, Japan), • The impact of quantitative easing (low interest rates and printing money) on commodity prices, • The recent drying up of liquidity towards mining projects (concern that quantitative easing is not working and the slower growth levels). Source: Chamber of Mines

7. Rising urbanisation, 3 billion people to urbanise by 2050 (most of the growth in Africa) World urban population growth (Billion people) Source: UN, McKinsey

8. The Global Mining Space • Top 6 minerals, expected greenfield production growth for the period 2011-2020 Source: CitiBank

9. The Fraser Institute • Vision: • A free and prosperous world where individuals benefit from the • operator choice , competitive markets, and personal responsibility. • Mission: • To measure, study, and communicate the impact of competitive markets • and government interventions on the welfare of individuals. • South Africa has fallen down the rankings – 54/93 in 2012 to 64/96 in 2013. • Based on existing regulations and practice, S.A. is ranked 77 out of 96 countries in 2013 from 62/93 in 2012. Comments; 1. Canada Canadian mining regulation and legislation are generally easy to operate under - A producer company with more than US$50M, Company president 2. Alberta Strong mining province, open for business. - An exploration company, Company president 3. New South Wales Stable, not corrupt, has technical potential, skilled labour force, not too green, and sensitive to how mining assist remote development and usefulness of royalties. Pro-mining conservative government. - A consulting company, Company president Continued…

10. 4. Australia in general Across Australia, political and regulatory panic is seriously impacting the quality and timeliness of decisions, and certainty about access to land is very concerning. The “Twitter” factor is determining political attitudes and actions, and regulators are reacting to minimize the perceived “risk exposure” of their ministers. - A consulting company, Company president 5. Botswana Can get work done. Reasonable approval process. Not excessive regulations. Clearly pro-mining culture. Honest civil servants - A producer company with more that US$ 50M, Manager • 6. South Africa • Strikes, demonstrations, military killing workers. • An exploration company, Vice- president • Country with an unworkable political structure • - An exploration company , Company president 7. South Africa & Zimbabwe Both South Africa and Zimbabwe are driving social experiments not driven by logic and economy, but by ideology. In the absence of reason, primary industries become the cash cows to fund the un-fundable. The rise of oligarchs in both countries evidences decline. - An exploration company, Vice-president Source: Fraser Institute 2012/13

11. Today’s conversation… This too will Pass! The Global Mining space The State of South African Mining The Impact of recent Labour Issues How do we stabilise the industry?

12. The South African Mining Industry • SA’s Mineral Value: 6 main commodities PGM’s: 254.3T produced in 2012, with Pt. accounting for 128.6T. #1 producer in the world, 2nd largest mineral export, 199215 employees. Manganese: 8.8MT produced in 2012, accounted for >20% of global production, 8646 employees. Gold: 167.2T produced in 2012, accounted for 6% of global production, ranked 6th largest in the world, largest component of mineral exports, 142193 employees. Diamonds: 7 million on carats produced in 2012, accounted for 12% of global production, 12081 employees Iron Ore: 67 MT produced in 2012, 4th largest component of mineral exports, 23368 employees. Coal: 258.6MT produced in 2012, largest part of mineral sales, 3rd largest component of mineral exports, 83245 employees. Source: Chamber of Mines

13. South Africa has significant geological potential Source: DMR/USGS

14. Perceptions and realities about mining Source: Chamber of Mines

15. The recent negative news items have resulted in an underperforming mining index on the JSE

16. Unfortunately, mining has been the worst performing sector of the SA economy over the past two decades

17. Health and Safety is Key • Zero Harm is still the Goal • Section 54s

18. Today’s conversation… This too will Pass! The Global Mining space The State of South African Mining The Impact of recent Labour Issues How do we stabilise the industry?

19. Confluence of factors have served to complicate the labour market situation Political opportunists seeking to capitalise on the situation Workers battle garnishing orders and too much exposure to micro credit Poor service delivery by municipalities, insufficient bulk infrastructure, land for settlement Rapid urbanisation (fastest in Africa, people seeking jobs in platinum belt) Labour unrest Inter-union rivalry High poverty rates Perception that mines are not doing enough to help local communities Increasing levels of protest against poor service delivery (average 8.8 protests per month in RSA) High unemployment rates (26.2% versus national average of 24.9%) Perception that mining companies can pay much higher wages Source: Chamber of Mines

20. Elephants in the Room… • AMCU is here… • Resource Nationalism/Beneficiation debate… • Safety, Costs and Productivity(Work Ethic)… • Transformation Source: Chamber of Mines

21. Today’s conversation… This too will Pass! The Global Mining space The State of South African Mining The Impact of recent Labour Issues How do we stabilise the industry?

22. How do we stabilise the industry? • Acknowledgement that the Game has changed in the Labour front… • Begin to engage on Productivity(Work Ethic) and Growth matters… • Accelerate on economic Growth enablers like skills development, investment , infrastructure development etc… • Eradication of Negative Messages about our Country! • Accelerate delivery on the Transformation agenda- This is about Hope! • This Too will Pass! Putting South Africa First…