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PRESENTATION TO THE PORTFOLIO COMMITTEE ON MINERAL RESOURCES:

JOB LOSSES AND WHAT IS BEING DONE TO MITIGATE AGAINST JOB CUTS

03 JUNE 2015

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PRESENTATION OUTLINE

1. STATUS OF THE MINING INDUSTRY

2. INITIATIVES TO ADDRESS SOCIO- ECONOMIC

CONDITIONS OF MINEWORKERS

3. MANAGEMENT OF JOB LOSSES

4. CONCLUSION

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STATUS OF THE MINING INDUSTRY• The declining trend in mining employment that dates as far

back as 1986, when employment peaked at 829 000 direct jobs was arrested in 2004 (when employment reached a trough of 449 000), after the introduction of regulatory reform in the form of the Mineral and Petroleum Resources Development Act (2002).

• Following the promulgation of the MPRDA in 2002, platinum industry has become the leading employer within the mining industry overtaking the gold sector.

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STATUS OF THE MINING INDUSTRY

• The recent declining employment levels in the mining industry is attributed to a number of factors which includes the global economic challenges and slowing down of demand for major commodities by South African major trading partners such as China

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100 000

200 000

300 000

400 000

500 000

600 000

700 000

1994' 1995' 1996' 1997' 1998' 1999' 2000' 2001' 2002' 2003' 2004' 2005' 2006' 2007' 2008' 2009' 2010' 2011' 2012' 2013' 2014'

Employment trend in mining (1994 - 2014)

TOT. Emp.

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100 000

200 000

300 000

400 000

500 000

600 000

700 000

1994' 1995' 1996' 1997' 1998' 1999' 2000' 2001' 2002' 2003' 2004' 2005' 2006' 2007' 2008' 2009' 2010' 2011' 2012' 2013' 2014'

Employment trend in mining, 1994 - 2014 (3 main commodities)

TOT. Emp. PGMs Gold Coal

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Indexed commodity Prices

01 Dec 1401 Nov 1401 Oct 1401 Sep 1401 Aug 1401 Jul 1401 Jun 1401 May 1401 Apr 1401 Mar 1401 Feb 1401 Jan 14

Indexed commodity price (1 Jan 2014 = 1)

28th Nov

2014varianc

e

PGMs

Nickel

Met coal

Iron ore

+14%

(1)%

(15)%

(50)%

Thermalcoal (17)%

Diamonds +7%

Copper (13)%

Indexed commodity price (1 January 2014= 1)

Industry growth rates for Q1 2015 (Y/Y)

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Source: StatsSA, May 2015

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INITIATIVES TO ADDRESS SOCIO ECONOMIC CONDITIONS OF MINEWORKERS

There are three initiatives to address the current situation in the mining industry not only in terms of job losses but on

broader sustainability:

• Special Presidential Package for the Distressed Mining Towns • Framework Agreement for a Sustainable Mining Industry • Strengthening of the Mining Industry Growth

Development and Employment Task Team (MIGDETT)

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INITIATIVES TO ADDRESS SOCIO ECONOMIC CONDITIONS OF MINEWORKERS

The Special Presidential Package which is led by an Inter Ministerial Committee focuses on the following key issues:– Integrated and sustainable human settlements, led by the DHS and

supported by its agencies, e.g. NHFC, HDA.– Improved socio-economic conditions, led by DCoG, Dept. of Traditional

Affairs, DRDLR and supported by DTI, EDD, Treasury, DBSA, SALGA, IDC, MISA.

– Improved working conditions of mine workers led by DoL.– Decent living conditions for mine workers and meaningful contribution

to the development trajectory of mining towns and labour sending areas, led by DMR.

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INITIATIVES TO ADDRESS SOCIO ECONOMIC CONDITIONS OF MINEWORKERS

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Fifteen mining areas in five provinces and their associated labour sending areas have been prioritised for the revitalisation .

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INITIATIVES TO ADDRESS SOCIO ECONOMIC CONDITIONS OF MINEWORKERS

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Twelve labour sending areas in two provinces have been prioritised for the revitalisation.

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INITIATIVES TO ADDRESS SOCIO ECONOMIC CONDITIONS OF MINEWORKERS

• The Framework Agreement for a Sustainable Mining Industry, is led by the President, and has the following key objectives: – Ensuring the rule of law, peace and stability. – Strengthening labour relations.– Improving living and working conditions of mineworkers. – Providing short to medium term measures to support growth and

stability.– Identifying long-term measures to support growth and stability.

• The Stakeholders are:– Government – Labour (NUM, AMCU, UASA and Solidarity, supported by their

Federations: COSATU, NACTU and FEDUSA)– Business [Chamber of Mines (CoM) and South African Mining

Development Association (SAMDA)]

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INITIATIVES TO ADDRESS SOCIO- ECONOMIC CONDITIONS OF MINEWORKERS

• With regard to MIGDETT, three work streams have been designed with the purpose of addressing pertinent issues in a more detailed manner.

• These streams are focusing on:– Industry stability – Transformation, growth and competitiveness – Sustainable development

• Due to recent job losses facing the mining industry, a special team has been constituted on Job Losses to assess the situation and advise MIGDETT principals. The team which was formed after the MIGDETT principals meeting of 14 May 2015, meets on a weekly basis

• There are other process that are looking at commodity specific matters, eg Coal & Platinum .

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INITIATIVES TO ADDRESS SOCIO- ECONOMIC CONDITIONS OF MINEWORKERS

• Total of R2.1 billion over the MTEF period ring-fenced funding for housing project implementation in mining towns– R290 million has been approved for Informal Settlement Upgrading

for 2014/15 period in the mining towns, in the following provinces: Mpumalanga, North West, Gauteng, Northern Cape, Limpopo and Free State.

• Informal settlement:– 82 settlements are being assessed or planned through National

Upgrade Support Programme (NUSP). Twenty (20) of these settlements have now moved into the implementation phase by provinces.

• Human Settlements Project Implementation:– 66 projects are being implemented– Tenure (eg securing land) work is being done on 40 of the projects.

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MANAGEMENT OF JOB LOSSES

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Regulatory framework for the management of job losses within the mining industry

•Mining sector is cyclical in nature, due to fluctuations of the commodity prices.•The mining and mineral regulatory framework encapsulated in the Mineral and Petroleum Resources Development Act, 2002 (MPRDA) (as amended) has built in mechanisms for the management of downscaling and retrenchments – through Section 52 of the MPRDA. •As part of the management of job losses, mining companies must commit in their Social and Labour Plans (SLP) to establish effective and formalised Future Forums. •The Future Forums exist to address, amongst other things, productivity, employment, promotion of efficiency and competitiveness of the company.

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PROVISIONS OF SOCIAL AND LABOUR PLANS PERTAINING TO DOWNSCALING & JOB LOSSES

•The SLP further requires the mining companies to develop a plan for portable skills training in order to ensure that mineworkers are equipped with the necessary skills that can be utilized outside of mine employment. In other words, portable skills training refers to the skills that the mine workers can keep or still use when moving from one job or situation to another.

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CURRENT/POTENTIAL JOB LOSSES•With regard to the current challenges relating to shedding of jobs, the Department is driving the engagements with affected stakeholders at the mines and also through the MIGDETT task team.

•The objective of the engagements is to save jobs.

•The sessions are been convened with mining companies guided by their Social and Labour Plans, as part of the management of downscaling.

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COMPANIES WITH A POTENTIAL TO SHED JOBS

Total Number of Companies

Commodity Province

Remarks

19 Companies, have the potential to shed jobs

DiamondsGranitesDolomiteGoldManganesePlatinumCoal limestone

NW, GP, LP, NC,MPEC,FS

•DMR interventions are underway•Submit section 52•Engage companies to explore Ways of saving jobs•Alternatives to job loses •Currently eg engaged Optimum coal mine and parties are all committed to finding solution.

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OBSERVATIONS

•The depressed commodity prices are negatively affecting South Africa’s mining operations.

•Platinum, and gold are the major employers and their situation has a greater impact on the industry.

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CONCLUSION

•The DMR through the involvement of MIGDETT as well as the Mineral and Petroleum Board will continue to play an active role to save jobs in the industry•The Department will continue to involve all stakeholders eg Department of Labour, Organised Labour, Organised Business, Productivity SA, in interventions to save jobs.•A process has been put in place, to effect the alignment of MPRDA (section 52 processes) with Section 189 of the LRA. As an example, for Optimum Coal they lodged a Section 52 notice and convened meetings were attended by the Department of Labour and the CCMA.

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I THANK YOU

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