Presentation to the Select Committee RICHTERSVELD LAND CLAIM SETTLEMENT:

Presentation to the Select Committee

RICHTERSVELD LAND CLAIM SETTLEMENT:

PSJV, ALEXANDER BAY TOWNSHIP ESTABLISHMENT & ALEXKOR RESTRUCTURING

2Strictly confidential

CONTENTS

Overview of Richtersveld Land Claim Settlement & Respective Obligations

Pooling & Sharing Joint Venture between Alexkor & Richtersveld Mining Company

Alexander Bay Township Establishment

Alexkor Restructuring


Richtersveld Land Claim

1998: Richtersveld Community (RVC) filed a land claim under the terms of the Restitution of Land Rights Act for a parcel of land situated in Alexander Bay

2001: Land Claims Court (LCC) initially rejected the RVC’s land claim on 22 March 2001

2003: RVC appealed to the Supreme Court of Appeals which ruled in its favour on 24 March 2003

2003: Alexkor and Government appealed the decision to Constitutional Court

2003: Constitutional Court awarded RVC both land & mineral rights on 14 October 2003

Constitutional Court referred matter back to LCC to determine nature of restitution


Richtersveld Land Claim…….The form of restitution claimed by the RVC was as follows:

Restoration of the land owned by Alexkor;

The mineral rights in respect of the claimed land or, alternatively, the rights to prospect and mine under the Minerals and Petroleum Resources Development Act belonging to Alexkor;

R1.5 billion as compensation for the diamonds extracted since 1928;

Repair of the environmental disturbance caused by the extraction of diamonds from the claimed land by the State and Alexkor or, alternatively, R1.2 billion as compensation for the environmental disturbance;

R10 million as solatium for the dispossession of the land and mineral rights.


Richtersveld Land Claim SettlementDepartment of Public Enterprises entered into negotiations with

the RVC

5 October 2006: Memorandum of Understanding on outlining the principles and undertakings of an out-of-court settlement

22 April 2007: Final and binding Deed of Settlement in the matter was signed

9 October 2007: Deed of Settlement made an Order of Court


Richtersveld Land Claim Settlement…The Settlement reached entails the following:

Restoration of the land claimed. Portions of land will be transferred to the RVC by Alexkor and the State [Alexkor, the State & Northern Cape Government ordered to give effect to];

Transfer of Alexkor’s land mining rights to the RVC [Alexkor ordered to give effect to]. In the interim, a Pooling & Sharing Joint Venture (PSJV) will be formed between Alexkor and the RVC. The State will capitalise Alexkor for it to contribute R200 million to this PSJV in order to constitute a viable mining venture;

Transfer of Alexkor’s agricultural and mariculture assets to the RVC in order to empower the RVC and to create a basis for future development and wealth creation [Alexkor ordered to give effect to];

R190 million as extraordinary reparation to be paid to the RVC’s Investment Holding Company in three equal instalments over three years [The State (DLA) ordered to give effect to];


Richtersveld Land Claim Settlement…R50 million lump sum development grant to the RVC’s Investment Holding

Company to be used for the recapitalisation of the agricultural and maricultural enterprises [State (DLA) ordered to give effect to];

R45 million to the RVC’s Property Holding Company as compensation to secure Alexkor’s right of occupation of the transferred residential properties for a period of ten years [Alexkor ordered to give effect to on transfer of erven to RVC];

Establishment of a formal township in terms of the Northern Cape Planning and Development Act, 1998 at Alexander Bay [The State & Alexkor ordered to give effect to];

Environmental rehabilitation and revision of the mine’s Environmental Management Programme [Alexkor ordered to give effect to financial obligation with the State providing a guarantee for the financial obligation]; and

Costs in connection with the implementation of the Settlement.


Pooling & Sharing Joint Venture

ALEXKOR

Land mining rights transferred to RMC

Alexkor retains sea mining rights, mining

assets

PSJVAlexkor 51%RMC 49%


Pooling & Sharing Joint Venture… Alexkor will remain the holder of its marine mining rights

Richtersveld Mining Company will remain the holder of its land mining rights

Alexkor & RMC will respectively put their marine & land mining rights under full control of Joint Board of PSJV

Alexkor will put its land & marine mining assets under control of Joint Board

Alexkor will have 51% interest (with 3 members on Joint Board) in PSJV & RMC a 49% interest (also with 3 members on Joint Board)

Joint Board will appoint Executive Committee

EXCO shall oversee the conduct of day-to-day operations

EXCO will put in place a development plan for viable mining venture


Pooling & Sharing Joint Venture……

Unanimous Resolution provides for a preliminary establishment phase of the PSJV

During this period, the PSJV Joint Board shall be a committee of the Board of Alexkor with Alexkor effecting the necessary delegations of powers & functions to the extent necessary for Joint Board to carry out its activities during the various stages of the preliminary establishment of the PSJV independently

EXCO will:

• Identify Alexkor land and marine assets to be pooled

• Identify personnel for the mining activities

• Draft a prospecting plan and work programme

• Draft an interim mining plan


Alexander Bay Township Establishment

The DPE undertook to establish a formal township in respect of the existing Alexander Bay village

The Deed of Settlement and the Court Order relating to the settlement of the land claim obligates Alexkor & the State to give effect to this.

To enable such township establishment, the municipal engineering services have to be upgraded to municipal standards.

Richtersveld Municipality will take over such services and fulfil all functions which a local authority has to fulfil in respect of the provision of engineering services and other public services in the formally established township of Alexander Bay.


Work undertaken….

In preparation for the township application, an engineering services assessment was conducted & this identified the infrastructure that would require upgrading. A draft layout of the township was also designed.

Phase 1

Preliminary Investigation of Services

Cost of Upgrading Services

Pre-application Work with Respect to Application for Township Establishment

Draft Township Plan


Work undertaken….Phase 2

Finalisation of Township Plan: negotiation with Richtersveld Community & coordination between town planners & engineers

Negotiation of Services Agreement with Richtersveld Local Municipality

Design of Civil & Electrical Services

Approval of Design

Survey & Pegging of the Plan

Environmental Impact Assessment

Submission of Township Application through Statutory Procedures

Environmental impact assessments


MOU between DPE & DBSAMOU signed between DPE & DBSA for the DBSA to take over the

implementation of the project under its Sustainable Communities programme

MOU sets out framework for DBSA to act as implementing agent for development of Alexander Bay Township

MOU provides that development needs of Alexander Bay will be addressed with due consideration to spatial issues such as Alexander Bay being a regional node in the Richtersveld & sustainable infrastructure technologies around energy, sanitation & water provision that are appropriate to its location, climate, needs & economy.

MOU provides for Steering Committee constituted by representatives of DPE, DBSA, Alexkor, Richtersveld Community, Richtersveld Municipality, Namakwa Municipality & NC Dept of Local Government & Housing & other stakeholders.


Functions of Steering Committee Determining the scope of work through:

Review the Spatial Development Framework and Town Plan for Alexander Bay to align more closely with the current Integrated Development Plan, the Provincial Spatial Development Framework & the National Spatial Development Perspective.

Review the work already undertaken and align existing project plans to the DBSA approach to sustainable township development.

Determining required resources;

Development of a roll-out and implementation plan for adoption by the respective parties;

Management and facilitation, cooperation and consultation in respect of the development of Alexander Bay;

Monitoring and evaluation of performance and project progress.


Way forward A township application, with a general plan based on existing civil

engineering, mechanical and electrical designs has been submitted.

Existing designs expected to cost R80 million to construct, over 18 month period

Steering Committee would like to determine whether it is possible to revise these designs at this stage, whether proposed sustainable approach principles can be incorporated into the work already undertaken and the cost of such revisions


Way forward….. Alexkor to prepare a comprehensive report on all work that has been

undertaken to date including infrastructure designs and costs, surveys and status of the township application.

Namakwa District Municipality to provide statutory requirements for township establishment.

DBSA to provide suggestions of infrastructure options for sanitation, energy and water provision after the decision of the Project Steering Committee of the favourable option and appointment of the project Manager with relevant competencies relevant to the desired option.

Above reports will be used to determine whether it is possible to revise the existing designs at this stage, whether proposed sustainable approach principles can be incorporated into the work already undertaken and the cost of such revisions.


Alexkor Restructuring

Background and details of the mine restructuring

Structure of the financial separation packages offered to employees affected by the restructuring

Progress with Social & Labour Plan obligations

Progress with stakeholder engagement obligations


Alexkor Restructuring……Deed of Settlement obligates Alexkor to:

• Transfer the agricultural & maricultural assets to the Richtersveld Agricultural Holding Company [transfer of agricultural & maricultural assets to the Community took place at the end of Jan 08]

• Transfer the mining operations to the PSJV [PSJV in preliminary establishment phase]

As a consequence, of the formation of the Pooling and Sharing Joint Venture (PSJV) and well as the transfer of the agricultural and maricultural assets of Alexkor to the Richtersveld Community (RVC), Alexkor is undertaking a restructuring programme.


Alexkor Restructuring……Focus of the restructuring initiatives:

Ensuring that employees are treated with fairness and dignity

Providing an financial package to ease the impact on employees

Providing support initiatives such as training to improve employability and transition support (assistance with seeking alternative jobs)

Engagement with key stakeholders (internally and externally)

Ensuring legal compliance at every stage of the restructuring

Restructuring approach is integrated & holistic, stakeholder engagement is a critical success factor


Affected Employees

Division

198

76

ABM ABT

ABT: Sectoral vs Non-Sectoral Employees

39%

61%

Sectoral Non-Sectoral

TOTAL: 276ABM (mine): 198 (72%) & ABT (farm): 78 (28%)

TOTAL: 78ABT sectoral: 49 (61%)ABT non-sectoral: 29 (39%)

Approximately 100 ABM positions have been ring-fenced for Care and Maintenance operations until PSJV takes over


Financial packages offered Original offer: Farms to transfer in terms of section 197 & Mine to undergo

retrenchment in terms of section 189 of Labour Relations Act

Offer changed…Voluntary Separation Package (VSP) offer to Farms only

Mandate changed to include Mine in the VSP

Retrenchment process placed on hold, with principle that retrenchment process would be resuscitated if there was insufficient interest in the VSP

VSP offer: 2 weeks for every completed year of service

Organised labour requested an improved offer of 3 weeks + R10 000 relocation allowance

DPE mandated an integrated and holistic approach to the restructuring & for the financial package to be re-evaluated

Research was conducted on similar restructuring initiatives in the Mining industry in the region (Mining Charter and the Social and Labour Plan guidelines used)


Organised Labour Expectations The uniform VSP offer to all employees instead of the original intention of

retrenchment, had the unintended consequence of denying affected employees access to the legitimate benefits of:

UIF

Tax reprieve

A distinction was drawn between

Farm workers, who had the safety of a job, if they did not take up the offer

Mine workers, who did not have job security

Organised Labour requested that the retrenchment process ito of section 189 be resuscitated and completed, to enable Mine employees to claim their legitimate benefits to UIF and the tax reprieve

An amended notice ito of s 189 was served on organised labour & consultation has commenced

Aim is to run the s 189 consultation with Voluntary Severance Packages (alternative to retrenchment) for ABM alongside the Voluntary Separation Packages for ABT employees


Employee financial packagePrinciples governing the package:

The package had to be socially conscious - ensure that the poorest, affected by this change, are not compromised & provided with an appropriate financial parachute

The value of the payment had to be meaningful

Consideration for the profile of affected individuals (Age, length of service & skill levels)

Re-employment prospects of the affected employee

Consideration of the VSPs against other redress mechanisms

Consideration of whether the package was legally defensible


Employee financial packageFINANCIAL PACKAGE FORMULA

Benefits (accrued leave & accumulated bonus contribution) +

VSP (2 weeks for every completed year of service) +

80% of VSP value as an Ex Gratia payment =

Total payout (minimum threshold of R 20 000)

TOTAL COST: VSP & benefits + Ex Gratia

R16 918 221.33 + R10 928 271.87 = R28 073 796.92


Phased restructuring approachThe restructuring process is being conducted in two-stages

Phase 1

Immediate transfer &/or exit of farm employees

Employees affected by the downscaling of the mining operations

Mine moving to a Care & Maintenance Model pending the PSJV becoming operative

Phase 2:

Exit of employees prior to the PSJV taking over operations

Financial packages communicated to all employees:


Legal Compliance requirementsIn terms of MPRDA & Mining Charter requirements, Alexkor is obligated

to develop a Social & Labour Plan that encompasses the following components:

Development programmes, in consultation with the local government structures

Processes to manage downscaling or closure of the Mining operations

Details of how to promote & ensure socio-economic development in the region

Minimise closure or downscaling impact on

Individuals,

Region &/or

Local economy


Proposed training & development interventions

ABT

Exiting Employees

Offered T&D programmes to ensure improved employability & self sufficiency

Post care for at least 2 months

Transferring employees

T&D to upskill & ensure sustainability of the farms

Management

T&D on core management skills

Coaching & Mentorship

Preferably within regional agricultural sector

Enable access to regional agricultural initiatives for the growth & sustainability of the business

ABM

Exiting employees

Offer T&D programmes to ensure improved employability & self sufficiency

Post care for at least 6 months

Maintenance & Care Operations

T&D to upskill & improve employability in JV operations

Facilitate & enable transition of ex-employees into JV


Social & Political Challenges Region & local economies are weak

Limited employment opportunities in the region area

Provincial opportunities are poor

Community Interventions Limited social support services/providers in the region

Government & Alexkor’s responsibility is to:

Consult the following stakeholders Government (National, provincial & local government representatives)

Community / Religious leaders

Employee Representatives

DPE & Alexkor

Link & leverage regional & provincial programmes to the benefit of affected employees & the community


Progress with stakeholder engagements

Alexkor & DPE has engaged with the following stakeholders

Provincial Government

Local Government

Relevant National Government departments

to link & leverage regional & provincial programmes to the benefit of affected employees & the community


Thank You

Presentation to the Select Committee RICHTERSVELD LAND CLAIM SETTLEMENT:

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