15 January 2013

South Africa: Department of Mineral Resources (DMR) Disappointed About the Anglo American Platinum Announcement

press release

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The Department of Mineral Resources (DMR) expresses grave disappointment about the unilateral decision of Anglo American Platinum to put its Rustenburg operations under care and maintenance for an undefined period and also dispose of its Union mine, which effectively affects 14 thousand direct jobs.

In its announcement the company cites that it has undertaken a year long study which has presented a case to take such a drastic decision. This study cites albeit not limited to, unprofitability and unviability of these assets as the basis of such a review.

It is regrettable that the company consulted with the department less than seven days ago despite the major socio-economic ramifications of its decision. The department regrets the behaviour by Anglo American on how the company relates and undermines the regulator on such important business decisions which impact on the country's economy.

This behaviour has indeed undermined the tripartisan relationship the DMR has sought to build over the years with mining companies through its stakeholder forum mining growth, development and employment task team (MIGDETT).

The DMR is also concerned about the extent of compliance with regulatory requirements on inter alia, establishment of future forums in terms of section 52 (Regulation 46 (d)) of the MPRDA on downscaling and large scale retrenchments. This failure resulted in the inability to achieve the primary objective of the Social Plan to avoid job losses and for the affected to foresee this eventuality.

Furthermore the statement makes no mention of whether the company has taken into consideration issues of Mine Health and Safety, environmental Management Plans that will be implemented during this undefined care and maintenance period of these operations as well as the societal impact of their decision. It seems perverse that Anglo American Platinum's announcement is very silent on the importance of regulatory compliance as a basis for the sustainability of its business.

In this regard the department will undertake a comprehensive investigation on the various aspects as announced in their statement. Key to these will be focus on patterns of capital

investments made towards these assets for long term sustainability and optimal exploitation of mineral resources.

The conduct of Anglo American Platinum also suggests the company's half-hearted commitment to meaningful transformation and undermines one of the key objects of the MPRDA, which envisages the sustainable and optimal exploitation of mineral resources.

Notwithstanding the purported unprofitability and unviability, the decision to put the Rustenburg operations under care and maintenance for an undefined period demonstrates that the company believes it is ethically acceptable to execute a complex form of hoarding of minerals and deprive the country of economic growth and workers of their livelihoods.

Anglo American Platinum's old order rights were converted in 2010 and granted for a period of thirty years on strength of a mining works programme that justified the period of non-interrupted and optimal exploitation. Anglo American Platinum imposed large scale retrenchments in 2009 and today's announcement seems to present a pattern of unsustainable business decisions linked to change of leadership in the company.

It is clear to the department that this decision lacks vision and long term business planning on the part of the company. In our analysis Anglo American omitted to invest in the future sustainable development of the mine.

In our constant pursuit to provide regulatory certainty, the DMR will subject the entire Anglo American portfolio of mining rights to regulatory scrutiny to ensure compliance to prescripts.

Issued by: Department of Mineral Resources

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