“CONTRACTORS-CHALLENGES IN THE MINING INDUSTRIES”

JIC Mining Services (Pty) Ltd Perspective

AGENDA

n JIC Overviewn JIC Structuren Specific Issues and Challengesn The Real Challenge : Building a Partnershipn Conclusion

OVERVIEW

JIC Overview

n Established in 1987, with a MBO in 2005n Employs 8,600 people on various mining

projectsn Main focus of operations in Platinum and

Goldn T/O in excess of R480mn One-stop mining service to the industry

Mining Services

n Implementing total management solutions in the operation of previously closed mines, shafts and marginal mines

n Pioneering new mine ventures – conventional and mechanised n Conventional stoping and pillar mining n Conventional or mechanised development (supply and

operation of the Mantis twin boom drill rig, continuous loader and DTH type drilling machines)

n Vamping and sweeping operationsn Wire mesh and lacingn Equipping and construction n Offering tertiary supportn Providing engineering services and plastic mining support n Providing mining consulting services

Current Client Basen Anglo Platinumn Impala Platinumn Hernic Ferrochromen Anglogold Ashantin GoldFieldsn Harmony

Future Prospectsn Samancorn Lonmin

Western Chrome Mine

Client focus – Platinum / ChromeCurrent Clients

Contact Made

Future Prospects

Mining Charter Compliance

n Ownershipn Managementn Vendorsn Trainingn Social Resp.

n Beneficiation

n ü

n Xn ü

n ü

n X

n N/A

n 25% BEEn HR Director, Dep Fin Dirn 25% BEEn ABET (11% No Schooling)n Long-term contract /

partnership not in place

JIC Structure

n Head Office in Pretorian 6 Divisions in Platinum, Ferrochrome and Goldn Engineering Divisionn Training Center

Our Motto

“Creating Prosperity In Partnership”

With:

UnionsClients

Preamble

n JIC Mining Services is a mining contacting company with distinct characters from the other contracting companies.

n What makes it so different and unique from the rest?n Professional Human Capital value adding

supporting service under the leadership of a HR Director and a deputy HR Director

n JIC has a full complement of HR personnel practitioners and HRD department.

Preamble continued…

n JIC comply fully to the statutory legislative requirements

n Actively involved in the mining industry professional associations

n Acknowledge union involvement and participation within the business as our stakeholders

n Established worker forums to enable employee participation in operational issues

n Supports Mining Charter with initiatives in place to ensure compliance

Safety Achievements for 2005

n B.R.P.M South 1000000 F.F.S - May 2005n R.P.M Turfontein shaft 1000000 F.F.S - April

2005n Western Deeps combined 1000000 F.F.S -

Dec 2005n R.P.M Town lands shaft 1000000 F.F.S -

August 2005n Amandelbult Swartklip 500000 F.F.S -

October 2005n Hernic 100000 F.F.S - December 2005

Housing and living conditions

n Royal Seshaba Food servicesn Fixed menus (audited by dieticians)n Hostel renovation and upgrading program in

placen Hostel maintenance program in placen Fix contracts with various transport companies n Hostel Forum to ensure employer and employee

participation on all hostel related issues

Employee Support Health Programme

n TEBA Home Based Care programme n This is a system of palliative care provided to the ill

person and supported by organisation. n Cost: R3300 per miner per annum n Each ill mineworker will receive medical sundries as

requiredn TEBA Fieldworker or Community Care Supporter

visits each medically unfit mineworker and family to provide treatment and support

Continued…

n Added support: TEBA will ensure that each ill mineworker is assisted to have proper documentation and to approach government services that offer welfare services, so that mineworkers and their families may claim benefits where such services are applicable.

n TEBA provides quarterly reports to each the company, detailing the numbers of mineworkers receiving support through the HBC Programme, as well as their health status

WOMEN IN MINING: AIM• Supporting JIC business strategy

• Initiative aimed at addressing the shortage of women with mining operational skills

• Addressing and supporting the company’s succession and career plan

• Growing a pull of competent, well trained miner• Supporting the Mining Charter and EE

• Attraction and Retention of young and competent workforce

Specific Issues and Challenges

Issues and Challenges

n Strategic PartnershipOne of the major challenges facing the mining contracting company limited opportunity available to participate as a real strategic business partner with the mine

n Contracting periodThe 30 Day notice principle poses huge challenge for us to put long term legislative/ charter effective plans in place.

Cont …

n Small scale ”Bakkie” contractors price competitive with no employee benefits

n Clients who jumps from one contractor to the next due to minimum price

n Skill Shortage Increased high demand of skills such as RDO’s and others

Cont….

n HIV/ AIDSThe pandemic still poses a challenge to us as well and HCB programme was sought as one of the initiatives

n Commodity Price CyclesClosure of operations

n Women participationSome of the under ground mine rules and regulations were a real

challenge especially during practical training

Women Participation

Mining Facilities

SocialIssues

Sexual Harassment

Physical Attributes

Availability of Female

Candidates

Training

Challenges Impacting Women Participation

Job Suitability

AttitudesSafety & Health

Policies & Budget

UNIONISATION

n Most of contracting companies are not affiliated to the bargaining structures and mining Chamber.

n Due to the integrated work force, decisions made at these bargaining units have an impact on contracting companies as well

n Major challenges occurs when such decisions are monetary related, this is during the wage negotiations

n NB: It is common practice that unions engage on benchmark exercise and turn to apply same strategy/ demands to the contracting companies

The Real CHALLENGE :Building a Partnership

Partnership

n “fundamental shift in the nature of the relationships between Client and Contractor”……”a shift which has seen all parties put aside their previous adversarial approach to each other and instead, pool their skills, expertise and resources to find creative solutions which allow their individual business goals to be achieved.”

Scott, B., “Competitive Advantage Through Alliancing”, 6th European Conference of the European Construction Conference, Lisbon, 17/18 November 1994.

Outsourcing can work, WHEN :-

n There is a clear adding of value by the contractor,

n The risks and rewards are matched with penalties and incentives,

n What is measured is controlled, andn Synergistic business goals exist.

Outsourcing fails when:-

n Lack of recognition of and utilisation of contractor’s skills, i.e. there is no added value.

n Risks placed on contractors who are unable to influence or manage the risks.

n Conflicting business goals. n Over prescriptive and onerous client requirements, n Lack of clarity of accountabilities,n Short term and adversarial relationships.

Paul Roux, Grinaker-LTA

Conclusion and Way forward

PARTNERSHIP

I THANK YOU!!