Black broad based economic empowerment

Complying With The South African Mining Charter

The South African Government introduced a requirement for mining companies to apply for the conversion of their existing mining rights to new order mining rights subject to these companies meeting certain requirements in compliance with the Mining Charter and the Mining Sector Scorecard developed and gazetted by the Department of Mineral Resources and Energy (DMRE). In addition, Broad-Based Black Economic Empowerment (B-BBEE) was also introduced by the Department of Trade and Industry (DTI) through the introduction of the BEE scorecard, which allows companies to score BEE points in recognition of their efforts to assist with the transformation process.

Palabora has developed a comprehensive Transformation Strategy supported by a set of policies and procedures that seek to address the five elements on the B-BBEE scorecard and these are evaluated against the following policy objectives:

The substantial increase in the number of Historically Disadvantaged Persons (HDPs) who have ownership and control of the Company;
The significant increase in the number of HDPs on our Board, and in executive and senior management positions;
Enhanced preferential treatment towards HDPs enterprises and black-empowered suppliers in our procurement processes;
Increased acquisition of skills, accelerated preference for HDPs to access training and acquire new skills for their development;
Increased income levels of HDPs and a reduction of income inequalities among race groups. This includes the prioritisation of HDPs in employment opportunities available within the
Company;
Increasing the proportion of the ownership and management of economic activities vested in the community, broad-based enterprises and cooperatives; and
Increased participation in productive economic activities in under-developed areas in order to uplift the socio-economic conditions of our communities.

Fostering an inclusive work environment

Palabora is committed to fostering an inclusive "equal opportunity workplace" and to cascading its diversity programmes throughout the business. The revised South African Mining charter, launched in 2010, emphasises a target of 30% black ownership of the country's mining assets. Palabora has been granted seven new-order mining rights and has executed six thus far (as at March 2013). In line with the charter, all our operations have social and labour plans (SLPs) with targets which have been developed in collaboration with employee representatives, communities and the Ba-Phalaborwa Municipality.

We are actively progressing towards the achievement of employment equity and procurement targets, as set out in the Mining Charter. The appointment of Historically Disadvantaged Persons (HDPs) at professional and managerial levels has increased from 44, 8% at 31 December 2010 to 70% at 31 December 2011, with the appointment of women reaching 20% compared to 10,6% in the previous years.

BEE Procurement

Palabora continues to be progressive in the South African context in terms of B-BBEE procurement and was an industry forerunner in this national initiative long before any official government minerals legislation was promulgated to this effect. In 1998, Palabora along with two other sponsoring companies, initiated a Business Linkage Centre (BLC) database to empower the Small, Medium and Micro Enterprises/Black Economic Empowerment (SMME/BEE) sector in Phalaborwa and surrounds, there were no BEE companies in the area.

The BLC provided mentoring and training to these companies to help foster the competitive capacity BEE companies needed when providing the three local sponsoring companies with goods and services. When the BLC closed down in 2004, there were 215 BEE companies located in the Phalaborwa region.

Since 1998, there has been an ever increasing drive by Palabora to increase the number of local BEE companies in its supply chain. Our procurement spend with BEE companies has ranged from a historical 28% to the present 44+% of total spend in market segments allocated for BEE companies. Indeed, Palabora has made a significant contribution to the local economy, and the company's support for local BEE companies has helped these suppliers to grow and compete successfully with outside suppliers.

As at the end of February 2012, Palabora's BBBEE spend amounted to 44,6%, at R2 171 million compared to 51,99% and R2 024 million for the same period in 2011.