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Presentation to the Select Committee RICHTERSVELD LAND CLAIM SETTLEMENT: PSJV, ALEXANDER BAY TOWNSHIP ESTABLISHMENT & ALEXKOR RESTRUCTURING.

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Presentation on theme: "Presentation to the Select Committee RICHTERSVELD LAND CLAIM SETTLEMENT: PSJV, ALEXANDER BAY TOWNSHIP ESTABLISHMENT & ALEXKOR RESTRUCTURING."— Presentation transcript:

1 Presentation to the Select Committee RICHTERSVELD LAND CLAIM SETTLEMENT: PSJV, ALEXANDER BAY TOWNSHIP ESTABLISHMENT & ALEXKOR RESTRUCTURING

2 Strictly confidential2 CONTENTS  Overview of Richtersveld Land Claim Settlement & Respective Obligations  Pooling & Sharing Joint Venture between Alexkor & Richtersveld Mining Company  Alexander Bay Township Establishment  Alexkor Restructuring

3 Strictly confidential3 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

4 Strictly confidential4 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.

5 Strictly confidential5 Richtersveld Land Claim Settlement  Department 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

6 Strictly confidential6 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];

7 Strictly confidential7 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.

8 Strictly confidential8 Pooling & Sharing Joint Venture ALEXKOR Land mining rights transferred to RMC Alexkor retains sea mining rights, mining assets PSJV Alexkor 51% RMC 49%

9 Strictly confidential9 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

10 Strictly confidential10 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

11 Strictly confidential11 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.

12 Strictly confidential12 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

13 Strictly confidential13 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

14 Strictly confidential14 MOU between DPE & DBSA  MOU 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.

15 Strictly confidential15 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.

16 Strictly confidential16 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

17 Strictly confidential17 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.

18 Strictly confidential18 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

19 Strictly confidential19 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.

20 Strictly confidential20 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

21 Strictly confidential21 Affected Employees TOTAL: 276 ABM (mine): 198 (72%) & ABT (farm): 78 (28%) TOTAL: 78 ABT 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

22 Strictly confidential22 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 + R 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)

23 Strictly confidential23 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

24 Strictly confidential24 Employee financial package Principles 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

25 Strictly confidential25 Employee financial package FINANCIAL 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 )  TOTAL COST: VSP & benefits + Ex Gratia R R = R

26 Strictly confidential26 Phased restructuring approach The 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:

27 Strictly confidential27 Legal Compliance requirements In 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

28 Strictly confidential28 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

29 Strictly confidential29 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

30 Strictly confidential30 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

31 Strictly confidential31 Thank You


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