1. Precious Metals Bill Presentation to the Minerals and Energy Parliamentary Portfolio Committee 13 October 2005 Parliament, Cape Town

2. 2 The Team Department of Minerals and Energy Mintek

3. 3 Overview Issues raised at the previous presentation Rationale for amending the law Major changes in the Bill Precious Metals Bill Conclusion

4. 4 Issues Raised at the Previous Presentation How will the regulation of the Act by the South African Diamond and Precious Metals Regulator be dealt with in the Precious Metals Bill –In the Precious Metals Bill, the Regulator is linked, under the definitions, to the South African Diamond and Precious Metals Regulator established by Section 3(1) of the Diamond Amendment Bill 2005 Clarity on special permits on unwrought –Dealt with in presentation

5. 5 Issues Raised at the Previous Presentation cont… Why the gold register has been scrapped –The gold register still exists for licence holders dealing with unwrought metal Why has silver been deregulated –Precious metals are linked to high value and silver is not a high value metal like gold and platinum group metals anymore –It is a bi-product of base metals and not produced in large quantities in the country

6. 6 Issues Raised at the Previous Presentation cont… Whether penalties have been verified – the jail sentences do not seem to match the fines –Adjusted as per advice by the State Law Advisors Why the DME was not administering Chapter 16 of the Mining Rights Act –The Mining Rights Act dealt with base minerals and all other types of minerals including precious metals –Link between gold and currency: The Department of Finance and SA Reserve Bank Exchange Control Regulations, still control the possession and trade in gold As such chapter 16 has remained in operation

7. 7 Rationale for Amending the Law Eliminate barriers to local beneficiation of precious metals Grow beneficiation industry in SA to create jobs Increase participation throughout the value chain Make SA a major international mineral beneficiation centre Rationalize the regulation of downstream development of precious metals

8. 8 Major Changes Administrative functions centralised within Department of Minerals and Energy Industry regulated and administered through SA Diamond and Precious Metals Regulator Regulator must consider –Promotion of equitable access –Orderly local beneficiation –Broad Based Socio-Economic empowerment in the industry

9. 9 Major Changes cont… Amendment of the definition of “unwrought precious metal” Definition of “semi-fabricated precious metals” introduced Introduction of a Precious Metals Beneficiation Licence Retention of Jeweller’s Permits Deregulation of: Silver Possession of trading in minted bars

10. 10 Unwrought Precious Metal New definition introduced: –To increase access to precious metals for local beneficiation –Excludes minted bars Definition: –In the case of gold, metal which has not been refined to 99.95% purity –For platinum group metals, metals which has not been refined to 99,90% purity

11. 11 Semi-fabricated Precious Metal Definition: –Metal refined to or beyond 99,95% purity in the case of gold; – Metal refined to or beyond 99,90% in the case of platinum group metals Metal can be bought in the form of pure metal or as sheet wire, tube or grain

12. 12 Precious Metals Beneficiation Licence New type of licence available to manufacturing industry e.g. IT, avionics, automobile industry Excludes the jewellery manufacturing industry Holder may only possess semi-fabricated precious metal Issued for 10 years and renewable Onerous provisions of registers removed, only statements reflecting the precious metals received and sold to be submitted annually.

13. 13 Jeweller’s Permit Retained for the jewellery industry Holder only allowed to possess semi fabricated precious metals Issued for 5 years and subject to renewal No register required Proper books of account must be kept and submitted annually to the issuing authority

14. 14 Licences and Permits UnwroughtSemi-fabricated Special permit for scientific purposes, jewellers and precious metals beneficiators Refining Licence Import Permit Certificate to acquire or dispose Jeweller’s permit Precious metals beneficiation licence

15. 15 Transitional Provisions Certificate, permit or licence issues under Mining Rights Act valid for –Period issued, or; –Two years after commencement of new Act Processing of pending applications Re-application by current permit/licence holders

16. 16 Conclusion  This Bill attempts to partially deregulate precious metals in order to increase the level of beneficiation and level of access to precious metal