Submission to the Portfolio Committee on Finance and the Portfolio Committee on Minerals and Energy Mineral and Petroleum Resources Royalty Bill By Anglo American South Africa

Introduction Anglo welcomes the opportunity to comment on the 3rd Draft of the Royalty Bill Current draft Bill takes into account most of the issues raised by the mining industry Support the intent behind the draft Royalty Bill Submission should be viewed from the perspective of a major investor in the mining industry

Anglo in context Leading mining and natural resource group – interests in platinum group metals, diamonds, coal, base and ferrous metals, industrial minerals Geographically diverse – presence in 64 countries Largest private sector investor in South Africa Current approved projects in South Africa - +-$5bn Anglo’s R46,762bn BEE deals since 1994 the catalyst in the formation of all today’s leading BEE South African mining houses Cumulative BEE procurement spend since 1993 is R55bn

Historical overview – Royalty Bill 1st Draft of Royalties Bill: - Royalties based on deemed revenue - Discrimination of royalty rates (diamonds and platinum) - Proposed royalty rates out of line with global competitors and reduced SA’s attractiveness for mining investment

Historical overview – Royalty Bill 2nd Draft Royalties Bill: - Royalties based on actual revenue - Deduction of expenses incurred for transport and insurance - Two tier royalty regime: higher rates for unrefined minerals as compared to refined products - Intensive consultation with National Treasury

Historical overview – Royalty Bill 3rd Draft Royalties Bill – positive changes - Removal of dual royalty rate system - Introduction of formula based royalty rate 3rd Draft Royalties Bill – comments - Formula based royalty rate - First saleable product - Statutory royalties to the state - Tax deductible nature

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