Dodd-Frank Wall Street Reform and Consumer Protection Act: “Conflict” Minerals and Mine Safety Reporting, …plus other reasons… MINE SAFETY & HEALTH Why does it matter?

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS  Dodd-Frank Wall Street Reform and Consumer Protection Act; January 2010:  “Conflict” Minerals and Mine Safety Reporting  MSHA actions and mining fatalities – related…?  International investors  “ Equator Principles”  Socio-economic factors:  Mining companies need to win the trust of local communities  They can no longer operate unsafely or put the community at risk of illness  Why should I run a safe mine…? 2 Mine Safety Matters...

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS  Intent of the 848-page Act: To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘‘too big to fail’’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes. 3 Dodd-Frank Wall Street Reform and Consumer Protection Act

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS  Section Conflict Minerals: Intended to limit minerals being used to promote conflict in the Democratic Republic of the Congo and adjoining countries. 4 Dodd-Frank Wall Street Reform and Consumer Protection Act

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS  Section Reporting Requirements Regarding Coal or Other Mine Safety : Intended to take into account the safety record of mines as a factor in their reporting status. 5 Dodd-Frank Wall Street Reform and Consumer Protection Act

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS  Why are these two provisions important?  Due diligence studies are intended to evaluate if mines can continue to operate, or if undeveloped mineral deposits can be brought into production.  Fatal flaws might include either of the previous two Dodd-Frank provisions.  “Conflict minerals” may be relatively easy to spot and/or avoid.  Safety concerns are less obvious. 6 Dodd-Frank Wall Street Reform and Consumer Protection Act

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS 1.For each coal or other mine of which the issuer or a subsidiary of the issuer is an operator— (A) no. of significantly and substantially violations under 104(a) of the Mine Act 1977; (B) no. of orders under section 104(b); (C) no. of citations and orders for unwarrantable failure under section 104(d); (D) no. of flagrant violations under section 110(b)(2); (E) no. of imminent danger orders under section 107(a); (F) dollar value of proposed assessments; and (G) no. of mining-related fatalities. 7 Sec. 1503(a) Reporting Requirements Regarding Coal or Other Mine Safety

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS 2.A list of such coal or other mines, of which the issuer or a subsidiary of the issuer is an operator, that receive written notice from the Mine Safety and Health Administration of— (A) a pattern of violations under section 104(e); or (B) the potential to have such a pattern. 3.Any pending legal action before the Federal Mine Safety and Health Review Commission involving such coal or other mine. 8 Sec. 1503(a) Reporting Requirements Regarding Coal or Other Mine Safety

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS …each issuer that is an operator, or that has a subsidiary that is an operator, of a coal or other mine shall file a current report with the Commission on Form 8–K (or any successor form) disclosing the following regarding each … mine of which the issuer or subsidiary is an operator: 1.The receipt of an imminent danger order issued under section 107(a). 2.The receipt of written notice from the Mine Safety and Health Administration that the coal or other mine has— (A) a pattern of violations of under section 104(e); or (B) the potential to have such a pattern. 9 Sec. 1503(b) Reporting Shutdowns and Patterns of Violations

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS  New standards under 17 CFR PARTS 229, 239 and 249 – Codifying regulations under the Dodd- Frank Act. – Effective Date: January 27, – 94 pages… CFR PARTS 229, 239 and 249

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS In the aftermath of several coal mine disasters, a wave of legislative and regulatory zeal impacted the United States mining industry, including  the Mine Improvement and New Emergency Response Act of 2006 (MINER Act),  heightened penalties in 2007 and 2008 for safety and health violations of 30CFR, and  attempts at passing the Supplemental Mine Improvement and New Emergency Response Act of 2007 (S-MINER Act). These resulted in increased enforcement actions… 11 Why Dodd-Frank for Mine Safety?

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS MSHA Assessments Assessments ($ millions)

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS MSHA Assessments Assessments ($ millions) $25.1

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS MSHA Assessments Assessments ($ millions) $25.1 $129.4

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS MSHA Assessments Assessments ($ millions) $25.1 $129.4 $154.3

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS 16 BUT… What about Mining Fatalities? Average Annual Fatalities through -- 1, Mine Safety & Health Act

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS  Mechanized, high-volume mining methods remove workers from danger …plus…  Miners are taking responsibility for their own behavior; all large companies have behavior- based safety systems, and…  National and international pressure around the world said, “Enough…!” 17 Why the Drop…?

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS 18 Why the Drop…? WOULD YOU RATHER DO THIS…?

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS 19 Why the Drop…? OR THIS…?

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS Objectives – to prevent accidents, harmful effects on the health of those employed and diseases arising from employment in opencast mines; – to ensure the appropriate design, proper technologies and safe operation of opencast mines; – to provide the means of analyzing existing technologies from the standpoints of safety and health and conditions of work, and modifying these technologies to remove the hazards discovered by the analyses; 20 ILO – Safety & health in mines

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS Objectives (continued) – to provide guidance in setting up administrative, legal and educational frameworks within which preventive and remedial measures can be implemented; – to promote the fullest consultation and cooperation between governments, employers' organisations and workers' organisations in the improvement of health and safety in opencast mining. 21 ILO – Safety & Health in Mines

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS  Coal mine explosion in Mexico, with 60+ fatalities, led to the mine’s closure  Highwall failure in Malaysia, with 2 fatalities, resulted in major changes to mining operations  Underground mine fatality in China led to substantial revisions to contractor policies  Ventilation concerns in an underground mine in Indonesia led to major capital expenditures These are just some cases I have worked on… …the list goes on… 22 Why is mine safety important, if I don’t operate in the US ?

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS  International banks got fed up with irresponsible mining operators and established a set of principles under which a mine would be judged for potential investment  These deal with “soft” issues, such as community involvement, sustainability, environmental stewardship, etc.  Safety plays a part… 23 The Equator Principles

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS  Higher Worker Morale  Increased Productivity  Lower Financial Risk 24 Why an Effective Safety Program Works

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS  Higher Worker Morale  Increased Productivity  Lower Financial Risk  More Predictable Operational Results 25 Why an Effective Safety Program Works

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS 26

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS 27 END OF STORY

B EHRE D OLBEAR founded 1911 MINERALS INDUSTRY ADVISORS MINE SAFETY & HEALTH by H John Head, PE, CEng Behre Dolbear – Americas +1 (630)