1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. END