1. The South African Mining Industry
ANGLOVAAL MINING LIMITED CEO’s evening : 2 November 2000

2. MINING IN SOUTH AFRICA Exceptional geological deposits
Political transition after 1990
Modernise the industry
Result: leaner, more focused, more competitive and
internationally active industry
Major transformation challenge remains
Continues to be a highly successful cluster in South African economy
Most major minerals have experienced long-term growth
Mining is a significant contributor to employment creation, rural economies and regional (SADC) development

3. Large, expanding industries
MINING IN
SOUTH AFRICA
Hidden inside SA’s aggregate mining statistics are large,
expanding industries
Production: coal, PGMs and chrome sectors have doubled
in size since 1980
During the same period, mining other than gold, grew faster
than the rest of the economy
World-class support industries (electricity, chemical,
engineering)
Large, expanding industries

4. MINING IN SOUTH AFRICA South African reserves and production in
key minerals 1998 (% of world)
(1)
Manganese
(1)
Chrome ore
(1)
PGMs
(1)
Vanadium
(1)
Gold
(1)
Alumino-silicates
(1)
Titanium minerals
Vermicullte
(2)
(2)
Zirconium minerals
(3)
Fluorspar
(4)
Uranium
(4)
Antimony
(5)
Coal
(5)
Nickel
Iron ore
(8)
Reserves
(6)
Zinc
Production
(9)
Phosphate rock
10%
20%
30%
40%
50%
60%
70%
80%
Source: Chamber of Mines

5. 60% of South Africa’s exports
MINING IN
SOUTH AFRICA
60% of South Africa’s exports
Mining and related beneficiation accounts for over half of SA’s exports
Mining remains the most important earner of foreign
exchange
Growth in manufacturing exports is based
on mining activities

6. MINING IN SOUTH AFRICA Extent of beneficiation Beneficiation process
% of production
% of exports
beneficiated
beneficiated
Antimony concentrate to antimony
troxide 65 80
Chrome ore to chromium alloys 57 71
Copper concentrate to copper metal 92 89
Iron ore to iron and steel 30 15
Manganese ore to manganese metal and 49 43
alloys
Nickel matte to nickel metal and
sulphate
100
100
Phosphate concentrate to phosphoric acid 52 37
and
phosphatic
fertilisers
Zinc concentrate to zinc metal
100
100
Diamond sorting/valuing to cutting/polishing
100 52

7. Composition by sector of South African export earnings
MINING IN SOUTH AFRICA
Composition by sector of
South African export earnings

8. Source: Minerals Bureau
MINING IN
SOUTH AFRICA
Africa 1%
Export destinations
for SA’s
processed
minerals
South America
2.5%
North and Central
America
28%
Europe
38%
Pacific Rim
Middle
Countries
East
25.8%
4.8%
Source: Minerals Bureau

9. Percentage contribution to GDP by sector:
MINING IN SOUTH AFRICA
Percentage contribution to GDP by sector:
Mining / manufacturing is inter-related

10. Source: SA Reserve Bank
MINING IN
SOUTH AFRICA
Contribution to mining GDP, 1998
Gross fixed capital formation
continues to be significant
Large portion of capital
investment in SA over past
decade has been into the minerals
complex (Alusaf, Columbus,
RBM, Saldanha Steel, Sasol, etc)
Coal
PGMs
21%
27%
Diamonds
Gold 7%
45%
Source: SA Reserve Bank

11. Principal ally against poverty
MINING IN
SOUTH AFRICA
Principal ally against poverty
For five million South Africans, mining is the principal ally
against poverty
Latest census - one in seven men with a formal sector job
in 1996 employed in mining industry
Mining industry is the conduit for money and opportunity to
some of the poorest areas in Southern Africa

12. Principal ally against poverty
MINING IN
SOUTH AFRICA
Principal ally against poverty
1996 population census - more than one sixth of the aggregate income of wage earners is derived from mining in 56 magisterial districts
These 56 districts are SA’s “mining nation”
These areas include poor rural districts from which mine
workers are recruited.
Total population of these areas is 5,7 million: on average, more than a quarter of all income earned by men is earned from mining

13. Principal ally against poverty
MINING IN SOUTH AFRICA
Principal ally against poverty 4 8 K i l o m e t r s R u s t e n b u r g K r i e l J o h a n n e s b u r g O b e r h o l z e r P e r c n t o f a l i m L s h 4 % 8 1 6 3 2 M

14. Proportion of workers at various formal education levels
MINING IN SOUTH AFRICA
Proportion of workers at various
formal education levels
New mine workers
30%
20%
Less than primary
10%
Matric 0% 85 90 95 98
Source: Chamber of Mines

15. Employees on Chamber of Mines gold mines
MINING IN SOUTH AFRICA
Employees on Chamber of Mines gold mines
95,000
Unskilled wages
20,000
90,000
15,000
Skilled wages
Rands per annum
Unskilled wages
Rands per annum
85,000
10,000
80,000
Skilled wages
5,000
75,000
1970
1980
1990
1998
Source: Chamber of Mines

16. MINING IN SOUTH AFRICA Sector 1970s 1980s 1990s Average Average
Contribution of direct taxes to the government
revenue (per cent of total revenue)
Sector
1970s
1980s
1990s
Average
Average
Average
Coal
0,29
0,52
0,60*
Gold & uranium
10,02
12,51
1,13
Diamonds
1,45
0,56
0,09
* 1990’s figure includes coal and other mining

17. Key to economic development
MINING IN
SOUTHern AFRICA
Key to economic development
Over last 20 years, two major economic shortcomings have forced African economies to depend on multilateral aid agencies:
1. Owing to inability of governments to generate
tax revenues, African countries have saved at
less than half the rate of other developing countries.
cont….

18. Key to economic development
MINING IN
SOUTHern AFRICA
Key to economic development
2. With limited exports, less foreign exchange to purchase machines and computers required for
export-led growth.
Root cause of this: political instability, weak institutions, poor policies
Mining can play a critical role in Africa’s economic
renaissance

19. MINING IN SOUTHern AFRICA Key to economic development
Tanzania
Zambia
Zimbabwe
Mozambique
Namibia
Botswana
Key to economic
development
in southern Africa
South Africa

20. MINING IN SOUTHern AFRICA
Recent mining FDI* in selected SADC
countries (US$ millions)
Source: Business Map/SACS - FDI database
FDI : Foreign direct investment

21. South Africa is well positioned
MINING IN
SOUTHern AFRICA
South Africa is well positioned
SA mining companies are leading the resurgence of
mining activity in the region
Extensive African exploration is underway
Johannesburg may reclaim position as global centre of
mining technology, specialist services and supplies
It is estimated that half of investment made in large-scale
projects in southern Africa is returned to SA through
purchase of services and supplies

22. South African firms are at the centre...
MINING IN
SOUTH AFRICA
South African firms are at the centre...
SA provides sophisticated inputs and services to the
global mining industry
SA firms have become globally prominent in three areas:
1. Technology providers
2. Providers of knowledge-
based mining services
3. Specialist mining contractors

23. Conclusion / looking forward
MINING IN
SOUTH AFRICA
Conclusion / looking forward
The contribution of mining to the economy must be seen
as coming not only from mining operations, but also
from upstream and downstream activities and the
huge multiplier effects the industry has at economic,
social and political levels
Mining represents the most successful “cluster” in SA’s
economy