9.   MANAGEMENT AND MANPOWER

9.1  

Introduction

This section includes discussion and comment on the human resources related aspects associated with the Material Properties. Specifically, information as provided by Kumba and Eyesizwe is included on the following: current legislation; the current board, executive and operational management structures; recruitment, training, productivity initiatives and remuneration polices; industrial relations; and terminal benefits liabilities. SRK note that the following section, in certain instances, includes discussion and comment on public domain statements which have been made. Certain aspects of these have been independently audited by various companies, specifically where these relate to compliance with regulatory requirements including the Mining Charter. These items may not be strictly required in respect of compliance with the Listings Requirements or the SAMREC Code. SRK however recognise the increasing importance of these items in respect of the South African Material Properties and specifically in respect security of tenure and have included disclosure relating to these for this reason.

9.2  

Legislation

Various regulatory authorities, in addition to mining and labour codes, govern labour legislation in the countries in which Exxaro operates. In general these are well-established in conjunction with Exxaro’s operating policies and form the cornerstone of human resource management.

9.3  

Industrial Relations

The Material Properties are planned to employ and contract (“TEC”) some 10,000 people with approximately 80% being registered members of trade unions. Industrial relations at the Material Properties are managed in accordance with key driving factors. These include the prevailing legislative requirements, regulatory bodies, labour representation including registered and unregistered organisations, collective bargaining arrangements and specific employee/employer agreements.

Historically, trade unions in South Africa have, due to links with political parties, had a significant influence over social and political reform and in the collective bargaining process. Presently the situation is manageable, however it is uncertain whether labour disruptions will be used to advocate such political causes in the future.

Mine management has initiated a process involving all labour representatives (unions and management) to ensure appropriate and timely interaction to resolve industrial relations issues, including communication, consultation and collaboration, bonus allocation and policies and procedures. Depending on fluctuations in international commodity prices and exchange rates, future workforce reductions may be required. In this instance SRK consider that appropriate procedures are in place and, other than periodic action during wage negotiations, industrial relations risks are manageable.

9.4  

Board, Executive and Management Structure

During 2005 the Board of Exxaro (formerly Kumba) consisted of 18 directors, comprising both executive and non-executive directors. Exxaro will continue to implement the Kumba corporate governance structures. However, it is anticipated that the Board will be restructured to include Eyesizwe representatives as well as representatives from its major Black Economic Empowerment shareholders.

9.5  

Recruitment, Training, Productivity Initiatives and Remuneration Policies

Recruitment, Training, Productivity Initiatives and Remuneration Policies are in general, typical of operating practices and strategies as implemented within the South African, Australian and Namibian mining industries:

• Recruitment: Recruitment policies are in line with the standard procedures within the South African, Namibian Mining and Australian industries:
• Training: Managerial training initiatives have focused on the development of both technical and managerial skills of senior and middle management. At the operational level training initiatives include mine managements commitment to the Adult Basic Education and Training (“ABET”) initiatives, as well as accredited technical operational and safety training;
• Productivity Initiatives: Mine management continually review and implement productivity initiatives which are in line with the standard procedures within the mining industry and reflect the operational conditions and remuneration policies within the individual labour markets; and
• Remuneration Policies: Remuneration policies are in line with the standard operating practices within the South African and Namibian mining industries and levels generally comply with industry-wide salary scales. In addition to basic components, employees receive additional entitlements, which are related to accommodation, medical, and employee benefit plans in the form of pension/provident schemes.

In addition to the above and subsequent to the various re-engineering programmes undertaken since 1998, Exxaro has, through a series of initiatives, developed various staff development and motivation programmes within a streamlined organisational structure. These initiatives include:

• The retention and development of high quality personnel through comprehensive organisational planning;
• The enhancement of strategic leadership through leadership development programmes, seeking to enhance the skills of individuals capable of achieving and maintaining competitive advantage;
• Improvement in the competency of operational staff by means of Mining Qualifications Authority accredited learning initiatives; and
• Development of a performance-reward culture for management and specialist staff, where commensurate compensation accompanies the achievement of measured results through an integrated performance system.

9.6  

Organisational Structures and Operational Management

Exxaro has informed SRK that, come completion of the Transaction, Exxaro will in the short term continue with the organisational structure as indicated in Figure 1.3. In effect this will include the Exxaro Board, supported by various corporate services, the individual commodity business units and operational management at the various Material Properties. The TEPs as presented in this report do not assume any fundamental change to this structure, however SRK notes that it is likely that Exxaro will revisit this structure and associated costs in line with future requirements of its operational portfolio.

9.7  

Terminal Benefits

The total terminal benefits liability (“TBL”) for the Material Properties has been determined by consideration of the TBL as at 1 January 2006 and the various employee requirements of the LoM profiles as included in the various operating options. The amounts stated as TBL in Table 9.3 below do not however allow for increased length of service over the various LoM Plans and assumes that the current unit TBL per employee is equally applicable on closure. TBL⁽²⁾ has been included in the FMs as presented in Section 14 of this CPR.