Fossil Fuels Conference. 10 November The Limpopo Province A Hub for Sustainable Development

Transcription

1 Fossil Fuels Conference 10 November 2015 The Limpopo Province A Hub for Sustainable Development

2 AGENDA The Economic Impact of Mining at anational, Provincial and Local Level Mining as a Catalyst for Development Coal of Africa Limited (CoAL) Overview Sustainable Development 2

3 ECONOMIC IMPACT OF MINING: NATIONAL Mining contributed 8.4% to the national GDP in Any changes in output therefore impact directly on annual economic growth rates, tax payments, public debt and credit ratings Mining generates 60% of national export revenue. This directly affects the Rand exchange rate, which indirectly affects inflation and interest rates. Declining exports from mining is bad for the Rand, which is currently evident. It is traditionally a primary attraction for foreign capital investment, with similar implications for the exchange rate, inflation and interest rates The national mining industry employed 490,000 in % of all employed persons. Gross earnings will exceed R100bn for the year The sector was traditionally the employer for many unskilled people, but skills requirements are rising rapidly. 3

4 ECONOMIC IMPACT OF MINING: PROVINCIAL & MUNICIPAL Mining contributed R67bn to Limpopo economy in % of GDP Current projects in pipeline could take sectoral contribution beyond 30% In Vhembe District mining only contributes 9% to GDP and 2% in Makhado Local Municipality There could be an increase from 2020 onwards In September ,000 people were employed in the mining sector, accounting for 6% of all employed In Vhembe District and Makhado Local Municipality, mining accounts for only 1% of employment. The district suffers from high levels of unemployment. 4

5 MAKHADO LOCAL MUNICIPALITY GROSS VALUE ADDED AT CURRENT PRICES Sector Sector %, 2013 Agriculture, forestry and fishing Mining and quarrying Manufacturing Electricity, gas and water Construction Wholesale and retail trade, catering and accommodation Transport, storage and communication Finance, insurance, real estate and business services Community, social and personal services General government Source: Quantec Regional Data, Total

6 DEVELOPMENT OF GROWTH POINTS IN LIMPOPO Mining as acatalyst for economic development is one of the underlying principles of the Limpopo Development Plan The concept of growth points or nodal development is based on spatial targeting, where resources are co-ordinated and directed to selected areas in response to identified development opportunities Limpopo Provincial Government has identified ten growth points for coordinated and high-priority development support, including Louis Trichardt and Musina towns Impetus for growth point development in Makhado will come from private sector coal mining development, with its consequent support for residential, retail, tourism and industrial development Horticulture and forestry will remain important sectors of the growth point economy and synergies with mining will be promoted Government will take the primary responsibility for essential infrastructure development and all parties will contribute towards skills development Rising skills levels will be critical for survival as the digital revolution that is currently underway gathers momentum. 6

7 COAL OF AFRICA LIMITED (CoAL) OVERVIEW CoAL is a South African emerging developer of high-quality coking and thermal coal, with its assets located primarily in the Limpopo province. Vision is to sustainably produce 6.7-million tonnes of coal a year, in a combination of hard coking coal, semi-soft and thermal coal. Environmental best practice, incorporating regulatory compliance, is a top priority at CoAL, as encapsulated in our operating philosophy of Doing it right first time. This approach has given rise to CoAL s Coexistent Model, a symbiotic model which seeks to marry the sometimes apparent divergent interests of mining development, agriculture, environment and heritage. In October 2014, CoAL signed an historic Biodiversity Offset Agreement in relation to its Vele Colliery with the Department of Environmental Affairs and the South African National Parks to protect Limpopo s Mapungubwe Cultural Landscape, within which the Mapungubwe World Heritage Site is located, by setting a new benchmark in the South African mining industry for co-existence between mining, agriculture and heritage. 7

8 CoAL s PROJECTS IN LIMPOPO PROVINCE 8

9 CoAL s PROJECTS IN LIMPOPO PROVINCE 9

10 CoAL s TURN AROUND STRATEGY 10

11 CoAL s PROJECT DEVELOPMENT STRATEGY 11

12 KEY DELIVERABLES TO UNLOCK INTRINSIC VALUE 12

13 MAKHADO PROJECT Regarded as the company s flagship project, the Makhado Project is located within the Soutpansberg Coalfield area. The nearest town, Makhado (Louis Trichardt) is situated 35 km south of the project area, with Musina town located 50 km to the north Has the potential to deliver significant value to all its stakeholders, including its shareholders, enabling the company to become a significant global coking coal producer. In June 2013, the company released an independently verified Class II Definitive Feasibility Study, demonstrating the project s ability to produce an annual 2.3Mt of hard coking coal, and 3.2Mt of thermal coal annually over its 16 years life of mine OWNERSHIP OF MAKHADO PROJECT 13

14 MAKHADO PROJECT COMMUNITIES There are 3 host communities and 4 neighbouring affected by the Makhado Project They have acollective population of more than 6,200 people Based on the information available, the unemployment statistics are as follows: 393 are unemployed 577 work seekers have become discouraged At steady state, the Makhado Project can potentially employ 600 people from the project area, which is less than the 970 people without work. Of the 917 currently employed people, some may also prefer a job within the mining sector CoAL can substantially reduce unemployment but cannot eliminate it. Source: Glen Steyn and Associates 14

15 IMPACT OF CoAL S PROJECTS CoAL s Makhado Project could: Double the contribution of the mining sector to the municipal economy Contribute up to R1.4bn in taxes Create short term jobs during construction and during mining. This will result in more than 4000 new direct and indirect jobs in the Province through the economic multiplier effect. Increase the sectoral contribution to employment in this local municipality by almost 200% and Gross Value Added (economic value less the cost of inputs) by more than that 15

16 SUSTAINABLE ECONOMIC DEVELOPMENT Sustainable economic development can only be driven through strengthened co-operation between all stakeholders. CoAL is acutely aware of the imperative to balance the socio-economic potential of development in the province, both private sector and government, with the potential impact it may have on the natural and heritage resources. This can be accomplished through building enduring relationships and strengthened co-operation between all stakeholders of CoAL, including government and communities. One of the key drivers of sustainable development is the development of and investment in communities. CoAL has designed a sustainable development model to ensure that: The benefits of mining are maximised for all communities Communities are capacitated and equipped to access opportunities within CoAL s projects. 16

17 REPOSITIONED CoAL Strengthened balance sheet net cash position as at September 2015 to use as working capital and advancement of the Makhado Project The regulatory processes moving ahead good progress has been made on the Makhado Project There are certain legacy issues, many of which have been completed. The sale of Mooiplaats is still in progress Opportunities exist for acquisitions/mergers. Given current market conditions, consolidation is appropriate. CoAL has survived 3 very difficult years, and is now well placed to finalise our Makhado Project Funding. 17