Optimising your strategy, operations and growth initiatives
Development of Strategic Options .........................................3 Capital Efciency ....................................................................4 Radical Business Improvement ...............................................5 Building the Growth Engine ...................................................6 Technical Mining Advisory Services ........................................7 Corporate Finance Solutions...................................................9 Saving cost, improving service through outsourcing Mining Shared Services ........................................................12 Outsourced Recruitment Solutions .......................................13 Dealing with sustainability Sustainable Mining ...............................................................17 Safety Analytics ....................................................................18 Tip-offs Anonymous .............................................................20 Corporate Social Investment ................................................22 Getting the most from your technology Pre-congured SAP Solutions ...............................................24 Application Integrity ............................................................25 Application Management Services .......................................26 IT Governance ......................................................................28 Exploring risk, extracting value ............................................30 Optimising your tax and legal position Tax Management Consulting ................................................32 Tax Efcient Supply Chain ....................................................34 Transfer Pricing ....................................................................36 Legal Advisory Solutions ......................................................38 Contract Optimisation ..........................................................40 Records Management Solution ............................................41 Addressing talent challenges Talent Development and Assessment Solutions ....................43 Remuneration and Incentive Design Services .......................45 e-Learning Solutions ............................................................47 Contents COUNTRIES SERVICED MOROCCO ALGERIA T U N IS IA EGYPT LIBYA NIGERIA W E S T E R N S A H A R A MAURITANIA CAPE VERDE ISLANDS MALI SENEGAL GAMBIA GUINEA-BISSAU GUINEA SIERRA LEONE LIBERIA BURKINA FASO NIGER CHAD SUDAN CENTRAL AFRICAN REPUBLIC ETHIOPIA ERITREA DJIBOUTI SOMALIA COMORES SEYCHELLES MAURITIUS REUNION CAMEROON GHANA IVORY COAST T O G O B E N IN EQUATORIAL GUINEA CABINDA GABON DEMOCRATIC REPUBLIC OF CONGO ANGOLA NAMIBIA SOUTH AFRICA BOTSWANA ZAMBIA ZIMBABWE KENYA TANZANIA UGANDA RWANDA BURUNDI M O Z A M B IQ U E M A L A W I LESOTHO SWAZILAND M A D A G A S C A R C O N G O
B R A Z A V IL L E COUNTRIES NOT SERVICED Deloitte footprint in Africa DELOITTE OFFICES SOUTHERN SUDAN 1 Deloitte has tapped into its vast resource pool to bring you mining specic strategic and business solutions to increase productivity, protability and minimise loss. Our subject matter experts have focused on providing solutions to the issues experienced specically in the mining industry. Our relevant experience in the mining industry allows us to help your organisation gain the coveted competitive advantage it needs to be successful in the mining industry. With our extensive footprint in Africa, Deloitte can address key challenges of our mining clients. By being a global multi-disciplinary organisation, we have access to leading experts in the various elds of auditing, tax, consulting, nancial advisory and corporate nance. As part of this pooled resource, all members are available for global deployment, supplying rapid and relevant responses to our clients needs. But even more re-assuring than this is the fact that the worlds top mining experts are to be found right here on home soil, to immediately help you with your companys challenges. Many of the worlds most successful mining ventures depend on Deloittes mining experts to advise them on complex business and industry issues. Take a deeper look at what Deloitte offers by reading through this brochure. Deloitte Mining Solutions 2 Optimising your strategy, operations and growth initiatives 3 Development of Strategic Options Challenges mining companies face Mining companies emerged from the nancial crisis leaner, meaner and frequently cash-rich. To deploy available capital effectively, some companies forge ahead with projects previously considered marginal; others are debating returning excess capital to shareholders, and still others have launched a spate of M&A transactions. Theres a renewed interest in beyond-borders expansion, particularly into Africa, with all the opportunities, threats and uncertainties associated with mining on the continent. Executives should now take a good, hard look at their portfolios, processes, plans and value drivers and articulate a long-term strategy to make informed investment decisions. How does the Deloitte solution address the business issue? Our approach encapsulates a rigorous analysis of the prospective acquisition targets, along a range of parameters, coupled with identication and quantication of risks facing potential investments, including political risk, prevalent particularly in Africa. At Deloitte we have found that our on-the-ground presence in most African countries plays a considerable role in our ability to understand local investment opportunities and risks. We use hypothesis formulation and testing as well as a real options approach as some of the useful tools in weighting investment options. Benets to your organisation Deloitte works with our strategy, actuarial and corporate nance specialists to deliver this unique solution. Our analysis provides a comprehensive as is picture and reveals potential opportunities for commercial exploitations while identifying any latent aws or fundamentally negative aspects, which may impact your investments. The high-level nancial models help to select the optimum entry option and the risk models aid the development of mitigation strategies. Scenario planning assists in the understanding of the country-specic risks, particularly in identifying the leading indicators or triggers, thus helping to ascertain early which of a range of identied scenarios could unfold. Jacek Guzek Tel: +27 (0)11 517 4163 Email: jguzek@deloitte.co.za 4 Challenges mining companies face Our experience has shown that every large capital project should include a detailed value improvement process coupled with a rigorous capital business case review. The need for a robust process has been highlighted by the current worldwide economic conditions where capital funding is constrained and it is crucial that projects deliver on the promised projected returns. How does the Deloitte solution address the business issue? Our approach encapsulates a detailed value improvement process coupled with a rigorous capital business case robustness review. Value enhancement is achieved by working closely with the project team, targeting areas of potential value through various techniques focusing on efciencies, waste and new sources of value. The position of the project in the overall project lifecycle will determine the focus of the review and the warranted analysis. During the business case robustness review, the business case is evaluated, assumptions tested and validated, while risks are framed and key drivers are modelled stochastically providing a view on the uncertainty associated with the reported project return. Benets to your organisation Big capital projects takes a considerable amount of time to develop. During this time many congurations are tested and assumptions made on which decisions are based, while the business case is continuously updated and changed. Since the world can change signicantly over the project study period a structured value improvement and business case robustness review could add value by providing decision makers with the peace of mind that the optimal value has been identied and that the project return numbers are sound. Capital Effciency Louis Kruger Tel: +27 (0)11 209 6444 Email: lokruger@deloitte.co.za 5 Challenges mining companies face Our experience has shown that clients understand the business improvement imperative, but often lack the capacity and approach to make improvement a reality. How does the Deloitte solution address the business issue? The Radical Business Improvement (RBI) approach aims to inuence the thinking and behaviour of operational teams to make business improvement a way of life. This is achieved through the embedment of a business improvement platform that not only fast tracks business improvement, but also ensures sustainable continuous improvement practices. Benets to your organisation Our RBI Team will provide your business with a platform that drives business improvement in a sustainable manner. The platform consists of specialised people, streamlined processes and supporting systems. Once this is established, your company will have gone through a culture shift where everybody understands, supports and participates in business improvement. Radical Business Improvement Abrie Olivier Tel: +27 (0)82 874 6040 Email: aolivier@deloitte.co.za 6 Challenges mining companies face CEOs are often surprised by the size of their companies Growth Gapthe difference between the revenue growth they can deliver through the current business versus the revenue growth they need to deliver (or have committed to delivering). How does the Deloitte solution address the business issue? The Growth Engine is not about the what, but the how. Deloitte member rms are in an ideal position to build, maintain, and run your Engine more so than any other service provider. Due to our organisations vast, global reach and the resulting deep industry and market insights enables us to: Assess opportunities Set targets and criteria Design, develop, and deploy Provide support services and tools Benets to your organisation The Growth Engine can provide you with: A market intelligence network to proactively scan for emerging opportunities; A mechanism for fltering through many ideas to highlight the most valuable and viable ones; A means for measuring an ideas potential for impacting revenue growth, protability, and shareholder value; The capability to repeatedly plan, commercialise, and manage a portfolio of new businesses. Building the Growth Engine Thomas Jankovich Tel: +27 (0)11 209 8839 Email: tjankovich@deloitte.co.za 7 Challenges mining companies face Mining companies face many technical and strategic challenges. Whether you are still exploring for minerals, developing your projects or in production, we have a unique combination of strategic and assurance services based on technically sound principles that can assist you to optimally develop your mineral project or more effectively manage your mining operations. How does the Deloitte solution address the business issue? The Deloitte solution ensures that appropriately experienced and skilled people develop a solution to any technical or assurance challenge, including: mining technical due diligence; the compilation or review of technical feasibility studies; the valuation of mineral deposits; mineral resource and reserve compliance assessments; technical risk assessments; competent persons reporting; project pipeline analysis; and general technical assurance services. Deloitte will work with the relevant counterparts at the company or project under review to assess the level and standard of information available followed by the generation of a time line and budget based on the scope of work. Benets to your organisation The following factors uniquely position Deloitte to provide the required services: Intrinsic strengths of Deloitte, the Global Firm; Relevant experience in the felds in which Deloitte will be required to exercise its judgement; and Availability of appropriate skills among the staff and associates. Technical Mining Advisory Services The Mining Advisory Services business unit is uniquely positioned to provide a range of Technical Services across the mineral asset value chain. Ebrahim Takolia Tel: +27 (0)11 209 6493 Email: etakolia@deloitte.co.za 8 Exploration/ Assessment Evaluation/ Analyses Design / Construction Production Depletion/Closure P R O J E C T
V A L U E
1 Preliminary economic assessments Valuation Prospecting rights application/s Compliance - mineral resources and reserves Assessment of project pipeline Environmental assessments Pre-feasibility and feasibility studies Mining rights application/s Compliance - mineral resources and reserves Environmental assessments Risk assessments Competent persons reporting Valuation Due diligence Capital effciency and operational readiness Assessment of risks in project execution plan and schedule Corporate governance framework Project to operation strategy Competent persons reporting Valuation Due diligence Radical business improvement plan / strategy Annual reporting - mineral resources and reserves, environmental Mine closure / rehabilitation assessments Mining shared services Competent persons reporting Valuation Due diligence Mine and process optimisation studies Mineral resources and reserves replacement strategy Mine closure / rehabilitation planning Optimal disposal of saleable assets Business Rescue CONFIDENCE Mining Advisory Services across the value chain Project Value 9 Exploration/ Assessment Evaluation/ Analyses Design / Construction Production Depletion/Closure P R O J E C T
V A L U E
1 Preliminary economic assessments Valuation Prospecting rights application/s Compliance - mineral resources and reserves Assessment of project pipeline Environmental assessments Pre-feasibility and feasibility studies Mining rights application/s Compliance - mineral resources and reserves Environmental assessments Risk assessments Competent persons reporting Valuation Due diligence Capital effciency and operational readiness Assessment of risks in project execution plan and schedule Corporate governance framework Project to operation strategy Competent persons reporting Valuation Due diligence Radical business improvement plan / strategy Annual reporting - mineral resources and reserves, environmental Mine closure / rehabilitation assessments Mining shared services Competent persons reporting Valuation Due diligence Mine and process optimisation studies Mineral resources and reserves replacement strategy Mine closure / rehabilitation planning Optimal disposal of saleable assets Business Rescue CONFIDENCE Corporate Finance Solutions Challenges mining companies face Accessing Cash: With mining projects invariably requiring signicant investment to bring them into operation, having access to sufcient cash resources is key to the success of any mining company. While some miners are cash rich, others have to look to capital markets and banks for cash, both of which are jittery after suffering losses in the global recession of 2008/09 and the looming economic troubles in Europe. Growing through acquisition: Mining Due Diligences are predominantly focused on the geological, metallurgical, environmental and other technical aspects of a project, and rightly so as these aspects are paramount to the potential investor. However, the nancial soundness and management of a project, mine or mining company is often overlooked as part of the acquisition process. Furthermore, inadequate M&A deal management can erode the value of a transaction. How does the Deloitte solution address the business issues? Deloitte has a track record of working closely with investments banks as part of multi-disciplinary IPO teams to ensure that mining companies extract the maximum value from initial and subsequent capital raisings. As well as traditional reporting accountant and sponsor roles, Deloitte also offers services such as IPO readiness reviews, capital structure assessments, drafting and coordination of listing documents and road show support. The Deloitte Debt Advisory team enables clients to take control of the vital debt raising process in order to access a much wider spectrum of funders, to pitch competitively and to execute the most effective deal that is RoE enhancing with the least amount of business constraints. Deloittes transaction services and M&A advisory teams can assist you through every step of an acquisition process to ensure that you gain the maximum benet from the transaction with the least disruption to your own business. Furthermore, fnancial and tax due diligence should be prioritised as part of the due diligence process to ensure that the investor gets a holistic view of the asset it is considering investing in or sponsoring. 10 Karin Hodson Tel: +27 (0)11 806 5668 Email: khodson@deloitte.co.za Benets to your organisation Having worked on some of the largest mining IPOs in key mining capital markets such as Johannesburg, London, Toronto and Sydney, and advised mining companies on large project nance deals particularly in Africa, Deloittes team of corporate nance advisors are best placed to assist you in accessing the cash that is so crucial to the success of your project. At Deloitte Corporate Finance, we have a wealth of experience in delivering focused and value-added nancial and tax due diligence services and M&A advisory services in the mining industry. Working in conjunction with your choice of technical mining experts (or indeed Deloittes own Mining Advisory Services), we consider the implications of key due diligence ndings on the nancial position and prospects of the business and recommend practical solutions to make the deal work. 11 Saving cost, improving service through outsourcing 12 Mining Shared Services Challenges mining companies face The mining sector is no stranger to boom and bust cycles. The global nancial crisis has hit harder than most mining companies anticipated. Many companies now nd themselves in a position of increasing production costs and high capital commitments, with lower commodity prices. As a result, cost management has been set as a top priority not only as a way to offset softening commodity prices, but also in response to the ongoing high costs for development, materials and labour. How does the Deloitte solution address the business issue? The concept of shared services rests on three principles: Standardisation Consolidation Re-engineering In most mining companies, transaction processing activities such as accounts payable and other support services are carried out from a number of different locations, performing the work in a variety of ways and using a range of systems. Shared services allows companies to strip out the lower value transaction processing common to disparate locations and bring it together in one site. Processes are standardised, the people and technology are relocated to a single site and the work is re-engineered to bring it to world-class standards. Benets to your organisation There are multiple benets for mining companies and their back ofce staff in partnering with Deloitte: Take advantage of economies of scale and thereby reduce and control operating costs Reduce time spent on non-core functions Improve process effciencies Improve business focus Transfer risks to Deloitte and the SSC. Free valuable management resources for other purposes Provide increased opportunities for existing staff Gain access to best-in-class global practices. Johan Theron Tel: +27 (0)11 806 6436 Email: jtheron@deloitte.co.za 13 Outsourced Recruitment Solutions Challenges mining companies face Mining companies, similar to those in other industries face ever increasing challenges in the strategic talent attraction and retention arena. The very recent economic downturn underscored the importance of strong, skilled leadership and a resilient, energetic management team. Having the right talent on board and holding onto your most valued and scarce skilled people, not only to maintain current business operations, but also to turn the tide, manage challenges and capitalise on opportunities, is paramount. Finding and retaining the right people with the right attitude, skills and experience is more critical than ever. How does the Deloitte solution address the business issue? RecruiTalent, the recruitment division in Deloitte offers search and selection services by a team of industry specialists with both local and international experience. Recruiting the best is a key success factor in any organisation. We partner with clients in understanding and fullling their exact recruitment needs, with due consideration of appropriate experience, skills, qualications, and importantly, culture t. RecruiTalent specialise in sourcing people with top talent in professional services from junior entry level to senior executive leadership. We have successfully recruited quality mining professionals for our clients in the mining industry. Our focus areas include sourcing of nancial staff and management including: Financial Managers and Executives Chartered and Management Accountants Internal Auditors Taxation Accounts payable and receivable staff Book keepers 14 We also source staff and management in: General Management Information Technology Management Consultancy Human Resources Engineering Project Management Procurement Specialist Change Management Specialist Legal Marketing Personal Assistants Data Capturers Administration. The Deloitte brand is a magnet for top talent. We have strong strategic relationships and leverage our extensive networks for continuous access to top candidates including previously disadvantaged individuals. We foster strong long term client relationships with an in-depth understanding of each client and its unique requirements which assist us to continually provide potential right-t candidates. Our ability to search for top executives is further strengthened by our extensive networks and alumni (ex Deloitte employees), database of qualied Chartered Accountants and other specialist skilled candidates. We commit ourselves to providing you with the best talent as well as support from our solid, knowledgeable and capable service delivery team. 15 Benets to your organisation Using the philosophy of One Deloitte we optimise the multi-disciplinary capability of our rm to add value to our clients. We are in a unique position to leverage a far wider team of professionals and their networks, where required, in sourcing top candidates Sound track record of recruiting for a variety of clients nationally in both the public and private sector A standardised and consistent recruitment process that is fully supported by our state of the art recruitment system An experienced and diverse team, which has specialist experience in recruitment and selection Our processes are fair and non-discriminatory and comply with company policies and current labour legislation Our global and national footprint strengthens our position, as we are able to synergise with our local and international ofces, to draw on the best talent and networks in order to full your recruitment needs Effcient service and turnaround times Highly competitive fees. Anneke Andrews Tel: +27 (0)12 482 0473 Email: anandrews@deloitte.co.za 16 Dealing with sustainability 17 Sustainable Mining Challenges mining companies face As an energy-intensive sector, mining companies will be one of the hardest hit by increasing fuel tariffs, rising electricity prices, depleting fossil fuel reserves and forthcoming climate change legislation. In order to be sustainable, mining companies need to start addressing these risks and preparing for an emerging carbon and energy constrained economy. How does the Deloitte solution address the business issue? The Deloitte Sustainability and Climate Change Team can assist your organisation in mitigating sustainability and climate change risks. Tools, methodologies and models have been developed to identify, manage and implement specic initiatives to create sustainable mines. With every risk there is always an opportunity. At Deloitte, the opportunities will always be investigated so as to best service each client individually. Options such as carbon emission reduction projects to generate revenue through carbon credits is one of the mechanisms considered. Sustainability, apart from enhancing protability, can also generate revenue for your organisation. Our team seeks to maximise these opportunities in order to ensure that your organisation is sustainable in the emerging carbon and energy constrained economy. Benets to your organisation Identifying strategic imperatives to enable the business to remain sustainable Identifying sustainability initiatives that add value to the business such as obtaining positive returns on investment to enhance operational efciency or revenue growth Improved investor and stakeholder perceptions Market differentiation Identifying specifc risks to the sustainability of your organisation Creating the roadmap to integrate sustainability into the business going forward Consideration of trends in the market place in which a business operates Benchmarking against key competitors Analysis of potential carbon market opportunities. Peter Oldacre Tel: +27 (0)11 209 6803 Email: poldacre@deloitte.co.za Duane Newman Tel: +27 (0)11 806 5362 Email: dnewman@deloitte.co.za 18 Safety Analytics To say that safety in the South African mining industry is an important issue, is an understatement. It cuts a highly charged, politically sensitive swathe through every mining industry stakeholder group including, among others, the families of miners killed while at work, the government, trade unions, human resources and labour relations professionals, Boards, and shareholders. Challenges mining companies face Safety issues in South Africa are particularly complex given increasing cost constraints, the increasing depth at which mining operations take place, ageing facilities and a legacy of unsafe behaviour. Conventional mining methods often take place alongside heavily mechanised activities, further increasing the risk of health and safety incidents. While signicant improvements in mine safety have been made, the quest for zero-harm continues. One thing is certain: A great deal more needs to be done to improve mining safety, if tougher mining laws are to be avoided. South Africas Mineral Resources Minister, went on record recently saying that government was very concerned about the continued carnage on South Africas mines, adding that South Africa may strengthen mining laws because companies are compromising worker safety as they accelerate production, amid rising commodity prices. Ramping up production might be one business imperative for mines right now, but there are also other pressing business reasons to improve safety. How does the Deloitte solution address the business issue? Traditionally, the focus on improving safety in mines has been on: Training Awareness Campaigns / Competitions Safety orientated process optimisation Implementing monitoring systems that gather and report on basic safety information. 19 There is much more that can be learned from existing data, however, by studying the underlying causes of and contributing factors to workplace accidents - the how, where, when, and why they occur - and then applying that information to further reduce fatalities. Deloitte does this by using advanced analytics, i.e. by applying two statistical techniques; Predictive Modelling and Data Mining to produce a mathematical model that effectively segments and predicts the likelihood of workplace accidents as well as indicating the likely severity of those events. Through the Advanced analytics process, we are also able to identify contributing factors. This methodology can assist in addressing mining safety from a different angle. By making use of data and techniques not previously applied in this industry, Advanced Analytics helps identify jobs, locations and processes that may carry a greater risk of injury or accident. Derek Schraader Tel: +27 (0)79 499 9046 Email: dschraader@deloitte.co.za Benets to your organisation Advanced analytics puts company data to work by combining traditional data sources of risk information with non-traditional data sources. The discipline supports enterprise cost containment, protability, and wellness strategies, along with efforts to lower the frequency and severity of workplace accidents. It also builds enterprise sustainability by increasing safety, improving legal and regulatory compliance and promoting corporate responsibility. Additional benets include: Increased productivity Reduced fnes as a result of improved compliance Competitive advantage in recruiting and employee retention Healthier employees and reduced absenteeism Improved employee satisfaction and morale. In summary, our view is that there is an opportunity to leverage safety related data (traditional and non-traditional data) more aggressively in order to generate insights and models that can positively contribute to the quest for zero-harm. 20 Challenges mining companies face Recent statistics by the Association of Certifed Fraud Examiners (ACFE) revealed that on average 6% - 10% of turnover was being lost to fraud within large organisations today. The ACFE further highlighted that entities that fail to protect themselves should expect to become victims of fraud as more than 70% of fraud goes undetected. Effective prevention and detection processes is therefore needed to increase condence and morale of all stakeholders. One of the key mechanisms of fraud detection is the implementation of an outsourced independent fraud hotline, such as Tip-offs Anonymous fraud and ethics hotline service. How does the Deloitte solution address the business issue? We currently enable an organisations stakeholders (employees, management, suppliers and customers) to report fraud, dishonesty and unethical behaviour in an anonymous and condential manner without fear of recrimination. There are currently six mediums of communication that include a unique Freecall 0800 number, unique email address, post, website, facsimile and sms. Tip-offs Anonymous 21 Benets to your organisation Our Deloitte Tip-offs Anonymous service: Acts as a powerful practical deterrent to dishonesty and inappropriate behaviour in the work place; Is designed to protect the assets, bottom line and reputation of organisations, both in the private or public sector; Is a simple, low cost but strong practical deterrent to workplace dishonesty, inappropriate behaviour and unethical business practices; Protects an organisation from negative publicity and adverse disclosure to the media; Demonstrates an organisations commitment to promoting a culture of honesty, and integrity; Is a tangible corporate governance initiative that all stakeholders can embrace to promote openness and transparency throughout your organisation; Effectively highlights risk areas and weak internal control environments; Promotes an organisations risk management strategy and prole as well as that of the internal audit function and audit committee.; Can be used as a barometer to measure unethical behaviour; Exposes undetected or unreported fraud, crime, non-compliance issues and collusion through anonymous calls; Embraces a recommendation of the King Reports on Corporate Governance to make available safe easily accessible channels to stakeholders; Enables an organisation to comply substantially with the provisions of the Protected Disclosures Act No 26 of 2000. Navin Sing Tel: +27 (0)31 560 7307 Email: navising@deloitte.co.za 22 Corporate Social Investment Challenges mining companies face Social Responsibility has evolved from being a business afterthought to being a key consideration to any sustainable business strategy. In an already complex business environment, companies operating in South Africa are increasingly under pressure from government, investors, customers and society to consider the wider socio-economic impact of their operations and to credibly report on their social performance. How does the Deloitte solution address the business issue? A number of forces are shaping South Africas Social Development Landscape: B-BBEE Codes of Good Practice, requires companies to contribute 1% of net proft after tax to socio- economic development, and 3% of NPAT to Enterprise Development. The JSE Social Responsibility Index (SRI) sets social performance criteria for companies seeking listing or SRI status on the index. Legislation Government establishes license to operate conditions related to social contribution, particularly in certain sectors. Reputation drives companies to focus on social responsibility to inuence perceptions. The Global Reporting Initiatives (GRI) and The King III vision is that disclosure on corporate governance, environmental, and social performance is as commonplace and comparable as nancial reportings importance to organisational success. Benets to your organisation Reduced project implementation failure Projects that support one or more business objectives Information for SLP or SED Projects & Verifcation Services is readily available Improved project communication, coordination & integration Reduced project risks. Mareza van Staden Tel: +27 (0)82 375 0106 Email: mareza@deloittertb.co.za Mark Roux Tel: +27 (0)12 482 0325 Email: mroux@deloitte.co.za 23 Getting the most from your technology 24 Challenges mining companies face Are you facing tighter margins with information systems that lack the ability to access your business information? Does your business need a best practice mining specic solution which can be managed effectively on your own at a low cost? Deloitte can deliver a dramatically reduced total cost of ownership system without any signicant disruption to business with the Mining in a Box solution which has been developed based on Deloittes many years of experience in the mining industry. How does the Deloitte solution address the business issue? Working in conjunction with SAP AG, our SAP Mining Practice has developed a pre-congured solution for the mining industry. This proven solution includes a fully pre-documented and pre-congured SAP solution that can be rapidly implemented and adjusted to meet clients specifc needs. Notably, the solution incorporates SAPs Best Practices for Mining, which was developed with extensive input from Deloitte. By speaking the industrys language, the solution provides mining companies of any size with a means to implement SAP faster and smarter, using fewer resources and causing less business disruptions. Benets to your organisation Deloittes pre-confgured SAP Mining Solution can help your company quickly establish a platform for growth. Youre up and running 50% faster than conventional systems, plus, the software package helps you simultaneously address the operational challenges and capacity constraints that your company could be facing during these challenging times and at all times provide you with the exibility you require with an ERP system. Pre-confgured SAP Solutions Frank van Niekerk Tel: +27 (0)11 209 8028 Email: fvanniekerk@deloitte.co.za 25 Challenges mining companies face In addition to organisation wide risks there are the practical software-related risks and concerns to be mitigated. Compliance with changing regulatory and legal requirements is a constant and growing pressure. Competitive use of new technologies and the speed with which they can be deployed is critical in attaining early mover advantages. How does the Deloitte solution address the business issue? Every application system (new or existing) has its own unique parameters and requirements. Thats why our approach is practical, risk-based and modular enabling us to tailor our approach to meet your specic needs. Our Application Integrity services include: Application security Business process controls Interface and data migration controls Compliance tools Benets to your organisation Whether you are starting from scratch, building on an existing software application or have sophisticated global software engineering capabilities, we can help take your organisation to the next level. We bring specialised skills and experience to your business applications environment. Application Integrity Cathy Gibson Tel: +27 (0)11 806 5386 Email: cgibson@deloitte.co.za 26 Challenges mining companies face The evolution of AMS is approaching an inection point with cost no longer the sole focus. Forward looking IT organisations are starting to view applications management as a platform for driving business innovation and value. Organisations face mounting pressure to reduce cost and drive greater ROI and a renewed focus is being placed on innovation and rapid delivery. There is also heightened attention to risk and regulatory environment and increased expectations for quality. Services that are not tightly aligned with business objectives diminish the return on application investments and innovation and continuous improvement becomes disconnected from the IT support department. Support issues are large,growing more complex, and touch the entire business meaning that IT expense bases are soaring but capital budgets for technology enabled business innovations are constrained. Nearly two out of three IT dollars are now sunk into operational services. How does the Deloitte solution address the business issue? Our Deloitte Application Management Services (AMS) practice delivers functional and technical capabilities across a global platform to continuously deliver on client specic business objectives. We are relentlessly focused on driving down costs, improving quality, and accelerating value in every aspect of our services. Our Application Management Services span the entire continuum from up-front advisory services through application optimisation and innovation. Globally Delivery Network - A Global footprint serving our clients where they work. Over 600 practitioners focused on AMS in the US alone, combined with over 7 000 practitioners performing AMS services worldwide. Services - A full suit of application management services offerings - advisory through maintenance, optimisation and innovation. Application Management Services 27 Application Management Services Benets to your organisation We leverage deep expertise from our industry, technical and functional competency centres to deliver differentiated application management service results: Industry: leveraging industry specic insights and intellectual capital across 27 industry segments, allowing us to make better, faster, more informed application management decisions Technical/functional: bringing to our clients market recognised expertise and deep partnerships with SAP and Oracle, allowing us to face off against our clients most complex, multi-dimensional application challenges. Technologies - A comprehensive coverage of outsourced applications - information management, custom applications and ERP application, tools, techniques and related disciplines Delivery Structure - An ability to provide the right resources at the right price in the delivery modes and business models that best meet our clients objectives People - A broad and deep bench of resources, spanning technical, functional and industry domain expertise differentiated by a strong business acumen Methods and tools - A globally standardised methodology and integrated out-of-the-box toolkit to accelerate the build, conguration, execution and realisation of value from AMS Value Level Management - Tying the performance and accountability of the AMS organisation to the objectives and business outcomes of our clients. Mike du Toit Tel: +27 (0)11 806 5449 Email: mdutoit@deloitte.co.za Glen Krynauw Tel: +27 (0)11 517 4688 Email: gkrynauw@deloitte.co.za 28 Challenges mining companies face CXOs want to and should know the return on investment (ROI) of IT in their business. This informs future IT investment decisions as well as current actions that may need to be taken in IT. It is also important to understand what the critical systems are to the business and whether sufcient focus, time and resources are being applied to these systems. It is also important to assess how these may be impacted by cost rationalisation efforts. Other areas such as IT governance (which is receiving increased attention from shareholders and the board as a result of recent legislation) and licensing are also key to the CXO. How well aligned are the business objectives with our IT strategy? How does the Deloitte solution address the business issue? Our approach is a good component of an approach to IT governance. Our approach recognises that cost optimisation is a journey and our tool output provides the rst step in that direction. The tool is aligned with COBIT (Control Objectives for Information and related Technology) and is facilitated through a half-day workshop. The tool has been developed in conjunction with Gary Hardy, an advisor to Deloitte and the ITGI (IT Governance Institute), a recognised leader in IT governance thinking and a key contributor to COBIT. Benets to your organisation The tool output is designed to assist management in achieving: Cost effective management of IT assets Well managed IT processes Optimised use of human capital IT Governance Claude Martin Tel: +27 (0)11 806 5496 Email: clmartin@deloitte.co.za 29 Exploring risk, extracting value 30 Exploring risk, extracting value Risk Advisory provides a range of services to help clients with their risk management issues. This includes the identication and prioritisation of enterprise-wide risks. Deloitte Risk Advisory offers clients an end-to-end solution for all their risk management needs. Challenges mining companies face Normally, Internal Audit practitioners follow a sample- based approach whereby a sample of a data population is selected and tested, as well as basic auditing conducted on information technology (IT) systems. Typically, the results of these tests would form the basis for the Internal Audit report and opinion on the adequacy and effectiveness of the internal control environment. How does the Deloitte solution address the business issue? Our approach draws on our global experience in the mining and resources sector to ensure Management and the Board have a clear view of how risks impact shareholder value and how data paints a picture that you can leverage towards your business growth objectives. Risk Intelligence allows us to jointly develop a shared understanding of the links between shareholder value, risk and assurance, which means you get an Internal Audit that delivers assurance that really matters to you. We call this Internal Assurance. The Risk Advisory suite of services that can assist you with your internal assurance include: Internal Audit Governance and Risk Management Data Analytics Technology Risk Advisory IT Audit Forensics Security and Privacy Services License Compliance and Asset Management Solutions Tipp Offs Anonymous Benets to your organisation Good internal assurance gets you one step closer to a complete combined assurance framework. We know that organisations make a considerable effort in the risk management arena and we propose building on this as part of our internal assurance programme, rather than starting anew. We build on and incorporate frameworks that you may already have designed and implemented into our approach and make the necessary amendments to avoid rework for all parties. Sidesh Maharaj Tel: +27 (0)11 806 5247 Email: simaharaj@deloitte.co.za Paulo Nunes Tel: +27 (0)11 209 8174 Email: panunes@deloitte.co.za 31 Optimising your tax and legal position 32 Challenges faced by mining companies: The mining industry has been thrown into a realm of uncertainty with the introduction of various mineral and resources royalty and resource taxes. In addition to the legislative uncertainty in calculating the mining royalty payable, mining houses are forced to keep abreast of the many changes in tax legislation regarding the mining industry as well as staying focused on the running of day to day business operations. Compliance with the mining tax and the mining royalty legislation, in general, has inevitably become a potential tax mineeld. How does the Deloitte solution address the business issue? Deloitte mining tax specialists apply their specic expertise to corporate tax issues in the mining industry. Our main expertise lies in tax planning and the ability to assist with preparing or reviewing tax returns and year-end tax accruals. In addition to the above, due to the complexities and murkiness surrounding the calculation of the mining tax royalty payable by mining houses, our mining tax specialists have: Developed a highly skilled knowledge base regarding the interpretation of the controversial legislation around the mining royalty; and formulated a means to assist with the calculation of the actual royalty payable. Tax Management Consulting 33 Suren Dharamlall Tel: +27 (0)11 209 8569 Email: sdharamlall@deloitte.co.za Service Offerings: Consulting; Compliance; Mining Royalty Calculations; Restructuring, including advice on implementation and drafting of legal agreements; Indirect Tax Advice; International Tax Advice; Tax strategy; Tax technology and systems integration; and Government Growth Initiatives. Benets to your organisation: You will enjoy the distinct advantage of obtaining the very best advice from leading professionals in each area of tax who can all be found under one roof- from legal advisers to thought leaders who will strive to assist you to identify the optimal nancial, practical and most tax effective mechanisms that will see your company not only prosper but ourish! 34 Tax Effcient Supply Chain Challenges mining companies face One of the greatest opportunities to unlock value in the mining industry is to plan across the entire supply chain. Since the major markets for African commodities include Asia, the US and Europe, companies need to identify efciencies beyond their own borders. This includes the careful management of risks across different jurisdictions. How does the Deloitte solution address the business issue? Business Model Optimisation (BMO) enables companies to obtain operating and tax efciencies. This includes four steps: Realign for business transformation Operational changes are usually required to move the business model and the tax plan into harmony. Dening a new operating model to improve operating margins and grow revenues in a tax compliant manner can generate increased after-tax earnings and enhanced cash ows. Shifting components of the physical value chain to more tax-efcient jurisdictions is part of the solution, as is the strategic relocation of intellectual property. Recongure Information Technology (IT) systems As governance structures, supply chains, and other parts of an enterprise realign to capture more value, the information systems that support those functions must evolve as well. As a result, the IT systems should be recongured to support the new operating model. In addition, the IT function is itself a source of potential new efciency through centralization, shared service centers, and economies of scale. 35 Readying human resources BMO initiatives have human capital implications across the organization. After all, moving functions and risks means moving people, and that can trigger leadership challenges, potential disruption to the business, and loss of talent. These challenges, which can also create opportunities, need to be managed carefully with a command and control project management structure, strong communication plans, and dynamic change management. Re-organise legal, nance, and tax structure BMO goes beyond narrowly dened tax questions but those questions remain at the heart of any worthwhile solution. A new legal structure and transaction ows often result from a BMO transformation as a means of managing tax and trade risks in the local countries as the legal entity structure aligns with the new operating model. Finance aspects, cash fows, and customs duties and other indirect tax implications of the new business model need to be considered within the new management and reporting structure. Benets to your organisation The risks inherent in the mining industry present unique opportunities for companies to reduce their effective tax rate. This can be done by aligning the supply chain in a tax effcient manner. Furthermore, careful consideration of the business model can overcome additional economic and regulatory challenges, such as liquidity shortages and withholding taxes. Louise Vosloo Tel: +27 (0)11 806 5360 Email: lvosloo@deloitte.co.za 36 Transfer Pricing Challenges Mining companies face The mining industry poses some very specic challenges from a transfer pricing point of view. South African mining groups are often involved at more than one level in the supply chain. For example, the group may both mine and beneciate the commodity in South Africa. This can make it very difcult to evaluate the protability of the South African entity or entities. In this scenario it is also necessary to determine the value on which the Mining Royalty will be paid. Companies would wish, as far as possible, to pay on the value of the commodity before any beneciation. The global footprint of many multinationals in the mining industry also presents challenges. It is necessary to consider the pricing of sales to group companies in multiple parts of the world. This is likely to mean that the pricing policies are very complex. Meeting documentation requirements in multiple jurisdictions is also onerous. A specic problem for ventures into Africa is the wide range of withholding taxes imposed by many African governments. How does the Deloitte solution address the business issue? The Deloitte transfer pricing team is part of a global team which has consistently had the highest number of individuals (including individuals from SA) rated in the Euromoney Guide to the Worlds Leading Transfer Pricing Advisers. The SA team has extensive experience in preparing OECD compliant documentation which satises the requirements of SARS and is readily adaptable to the requirements of other countries. We have extensive experience in the mining industry. Apart from substantial documentation projects, our assignments have included the following: Benchmarking the sale to Europe of a valuable by-product from mining operations Working together with colleagues in the UK and Canada to secure an advance pricing agreement (APA) between the authorities of those two countries Advising on the SA transfer pricing implications of a signicant restructuring of the supply chain of a commodity mined in SA.
37 Billy Joubert Tel: +27 (0)11 806 5352 Email: bjoubert@deloitte.co.za Benets to your organisation The benefts of using the SA TP team are as follows: A cutting edge SA practice with access to a world-wide range of specialists in the mining industry A proven record of successful and constructive negotiations with SARS and with revenue authorities in other African countries (most recently, Botswana and Malawi) Extensive experience in the mining industry 38 Legal Advisory Solutions Challenges mining companies face Political and regulatory changes have long had a bearing on mining companies. Regulatory compliance is not negotiable and holds serious consequences if not fullled. Mining companies therefore need to continuously ensure that new legislation is considered for impact on investment decisions and to ensure operations comply with the law. Following the recent global fnancial crisis, government interventions and new legislation have reached new heights across the globe, including Africa. Examples include imminent data privacy law, new royalty and other resource tax legislation, tightening of permitting, beneciation, changes in labour laws and competition law to mention a few. How does the Deloitte solution address the business issue? Through our Deloitte network of ofces in Africa and our Global Legal Network, we provide advice to clients on cross-border M&A and regulatory requirements including: Country reviews including political, economic, social, technological, legal and environmental reviews and specic environment of business assessments Market reviews focussing specifcally on competition and regulatory assessments Regulatory reviews including sector specifc regulatory environment assessments and general corporate law Due diligence assessments on potential acquisition and/ or joint venture targets Country specifc compliance offerings addressing topics such as competition law, records management, electronic communication and transactions, labour law, royalty and social license requirements. Legal agreements including cross-border M&A, expatriate employment contracts and general commercial agreements. 39 Dean Chivers Tel: +27 (0)11 806 5159 Email: dechivers@deloitte.co.za Benets to your organisation Deloitte Legal is represented in 47 cities in 30 countries throughout Africa. We therefore have on-the-ground knowledge of new legislative requirements ensuring that: Sound knowledge exists of the legislative requirements and that the ease and cost of doing business is assessed before entering a country The impact of new legislation is assessed and addressed in terms of nancial performance or investment Companies keep abreast of the latest developments and legislative requirements Compliance with legislation and regulations Proactive action is taken to reduce cost of compliance Ethical risks to the company are understood and managed appropriately. 40 Challenges mining companies face Contractual provisions around pricing, rebates and penalty rights are not always effectively enforced meaning that full value is not always extracted during the course of the enforcement of a contract. How does the Deloitte solution address the business issue? Contractual Value Extraction is an accelerated process aimed at quickly identifying contractual clauses such as price regulation, penalty implementation or volume rebates with a view to establishing the extent to which costs can be reduced through better enforcement of such provisions. The process includes drawing nancial data and analysing this in light of agreed contractual provisions. Benets to your organisation Our Contractual Value Extraction Process will add value to your business through cash improvement and skills transfer, while simultaneously improving governance from both an administrative and negotiation perspective. Contract Optimisation Dean Chivers Tel: +27 (0)11 806 5159 Email: dechivers@deloitte.co.za 41 Challenges mining companies face A number of laws of general application require businesses to retain certain records for certain periods in specic formats. Generally businesses retain records for the following reasons: In order to ensure legal compliance (prescribed retention periods range from 3 months to 30 years) Retain evidence (the use of email and evidence in disciplinary hearings and litigation have increased dramatically over the last few years) For operational reasons Failure to retain records subject to retention requirements may expose businesses to criminal nes, civil liability and reputational harm. How does the Deloitte solution address the business issue? The Deloitte Email and Records Management Solution includes the following modules: GAP Analysis Report Training Records Management Policy Retention Schedule (a document detailing all retention legislation applicable to a business, records subject to retention requirements, retention periods and prescribed formats) Email Archiving Policy Electronic Evidence Policy Public Information Disclosure Policy Policy maintenance and updates Technology advice on compliance solutions Benets to your organisation The records management solution allows businesses to comply with legislation and common law provisions which indirectly require businesses to archive all outgoing email for at least three years. Records Management Solution Dean Chivers Tel: +27 (0)11 806 5159 Email: dechivers@deloitte.co.za 42 Addressing talent challenges 43 Talent Development and Assessment Solutions Challenges mining companies face As the mining industry ramps back up in response to growing demand, talent shortages will become more pronounced. In Africa this is an even greater challenge given the younger demographic prole, and limited access to tertiary education compared to other parts of the world. The already skilled workforce on the other hand, is mobile and has great bargaining power which mandates companies to think more creatively about talent. How does the Deloitte solution address the business issue? Deloitte has a far ranging set of human capital solutions to address talent challenges. One of these sets include our assessment and development solutions which systematically and creatively close the gap between where a business needs to go and the talent they must have to take them there by providing: Competency-based recruitment and selection systems that enable organisations to hire better people faster. Training and development that helps improve leadership and employee performance at all levels within the business. Deloitte Consulting South Africa is the sole Africa representative of Development Dimensions International, Inc. (DDI). We bring the deepest, broadest and freshest experience, learning programmes and technology to the table to help organisations develop their talent capability and the people they will need to successfully execute tomorrows business strategy. The DDI solution suite offers the following: Selection solutions Leadership development solutions Workforce development solutions Customer service solutions Performance management solutions Succession management solutions Assessment centre solutions. 44 Benets to your organisation Deloitte works with you to connect your talent development strategy with your business strategy to: Pinpoint current and future business drivers Defne how success will be measured Identify gaps in the quality and quantity of talent required to execute your business drivers Pinpoint strengths and weaknesses in your current talent management systems and capabilities Deliver a solution aimed at closing your talent gaps. David Conradie Tel: +27 (0)11 517 4207 Email: dconradie@deloitte.co.za 45 Challenges mining companies face The mining industry operates in a volatile, commodity price driven environment in which experienced and skilled executives and management and operational talent are at a premium, are absolutely necessary for success, and yet are extremely mobile and susceptible to offers from competitors. Attracting, retaining and rewarding employees for performance is a key strategic requirement in such an environment, particularly as company nancial and/or operational performance must prevail over, but can be dwarfed by, the inuence of external factors. Balancing and designing reward delivery mechanisms (guaranteed pay, annual incentive pay, and long term (share based) incentives becomes a challenge which requires balanced, experienced and authoritative support. The price of failure or sub-optimality is high. How does the Deloitte solution address the business issue? Deloitte brings its long and extensive, international experiential base to bear in devising reward strategies that are best international practice and yet tuned to the operational and strategic requirements of its clients. In the eld of incentives design it brings to bear the combined services of reward, tax, accounting, legal and regulatory oriented experts and unashamedly looks for the optimal solution for the client, that will survive the passage of time and the vagaries of an uncertain future. Its knowledge of the mining industry is extensive and includes operational as well as consulting experience. Deloittes offerings extend into such elds as: Reward philosophy and strategy & compliance with King III, including; Executive compensation design; Assistance in drafting Remuneration Charters & Remuneration Reports for inclusion in annual reports; Performance Management & annual incentives design & implementation; New age share plan and long term incentive design and implementation (including tax and legal implementation); Employee share ownership plans; Non-executive pay quantum and structuring; Strategic advice and assistance to Remuneration Committees. Remuneration and Incentive Design Services 46 Due to Deloittes multi-disciplinary approach and services, we are also well positioned to ensure that the above offerings are implemented with a focus on people and behaviour to ensure buy-in and commitment to any new or revised remuneration strategies or structures and their implementation. Benets to your organisation Remuneration is a major cost to any mining company and also, in respect of executives remuneration, a major source of reputational risk. Deloitte has been at the forefront of providing responsible remuneration advice that is attuned to nding an appropriate balance between the apparently conicting demands of reward strategy, shareholder value and corporate governance. Clients can be condent that the advice and assistance it receives from Deloitte will strive to maintain a high ground in which all remuneration provisions will be defensible and generally supported by stakeholders. It counts a very large number of mining companies amongst its client base. We offer a One Deloitte service offering thereby providing an end to end customised solution. Leslie Yuill Tel: +27 (0)83 453 4242 Email: lyuill@deloitte.co.za Creating value in mining. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member rms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member rms. Deloitte is the brand under which tens of thousands of dedicated professionals in independent rms throughout the world collaborate to provide audit, consulting, nancial advisory, risk management, and tax services to selected clients. These rms are members of Deloitte Touche Tohmatsu Limited (DTTL), a UK private company limited by guarantee. Each member rm provides services in a particular geographic area and is subject to the laws and professional regulations of the particular country or countries in which it operates. DTTL does not itself provide services to clients. DTTL and each DTTL member rm are separate and distinct legal entities, which cannot obligate each other. DTTL and each DTTL member rm are liable only for their own acts or omissions and not those of each other. Each DTTL member rm is structured differently in accordance with national laws, regulations, customary practice, and other factors, and may secure the provision of professional services in its territory through subsidiaries, afliates, and/or other entities. 2012 Deloitte & Touche. All rights reserved. Member of Deloitte Touche Tohmatsu Designed and produced by Creative Solutions at Deloitte, Johannesburg. (803120/mar) 47 Challenges mining companies face In the mining industry the cost of training and the number of shifts lost due to training attendance are two of the biggest concerns for leaders. On the other hand, bigger awareness of safety also highlights the need for high quality training. Leaderships challenge is to nd the right balance. In addition, employers and employees needs are often not met due to insufcient training and development programmes, which do not integrate with other forms of learning to accommodate the needs of highly diverse and busy employees. How does the Deloitte solution address the business issue? The value of training starts with people. We partner with organisations to help them achieve their strategic objectives through their people by developing and implementing world class learning and development strategies and optimising learning delivery and management through proven adult learning methodologies and approaches using innovative technologies, systems and processes. We have proven that our methods not only save time, but are also the best way to meet and prove compliance with Mine, Health and Safety Authority (MHSA). Benets to your organisation We assist in creating a new culture where knowledge is treated as an asset by people and the organisation becomes a lifelong learning organisation. This happens when the whole learning path is provided for with theory and practical learning opportunities. Learning with Deloitte becomes a driver of the business strategy, rather than a service, due to the alignment of the business strategies. e-Learning Solutions Leana du Plessis Tel: +27 (0)12 482 0364 Email: lduplessis@deloitte.co.za Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member rms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member rms. Deloitte is the brand under which tens of thousands of dedicated professionals in independent rms throughout the world collaborate to provide audit, consulting, nancial advisory, risk management, and tax services to selected clients. These rms are members of Deloitte Touche Tohmatsu Limited (DTTL), a UK private company limited by guarantee. Each member rm provides services in a particular geographic area and is subject to the laws and professional regulations of the particular country or countries in which it operates. DTTL does not itself provide services to clients. DTTL and each DTTL member rm are separate and distinct legal entities, which cannot obligate each other. DTTL and each DTTL member rm are liable only for their own acts or omissions and not those of each other. Each DTTL member rm is structured differently in accordance with national laws, regulations, customary practice, and other factors, and may secure the provision of professional services in its territory through subsidiaries, afliates, and/or other entities. 2012 Deloitte & Touche. All rights reserved. Member of Deloitte Touche Tohmatsu Designed and produced by Creative Solutions at Deloitte, Johannesburg. (803120/mar)