BEHRE DOLBEARfounded 1911MINERALS INDUSTRY ADVISORS

Dodd-Frank Wall Street Reform and Consumer Protection Act: “Conflict” Minerals and Mine Safety Reporting,

…plus other reasons…

MINE SAFETY & HEALTHWhy does it matter?

2BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

Dodd-Frank Wall Street Reform and Consumer Protection Act; January 2010:“Conflict” Minerals and Mine Safety Reporting

MSHA actions and mining fatalities – related…? International investors

“Equator Principles”Socio-economic factors:

Mining companies need to win the trust of local communitiesThey can no longer operate unsafely or put the community at

risk of illnessWhy should I run a safe mine…?

Mine Safety Matters...

3BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

Intent of the 848-page Act:

To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘‘too big to fail’’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.

Dodd-Frank Wall Street Reform and Consumer Protection Act

4BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

Section 1502. Conflict Minerals:

Intended to limit minerals being used to promote conflict in the Democratic Republic of the Congo and adjoining countries.

Dodd-Frank Wall Street Reform and Consumer Protection Act

5BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

Section 1503. Reporting Requirements Regarding Coal or Other Mine Safety :

Intended to take into account the safety record of mines as a factor in their reporting status.

Dodd-Frank Wall Street Reform and Consumer Protection Act

6BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

Why are these two provisions important?Due diligence studies are intended to evaluate if

mines can continue to operate, or if undeveloped mineral deposits can be brought into production.

Fatal flaws might include either of the previous two Dodd-Frank provisions.“Conflict minerals” may be relatively easy to

spot and/or avoid.Safety concerns are less obvious.

Dodd-Frank Wall Street Reform and Consumer Protection Act

7BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

1. For each coal or other mine of which the issuer or a subsidiary of the issuer is an operator—(A) no. of significantly and substantially violations under 104(a) of the Mine Act 1977;(B) no. of orders under section 104(b); (C) no. of citations and orders for unwarrantable failure under section 104(d);(D) no. of flagrant violations under section 110(b)(2);(E) no. of imminent danger orders under section 107(a);(F) dollar value of proposed assessments; and(G) no. of mining-related fatalities.

Sec. 1503(a) Reporting Requirements Regarding Coal or Other Mine Safety

8BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

2. A list of such coal or other mines, of which the issuer or a subsidiary of the issuer is an operator, that receive written notice from the Mine Safety and Health Administration of—(A) a pattern of violations under section 104(e); or(B) the potential to have such a pattern.

3. Any pending legal action before the Federal Mine Safety and Health Review Commission involving such coal or other mine.

Sec. 1503(a) Reporting Requirements Regarding Coal or Other Mine Safety

9BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

…each issuer that is an operator, or that has a subsidiary that is an operator, of a coal or other mine shall file a current report with the Commission on Form 8–K (or any successor form) disclosing the following regarding each … mine of which the issuer or subsidiary is an operator:

1. The receipt of an imminent danger order issued under section 107(a).

2. The receipt of written notice from the Mine Safety and Health Administration that the coal or other mine has—(A) a pattern of violations of under section 104(e); or(B) the potential to have such a pattern.

Sec. 1503(b) Reporting Shutdowns and Patterns of Violations

10BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

New standards under 17 CFR PARTS 229, 239 and 249–Codifying regulations under the Dodd-

Frank Act.– Effective Date: January 27, 2012.–94 pages…

17 CFR PARTS 229, 239 and 249

11BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

In the aftermath of several coal mine disasters, a wave of legislative and regulatory zeal impacted the United States mining industry, including the Mine Improvement and New Emergency Response Act of

2006 (MINER Act), heightened penalties in 2007 and 2008 for safety and health

violations of 30CFR, and attempts at passing the Supplemental Mine Improvement and

New Emergency Response Act of 2007 (S-MINER Act).These resulted in increased enforcement actions…

Why Dodd-Frank for Mine Safety?

BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

MSHA AssessmentsAs

sess

men

ts ($

mill

ions

)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

MSHA AssessmentsAs

sess

men

ts ($

mill

ions

)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$25.1

BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

MSHA AssessmentsAs

sess

men

ts ($

mill

ions

)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$25.1

$129.4

BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

MSHA AssessmentsAs

sess

men

ts ($

mill

ions

)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$25.1

$129.4

$154.3

16BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

BUT… What about Mining Fatalities?Av

erag

e An

nual

Fat

aliti

es

1936

2012-- through --

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800 1,546

35

Mine Safety &Health Act - 1977

17BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

Mechanized, high-volume mining methods remove workers from danger

…plus…Miners are taking responsibility for their own

behavior; all large companies have behavior-based safety systems, and…

National and international pressure around the world said, “Enough…!”

Why the Drop…?

18BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

Why the Drop…?

WOULDYOURATHERDOTHIS…?

19BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

Why the Drop…?

OR THIS…?

20BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

Objectives– to prevent accidents, harmful effects on

the health of those employed and diseases arising from employment in opencast mines;

– to ensure the appropriate design, proper technologies and safe operation of opencast mines;

– to provide the means of analyzing existing technologies from the standpoints of safety and health and conditions of work, and modifying these technologies to remove the hazards discovered by the analyses;

ILO – Safety & health in mines

21BEHRE DOLBEAR

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Objectives (continued)– to provide guidance in setting up

administrative, legal and educational frameworks within which preventive and remedial measures can be implemented;

– to promote the fullest consultation and cooperation between governments, employers' organisations and workers' organisations in the improvement of health and safety in opencast mining.

ILO – Safety & Health in Mines

22BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

Coal mine explosion in Mexico, with 60+ fatalities, led to the mine’s closure

Highwall failure in Malaysia, with 2 fatalities, resulted in major changes to mining operations

Underground mine fatality in China led to substantial revisions to contractor policies

Ventilation concerns in an underground mine in Indonesia led to major capital expenditures

These are just some cases I have worked on……the list goes on…

Why is mine safety important, if I don’t operate in the US ?

23BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

International banks got fed up with irresponsible mining operators and established a set of principles under which a mine would be judged for potential investment

These deal with “soft” issues, such as community involvement, sustainability, environmental stewardship, etc.

Safety plays a part…

The Equator Principles

24BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

Higher Worker Morale

Increased Productivity

Lower Financial Risk

Why an Effective Safety Program Works

25BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

Higher Worker Morale

Increased Productivity

Lower Financial Risk

More Predictable Operational Results

Why an Effective Safety Program Works

26BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

27BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

END

OF

STORY

28BEHRE DOLBEAR

founded 1911 MINERALS INDUSTRY ADVISORS

MINE SAFETY & HEALTH

by H John Head, PE, CEngBehre Dolbear – Americas+1 (630) 750-0652john.head@dolbear.com