Ingwe-CONTRACTOR MANAGEMENT - COP - SACMA

1 OPT 09 Page 1 of 1 Revision 5 Compiled by contractor Superintendent Accepted by Responsible HOD S ystem s Co ord i n a tor Approved by General Manager Effective Date: CODE OF PRACTICE contractor MANAGEMENT COP contractor MANAGEMENT OPT 09 Page 2 of 2 Document Vali d for Day of Printi ng Onl y Revi si on 5 1. TITLE PAGE TITLE PAGE 1. NAME OF MINE : OPTIMU M C OL L IER Y 2. COMMODITIES PRODUCED : COAL 3. MINING METHODS : Opencast 4.

2 CODE OF PRACTICE FOR : FATAL RISK: contractor MANAGEMENT 5. DME REFERENCE NUMBER : N/A 6. CODE OF PRACTICE NUMBER : OPT 09 7. EFFECTIVE DATE : 8. REVISION DATES : ANNUALLY COP contractor MANAGEMENT OPT 09 Page 3 of 3 Document Vali d for Day of Printi ng Onl y Revi si on 5 2. TABLE OF CONTENTS PAR. CONTENTS PAGE 1. TITLE PAGE 2 2. TABLE OF CONTENTS 3 3. SCOPE, PURPOSE AND STATUS OF CODE OF PRACTICE 4 4. MEMBERS OF DRAFTING COMMITTEE 5 5. GENERAL INFORMATION 6 6. TERMS AND DEFINITIONS 7 7. RISK MANAGEMENT 9 8. ASPECTS OF THE CODE OF PRACTICE 11 9. SPECIFIC REQUIREMENTS 12 MANAGEMENT Process 12 contractor Selection Phase 13 Pre-operational Phase 17 Operational Phase 24 Contract Completion Phase 26 Contracts to be Managed 28 References 29 COP contractor MANAGEMENT OPT 09 Page 4 of 4 Document Vali d for Day of Printi ng Onl y Revi si on 5 3.

3 SCOPE, PURPOSE AND STATUS OF CODE OF PRACTICE Scope This Code of Practice is applicable to those managerial and administrative procedures, duties and controls, which are fundamental to ensuring the quality and successful completion of contracted work executed at Optimum Colliery. The code is applicable to documentation that shall be completed and mandatory procedures that shall be followed by Line MANAGEMENT when contracting out work. The code applies to external businesses, contractors and individuals when contracted to provide a service or carry out operational work related to Optimum s mining activities, even if such activities are not performed on Optimum s authorization area. Purpose To define the procedures that shall be followed in the various stages involved in the selection, appointment, establishment, MANAGEMENT , facilitation, adjudication of completedwork and remuneration of contractors.

4 To provide a framework for the standardized MANAGEMENT of contractors, in particular their health and safety, to assist the mine to maintain compliance with statutory obligations and its own requirements, policies, procedures, et cetera during the presence of a contractor . To facilitate the healthy, safe, environmentally sound and cost effective completion of quality contracted work conforming to customer requirements.(*) To empower line managers to verify and influence the performance levels of contractors to facilitate the delivery of efficiency and quality commensurate with the values of the Board, MANAGEMENT , Stakeholders, Shareholders and the Community. Status The format of this Code of Practice conforms to the requirements of Section 9(2) and 9(3) of the Mine Health and Safety Act, except that it was not submitted for approval to the Inspector of Mines, however it will hold the same status within the mine as a Mandatory Code of Practice as far as implementation and compliance are concerned.

5 This Code of Practice may be used in an accident investigation / inquiry to ascertain compliance and establish whether the Code achieves its objectives, is effective and fit for purpose; This Code of Practice supersedes all previous relevant Codes of Practice; and All Managerial Instructions or recommended Procedures on the relevant topics must comply with this Code of Practice and must be reviewed to ensure compliance. This Code of Practice for the MANAGEMENT of contractors refers to relevant statutory and other requirements defined in the following documents and related sources: The Mine Health and Safety Act. Appropriate requirements of the Occupational Health and Safety Act, No. 85 of 1993 ( OHSA ); Appropriate requirements of the Compensation for Occupational Injuries and Diseases Act, No.

6 130 of 1993 ( COIDA ) Applicable company policies, standards, codes of practice, and procedures. COP contractor MANAGEMENT OPT 09 Page 5 of 5 Document Vali d for Day of Printi ng Onl y Revi si on 5 4. MEMBERS OF DRAFTING COMMITTEE NAME DESIGNATION E-MAIL CONTACT NO. 1 Jan Voges 2 Riaan Basson 3 Simon Dlamini 4 Mielie Niemand 5 Patrick Jacobs 6 Mike Badenhorst Contr. Supt. 7 Bradley Henderson 8 Pierre Immelman 9 Adriaan Venter COP contractor MANAGEMENT OPT 09 Page 6 of 6 Document Vali d for Day of Printi ng Onl y Revi si on 5 5.

7 GENERAL INFORMATION Corporate Environment Optimum Colliery, along with 8 other mines in the Mpumalanga and KwaZulu Natal areas, belong to Ingwe Coal Corporation. Ingwe is a wholly owned subsidiary of BHP Billiton and one of seven steaming coal operations falling in the Energy Coal Customer Sector Group. BHP Billiton has a dynamic corporate governance infrastructure, which sets and audits a series of HSEC MANAGEMENT Standards, as well as a framework of Fatal Risks, which are interpreted and managed by the respective mines within their own risk profiles. The Fatal Risks are also subjected to Peer Review. A Brief History of Optimum Colliery In 1968 the Mine was registered as a single-product mine that would supply coal to the Hendrina Power Station.

8 The first large Marion 8000 dragline was commissioned in 1971 when opencast operations commenced. In 1982 the underground operations ceased and in 1983 the Mine became a multi-product producer, supplying both the Hendrina Power Station and the export market. The Drum Plant and Cyclone and Spiral Plant were commissioned in 1983 and 1986 respectively. Optimum Colliery was enlarged with the Eikeboom Section s incorporation in 1993. In addition, Optimum Colliery supplies both sized and low phosphorous coal to numerous inland markets. Optimum Colliery is situated in the rich Witbank coalfields and supplies bituminous coal to customers locally and internationally. Full Name of the Mine - Optimum Colliery Private Bag 1201 Pullenshope 1096 Location of the Mine - Hendrina, Pullenshope, Mpumalanga, South Africa Owners - BHP Billiton Commodity Mined - Coal (bituminous) Mining Method - Single bench, Semi spoil, Dragline-Dozer method Coal seams mined - 4 Lower Seam, 2U Seam, 2 Seam, 2L Seam, 2A Seam, 1 Seam Tonnages per annum - M15, 600000 Mining Production and Processing The first step of the production process is to conduct geological surveys to determine the nature, extent and thickness of the coal seams.

9 Once the viability of mining a seam has been established, earthmoving machines remove the top soil. This soil will be stock-piled with the objective of replacing it once re-levelling of mined areas has been effected. COP contractor MANAGEMENT OPT 09 Page 7 of 7 Document Vali d for Day of Printi ng Onl y Revi si on 5 The waste rock above the seam, mostly comprising of soil, weathered material, shale and sandstone, is fragmented by drilling and blasting. Dozers level off the blasted material as a base for either draglines or truck and loader operations to remove the broken material over-laying the coal seams. The exposed coal is then drilled and blasted to manageable dimensions for loading equipment.

10 Front-end loaders and face shovels load the blasted coal onto coal-haulers or trucks that transport it to tips, from where it is conveyed to the processing plant. Here the coal is crushed, washed and sorted to the specifications of the different international and inland customers. Markets Optimum markets through Ingwe Coal Corporation serve both the international and domestic South African markets. International - The three major international markets are Europe, Far East and South America South Africa - The South African markets are mainly electrical supply utilities, the metallurgical industry, the paper and pulp industry, the agricultural industry and the domestic market. A number of sales, especially international sales, are contractual sales of long term nature, although increasingly larger amounts of coal are sold on the spot markets.