SUSTAINABLE DEVELOPMENT REPORT 2019 OVERVIEW
The purpose of this report is to provide our stakeholders – including those who work for us, local communities, non-governmental organisations, investors, customers, businesses and governments – with a transparent account of how we addressed the most material sustainability issues our Company faced during 2019. The report forms an important part of our annual integrated reporting process, and ideally should be read in conjunction with our Integrated Report 2019.
2019 SUSTAINABILITY PERFORMANCE SUMMARY
Zero fatalitiesFATALITIES AT MANAGED OPERATIONS:
10% year-on-year improvement in LTIFR performanceLTIFR AT MANAGED OPERATIONS:
(12% improvement y-o-y)
Year-on-year reduction in number of new cases of occupational diseaseNEW NOISE-INDUCED HEARING LOSS (NIHL) CASES (+10% SHIFT):
(37% reduction y-o-y)
TB incidence rate below estimated national average of 567 per 100 000ANNUALISED TB INCIDENCE RATE PER 100 000:
337 (SA operations)
(35% reduction y-o-y)
Reduce direct (scope 1) carbon emissions by 2% on 2017 levels by 2020SCOPE 1 EMISSIONS:
(target 392kt by 2020)
Reduce indirect (scope 2) carbon emissions by 5% on 2008 levels by 2020SCOPE 2 EMISSIONS:
(target 2 568kt by 2020)
Ongoing operational efficiency improvements to ensure 40% of water consumed is recycledWATER RECYCLED:
(target of 40%)
Continue to deliver on commitments in our social and labour plans (South Africa) and through projects (South Africa and Zimbabwe) that meaningfully mitigate social challenges in our host communitiesSOCIO-ECONOMIC DEVELOPMENT SPEND:
in South Africa
STATEMENT BY THE CHAIRPERSON OF THE SOCIAL, TRANSFORMATION AND REMUNERATION COMMITTEE
IMPLATS REMAINS IN A STRONG POSITION TO ENSURE SUSTAINABLE VALUE-CREATION FOR ALL OUR STAKEHOLDERS. TO DO SO WITHOUT HARM IS OUR ONGOING INTENT.
It gives me pleasure to introduce Implats’ annual Sustainable Development Report, and to share some high-level reflections about our sustainability performance over the year. I encourage you to also refer to the review by my colleague, CEO Nico Muller (page 11), for his reflections on issues critical to Implats’ longer-term sustainability, including the Group’s progress in optimising and repositioning the Impala Rustenburg operation.
This has been a very encouraging year for Implats, with improved operational and financial results accompanied by a predominantly positive sustainability performance. Tragically, however, five employees lost their lives at our managed operations during the year. Any loss of life is unacceptable, and we remain unwavering in our commitment to achieving and maintaining our vision of zero harm across all operations. The Group’s progress this year was underpinned by maintaining our social legitimacy, ensuring appropriate investment in our employees and communities, minimising our environmental impacts, and being accountable to our stakeholders. Our ongoing efforts to build and maintain trusted relationships with all stakeholder groups have been critical in enabling us to meet our commitments, and to manage expectations and challenges.
Details on these issues are provided in the respective sections of this report, which supplements our Integrated Annual Report. I invite you to share your feedback on this report in terms of our performance and the quality of disclosure. Frank feedback from stakeholders is essential to foster greater accountability and helps us deliver more effectively on our sustainability goals.
GROWING EXPECTATIONS FOR SUSTAINABILITY DISCLOSURE
In recent years, the sustainable development agenda has been gaining ground, with investors and other stakeholders increasing their focus on environmental, social and governance issues. Implats is highly rated among its peers in demonstrating socially and environmentally responsible practices and good governance. In line with our commitment to making lasting positive contributions to the communities around our operations, we are developing our understanding of how we can optimise our contribution towards the attainment of the United Nations Sustainable Development Goals (SDGs). This work builds on our ongoing commitment to the UN Global Compact and its 10 principles.
To monitor and improve our sustainability reporting, we engaged external advisory services for a consecutive year to provide a critique on our most recent Sustainable Development Report. This 2019 report aims to address the recommendations made in the evaluation of our 2018 report, which was generally well received as demonstrating a year-on-year improvement in quality and disclosure.
VALUING OUR PASSIONATE WORKFORCE
The turnaround in our business, reflected in improved safety performances and productivity – especially at our more challenging mines, Impala Rustenburg and Marula – is driven by our people. As part of our organisational culture transformation process, we are embedding our improved approach to valuing, developing and empowering our people.
We maintain a focus on instilling organisational discipline and having the right leaders in place who understand our vision, path and strategic objectives. This year, new appointments were made to our executive committee team that not only enhance our leadership capabilities but help drive the transformation imperative. The representation of historically disadvantaged South Africans (HDSA) at this level of our organisation has improved from 25% in FY2018 to 55%.
We have also taken decisive steps to improve our approach to creating an environment conducive to gender equality and to address barriers to the employment, retention and the advancement of women. To enhance our ethical culture, we are developing a formal ethics programme to be rolled out across the Group, which will include training, awareness, monitoring and reporting.
The sustained good relations the Group enjoys with employees and their union representatives has been evident throughout the restructuring undertaken at Impala Rustenburg, as well as the wage negotiations which commenced in July 2019.
Sustaining our focus on passionate, resilient safety leadership and mining discipline is imperative to deliver on our commitment to eliminate fatalities and reduce levels of injuries and harm. Regrettably, 36 new cases were compensated for hearing loss this year. While we still use some equipment at Marula which emits noise levels above the industry 2024 milestone target limit of 107dB, the rollout of replacement units will be completed in FY2020.
In managing the principal non-occupational health risks facing our employees – pulmonary tuberculosis (TB) and the associated human immunodeficiency virus (HIV) co-infection – we have kept levels of both under control, with improvements in most performance indicators. In promoting employee wellbeing, we are enhancing our financial wellness programmes, to mitigate mental health challenges associated with financial difficulties, especially over-indebtedness.
We endeavour to enable our employees to reside with their families in decent housing and within easy commuting distance of work. We have conducted accommodation and living-out allowance surveys among our workforce at Impala Rustenburg, Marula and Impala Springs, to inform our housing strategies at the respective operations. Our primary objectives are to facilitate home ownership, and to reduce levels of employees living in backyard dwellings and informal settlements around our operations.
INVESTING IN OUR COMMUNITIES
In seeking to build and maintain our social licence to operate, we invest in socio-economic development initiatives aligned with our legislated transformation requirements. We engage proactively with community representatives and government officials at all levels to maintain constructive relationships with local stakeholders and manage expectations. This has been vital in the face of growing frustration and community activism in many of the communities neighbouring our South African operations, with escalating community demands directed at our operations, relating primarily to employment and procurement. The appointment this year of a dedicated Group executive for stakeholder relations has provided additional oversight and support in managing stakeholder issues. Notwithstanding the seven-day operational disruption at Marula this year due to community unrest, I am pleased with the progress made in improving community relations and mitigating unrest in a challenging operating environment at the mine.
Details on our collaborative efforts to address challenges, including community leadership disputes, are provided on pages 27 and 62. Priorities are to secure a sustainable resolution to the ongoing disputes around the governance and distribution of the community-managed dividends from the Makgomo Chrome project, and to ensure more inclusive efforts to achieve and maintain stability around the operation.
Much of our attention this year was directed at mitigating the socio-economic impacts on our employees and communities due to the Impala restructuring process. The outcomes to date are more positive than we initially envisaged, notably the success of our job-loss avoidance measures undertaken in consultation with our employees and unions, government, and community leadership. Our improved operational performance and the positive price environment for palladium and rhodium have supported our efforts to increase local procurement opportunities in the face of increasing demands from our local communities.
We have delivered effectively on our commitments in our social and labour plans (SLPs) at our South African operations, although Impala Rustenburg and Marula await a response to their request for a two-year extension of the implementation period to complete certain infrastructure projects. Our third generation SLPs focus on supporting sustainable job creation. Our South African operations have continued to make good progress in increasing localised and preferential procurement, particularly with black-owned and black women-owned suppliers.
In Zimbabwe, amid a downturn in the socio-economic economic climate, Zimplats maintained cordial relations with its communities, ensuring uninterrupted business operations. The operation continues to deliver pleasing results through its local procurement and local enterprise development activities. In support of government’s efforts to place mining at the centre of economic reform initiatives, Zimplats has initiated enterprise development and industrial linkages in underground roof support manufacturing and is developing a high-impact commercial livestock project that incorporates community involvement. This year, Zimplats also responded quickly and contributed meaningfully to relief efforts for the following national disasters: a major cholera outbreak, tropical cyclone Idai, and trapped artisanal miners.
We have maintained a good performance across key areas of responsible environmental stewardship.All operations are now certified against ISO 14001:2015 for their environmental management systems. This year there were no major non-compliances at our operations. The number of limited impact (level 3) environmental incidents recorded remained largely unchanged.
The majority of energy savings have already been realised at our operations. Additional efficiency improvement initiatives will require substantial capital. Water use remains a critical priority and we continue to meet our target of ensuring that 40% of the water used is recycled. All operations are sensitive to the amount of waste they generate. To this end, we recycled 70% of our non-mineral waste against a 60% target and reduced the amount of hazardous waste disposed to landfill by 38%.
A focus this year has been the introduction of South Africa’s long-delayed Carbon Tax Act. We assessed the potential carbon tax liability for Impala Platinum and continue to evaluate our approach to reducing our emissions. Another focus has been tailings dam integrity, which is under increased scrutiny following several serious tailings dam breaches internationally in recent years. We have further scrutinised our practices and identified areas for improvement to ensure we comply with world-class Canadian standards for tailings dam management.
CONCLUSION AND APPRECIATION
Looking to the future, I believe there is still more that we can do to ensure that the Group achieves its aspirations to be a sustainable, profitable and safe PGM-focused organisation. We must continue to cultivate a culture of performance and care in order to deliver on our commitment to zero harm. Further, there remains scope for us to extend our efforts in promoting employment and local socio-economic opportunities through our procurement and enterprise and supplier development activities. I encourage management to continue engaging with communities and to leverage partnerships with business, government and labour to address the challenges facing the sector and society at large.
In closing, I express my thanks to our CEO, Nico Muller, for his transformative leadership, as well as my colleagues on the STR committee, the management team and all employees for their work towards delivering on Implats’ sustainability commitments. I convey my particular appreciation to community leaders and the government for their collaborative efforts. I believe our progress this year sets us up well for further value growth and delivery on our commitments relating to zero harm, transformation, socio-economic development and environmental protection.
THIS HAS BEEN A YEAR OF SIGNIFICANT PROGRESS FOR IMPLATS IN STRENGTHENING OUR COMPETITIVE POSITION AND ENSURING WE HAVE A TRULY SUSTAINABLE BUSINESS. THE STRATEGIC CHOICES WE HAVE MADE, AND THE ENERGY AND PURPOSE WE PUT INTO CARING FOR OUR PEOPLE AND BUILDING A HIGHPERFORMANCE CULTURE, ARE STARTING TO DELIVER THE DESIRED BUSINESS OUTCOMES AND ORGANISATIONAL CULTURE. IN BECOMING MORE AGILE AND RESILIENT AS A BUSINESS, WE CAN CREATE GREATER SUSTAINABLE VALUE, ENHANCING OUR ROLE IN SOCIETY.
The Group’s improved operational performance this year, supported by stronger palladium and rhodium market prices and higher sales volumes, saw a welcome return to profitability and cash generation. This was achieved against a challenging socio-economic backdrop characterised by growing community activism in the lead up to the national elections in South Africa, operational disruptions caused by the crisis at Eskom and the commencement of wage negotiations at year-end. In Zimbabwe, foreign currency shortages and natural disasters introduced further complexity into an already difficult operating climate. We have, however, navigated these and other challenges, without major incident, through effective collaboration with our stakeholders.
As we progress on our trajectory to being a value-focused PGM producer, we are mindful of the issues critical to Implats’ longer-term sustainability:
- delivering on our commitment to zero harm
- the successful restructuring of Impala Rustenburg over the next one and a half years
- fostering and embedding our desired organisational culture of performance and care
- addressing growing levels of community activism
- proactively responding to the legislative and policy environment in South Africa and Zimbabwe.
Strong palladium and rhodium fundamentals are expected to persist for the foreseeable future, but the near-term outlook for platinum remains muted. In this environment it is imperative we continue to focus on repositioning our operations on the western limb of the Bushveld Complex to withstand longer-term sustainability risks. We are one year into a three-year, phased process to radically transform Impala Rustenburg into a leaner, more focused and profitable operation, to support the future success of the Group. We have made a good start and are tracking well against our goals.
The smooth execution of phase one of the Section 189 consultative process entailed a reduction of 1 329 jobs and was finalised with no major discord or disruption. Through various job-loss avoidance measures – including transferring employees to vacant positions at the 16 and 20 growth shafts, natural attrition, reskilling, voluntary separation and business improvement initiatives – we restricted the number of forced retrenchments to 117. This achievement is a testament to the constructive engagements and good relationships we maintain with our employees and unions, the government and community leadership. Our ability to navigate these challenges together augurs well for managing the second and third phases, which will be more challenging. The improved price environment for palladium and rhodium has improved the economics of the shafts we earmarked as non-core and has enhanced strategic optionality in how we pursue the restructuring of our larger, high-cost operations with a reasonable life of mine – 12 and 14 Shafts.
The strategic changes we effected at Marula last year have ensured a sustainable business turnaround. Following a strong first half, Marula’s performance was impacted by power disruptions and a seven-day community stoppage in the third quarter. The operation’s overall improved financial and operational performance will support the construction of a new tailings dam facility at the mine.
The vital role our people play in delivering on Group strategic objectives cannot be understated as we traverse our transformation. It has been gratifying to see the positive change in our workforce dynamic, motivated by concerted efforts to put our people at the centre of our business model and strategy. Two years into our revised people strategy, we are well advanced in shaping a new organisational culture across our operations. At the heart of this change process, is the implementation of our Leading the Implats Way programme. Based on a care and growth leadership methodology, the programme is building the leadership competencies we aspire to embed across the organisation, with a focus on middle management and supervisory levels. This work is supported by our renewed impetus on skills development, teamwork, innovation, recognition and communication.
We have good communication and relations with our employees and recognised unions, which provides a robust foundation for negotiating a new three-year wage agreement for the Impala Rustenburg and Marula operations. In preparing for the talks, which began early July, we had intensive engagements with the leadership of the Association of Mineworkers and Construction Union (AMCU), in which I was personally involved. Recognising the potential for labour unrest, we deepened our understanding of potential risks and mitigation measures to support a positive outcome. Our discussions with the AMCU leadership have been encouraging and we are confident of an outcome that will ensure employees continue to receive a fair and equitable wage while safeguarding the financial sustainability of our organisation.
It has been a personal priority to foster a culture of collective responsibility, ensuring safety is an inherent part of daily action and thinking, fully integrated in all we do. That we continue to experience serious safety incidents, in which five employees died this year at our managed operations, is tragic. After the first fatality in the first quarter at Impala Rustenburg, we operated fatality-free until the fourth quarter, when we had our first fatality at Zimplats since August 2013 (FY2014), and three further fatalities in separate incidents at Impala Rustenburg. We thoroughly investigated each incident and acted on lessons learned.
We are encouraged by the ongoing improvement in our safety performance across our South African operations and particularly at Impala Rustenburg under the leadership of CEO Mark Munroe. The Group continues to perform favourably relative to the overall industry. Zimplats’ consistent safety record, notwithstanding the fatality this year, was recognised with various safety awards for outstanding performance. Our safety performance before the fourth quarter incidents was our best ever and industry leading, recording all-time low fatality and injury frequency rates. But until we deliver a fatality-free workplace we cannot be satisfied with our progress. We continue to experience high-risk behaviour at Impala Rustenburg and Marula. We will not waver in our focus on effective, resilient safety leadership and operational discipline.
Compounding deep-seated challenges of high unemployment and poor service delivery from local government, community sentiment this year was heightened by divisions and factions within communities. The lead up to the national elections aggravated tensions and saw an escalation of complaints and demands directed at our operations, most of which were related to employment and procurement. We managed the challenges by maintaining good, trusting relations with community leadership. Marula was the only operation disrupted by community protest.
LEGISLATIVE AND POLICY ENVIRONMENT
Significant strides were taken by the South African and Zimbabwean governments to support economic development and investment in the mining sector. In South Africa, the new Mining Charter (Mining Charter III of 2018) creates a more supportive environment for the reindustrialisation of South Africa. However, it contains several provisions that are a cause for concern. We are confident that with the right engagement through the Mineral Council SA, these uncertainties will be resolved.
In Zimbabwe, President Emmerson Mnangagwa relaxed the indigenous policy that impeded foreign direct investment in the country for more than a decade, prompting much-needed investment inflows. While we continue to engage closely with the government on indigenisation and beneficiation policies to resolve areas of uncertainty and support positive outcomes, our priority has been addressing the economic and fiscal policy constraints of the country.
Amid a groundswell of public opinion in support of climate legislation, politicians can no longer put it on the back burner. We are confident the products we mine will make an increasingly important contribution to a greener world, with PGMs playing a critical role in autocatalysis and pollution control in the automotive sector. South Africa is in a strong position to progressively decarbonise its energy mix cost effectively and in a jobs-rich manner, without undermining the security of electricity supply. The country can have relatively low-cost clean electricity by using its resource advantages in solar and wind to generate hydrogen, for use in platinumcatalysed hydrogen fuel cells to produce emission-free mobile and stationary electricity as well as heat.
A major step forward was taken this year in implementing our fuel cell development roadmap. A special economic zone (SEZ) for fuel cell development is in development under the auspices of the Gauteng Industrial Development Zone initiative, situated on Implats land adjacent to our refineries in Springs. We intend to use the SEZ platform to build on our current partnership initiatives, develop skills capacity and leverage our infrastructure for fuel cell manufacturing and deployment.
We are optimistic about the sector’s longer-term future and the opportunities available to the Group, but acknowledge the challenging price environment and global macroeconomic uncertainty, which point to a turbulent three to five years ahead. Our strategic change initiatives position our portfolio exceptionally well for future profitability, even at low platinum prices. Every step of our progress is underpinned by our people. I thank everyone within the organisation for their contribution. Together we are enabling our great organisation to evolve and adapt – to become stronger and more sustainable, for the benefit of all stakeholders.