Ensuring the safety of employees at work is a priority for ARM’s operational management, and a performance indicator on which ARM’s corporate centre places great emphasis. Safety management systems and reporting are guided by legislation, primarily the Mine Health and Safety Act (MHSA) in respect of mining operations, the Occupational Health and Safety Act in respect of smelting operations, and international practice. Particularly in respect of mining operations,the tripartite (that is,management,union and government) processes and structures, including safety and health committees and elected safety stewards and representatives, as envisaged by the MHSA, have been established at all operations. Regular contact is maintained with the local and national structures of the Department of Minerals and Energy (DME). Employees are able to participate directly, and through the election of representations in joint decision-making and planning with regard to safety management.
A Group safety, health and environment manager provides guidance in respect of targets and good practice, and reviews performance.
ARM’s target is to eliminate all fatal accidents and to achieve an improvement year-on-year in the key safety indicators aligned with the DME milestones for improving heath and safety in the mining industry.
It is with great regret that the Company reports that there were eight fatalities at the operations which it manages, or at which it is involved in the management, in three separate accidents. This is a significant increase from the two fatal accidents reported in F2007 and is of great concern to the Company. It should be noted that six employees died in a single tragic accident at the Cato Ridge smelter, which is dealt with in more detail below.
Note that the safety statistics reported below are for the ARM Ferrous and ARM Platinum divisions, and that the ARM Group information in this section relates to a combination of these statistics.
It is with deep regret that ARM reports the details of those who died at ARM’s operations during the year. Deepest sympathies are extended to the families and collegues of those who died.
| 5 July 2007 | Mr Marcus Mpho Khukhutje (33), Belt Attendant, Two Rivers Platinum Mine | Mr Khukhutje was overwhelmed by a mud rush from an ore transfer box. | Mr Khukhutje was from Ga-Malekane Ngwaabe, and leaves his wife, Manage Emely. |
| 14 December 2007 | Mr Lennus Tenza (50), Furnaceman, Cato Ridge Works | Mr Tenza suffered from severe burns when the furnace raw material bed erupted in an accident on 11 December. | Mr Tenza was from KwaXimba in KwaZulu Natal and leaves his mother, Sibongile Mavis Tenza, and wife,Thulisile Mavis Xaba. |
| 24 February 2008 | Isaac Gcumisa (32), Furnaceman | Cato Ridge Works accident. An explosion at the No. 6 furnace at Cato Ridge Manganese Works resulted in nine employees sustaining severe burns, six of whom died in the accident. | Mr Gcumisa was from Emvini, KwaXimba, in KwaZulu-Natal. He leaves his wife, Khanyisile Gcumisa. |
| Alfred Mtolo (53), Payloader | Mr Mtolo was from Emvini, KwaXimba, KwaZulu-Natal. He leaves his wife, Gladness Mtolo. | ||
| Vusi Kubheka (34), Millwright | Mr Kubheka was from Newcastle in KwaZulu-Natal and leaves his wife, Nomusa Tshabalala | ||
| Zibuse Maduna (48),Tapper | Mr Maduna was from Esiweni, KwaXimba, in KwaZulu-Natal. He leaves his wife,Alice Maduna. | ||
| Ndlovu Bheki (41), Production Foreman | Mr Bheki was from Entukusweni, KwaXimba, in KwaZulu-Natal. He leaves his wife, Cashile Ndlovu. | ||
| Nhlanhla Ngcobo (26), Labourer | Mr Ngcobo was from Emvini, KwaXimba, in KwaZulu-Natal, and leaves his wife, Phumelaphi Ngcobo. |
Statistics for Goedgevonden are not included in this report.
Three key measures of performance are recorded and reported by ARM operations, namely the Fatal Injury Frequency Rate (FIFR), the Lost Time Injury Frequency Rate (LTIFR) and the Reportable Injury Frequency Rate (RIFR).
On 24 February 2008, an explosion at the No. 6 furnace at Assmang’s Cato Ridge Manganese Works in KwaZulu-Natal resulted in nine employees sustaining severe burns. Six of the nine injured employees passed away within three days of the explosion, as a result of their injuries. A memorial service was held at Cato Ridge Works on 28 February which was attended by employees, family members and management from both Assmang and ARM.
As at the end of June 2008, one of three injured employees who survived the accident had returned to work, while the other two employees were recovering at home, undergoing counselling. One employee is also receiving occupational therapy.
Comprehensive action plans for preventive measures to ensure safe operation of the smelter were compiled by the company and accepted by the Department of Labour and the unions. This includes the recommendation of an independent consultant that blast protection walls be constructed to shield employees from the furnaces, and the retraining of operations staff.
Prior to this accident, another employee died at this operation in December 2007. Before that the long term safety trend had shown consistent improvement in performance.
In addition to the Cato Ridge accident, two specific significant incidents at the Modikwa Platinum Mine had an impact on the three key measures of safety performance by reported ARM, namely, when:
The increase in both reportable accidents and lost-time injuries is of concern to the Group and attention is being directed towards reversing this upward trend. A factor that has had an influence on the rise in injuries has been the increase in operational activity and, in particular, the rise in the total number of people (employees and contractors) at ARM operations increasing by 62% the past three years, mainly due to the increased number of contractors.
Two of the Group’s operations were recognised by the DME for good safety performance during the year:
The ARM Group also has two internal safety awards as a way of heightening safety awareness and providing recognition for good performance.These are the Santa Barbara Award and the Excellence in Safety competition. The Santa Barbara trophy is awarded to any operation that completes one million (or a multiple thereof) fatality-free shifts, while the winners of the Excellence in Safety competition are selected based on a weighted average of differential LTIFR data over the last three financial years.
The following mines received the Santa Barbara award this year:
The Manganese Mines were pronounced the winner of the Excellence in Safety competition for significantly improved safety performance during F2008.
Ensuring the health of employees at work is a priority for ARM’s operational management.
As with safety, in respect of mining operations, the tripartite (that is, management, union and government) processes and structures stipulated by the MHSA are in place at all operations, and joint management and union safety and health committees meet on a regular basis. Each operation has a safety and health policy.
ARM’s operations are either mines or smelter operations which present different hazards in respect of occupational health and hygiene. The mining operations vary in respect of the orebody and the mining method applied (opencast versus underground mining), and also in respect of the degree of mechanisation. These factors determine the impact on the potential hazards they present.
All operations perform medical surveillance in compliance with legislation. Baseline medical examinations are conducted on entry, at exit and on an annual basis during the period of employment.
In 2006, four cases of manganism were identified at the Cato Ridge Manganese Works in KwaZulu-Natal. This occupational illness is caused as a result of exposure to manganese and is very difficult to diagnose. (The symptoms displayed are similar to those of Parkinson’s disease). In 2007, a further six cases of manganism were identified. As a result, compensation was applied for on behalf of 10 employees to the Compensation Commissioner.
The Cato Ridge smelter has consistently applied safety and health mechanisms (including surveillance) as required by law. In 2007, arising from the above initial diagnosis of manganism, Assmang developed a more comprehensive medical surveillance programme.
This programme includes examination by a movement disorder specialist and a neuro-psychologist. All employees at Cato Ridge Works have gone through this enhanced medical surveillance, and apart from the 10 employees who were initially diagnosed with manganism, no other employees have been found to have manganism.
Evaluations by both local and international medical experts have indicated that, based on the available evidence, the 10 initial diagnoses of manganism are incorrect and that none of the 10 employees who were initially diagnosed as having manganism can be considered to have manganism, and that further investigation is warranted.
Assmang is of the opinion that the 10 persons who were initially diagnosed with manganism should be medically re-examined by specialists qualified in the field.
An inquiry convened by the Department of Labour in 2007, continued with its work in 2008,but by year-end its work had not been completed. Assmang remains committed to protecting the health of its employees and to provide a working environment for its employees which is safe and healthy.Over the past 12 years,Assmang has spent,in current terms, capital of more than R200 million on health and safety improvements at Cato Ridge.Assmang has planned additional capital of R150 million over the next three years on a fugitive dust and fume extraction project.
Operating as it does in southern Africa,ARM’s operations and the communities in which the company and its employees reside have been severely affected by the HIV and AIDS epidemic.ARM’s approach to the management of HIV and AIDS is aimed at halting the spread of the disease on the one hand, and caring for those who are infected and affected on the other.
The operations are responsible for the interventions with employees and communities. Their activities are, however, guided and supported by the corporate strategy and reviewed by a corporate team, which is supported by a specialist consultant.A group HIV and AIDS coordinator was appointed in May 2008 to add impetus to ARM’s programme.
The ARM Community Investment Trust supports community projects that have a meaningful impact on those in need.
Because each operation currently manages HIV & AIDS independently, reporting is challenging in terms of the group’s overall performance. During F2008, ARM formally adopted the resource document compiled by the Global Reporting Initiative (GRI) as the basis of a reporting framework for ARM operations.
In developing its own matrix to evaluate the performance of its own operations, ARM used the 16 performance indicators identified in the GRI document, ranging from financial concerns to social concerns.These 16 GRI performance indicators fall into the following four categories
In respect of the four key elements, the following is reported:
Care for the environment in which it operates is a fundamental part of the Group’s sustainable development strategy.At a minimum, the Group’s aim is to ensure compliance with all legislation, regulations and permits. However, it is the intention that operations should adopt and implement good environmental practice, so that negative impacts are mitigated as far as these are possible.
All of ARM’s operations have environmental management programmes based on ISO14001.All but three operations (Nkomati,Two Rivers and Khumani) are ISO14001 certified and these operations will seek certification during the next two years.
A number of environmental impact assessment and scoping studies were undertaken during the year, and numerous permits were applied for and received. Applications were made by both smelters for licences in terms of the new National Environmental Management: Air Quality Act. No significant permits were declined and a number of Record of Decisions (RODs) were received. There have been significant delays in the receipt of water licences, however, despite the fact that applications have been made timeously.This is an industry-wide problem.
The most significant matter of non-compliance related to the Cato Ridge smelter. In August 2007, Assmang responded to a report from the Department of Environment and Tourism (DEAT) following an inspection undertaken in February 2007. Further interaction ensued between the parties in respect of air pollution and emissions, non-adherence to conditions of the dust disposal facility permit, the absence of a monitoring committee, and perceived inadequacies in terms of monitoring and general pollution issues.
Assmang was given 21 days in which to prepare detailed action plans to address the listed non-conformances and other issues raised by DEAT, and this was provided timeously on 16 November 2007. In compliance with the action plans developed, waste management (for dust and slag) and waste management facilities, water management and licensing, as well as air quality monitoring and management, have received significant attention. A number of specialists were engaged to prepare the appropriate project scopes, plans and costings to address environmental management at Cato Ridge and ensure compliance in the future. Implementation of the plan will take two to three years. Bi-monthly meetings are held between the Works, the local municipality and DEAT to track a report on progress.The project is on schedule.
An external audit of all safety, health and environmental management systems is conducted at ARM’s managed operations every second year. Following the external audit undertaken in June and July 2008, all operations submitted action plans to address issues of non-compliance, and implementation of these plans has progressed. The audit was repeated in July and August 2008, given a decision to establish an integrated risk and liability profile of the operations.
Since the operations under management vary greatly in terms of location, legacy, metals and type of mining, the environmental issues that are dealt with and the risks they present can be vastly different. The primary areas of environmental concern at each operation include: finalisation of water use licences; implementation of new EIA regulations (that were promulgated in 2006); the need to undertake new EIA’s and EMPR amendments at rapidly expanding operations.
Water balances are prepared for all operations. Where water availability is limited, water trading with downstream users has been implemented. Aquifer level monitoring, groundwater sampling and chemical analyses form part of all operational water management plans.All operations have obtained or have applied for integrated water use licences (WULs) through the lead authority, the Department of Water Affairs and Forestry (DWAF).
At the smelting operations water is sourced from the relevent municipalities. At the mining operations, water is sourced from rivers and boreholes, in line with licenced, DWAF agreed and water use licence abstraction allocations.
Most sites run closed water management systems, so there is no discharge into the environment.Water is discharged at the Cato Ridge Works and water monitoring is undertaken for a range of chemical, biochemical , particulate and organic measures.The Works is currently applying for a water use license.
In late 2007 and early 2008, the national power utility Eskom found itself in a position where national demand for electricity exceeded capacity for generation. Following a period of crisis, the industry, including ARM, engaged constructively with Eskom both in order to reduce peak demand, but also in finding a way forward so that the power allocations that are required for new projects will be provided for.
To discourage wastage or inefficient use of electricity and to raise capital for additional generation capacity, electricity rates have increased substantially in the latter part of the financial year, while limitations have been imposed on electricity supply. ARM’s smelter operations have especially been affected.
A number of short-term measures have been put in place at an operational level to deal with reduced energy consumption constraints.
Further medium-term measures include:
ARM participated in the Carbon Disclosure Project’s survey in respect of climate change and carbon emissions.The Carbon Disclosure Project (CDP) is an independent not-for-profit organisation aiming at creating a lasting relationship between shareholders and corporations regarding the implications for shareholder value and commercial operations presented by climate change.
As far as climate change risk is concerned, the potential for drought is considered to be a potential risk, especially for those operations that rely on abstraction from rivers and aquifers as opposed to supply from municipalities.
Carbon trading programmes and feasibility studies of projects aimed at the co-generation of electricity have been initiated by both smelters. The company is also part of and, in many cases, plays a leading role in industry forums that are investigating the opportunities and threats posed by climate change.
Issues relating to biodiversity and land management are typically catered for in each operation’s environmental management plan (EMP). Where required, specific biodiversity assessments are undertaken.
Thorough heritage site and historical grave assessments have been done at all the operations which have EMPR, (thus all mines) since it is a requirement of the process.
Emissions inventories, which include emission quantification and a point source inventory for the operations, have been compiled for both smelters in terms of the requirements of the Air Quality Act. Reporting in terms of the criteria pollutants specified in the applicable legislation (nitrogen dioxide, carbon monoxide, hydrocarbons, sulfur oxides, lead and total suspended particulate matter) and greenhouse gas emissions (GHGs) will take place during the next financial year in accordance with the requirements of the licence (which will be issued and regulated by the DEAT).
Where applicable, fallout dust monitoring and PM10 measurements are taken.
Closure and rehabilitation provision assessments are performed annually at all operations. The process is done by means of external estimation of closure and rehabilitation requirements annually and then provision into the various Trust Funds (one for Ferrous, one for Nkomati, one for Two Rivers and one for Modikwa). In some cases bank guarantees are also issued.
Closure plans are developed in accordance with the requirements of each EMPR and costing is done according to the methodology and standards specified in the EMPR.
| Estimated | Contributions | ||||
|---|---|---|---|---|---|
| Operation | closure | Trust Fund | Guarantees | Total including | |
| cost as | 2008 | Est Fund Balance | Guarantees | ||
| at 30 June 08 | Contribution | as at 30 June 08 | |||
| Beeshoek | 58 964 003 | 3 809 744 | 32 295 793 | 32 295 793 | |
| Khumani | 66 904 623 | 2 676 185 | 2 676 185 | 38 000 000 | 40 676 185 |
| Gloria | 8 371 854 | 233 179 | 2 775 555 | 2 775 555 | |
| Nchwaning | 10 046 536 | 274 566 | 3 456 957 | 3 456 957 | |
| Manganese Mines | 25 780 793 | 738 185 | 8 064 348 | 20 064 845 | 28 129 193 |
| Dwarsrivier | 21 600 690 | 677 248 | 5 346 736 | 9 267 341 | 14 614 077 |
| Two Rivers | 14 092 692 | 526 925 | 1 599 684 | 4 111 889 | 5 711 573 |
| Nkomati | 39 122 797 | 28 136 090 | 39 318 703 | 39 318 703 | |
| Modikwa | 41 110 639 | 1 600 745 | 4 294 405 | 58 600 834 | 62 895 239 |
| ARM total | 285 994 627 | 38 672 867 | 99 828 366 | 130 044 909 | 229 873 275 |
As a leading BEE company in South Africa,ARM is fully committed to the transformation of South African business, and in particular the mining industry in which it participates.The Group recognises that, as a responsible business, it has a significant role to play in the transformation and empowerment of civil society as a whole, and to act as a catalyst for change for those communities that have been historically disadvantaged.
So important is the fact deemed to be in the overall sustainability of the business and the communities in which the company operates, that this element has been added as a fundamental pillar in ARM’s sustainability strategy. In addition to the consideration of matters relating to employment equity and BEE at both board level and within the executive of the company, it is also an item for consideration by the Sustainable Development Committee of the board. Specifically, the following are considered to be priorities, namely:
BEE and, in particular, broad-based BEE (BBBEE) occurs at a number of levels as a strategic imperative of the company, most of which cannot be separated from the ongoing business of the Company. Nonetheless, there are some specific areas that can be reported on, namely the BBBEE equity holding in the group and its operations, the way in which the Company’s procurement policies and practices are used as an agent for change and transformation, and the employment equity practices within the company. These three elements are dealt with below, but are also addressed elsewhere in the report.
ARM has a 55% black ownership base,with ARMI owning 41% .Various church groups, union representatives, seven broad-based provincial upliftment trusts, several community, business and traditional leaders and a broad-based women upliftment trust have been registered as beneficiaries of the ARM BBBEE Trust. As at 30 June 2008, this Trust held 14% of ARM, valued at R8 billion, based on the market capitalisation of the group at that time. Dividends of some R8 million were paid to the Trust in F2008. At an operational level, communities around the Modikwa operation own a 17% stake in the ARM Mining Consortium Limited, which in turn holds a 50% stake in Modikwa.
ARM aspires to procure at least 40% of its capital goods, services and consumables from BBBEE suppliers by the 2010 calendar year. This endeavour is commercially driven and is informed through appropriate pre-qualifying criteria. The information is reported below on a 100% basis.
ARM has seen increases in its overall expenditure from the F2006 base of R4.3 billion, by 24% and 93% in F2007 (R5.3 billion) and F2008 (R10.3 billion) respectively. This increase in expenditure reflects both the additional capital and operating costs at Two Rivers Platinum (R1.5 billion), Khumani (R4.0 billion) and the Nkomati expansion (R0.4 billion in Phase 1, and early expenditure in Phase 2).
BBBEE procurement (as a percentage of total discretionary procurement) has progressively increased from the F2006 reference of 21.2% to 26% in F2008. (Discretionary procurement is defined as the total procurement less procurement through public sector vendors (rates and taxes, utility service providers (electricity), academic institutions and sponsorships).
An analysis of the data indicates that if more of the non-accredited vendors had been accredited, the BBBEE statistic for ARM could have been as high as 62% in F2008. Plans are being developed to ensure that the best practices in procurement demonstrated at Khumani will be replicated elsewhere in the Group, and specifically at Nkomati and Machadodorp. Formal vendor accreditation also needs to be driven at all ARM operations.
Employment equity is considered as a specific objective of the broader human resources development strategy. In this respect, the Company addresses the recruitment, development, promotion and retention of those who are considered to be HDSAs, including women.
Steady progress continues to be made towards the Group’s employment equity targets and the group is confident of its ability to meet all the requirements of the Mining Charter.
The development and implementation of SLPs as part of the Mining Charter form important parts of the Company’s transformation commitments and planning. Included in these are the elements underpinning the Company’s employment equity plans,like mentoring, training and development, etc. All operations are required to develop SLPs as part of their applications for new order mining rights and exploration rights, and to report on progress made on an annual basis.
The following is reported on the progress in respect of ARM’s SLPs.
| F2006 | F2007 | F2008 | |
|---|---|---|---|
| Board representation | |||
| Black directors on board | 50% | 50% | 53% |
| Women on board | 13% | 13% | 12% |
| Senior management | |||
| Members of top management who are black | 50% | 50% | 50% |
| Members of top management who are women | Nil | Nil | Nil |
| Members of senior management who are black | 30% | 19% | 19% |
| Members of senior management who are women | 12% | 11% | 10% |
| Members of steering committee members who are black | 43% | 40% | 43% |
| Members of steering committee members who are women | 24% | 20% | 14% |
| Skilled employees | |||
| Professionally qualified employees who are black | 34% | 34% | 30% |
| Professionally qualified employees who are women | 14% | 15% | 12% |
| Technically qualified employees who are black | 54% | 49% | 43% |
| Technically qualified employees who are women | 9.5% | 8% | 7% |
| All employees | |||
| Total number of employees who are black | 84% | 84% | 83% |
| Total number of employees who are women | 10.6% | 9% | 7% |
ARM’s approach to CSI is committed to invest in the development and empowerment projects that embrace the diversity of South Africa.The Company’s CSI policy (available at www.arm.co.za) has as its vision,‘to be one of the leading socially responsible organisations involved in the reduction of poverty and social problems, through the development and upliftment of communities surrounding our mines and operations and secondly those communities from which we source our labour’. Informing all of its interactions in respect of CSI are three clear value sets, namely:
ARM gives effect to its CSI strategy at three levels: first, at the corporate level through the ARM CSI Trust and Chairman’s Fund; second, at an operational level, through operations-based participation in and funding of projects; and third, through the commitments to local economic development (LED) that are undertaken as part of the Company’s SLPs.
Specialist corporate social investment personnel are employed at each operation to identify projects, manage the Company’s contribution to them, and to ensure alignment between local projects and the corporate vision. These corporate social investment personnel are guided and supported by a CSI manager based at the corporate office.
ARM maintains good relations with a wide range of partners in delivering on its CSI objectives and partners with communities around its operations, and with relevant stakeholders (such as government) to implement sustainable community development initiatives.
To ensure that its CSI projects are both meaningful and sustainable, ARM focuses on those initiatives which enjoy broad-based stakeholders’ support, while avoiding ‘handouts’ which are unsustainable. Communities and beneficiaries of ARM’s programmes and projects are actively consulted in the process of project selection, implementation and evaluation. The roles and responsibilities of stakeholders and projects/programme beneficiaries are clearly defined in advance, with specific emphasis placed on financial controls and corporate governance compliance. Projects that are funded must have a developmental approach, that is, they must be intended to build capacity in communities and should eradicate dependency.
In respect of specific project guidelines, ARM ensures that projects take an affirmative action approach, with women, the disabled, youth and the socially destitute being prioritised. Also, individuals are not funded – the funding must benefit a wider community or groups with common objectives and purpose. Direct and regular contact is maintained with project beneficiaries while the projects are monitored to assess their impact on development and progress with implementation. Adherence to stated objectives is constantly monitored and evaluated, with annual audits of projects being conducted.
Seven priority areas have been identified which provide the foundation of ARM’s strategy:
In F2008, the group spent R21 million on CSI projects (F2007:7.5 million).
In line with the company’s SLPs, all operations have engaged with local governments and communities in order to establish their needs and developmental requirements and projects are integrated within the integrated development plans (IDPs) of the various district and local municipalities. In F2008, operations within the group spent R13 million on LED initiatives. The groups budget for LED in F2009 is R65 million.
Some of the primary projects that were undertaken as part of the group’s CSI and LED initiatives during the year include the following:
Sustainable development report 2009 (PDF - 1.9MB)
Sustainable development report 2008 (PDF - 1.9MB)
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