Sustainable Development Report 2010 Sustainable Development Report 2010

The environmental dimension of sustainability concerns an organisation’s impacts on living and non-living natural systems, including ecosystems, land, air, and water. Environmental indicators cover performance related to inputs (e.g. material, energy, water) and outputs (e.g. emissions, effluents, waste). In addition, they cover performance related to biodiversity and environmental compliance and other relevant information such as environmental expenditure and the impacts of products and services.

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Environmental performance

Material environmental indicators

There are four primary material issues in respect of environmental performance for Harmony, namely:

  • Implementing environmental management and auditing systems that ensure compliance with legislation and regulation in the countries in which Harmony operates as well as the company’s own internal policies and standards.
  • The responsible use of resources such as energy and water.
  • Affirmative procurement with an emphasis on promoting business with HDSAs, women and local communities.
  • Ensuring appropriate risk management practices and mitigation measures are in place to prevent or minimise the company’s impact on the environment. Specific areas of concern include the management of cyanide, water pollution abatement, addressing Acid Mine Drainage (AMD), and understanding and developing plans to deal with climate change.
  • Ensuring that closure plans are in place, including appropriate funding mechanisms, and the rehabilitation and closure is planned for during the life of mine, and undertaken at closure.

See the section on Harmony's approach to sustainability reporting to find out how we identified our material issues.

Introduction

Harmony recognises the impact of its business on the surrounding communities and natural environments and that these may affect the long-term sustainability of its business. Following the appointment of a senior executive to lead the environmental function in FY09, this team was further bolstered in FY10 with additional appointments, a review and revision of the group environmental strategy and, accordingly, the setting of revised objectives and targets.

Key group environmental risks were identified and management systems determined to control and reduce these risks. Environmental objectives and targets were then formulated to track the company’s implementation of the management methods and the risk reduction performance. These targets were based on the environmental assessments carried out at the various operations.

Harmony’s environmental performance goal is the implementation of effective environmental management systems in line with its own policies, as well as with the regulations and legislation of the countries in which it operate. The company monitors its environmental compliance through internal and external audits, and technical audits. Self assessments are planned for implementation in FY11.

The new strategy is closely aligned with the group’s environmental policy’s principles of ensuring compliance, continually improving the effectiveness of its environmental management systems (EMSs), pollution prevention and continuous awareness of its environmental responsibilities amongst employees, contractors and suppliers.

The objectives of Harmony’s new environmental strategy are to achieve optimum environmental performance through:

  • managing the business, with environment constituting an integral part;
  • focusing on the effectiveness of risk controls;
  • reducing the environmental liability of the organisation; and
  • creating a sharing, learning, challenging and innovative environmental culture in the organisation.

The overall oversight of environmental strategy and performance within Harmony lies with the Sustainable Development Committee while general managers are responsible and accountable for environmental management at operations. Each operation develops annual environmental management plans to increase compliance and minimise pollution to the external environment. In addition to the executive environmental manager, an environmental leadership committee has been appointed for the group, to lead environmental improvement strategically at the various operations.

South Africa

Environmental management and auditing

In line with Harmony’s strategy of ensuring compliance with legislation and regulation, the company is implementing environmental management systems that ensure compliance with legislation and regulation at all operations, and that environmental management is addressed through a formalised, systematic approach.

Corresponding to the MPRDA, Environmental Management Plans (EMPs) have been drawn up for each operation and have been submitted and agreed to by the DMR. Amendments to these plans are made as and when required.

An integrated water use licence resubmission was made for Kusasalethu and a revised EMP was approved for Doornkop in June 2010. A revision of the EMP for Kusasalethu, and a closure plan for Deelkraal operation, were submitted in August 2009. EMP assessments were undertaken during the year at all operations. The Free State operations have submitted the EMP assessment reports to the DMR, while the North operations are still in a process of iteration and finalisation.

Other legislation and regulations of importance to the company are water use licencing and permitting, as well as compliance with the National Environmental Management Act (NEMA) and the National Nuclear Regulator Act. Water use licence applications have been submitted and the company awaits feedback on them.

Harmony received no environmental fines or sanctions in FY10.

ISO 14001 implementation

Harmony reviewed its strategy regarding ISO 14001 during the year under review. As a result, it was decided that all operations will operate and comply with ISO 140001 standards while all new and long-life assets will be ISO-certified within the next three years. The strategy was reviewed to align it to the business strategy which articulated the scaling down of some operations and the development of others. Some of Harmony’s assets are closed or in the process of being closed; they have very short lives and implementing a system for certification would only add very short-term value. The emphasis at these operations is the design and implementation of closure plans in accordance with ISO principles. Long-life assets which will benefit from continuous improvement through a longer life of mine have been prioritised for certification. These long-life assets are: Doornkop, Evander 8 Shaft, Kusasalethu, Kalgold, Bambanani; Unisel, Masimong, Phakisa, Tshepong, Saaiplaas, Target 1&3, Joel and all new projects.

The implementation of the ISO 14001 system is ongoing and action plans to remediate all high-risk impacts are currently in progress. ISO-aligned environmental management systems (EMSs) are in place at Doornkop, Kusasalethu, Evander and Kalgold. The Doornkop shaft was certified as being ISO 14001-compliant in November 2009 with the Doornkop plant certification expected in November 2010. Certification is scheduled for Evander and Kalgold in October 2010, Kusasalethu in March 2011 and Harmony 1 Plant in December 2011.

Responsible use of resources

In line with Harmony’s strategy of managing the resources available to the company effectively and responsibly, group targets have been set for energy and fresh water usage and for waste management and recycling. These targets include each operation exceeding 100 000t CO2e emission must have and maintain energy conservation plans by 2012. The group target aims for an energy consumption target of 10% per tonne milled (based on 2005 base year). In addition, the company aims to reduce fresh water consumption by 2% by 2013 and a 5% improvement in the use of affected water by 2013.

Water

As Harmony’s operations make extensive use of water, the company has embarked on a group-wide campaign to re-use processed water and to optimise water retreatment. This has been hugely successful. All affected water at Kalgold is recycled for internal plant use while at Doornkop, affected water is stored for re-use in the plant. At the Evander operation, affected water is also re-used in the plant and the excess is sent to Leeupan for evaporation. Shaft and plant process water at all the South operations is routed to the water dams from where it is recycled for use in the operations.

With the exception of Kalgold, South African operations do not draw water directly from surface water sources. Water is sourced as follows:

  • bulk water service providers and municipalities;
  • surface water run-off;
  • water that ingresses into deep-level mining operations that is then pumped to surface;
  • recycled water; and
  • boreholes.

The total water used for primary activities in FY10 increased by 34.5% to 44 338 781m from FY09. Surface sources and slimes reclamation are water use intensive and may have contributed to the increase. In additional, there has been an increase in rock and ore mined and processed which would also contribute to the increase in water consumption. Of the total volume of water used during the year, approximately 31% was recycled, while potable water used declined by 11.2%.

PwC assured

This indicator has been assured by PwC:

Total amount of water used for primary activities: 44 338 781m³.

An 11.2% reduction in potable water from external sources indicates a positive trend. A number of Harmony shafts have ceased operation, hence the decline in the volume of water recycled. This excludes figures from assets disposed to Rand Uranium.

Water consumption
(000m³)

Water consumption
 

Potable water from external sources
(000m³)

Potable water from external sources
Water used and recycled (000m³)
FY10FY09FY08FY07
Water used for primary activities 44 33932 971104 763101 024
Potable water from external sources14 84016 72121 32322 972
Non-potable water from external sources10 57016 24983 42978 052
Surface water used1 13511155 08853 795
Groundwater used23 79015 74228 35224 545
Water recycled in process23 23210 49134 52129 295

Energy

South Africa – Energy consumption (MWh)
(Energy from electricity purchased)

South Africa – Energy consumption (MWh) (Energy from electricity purchased)

Energy consumption at Harmony is largely in the form of electricity drawn from Eskom, the national energy utility. Eskom is primarily driven by coal-fired power stations. Hoisting, cooling and ventilation systems all require significant amounts of electrical power and make the company a considerable user of electricity. Energy is therefore a major part of Harmony’s operating costs with this being increased in the last two years by rising electricity tariffs.

Following the electricity supply crisis in 2008/2009, South African electricity tariffs have steadily increased and are expected to increase further in the year ahead. Harmony was exposed to the most recent price increase in April 2010, where tariffs rose by an average of 23.48%. Further increases are anticipated over the next two years of approximately 25% for FY11 and 20% for FY12.

PwC assured

This indicator has been assured by PwC:

Total energy consumption: 3 659 376MWh.

In FY10 the total electrical energy usage was 3 659 376MWh (FY09: 3 444 444MWh – this has been restated based on an actual figure while the FY09 figure included a two-month extrapolation) for the South African operations, a negligible increase from FY09.

The Energy Efficiency Strategy of South Africa of 2005 sets a national target for an energy efficiency improvement of 12% by 2015. The industrial and mining sectors are the largest users of energy in South Africa and have been set a final energy demand reduction of 15% by 2015. Although this target is currently voluntary, it is in effect mandatory given the 10% demand reduction imposed by Eskom in response to the electricity crisis.

The National Energy Regulator of South Africa (NERSA) approved the Renewable Energy Feed-In Tariff (REFIT) Guidelines in April 2009 and it is expected that this will stimulate the development of renewable energy in South Africa as it may become more financially feasible to invest in renewable energy.

Harmony is committed to the reduction of its energy usage and has worked very closely with Eskom in managing its electricity usage and peak demand both before and after the recent energy crisis. The company is currently involved in a number of efficiency projects.

Harmony has actively engaged with Eskom in demand side management (DSM) strategies to reduce electricity consumption during peak periods such as early morning and late afternoon. This initiative involved measures such as timing pumping to consume electricity during cheaper off-peak periods, making more efficient use of Eskom tariffs that reward load-shifting, and improving the efficiency of pumping operations. The installation of sophisticated equipment and variable-speed pump motors that reduce the surge in power consumption when a pump is started is also necessary. While the software needed to support these systems is complex and costly to develop and implement, savings are significant as demonstrated by the drop in electrical energy consumed considering the 18% increase in rock mined.

A refrigeration plant optimisation initiative at Kusasalethu in FY10 resulted in an energy saving of 20 670 636kWh. An additional two energy efficiency projects, Kusasalethu water turbines and Evander 8 shaft solar water heating were successfully implemented during FY10. A load reduction of 1.84MW and energy savings of 1 323.43MWh per month can be achieved with these two projects. Kusasalethu is also in the process of commissioning an additional two water turbines that will contribute 3MW in load reduction and 31 536MWh in energy savings per annum.

Three water and air optimisation projects were also approved by Eskom for partial DSM funding with an expected load reduction of 7.7MW and 44165MWh energy savings per annum. The expected completion date for these projects is June 2011. Harmony has committed a contribution of R20.1 million to fund the project.

A further seven projects with a targeted load reduction of 32MW and energy savings of 280 320MWh per annum are in the process of being submitted to Eskom for DSM funding and an additional seven energy efficiency projects are in the final stages of investigation. The projected capital expenditure to implement these projects amounts to 161.7 million during FY11.

Given Harmony’s current involvement in five growth projects whose objective is to increase production, Harmony’s resource usage – water, energy, timber, cyanide and other chemicals – is likely to increase in the next few years. Harmony’s focus is therefore on improving the efficiency with which the company utilises its resources for a positive impact on the environment and the cost of production.

Materials used

The primary materials used are rock and ore, Liquefied petroleum gas (LPG), grease, cyanide, fuels, and lubricating and hydraulic oils. Data on usage is provided in the table below.

Materials used by operations (by weight or volume) South Africa (000t)
FY07FY08FY09FY10
Rock mined (ore and waste)23 68513 38911 29114 297
Ore mined14 02910 3156 1379 696
Waste rock recycled1 3752 7395 8551 763
Slimes recycled1 7637 53313 8687 306
LPG0.3200.220.60
Grease0.370.410.41181.75
Cyanide9.658.98 6.307.88
Fuels – petrol and diesel11 87512 8336 5548 899
Lubricating and hydraulic oil2 1662 1883 3573 986

Risk mitigation

Appropriate risk management practices and mitigation measures are in place to prevent or minimise the company’s impact on the environment. Specific areas of concern include the management of cyanide, the discharge of water to the environment, addressing AMD, and understanding and developing plans to deal with climate change.

Significant environmental incidents

Incidents that have an impact outside the company’s boundaries may cause irreparable harm, and which require considerable expenditure to remedy, are classified as significant. Five significant environmental incidents were reported in FY10 as follows:

  • During a routine pipe inspection at Evander in July 2009 by Fraser & Alexander on the pipe columns from Winkelhaak to the Kinross plant, it was found that gold-bearing slime was spilling into the Winkelhaak Spruit. The pump was immediately stopped and, after further investigation, it was found that the bridge of the valve was cut off and a stainless steel valve spindle had been removed. This resulted in approximately 30m³ of gold-bearing slime being discharged from the damaged valve. No visible affect on aquatic life was observed during the inspections.
  • In February 2010, a total of 60mm of rain fell on Kusasalethu’s return water dam catchment area resulting in increased seepage due to run-off and higher water levels in the dam. The seepage sump pump was unable to cope with the increased water load resulting in an overflow from the seepage collection sump to the stream leading to the Loopspruit. This caused approximately 3.9l/s (or 0.34 Ml/day) of seepage to overflow into the Loopspruit tributary. Remediation entailed the upgrading of the pumping and piping facilities to deliver seepage water to the return water dam.
  • In February 2010 there were floods in the upper catchment areas of the Winkelhaak spruit and Grootspruit streams in Evander after 100mm of rain fell in a total of four hours. The Evander dam also flooded as a consequence compromising the stream’s water quality. Water quality samples were, however, analysed with the conclusion that there was no significant impact to the environment.
  • In February 2010 the surface water holding tanks that receive underground water at Doornkop operation overflowed, spilling process water into the storm water trench. Remediation entailed by-passing the excess water directly to the return water dam system.
  • In April 2010 the sewage transfer pump station pump at the Doornkop operation failed, resulting in raw sewage being spilled into the adjacent land. The pump was subsequently replaced and the area cleaned in line with the spill management procedure.
PwC assured

This indicator has been assured by PwC:

Total number of significant environmental incidents in FY10: Five.

Cyanide management and compliance with the Cyanide Code

Harmony has been a signatory of the International Cyanide Management Code for the Manufacture, Transport and use of Cyanide in the production of Gold (the Cyanide Code) since June 2007. The Cyanide Code, developed by the United Nations’ Environment Programme and the International Council on Mining and Metals (ICMM), is a voluntary industry programme for companies involved in the production of gold using cyanide.

Excluding Kalgold, Harmony undertook to comply with the Cyanide Code at all its major gold operations. The Kusasalethu plant near Carletonville, Target 1, Central and Virginia plants in the Free State and the Kalgold plant near Mafikeng all underwent an external, independent compliance audit in FY09. Kusasalethu was certified as substantially compliant and is expected to be fully certified by January 2011.

The Doornkop plant has been certified with substantial compliance and corrective action on minor findings has been submitted. The Saaiplaas certification audit was conducted in March with a number of minor non-compliance issues identified which were attended to within a month of the audit, and two substantial issues are to be re-evaluated in November 2010. The Joel plant was initially scheduled for decommission but is now fully operational. As a result, the Cyanide Code implementation started after the other plants. A follow-up audit and a gap analysis will be conducted in FY11 with re-certification planned every three years. The Evander operation was certified as being substantially compliant. The Harmony 1 plant certification audit was conducted in January 2010 with the substantial compliance result being for outstanding training on all the new cyanide procedures. This training has since been completed.

Harmony used 7 884 tonnes of cyanide in FY10 (FY09: 6 304 tonnes), an increase of approximately 25% on the previous year.

PwC assured

This indicator has been assured by PwC:

Total cyanide usage in FY10 in South Africa: 7 884 tonnes.

Acid Mine Drainage

Acid mine drainage (AMD), at times referred to as acid rock drainage (ARD), refers to the outflow of acidic water from usually abandoned or operational metal or coal mines. However, other areas where the earth has been disturbed by mining activities may also contribute ARD to the environment.

There were no specific risks to Harmony with regard to AMD in FY10. All operations currently manage their fissure water and there is minimal risk of AMD water reaching the environment. In the case of closed operations, the risk of AMD has been assessed and no threat has been established. In the event of a risk of rising water levels and potential impact to the ore reserves of other operations or to the environment, the water is pumped to the surface.

The company is working closely with regional partners to identify the risks of AMD in the long term and will work with these regional committees to establish sustainable solutions to potential problems.

Climate change and greenhouse gas emissions

See discussion on Harmony’s climate change policy (PDF - 374KB) as well as the company’s approach to climate change below.

Harmony’s total scope 1 and 2 emissions in FY10 in South Africa were 4 402 675 tonnes CO2e (FY09: 4 183 373 tonnes CO2e), an increase of 5%. These emissions are mostly indirect and as a consequence of electricity used and purchased from Eskom.

 

South Africa: Scope 1 emissions FY10
(tonnes CO2 equivalent)

 

South Africa: Scope 1 emissions
(GHG type)

 

South Africa: GHG emissions breakdown

PwC assured

This indicator has been assured by PwC:

Total CO2 emissions in FY10 in South Africa: 4 402 675 tonnes.

Closure and rehabilitation

Ensuring that closure plans are in place, including appropriate funding mechanisms, and that rehabilitation and closure is planned for during the life of mine, and undertaken at closure, is a key priority for Harmony.

As a funding philosophy, Harmony is committed to enhancing rehabilitation at its operations and continuously identifies land for rehabilitation to a sustainable alternative land use. Where operations have been decommissioned, the company has and is developing comprehensive closure plans that have been submitted to the regulators for consideration and approval.

 Total land
managed (ha)
Total land disturbed and not yet rehabilitated –
opening balance
(ha)
Total area of land disturbed and not yet rehabilitated –
closing balance
(ha)
Tshepong and Matjhabeng3 1871 4911 491
Virginia, Merriespruit, Masimong, Saaiplaas, Brand, Unisel7 9854 5994 599
Evander7 8832 2292 229
Kusasalethu2 978671671
Bambanani2 752750750
St Helena2 882396396
Target423251251
Kalgold3 991932932
Joel2 162135135
Doornkop913509509
ARM1 683421421
Pamodzi N & S2188729729

Harmony has approximately 49 844 hectares of land under management within mining rights (including 13 678 hectares of land pending transfer to Rand Uranium) and the disturbed areas under rehabilitation. None of Harmony's producing operations are located in areas of high biodiversity value, either inside of or outside of protected areas; and none of the company's operations affect IUCN Red List species. The total rehabilitation liability was estimated at R2 229 million in June 2010 while funding (including bank guarantees) is R1 987 million.

Climate change

Harmony continues in its efforts to reduce the use of fossil fuels and to develop initiatives that mitigate and absorb greenhouse gases (GHGs) with the aim of reducing the company’s carbon footprint.

Harmony submitted its third response to the Carbon Disclosure Project (CDP7) in FY10, which may be found at www.cdproject.net and on the company’s website at www.harmony.co.za/sd/cdp-response.asp.

Both countries in which Harmony operates – predominantly South Africa and also in PNG – are non-Annex I countries and therefore do not have emission reduction targets under the Kyoto Protocol in the First Commitment Period, ending 2012. Harmony’s exposure to Australian legislation is limited as the operations the group owned there have either been sold, or are currently under care and maintenance.

After the Climate Summit in Copenhagen in December 2009, South Africa committed to 30% clean energy by 2025 with the vision that South Africa’s GHG emissions should peak by 2020-2025 at the latest, plateau for a decade and then decline by 40% by 2050. South Africa is currently also developing a National Climate Change Response Policy which is expected to be completed by 2012. This policy will be translated into a legislative, regulatory and fiscal package from now until 2012.

Harmony’s largest portion of GHG emissions are predominantly electricity related, with its electricity expenditure amounting to 10% of its operational costs in South Africa. While cost management is clearly a strategic issue for Harmony, of even greater importance is that energy supply be constant and reliable, given the implications that the loss of energy has on both production and for health and safety reasons. GHG emissions regulation which would increase the price of energy, within reason, will not affect Harmony as significantly as regulation which stipulates emission thresholds, or sets technology standards which may result in an insecurity of energy supply.

As Harmony’s current mines have a life expectancy of up to 24 years, the company is undertaking capital projects to sustain and increase production at the Phakisa, Doornkop, Kusasalethu, Tshepong and Hidden Valley operations. Harmony’s intention is to increase production to 2 million ounces by 2012. These expansions would extend the company’s mining operations by another 10 years or more, by which time GHG regulations are expected to be a permanent feature of the global economy. Future climate change regulation will therefore need to be considered for all Harmony’s extensions and acquisitions. All new greenfields and brownfield projects are required by company policy to consider the impact of climate change in their design and planning.

Harmony is also likely to be exposed to GHG emission regulation thresholds specifically regarding leakage from refrigerant gas usage. Harmony will therefore be required to manage CFC-free refrigerant gas, and will consider using absorption chillers. This could have cost implications for the company.

PNG

Environmental management and auditing

MMJV is currently developing an integrated sustainable business management system (SBMS) which, when implemented, will meet the requirements of ISO 14001 and other relevant international safety and community standards.

Environmental training and awareness in PNG involves a specific environmental presentation to new employees at induction and the identification of an environment topic of the month for the entire workforce. In addition, the MMJV front line leadership training course includes an environment component.

In FY10, environment permits for two exploration licences were sought and approved by the regulatory authorities in PNG.

Responsible use of resources and integrated risk management

Water use

Water is the most significant resource used by MMJV. In FY10 modifications were made to the Hidden Valley processing plant to significantly reduce the amount of fresh water used and to increase the amount of treated recycled water utilised in the process. The plant water balance is still being refined to assess the exact effect of these changes but fresh water usage is likely to have decreased by approximately 100m3/h.

Water used and recycled (000m3) – PNGFY10
Water used for primary activities1 843
Potable water from external sources
Non-potable water from external sources
Surface water used1 843
Groundwater used1 875
Water recycled in process762

Watut River water quality

The construction of the Hidden Valley mine contributed to a build up of sedimentation in the Watut River system, which is causing concern among downstream communities who live on the river banks.

In response, a series of studies were commissioned by Hidden Valley Services Limited (HVSL) to assess current and future impacts on the Watut River system. These sediment, biology and Acid Rock Drainage (ARD) characterisation studies confirm the sediment impact on the Watut River in part from activities at Hidden Valley as well as from other sources along the river.

HVSL has established a team of experienced personnel supported by an independent advisory committee to manage a range of remedial actions and conduct ongoing assessments of the river, stakeholder engagement and communication.

Significant progress was made in FY10 in both reducing mine related sediment in the river and community engagement including:

  • Ceasing side casting of waste rock in September 2009. Since then all overburden produced from open pit mining and infrastructure construction has been placed into stable fully engineered storage structures on the mining lease.
  • Ensuring a waste rock is classified appropriately, handled and stored.
  • Modifying the cyanide destruction plant to improve its treatment efficiency and ensure e discharge water quality meets stringent internal water quality standards.
  • Managing Watut River water quality via a combination of drainage control, chemistry modelling and a treatment system which balances runoff from the overburden dumps.
  • Engaging a contract engineer to assist in water management and erosion control. This work identified a significant improvement in suspended sediment in creeks and rivers during the past year.
  • Installing seven monitoring stations to measure river flows and sediment migration rates on the Watut River. Site and downstream compliance monitoring has also been intensified, and is showing an improving trend in turbidity measured at the compliance point.
  • Conducting an expert-panel review and ecological risk workshop to evaluate Watut River ecological data and prioritise further studies.
  • Conducting extensive environmental awareness campaigns for employees and affected downstream communities.
  • Engaging an independent NGO, Tanorama, to assess the views of the community as well as the extent of mine related sediment impacts.
  • Commencing a health risk assessment of the Watut River communities.
  • Expanding the MMJV environment team by approximately 18 positions.

Energy management

Australian companies with energy consumption or GHG emissions over a certain threshold are required to report on these annually under the National Greenhouse and Energy Reporting Scheme (NGERS), which will be used to determine future financial liabilities under the Carbon Pollution Reduction Scheme (CPRS). Due to Mt Magnet mine being under care and maintenance, Harmony Australasia did not have NGERS reporting obligations for FY10. No financial liabilities are associated with NGERS although there are financial penalties for non-compliance.

A large open-pit mining fleet is active at the Hidden Valley project in PNG, and rising energy costs will have a significant impact on it. A considerable amount of exploration support is also carried out by helicopter. A regulatory regime which encourages a move away from fossil fuels to low emissions fuels will address both baseline and climate change regulatory cost increases simultaneously.

The total energy consumption generated from diesel in FY10 at PNG was 105 015MWh.

The most significant initiative to reduce the amount of energy used at Hidden Valley is the connection of the new hydro power transmission line planned for FY11. This will reduce the reliance on diesel-generated power on site. The main goal for PNG operations is to switch the mine’s generation of electricity from diesel to hydroelectric sources through the PNG electricity grid. Progress in achieving this major change in fuel consumption is subject to PNG power’s timetable for the construction of a new generation capacity and transmission infrastructure.

Significant environmental incidents

The construction of the Hidden Valley mine has contributed to sediment-related impacts on the Watut River. Harmony’s strategy to deal with these impacts is discussed in detail in the Watut River water quality section. There were a small number of localised environmental incidents reported in PNG in FY10, but these were not considered significant as they did not have any effect on the ecosystem.

Cyanide management

Since both Harmony and Newcrest are signatories to the Cyanide Code, Hidden Valley mine is implementing the Code, and is planning for certification in the latter part of FY11. The processing plant was designed to comply with the Cyanide Code and a gap analysis has been commissioned to identify any key actions necessary to meet the Code’s requirements.

Since commissioning of the processing plant in FY10, measured cyanide concentrations remained in compliance with the environment permit limits at the Nauti Village compliance point.

Materials used at operations (by weight or volume) – PNGFY10
Rock mined – ore and waste (000t)16 740
Ore milled (000t)2 640
Waste rock recycled (000t)
Slimes recycled (000t)
LPG (000t)
Grease (000t)
Cyanide (000t)3
Fuels (000l)42 927
Lubricating and hydraulic oil (000l)489
Waste management (000t) – PNGFY10
Accumulated tailings in tailings dams (active and dormant)4 635
Accumulated in waste rock dumps4 635
Non-mineral waste0.51
Hazardous to landfill
Hazardous to incineration
Scrap steel0.12
Scrap timberNot measured
Percentage of materials used that are recycledNot measured

Climate change and greenhouse gas emissions

The recently-established PNG office of Climate Change and Environmental Sustainability is charged with studying the potential for PNG’s future economic growth to be fuelled by renewable energy. Along with other Pacific Island countries, PNG has adopted a Framework for Action on Climate Change 2006-2015 and a Disaster Risk Reduction and Disaster Management Framework for Action. The implications of these structures on Harmony’s operations in PNG have not yet been established and studies in this regard are ongoing.

In April 2010, the Australian government announced that the introduction of an emissions trading system in Australia, known as the Carbon Pollution Reduction Scheme (CPRS), would be delayed until 2013, with the legislation delayed until 2011. Originally planned to come into force in July 2010, the CPRS will now only take place after the first phase of the Kyoto Protocol expires in 2012, when the Australian government will be in a better position to assess the level of global action on climate change.

This change in policy direction in Australia reduces the impetus for carbon emission reduction in the country in the short term. However, other non-regulatory risks, mostly projected substantial electricity price increases, remain significant drivers for achieving emission reductions in Australian operations.

Harmony is developing a framework for establishing an internal GHG management strategy, including standardised emissions measurements and estimation techniques at PNG.

See also, the discussion on Harmony’s approach to climate change.

GHG emissions in PNG are only direct and treated as scope 1 emissions as they are all generated from diesel generators and no electricity is purchased. In FY10, the total emissions increased by 65% to 128 371 CO2e. This is because the Hidden Valley mine, previously under construction, is now fully operational.

Greenhouse gas emissions – PNG
Emission sourceTonnes Estimated CO2e
Petrol8
Diesel (transport)2 185
Natural gas
Explosives (total)306
Mine methane
Electricity generated on site125 873
Total scope 1128 371

Stakeholder engagement

Harmony has undertaken substantial community engagement programmes in PNG encompassing those associated with the Hidden Valley mine, the communities living along the Watut River and also those associated with the Wafi Golpu exploration activities.

The community relations team is part of the MMJV sustainability and external affairs group which is headed by a general manager reporting to the joint venture committee. In addition to regular community consultation and engagement, the community relations team oversees the implementation of the Sustainable Community Development Programmme. This programme was initiated in FY10 and will bring greater education support, enhanced agricultural skills, improved health programs and community facilities such as better sanitation and water supplies. These programmmes are being developed in partnership with the Morobe provincial government to ensure sustainability in the long term and to produce lasting benefits for the people affected by the company’s operations.

Closure and rehabilitation

Land is another significant resource used in PNG. Land clearing is managed through the use of a clearing permit process which requires approval from the environment and community affairs department before any clearing can take place.

Harmony has strategies in place to manage impacts on biodiversity, including the development and implementation of an EMS that is consistent with ISO 14001, as well as ongoing rehabilitation activities which will restore the habitat for native species. The Hidden Valley mine is not located in a biodiversity-protected area, however there are five mammal species that are known to occur in the area (but have not been seen) and which are listed in the 2009 IUCN Red List of Threatened Species as ‘vulnerable’ or ‘endangered’. These include two species of tree kangaroos (Dendrolagus dorianus and D. goodfellowi), the long-snouted or giant echidna (Zaglossus bruijni), the rare nectar bat (Syconycteris hobbit) and the New Guinea harpy eagle (Harpyopsis novaeguineae).

Hidden Valley employs a strategy of progressive rehabilitation and rehabilitated 72 hectares of disturbed land in FY10. The total rehabilitated area within the mining lease and mine access road is 174ha, which is 83% of the area available. An on-site high capacity nursery has been established and work is in progress to harden as many seedlings as possible in preparation for field planting. At the end of July 2010, there were approximately 11 000 seedlings in the nursery.

A closure plan has been developed for Hidden Valley and the provision for rehabilitation and closure liabilities is US$52.7 million.

Land management – total area of land (ha) owned, leased or managed for production activities or extractive use by region – PNG
PNG
Total land managed (ha)4 150
Total land disturbed and not yet rehabilitated (ha) – opening balance389
Total area of land newly disturbed within the reporting year (ha)141
Total area of land rehabilitated to agreed upon end of use (ha)174
Total area of land disturbed and not yet rehabilitated (ha) – closing balance530

HARMONY SUSTAINABLE DEVELOPMENT REPORT 2010