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Our Sustainable Development Report has been developed in alignment with the requirements of GRI, through management processes, an analysis of stakeholders’ concerns and our integrated risk management process. While we have addressed the main issues raised by GRI, we are focused on addressing and managing our sustainability priorities.
Ensuring employee safety and eliminating fatal accidents is a priority for all senior and operational management. Our performance in FY09 was unsatisfactory as there were 22 fatalities. This is of great concern and regret to the company. Yet, we have also seen promising improvements in key performance indicators that reflect the increasing and absolute emphasis placed on safety and health by the company. Significant improvements were reported in both the lost time injury frequency rate (LTIFR) and all injury frequency rate (AIFR). The LTIFR improved to 9.35 per million hours worked, while the AIFR improved by 24% year-on-year to 18.73 per million hours worked.
An analysis of the fatal accidents that occurred during the year showed a high degree of non-compliance with standards and an increasing proportion of accidents in non-mining related occupations. With this in mind, the company is focusing its emphasis in FY10 on further instilling a culture and mindset of safety, hence the emphasis on behaviour-based safety initiatives, and on service-related disciplines. We are confident that we can mine safely without accidents, and are committed to achieving this. For further information see the section on safety and occupational health.
An important development during the year was a fundamental review of the approach to mining and a change in management at the Kusasalethu Mine, following a dismal safety performance in the first half of the year. We took the unprecedented step of seconding to the mine, in the capacity of general manager, a senior operations executive for a period of six months. This resulted in a substantial decrease in production, but a pleasing improvement in safety performance.
The impact of the global financial crisis has had far-reaching implications for the global and South African economies. While the market for gold has continued to display strength during the year, the relative strength of the rand against the US dollar has partly undermined the revenues achieved by the group. Key factors felt by the company include:
Harmony has developed strategies to address these issues.
Further, we have successfully managed to raise funding twice in this very tight market, and have successfully concluded two major transactions.
For further information see the economic performance and corporate governance sections.
The skills crisis in South Africa has not abated despite the recent economic downturn, with pressure continuing to be placed on the recruitment, development and retention of skilled employees. This is particularly critical in respect of the recruitment and retention of historically disadvantaged South Africans (HDSAs) and women in mining in South Africa, as well as the recruitment and training of local landowners in PNG.
Harmony’s leadership has remained stable, with no resignations from the board and executive for two consecutive years. Three new appointments have recently been made at executive level (risk management, legal and compliance, and environmental management) so as to bolster this executive team further. We have appointed four new talented and experienced mine managers, and are placing considerable emphasis on succession planning at all levels.
Our programmes to develop and attract university and young school leavers through learnerships, bridging programmes and bursaries continued, as well as extensive in-house and external training programmes.
In PNG we have made excellent progress in recruiting and training local landowner communities, particularly women, and equipping them with skills and expertise.
Our turnover level (at 18% for FY09) is above that of FY08 (14%). In FY10, we will continue to invest both money and effort in this area, with some R92 million allocated to training and development in FY10.
For further information see the Harmony as an employer section.
Harmony as a group pays a great deal of attention to the long-term sustainability of our business. Many of the operations currently within the group were acquired from other producers and would, if they had still been held by their previous owners, be moth-balled or closed. Harmony has, therefore, played a significant role in the preservation of the gold mining industry in South Africa, particularly in the Free State, and remains a significant employer – employing 45 685 people (employees and contractors) in FY09. In PNG, Harmony has been instrumental in the development of the gold mining industry in Morobe Province, which is fast becoming a new and exciting global gold ‘province’.
Over the past two years, Harmony has invested more than R8.4 billion ($933 million) to develop its assets – through the establishment of new infrastructure and the extension and development of old infrastructure. In this way the company has significantly extended its reserves and resources and its life-of-mine, and aims to increase production to 2.2 million ounces by FY12/13. This strategic focus on tomorrow’s gold will ensure the sustainability of the company for at least a further three decades and beyond, and ensure continued significant direct employment and indirect economic benefits.
Employee health and well-being is critical, both from the company’s perspective and that of the employee. A new health care strategy was developed during the year to address this issue, both in the short- and long-term, taking into account occupational health issues (such as noise induced hearing loss and occupational lung diseases (OLD), TB and HIV & AIDS), as well as high levels of absenteeism and lower than desired levels of productivity. This new strategy involves the decentralisation of occupational health and health care facilities, taking these closer to the workplace and making them more accessible to employees.
A new strategy to improve attention given to both TB and HIV & AIDS, which together place a significant health care burden on the company and individual employees, will be implemented in the coming year. Given the close relationship between these two illnesses (where some 70% of individuals identified with TB are HIV-positive), the company has decided to increase the CD4 count at which HAART is administered to employees (so as to prevent employees from becoming AIDS-ill) and to focus on VCT programmes so as to identify those who are HIV-positive as early as possible and to encourage them to receive treatment.
In South Africa, we remain fully committed to delivery against the Social and Labour Plans (SLPs) that were submitted and accepted by the DMR, and for which compliance reports are submitted on an annual basis in support of our mining licences. These SLPs detail the company’s programmes and progress towards specific targets in respect of employment equity and training and development, affirmative procurement, beneficiation and local economic development, among others.
Implementation of these programmes is not without its challenges. Key amongst the challenges we face are the recruitment and retention of HDSAs into management. Historic inequity in the education system has limited the size of the pool of adequately educated and experienced individuals and consequently, competition amongst employers is fierce. These issues apply equally to women in the industry, whose retention is exacerbated by their physical disposition, a lack of relative physical strength in an industry that still requires this, legislation that requires women who are pregnant be removed from the underground environment, and cultural and historical barriers (that limit their ability to be placed and accepted underground). Despite the challenges, Harmony has seen some significant successes in the development of women and HDSAs in its areas of operation as a result of its bridging and bursary programmes. In respect of women in core mining activities, programmes are in place, developed in close consultation with unions, to overcome decades of historical barriers so that women may have equal access to careers in this industry.
In PNG, we have made excellent progress in the recruitment, training and development of local land owners in line with the agreements in place with the authorities and local communities. In particular, success has been recorded with the employment of women landowners.
Another area where emphasis is being placed is on affirmative procurement – that is procurement with companies that are largely owned by HDSAs and are therefore deemed to be Black Economic Empowerment (BEE) companies. In FY09, Harmony increased its expenditure with BEE companies to R3 190 million, around 45% of total discretionary expenditure. This BEE spend includes expenditure with parastatals. Excluding parastatals, this figure was 27%. Challenges in this area persist, however, and include the fact that, while it is relatively easy to appoint BEE companies to supply goods and services in certain areas, in other areas these companies still have a lack of skills, track record and ability to deliver into large contracts. Harmony also guards against those companies who are not truly empowered. Business development centres are being set up in our areas of operation to assist BEE entrepreneurs, both in setting up appropriately, but also in matching them with tenders and assisting them in responding to tenders.
In PNG, the Morobe Mining Joint Venture has met all the requirements of the Memorandum of Agreement (MOA) on the Hidden Valley Project, and will continue to develop and offer business development opportunities specifically for the landowner communities (see Working with the community - PNG).
Harmony has comprehensive corporate social investment and local economic development programmes in place that address high-priority community needs at both a regional and local level. Education, health care, leadership development and beneficiation have remained strategic corporate social investment priorities in South Africa, where Harmony’s long-term association with a number of critical interventions and initiatives have helped to sustain and grow them over a number of years.
Local economic development projects have been identified and progressed in line with our SLPs and in conjunction with local municipalities to meet their own Integrated Development Plans. The identification of projects, and indeed their progress, is not directly and only in the hands of the company, and some delays and lack of progress have been experienced. In fact, the viability of some projects remains under question. Harmony continues to work closely with the DMR and local municipalities in addressing this critical issue (see Local economical development).
In PNG, the company has made a number of commitments to both local landowners and the authorities in terms of job creation, skills development, local economic development and corporate social investment. Delivery against these commitments will continue to increase at the MMJV while it ramps up to full production.
This financial year was a landmark for Harmony as the company embarked on its holistic and goal-oriented approach to environmental management. This follows the setting of key strategic environmental objectives in FY08. Harmony has continued with its programme to implement the international environmental standard, ISO14001, as the basis for its environmental management system (EMS). Progress on this has been slower than planned or desired, however, owing to the challenges encountered and operational imperatives. Full implementation is planned for FY12.
Progress has also been made with the implementation of the International Cyanide Management Code for the Manufacture, Transport and use of Cyanide in the production of Gold (Cyanide Code). Gap analyses have been completed on three of the four identified plants and full implementation of the Cyanide Code and an external audit of compliance is planned for FY11.
We undertook a more detailed review of our carbon footprint during the year, including an assessment of the risks and opportunities posed by climate change. This is documented in our response to the Carbon Disclosure Project (CDP) and may be found at www.cdproject.net. We understand, though, that we are still at an early stage of fully understanding our emissions and their impact, and that further work remains to be done.
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