Sustainable Development Report 2010 Sustainable Development Report 2010

“Harmony’s sustainable development strategy is not static.
By its very nature it has to be dynamic, evolving with changing
conditions - developing as we and our stakeholders
define our needs and expectations...“

Graham Briggs
Chief Executive Officer

Letter from the CEO

Dear stakeholder

Among our principal responsibilities to our shareholders is the need to operate our mines in South Africa and Papua New Guinea (PNG) profitably. Our target in this respect is to run our operations so as to develop the cash flows needed to pay dividends and to finance sustainable organic or acquisition growth.

Principal among our responsibilities to our other stakeholders is the sustainable development of our operations. Without profits we cannot contribute to the societies that host our operations nor can we offer employment opportunities. Without sustainable development, we will not retain the operations that generate returns for those who invest in us. Profitability and sustainable development are therefore inextricably linked.

Harmony’s sustainable development strategy is not static. By its very nature it has to be dynamic, evolving with changing conditions - developing as we and our stakeholders define our needs and expectations, and evolving as we seek to match our stakeholders’ different needs and priorities. We are acutely focused on those issues that are most critical to the group. This leads to a progressive refining of our sustainable development programmes.

We would be the first to acknowledge that we have further to go, but I am convinced that despite any occasional unfortunate set-backs we are moving in the right direction. This report covers all of the aspects of sustainable development that we believe are important to our operations – safety, health, environmental and social. The report’s sections speak for themselves and there would be little to be gained by my repeating their contents. Rather, let me place the various issues in the contexts of our vision for the future.

Our economic operating environment

The principal factor in determining our current and future performance will be the price of gold and the exchange rates of the countries in which we operate. Our near-term and long-term planning is based on conservative projection of these two factors and realistic estimates of likely future capital and operating cost trends.

Our main immediate concern in South Africa is the administered price of electricity – set to rise by a further 25% in each of the next two years with no certainty of an early moderation once the current round of increases is complete. More than 13% of our operating costs are currently represented by power delivered by Eskom and alternative sources are impractical. Our focus, then, is on economising on power usage as far as possible by timing our draw-downs to coincide with grid off-peak periods and by introducing more-efficient capital items such as pumps and underground ventilation equipment.

The past several years have been marked by a significant degree of cooperation between the company and its unions. It is to be hoped and expected that this relationship will persist. Harmony has to become more productive to compensate for ever higher wage bills.

In South Africa there have been renewed calls for nationalisation of the country’s mines, but the ruling ANC party is emphatic that this is not government policy.

While South African gold production is likely to continue to decline as a whole, Harmony’s strategy and strict policy will be to produce only profitable ounces. While this may involve further closures of unprofitable shafts the group will do all in its power to mitigate individual hardship.

Disappointments and highlights

The principal disappointment of FY10 was the failure to reduce the number of work-related fatalities across the group - reduction in this regard remains our target. However, FY10’s disappointment must be contrasted with the improvement in our lost time injury frequency rate.

A highlight is that the situation of illegal mining is being comprehensively addressed and those involved are steadily being brought to book. Nevertheless, we cannot lower our guard in a situation that threatens the wellbeing of our employees and the efficient operation of the affected mines.

In PNG the rate of deposition is ameliorating and the environmental challenges that have affected down-stream communities are being overcome in co-operation with the PNG authorities and with the local communities.

Our earlier disappointment over the slower than expected implementation of ISO 14001 and of the Cyanide Code of South Africa has given way to satisfaction. Both measures are being implemented across the group and certification should be completed during FY11 or early in FY12.

In South Africa and PNG we are delighted with our progress towards purchasing from local businesses, particularly from historically disadvantaged South Africans and from local businesses that we are helping to develop in PNG. In both countries we have met the challenges that arose from the lack of facilities, skills and finance of would-be suppliers and have contributed to placing local businesses on sound footings.


Mining, by its very nature, can be a risky profession, but not a profession whose dangers cannot be minimised by progressive and appropriate interventions. Our targets are zero fatalities and zero workplace injuries, and though the 22 lamentable fatal accidents of FY10 showed no improvement on FY09, the trend is in the right direction as indicated by our improving lost time injury frequency rate - and our efforts are being stepped up in this regard. We have formal structures in place to improve our safety record, and realise that responsibility for safety lies with management, the unions and employees.


Harmony’s focus is on preventative rather than curative health care for its employees, their dependants and for members of our host communities.

Silicosis, which can lead to TB, has long been known as a hazard of deep-level gold mining, and our long-established strategy has been to install and equip fogging water vapour equipment where dust is a particular problem. Our employees are tested regularly for silicosis as well as for other compensable work-induced health problems such as noise induced hearing loss. But, again, during the past few years our focus has been on reducing the noise levels of underground equipment and enhancing this initiative by the issuing of hearing protection equipment.

HIV & AIDS is a particular health problem in South Africa. Harmony provides integrated counselling, treatment and preventative measures for its employees. The illness is also manifesting itself increasingly in PNG, and we are fortunate in being able to draw on our South African experience in providing preventative assistance. In PNG, our community health reach is also directed towards malaria prevention – assisting communities in lower-altitude areas to remove potential mosquito breeding sites, providing insect-proofed mosquito nets and prophylaxis.


Harmony’s approach to protecting the environment is straightforward. While our target of an increase in annual gold production to 2 million ounces is likely to raise our overall carbon footprint, our use of cyanide and of water, the effects are steadily being mitigated by greater efficiencies and the careful use of resources.

In South Africa we are working with electricity supplier, Eskom, to curb our overall electricity use and our peak demand. The bulk of the water we use is re-cycled and we are improving our cyanide use in line with internationally accepted standards.

Essentially, our objective is not only compliance with local environmental legislation, but to go beyond it over the lifetimes of our individual operations. That extends from protecting the environment when mines are operating through to adequate provision for environmentally satisfactory and responsible closures at the ends of their lives.

Governance and communities

Fundamental to our corporate ethos is a commitment to ensuring that our host communities have the wherewithal to remain viable during our operations and long after our operations have closed and in generations to come. Our individual contributions are noted elsewhere, but our policy is, as far as is feasible, to purchase our operational requirements from local suppliers and to favour local people in our hiring and training. Over the longer run, it is our aim to have provided appropriate training opportunities to employees and their dependants that deliver skills needed by the mines and that can be deployed locally over many years.

Our reach is progressively into facilitating community development, ranging from help in the provision of adequate housing, sanitation and utilities as well as in assistance in developing local businesses. The leitmotif is sustainable development – social development that can be sustained during and after the life of individual mines.


In line with our commitment to integrated reporting, we have for the first time incorporated key sustainability indicators into this year’s Annual Report. A significant milestone for us has been the fact that we identified our most material sustainability issues important to both the business and its stakeholders, and these are covered extensively all through this report. Corresponding to our objective of complying with regulations in our reporting process while being as cost-effective as possible, as well as in the interest of the environment, this report has not been printed and has instead been published as a fully interactive HTML online document.

We continue to report in alignment with the G3 guidelines of the Global Reporting Initiative (GRI) and as far as possible in accordance with the integrated reporting principles as recommended by the King II. Harmony is in the process of implementing King III. We have self-declared a B+ level of reporting and this has been checked by external auditors, PwC. Key performance indicators have also been assured by PwC.


We welcome feedback from our stakeholders and to this end, a feedback form is available.

Graham Briggs
Chief Executive Officer
6 October 2010