As this report is specifically addressed to shareholders we have concentrated on the principal issues that provide an understanding of Lonmin’s business and the environment in which we operate. Some initiatives in progress or planned for 2012 are not reported on in this section, based on their significance. However, the omission of this information should not be considered to imply any lack of commitment to them on the Company’s part.
Sustainable development supports the delivery of our corporate objectives through the fostering of a safe production culture, operational excellence and building growth to supply the robust market demand for PGMs. Through transformation and sound sustainable development practices, we capitalise on diversity and quality of our workforce.
Sustainable Development Approach
Lonmin’s Integrated Sustainable development approach focuses on three main pillars:
- People: Caring for the social wellbeing of employees, contractors and communities.
- Planet: Fostering environmental stewardship through resource management, efficiency and impact management.
- Profit: Enhancing equitable prosperity through resource optimisation, financial performance, product stewardship and procurement processes.
Underpinning these three pillars is the foundation of good governance. This system enables sustainable development considerations to form an integral part of how we do business by adopting sustainable development as a core value. We are fully committed to the highest standards of corporate governance practice, which we believe is necessary to achieve the business integrity required to deliver robust and sustainable business results. Focus areas have been identified, based on our principal sustainable development risks, as part of an ongoing improvement process that will ensure integration of sustainable development within Lonmin’s planning and decision making systems.
Our approach to the sustainable development pillars is supported by our specific strategies and management plans to achieve the corporate objectives.
Managing Sustainable Development
The Company’s overall governance practices are underpinned by the values set out in the Lonmin Charter and supported by the newly refined Lonmin Code of Business Conduct, which will be released in the near future. Our commitments in the governance of sustainable development are defined in the Lonmin Safety and Sustainable Development Policy and guided by our Lonmin Sustainable Development Standards aligned with the Ten Principles of the ICMM.
Our Chief Executive Officer (CEO), Ian Farmer, is ultimately responsible for advocating sustainable development within Lonmin. The Exco assists him and is responsible for reviewing the Company’s progress and performance on safety and sustainability issues. The EVP – Processing, Natascha Viljoen, has line responsibility for our Sustainable Development Programme.
Transformation Committee
The primary purpose of the Transformation Committee of the Board is to ensure that the Company meets or exceeds its commitments and obligations and that the interests of all stakeholders, including shareholders, are properly enhanced in the areas of transformation and empowerment.
Safety & Sustainability Committee
The Safety & Sustainability Committee of the Board has oversight of the safety, health and environment matters. The Committee reviews significant safety and environmental incidents and considers causative factors, consequences and actions. The Committee reports to the Board on developments, trends and forthcoming significant legislation on safety and sustainability matters.
Reporting on our Principal Sustainable Development Risks
The global environment remains turbulent and we are, of course, affected by the risks associated with this turbulence. Our operations are all in South Africa, which faces significant development challenges such as poverty, inequality, unemployment, poor health and inadequate education.
We prioritise the identification and management of all risks that could impact our business and allocate suitable resources to manage our sustainable development risks. As not all risks are significant we assess our principal risks and set targets for management of those risks that are identified as principal risks. Additional information on our management approach, sustainability performance and other sustainable development risks that we have identified is provided in the SDR.
Performance Against our Targets
Governed by our Safety and Sustainable Development Policy we have targets in place that direct adequate resources to the effective management of those risks. The table in the Performance Against Our Targets section provides an overview of the targets we set for 2011, our performance against those targets and the targets we have identified for future years.
Establishing Integrity through Auditing and Assurance
We commission regular auditing and assurance processes with the aim of improving the integrity of our measurement and data management systems and the quality of our external reporting activities. The Board’s Audit & Risk Committee approves the annual Company wide internal and external audit plans. Audit findings are updated monthly and progress on corrective management plans are reviewed monthly by the Exco and twice a year by the Audit & Risk Committee of the Board. In addition to the Company wide assurance processes conducted for our annual SDR, we also conduct an internal audit on selected key sustainability indicators. External assurance is provided on selected parameters in the SDR, the alignment of our policies and business practices with the ICMM Principles and our reporting in accordance with the Global Reporting Initiative (GRI) reporting principles.
External audits of our International Standards Organisation (ISO) 14001, ISO 9001 and Occupational Hygiene and Safety Standard (OHSAS) 18001 management systems support continuous improvement of our performance at an operational level. In 2011 all our operations retained their ISO 14001 Environmental Management System certification. Currently, our Smelter, Base Metal Refinery (BMR), Precious Metal Refinery (PMR) and Analytical Laboratories are OHSAS 18001 certified. Our PMR and Training Academy retained their ISO 9001 certification.
In 2011 we achieved our target of receiving no prosecutions or fines relating to safety, health and environmental management. We generate regular Environmental Management Programme Reports (EMPRs) which form part of the bi-annual external Environmental Performance Assessment audit.
Based on our own assessment of the web based Sustainable Development Report against the criteria provided in the GRI G3.1 application levels, we declare the report fulfils the requirements of an A+ application level.
Membership of External Organisations and Initiatives
Lonmin has been a member of the ICMM since 2004 and we are signatories to the United Nations Global Compact (UNGC).
The ICMM Sustainable Development Framework comprises three elements: a set of Ten Principles (which include a set of supporting position statements), public reporting and independent assurance. These have been developed systematically over the past ten years. More details on the ICMM can be found on their website (www.icmm.com).
Through our participation in the ICMM, we support the Extractive Industries Transparency Initiative (EITI), a coalition of governments, companies, civil society groups, investors and international organisations that aims to strengthen governance by improving transparency and accountability in the extractive sector.
Public Policy Positions
A Company representative belongs to two groupings of company secretaries / general counsel that undertake significant lobbying in the United Kingdom and Europe on corporate legal and governance matters on a cross industry basis.
In South Africa we have been engaging with the DMR both directly and via the Chamber of Mines. Our CEO participates as an Executive Council member of the Chamber of Mines.
Engaging our Stakeholders
We believe that establishing sound relationships with our stakeholders allow us to create and maintain resilient, stable operations, which in turn allows us to deliver long term value to our shareholders.
Our stakeholders include the investment community, employees, contractors, unions, governments, (national, regional and local), intergovernmental bodies, regulators, communities hosting our operations, business partners, non-governmental organisations, suppliers, customers and the media. We identify and engage our external stakeholders at a number of different levels and engagement is undertaken in various ways. To manage our stakeholder relationships we have developed the Lonmin Stakeholder Engagement Protocol based on industry best practice. A detailed review of the nature of our stakeholder identification and engagement practices is provided in the SDR.
We have introduced an Annual Stakeholder Forum to mitigate the risk of possible failure of employee and community relations. The Annual Stakeholder Forum not only provides an engagement opportunity, but will also form part of our more structured approach to stakeholder engagement.
We have also agreed to the establishment of a Bapo Ba Mogale Development Team which will be chaired by the CEO. The objective of the development team will be to identify community employment and job creation opportunities both at Lonmin and via the community development programme.
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- Sustainable Development Approach
- Managing Sustainable Development
- Reporting on our Principal Sustainable Development Risks
- Performance Against our Targets
- Establishing Integrity through Auditing and Assurance
- Membership of External Organisations and Initiatives
- Public Policy Positions
- Engaging our Stakeholders