Towards Sustainable Partnerships CONTENTS Towards Sustainable Partnerships
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KUMBA IRON ORE SUSTAINABLE DEVELOPMENT REPORT 2011 Towards sustainable partnerships CONTENTS Towards sustainable partnerships ii Kumba at a glance 1 Approach 2 Key features of the year 3 Key statistics APPROACH AND OVERVIEW 6 Letter to stakeholders from the chairman: Safety, Sustainable Development, Social and Ethics Committee 8 Chief executive’s review 10 Material issues 11 Vision, mission and strategy 12 Case study: Implementing the Anglo American Way to transform safety performance FRONT COVER: A GOOD EXAMPLE OF 14 Case study: Envision: empowering our employees SUSTAINABLE PARTNERSHIPS 16 Case study: Making sustainability a reality through Grecious Tlhaole, Maggy van der Post and Rachel Manumo constructive engagement are employed at the Skyfontein hydroponics food project outside Postmasburg, near Kumba’s Kolomela mine. Here, 18 Stakeholder engagement they are working together on one of the project’s first 24 Case study: The Dingleton resettlement: changing for spinach harvests. Theirs are jobs of partnership, requiring the better mutual recognition of each other’s roles, together with an understanding of their shared goal. 26 Governance of sustainability At Kumba, we understand the importance and the business 32 Case study: Kumba against corruption potential of working in partnership with our stakeholders to achieve and exceed our long-term goals, both for our SUSTAINABILITY PERFORMANCE company and for South Africa as a whole. 34 Economic performance It is with this in mind that we introduce our suite of reports for 2011 with the theme: ‘Towards sustainable partnerships.’ 40 Case study: Developing local suppliers and small and medium enterprises 42 Case study: Training and development for change 44 Social performance 46 Safety 50 Health and well-being 54 Case study: The Ulysses Gogi Modise wellness clinic 55 Case study: People first: the Batho Pele mobile health units Integrated Report 2011 Annual Financial Sustainable Development 56 Employment and employees Statements 2011 Report 2011 62 Human rights 64 Social and community development 67 Case study: Kumba’s social and community development strategy 2012 to 2036 68 Product responsibility 70 Environmental performance 80 Case study: Biodiversity, custodianship and Abridged Integrated Kumba Online Report 2011 dewatering at Sishen mine Report 2011 http://www.angloamericankumba.com/ reports/kumba_ar2011/index.php 81 Case study: Hydrocarbon management and bioremediation at Sishen mine Look out for important references in this document FEEDBACK, COMPLIANCE AND ADMINISTRATION KPI Key performance indicator AFS See the corresponding pages in the Annual Financial Statements 84 Assurance IR See the corresponding pages in the Integrated Report 86 Statement from the Global Reporting Initiative 87 www See the website www.angloamericankumba.com Global Reporting Initiative content index 99 Glossary of terms and acronyms CS Case study IBC Administration Sustainable Development Report 2011 i KUMBA AT A GLANCE A GROUP PROFILE 4a 4d 4c 3b 4b 4e Thabazimbi mine Sishen mine Limpopo Kolomela mine 2c 1 Mpumalanga 3a 2 1 North West Gauteng 2a 2b SOUTH AFRICA 1 Corporate office 3 Port operations Free State KwaZulu- Natal Centurion (South Africa) a. Saldanha Bay (South Africa) Northern Cape 2 Mines b. Qingdao (China) a. Sishen mine 4 Exports b. Kolomela mine a. Western Europe Eastern Cape c. Thabazimbi mine b. China c. Japan 3a Western Cape d. South Korea e. The Middle East IRON ORE VALUE CHAIN DRILLING AND SEPARATING OF EXPLORATION REMOVING WASTE ORE REMOVAL ORE GRADES PROCESSING TRANSPORT BY TRAIN 123456DMS and jig plants QC QC – Quality check FOB – Free-on-board CIF – Cost, insurance and freight ii Kumba Iron Ore Limited EXPORT AND EMPLOYEE AND DOMESTIC SALES CONTRACTOR BREAKDOWN 2011 BREAKDOWN 2011 10 (%) 9 0 6 5 , 3 9 0 5 , 3 5 Export Domestic Employees Contractors Kumba Iron Ore Limited (Kumba or the group), a member of the Kumba’s South African project pipeline is extensive, with the Anglo American plc Group, is a leading value-adding supplier of potential to grow production to 70Mtpa by 2019; Kolomela mine is high-quality iron ore to the global steel industry. With its headquarters expected to produce an additional 9Mtpa by 2013 while a further in Centurion, South Africa, the group holds a 73.9% interest in and -TPACOULDCOMEFROMOTHER.ORTHERN#APE0ROVINCEOPERATIONS manages Sishen Iron Ore Company (Pty) Limited (SIOC) which, in and 5Mtpa from Limpopo Province. As much of this growth potential turn, has three mining operations: resides in lower-grade ore, the group is intensely focused on turning s 3ISHENMINE LOCATEDNEARTHETOWNOF+ATHUIN.ORTHERN this material to account. In the year under review, Kumba announced Cape Province; its intention of seeking growth in other parts of Africa, in a second s 4HABAZIMBIMINE SITUATEDINTHETOWNOF4HABAZIMBIIN,IMPOPO footprint, most notably west and central Africa, with the aim of Province; and growing production by a further 10 to 20Mtpa by 2020. s +OLOMELAMINE ANEWDEVELOPMENTINTHEVICINITYOF0OSTMASBURG IN.ORTHERN#APE0ROVINCE WHICHWASBROUGHTINTOCOMMERCIAL At the end of December 2011, Kumba employed 11,898 people, production in December 2011 and is anticipated to produce comprising 6,303 full-time employees and 5,595 full-time between 4 million tonnes (Mt) and 5Mt while ramping up in 2012, contractors. A further 4,131 fixed-term project contractors were before reaching design capacity of 9 million tonnes per annum employed on capital expenditure projects during the year. (Mtpa) in 2013. Kumba, which is listed on the JSE Limited (JSE) in South Africa, had Both the Sishen and Kolomela mines are long-life operations with a market capitalisation of R161 billion at 31 December 2011, the current life-of-mine estimates of 21 years and 27 years respectively. eighth largest company listed on the JSE by market capitalisation. 4HABAZIMBIMINEISREACHINGTHEENDOFITSLIFEPLANNEDFOR after some 80 years of continuous operation. The Phoenix project, The company’s largest shareholder is Anglo American plc, with a WHICHISADJACENTTO4HABAZIMBIMINE ISCURRENTLYATAFEASIBILITY 65.2% interest. Also holding a significant stake is South Africa’s stage. Subject to board approval, this project will replace production Industrial Development Corporation, a national development finance FROM4HABAZIMBIMINE!TTHEENDOF THEGROUPREPORTEDTOTAL institution set up to promote economic development and growth attributable Ore Reserves of 1,197.7Mt and attributable Mineral in the country, which holds 12.9%. The balance (free float) is held Resources of 1,340.4Mt. These are reported in accordance with the largely by institutional investors in South Africa (45%), the United South African Code for Reporting of Exploration Results, Mineral +INGDOM .ORTH!MERICA AND%UROPE Resources and Mineral Reserves (SAMREC). Achieved in a landmark transaction in 2006, SIOC is fully Kumba produced 41.3Mt of iron ore for domestic and export markets in 2011. The export ore is railed via a dedicated iron ore rail empowered, with a black economic empowerment (BEE) ownership link operated by Transnet Freight Rail, the national transport utility for of 26.1%. Through this empowerment structure, Kumba has rail operations, to the port of Saldanha Bay. achieved a significant and broad-based BEE shareholding as set out below. The slight increase in the BEE ownership from In 2011 the company exported 37.1Mt of iron ore from the port of 2010 is as a result of the unwinding of the first phase as well Saldanha Bay to customers in countries and regions around the as the implementation of the second five-year phase of the world, including China (68%), Western Europe (13%), Japan and Envision scheme. South Korea (18%) and the Middle East (1%). s %XXARO2ESOURCES,IMITED%XXARO ALEADING"%%COMPANYLISTED The group continues to invest significantly in the development on the JSE, has a 19.98% stake. and expansion of its business. In 2011 Kumba spent R5.8 billion s 3)/##OMMUNITY$EVELOPMENT4RUST#$4 HASA on capital – 53% on growth projects and 47% on stay in 3% unencumbered interest. business capital. s 4HE%NVISIONEMPLOYEESHAREPARTICIPATIONSCHEMEHAS DISCHARGE PORT SALDANHA STOCKPILE SHIPPING STOCKPILE TRANSPORT BY TRAIN CUSTOMER STOCKPILE STEEL MILL CUSTOMER 789101112 QC CIF QC FOB iii Kumba Iron Ore Limited APPROACH INTEGRATED APPROACH TO REPORTING Kumba has adopted an integrated approach as the basis for its for context where appropriate. Also supplied are targets and annual reporting for the 2011 financial year, that is, from 1 January projections where these support an understanding of the strategy of 2011 to 31 December 2011. the business. Kumba has therefore produced an integrated report as its primary Kumba has internal systems in place for data collation, and these are vehicle for communicating with the company’s broad range aligned with the requirements of the Anglo American plc Group of of stakeholders and interested and affected parties, including companies. Internal and external audits of the group’s systems and shareholders, employees, customers, communities, suppliers and the data integrity are carried out on a regular basis. Where relevant, data public at large. This report is intended to provide a holistic picture of measurement techniques and the bases of calculations, including the business, covering the group’s operating context and markets, assumptions and techniques underlying estimations applied to the opportunities and challenges it faces, its strategy, its operational, the compilation of indicators, are indicated in the report, or in the