Eurasian Resources Group Resources Eurasian | Sustainable Development Report 2019 Report Development | Sustainable
BUILDING A SUSTAINABLE BUSINESS
SUSTAINABLE DEVELOPMENT REPORT 2019
Eurasian Resources Group S.à r.l. With a global presence and a workforce of more than 67,000,1 ERG owns integrated mining, processing, energy, logistics and marketing operations – primarily in Kazakhstan and Africa.
ERG represents one third of the metals and In Africa, ERG is a large producer of cobalt mining industry in Kazakhstan, and is the world and copper, and has recently launched a leader in high-carbon ferrochrome production major tailings reprocessing operation (Metalkol by chrome content. The Group is also a Roan Tailings Reclamation or Metalkol RTR) substantial supplier of iron ore, aluminium in the Democratic Republic of the Congo and alumina in Eurasia, as well as a provider (DRC). The Group has further operations and of energy and railway services. development projects in Zambia, South Africa, Zimbabwe, Mozambique and Mali.
In Brazil, ERG is pioneering an integrated iron ore mining and logistics project (BAMIN) in the State of Bahia.
Cover images 1 2 1 Bunker operator and electric filter 4 Student at the informal school run by the operator at Pavlodar Aluminum Plant’s Good Shepherd International Foundation sintering shop in the artisanal mining community of 3 2 Zhasybay Lake in Bayanaul State National Kabamba in Lualaba, DRC Park, Pavlodar region © Photo courtesy of Good Shepherd International Foundation/Nyokabi Kahura. 3 Furnaceman standing next to furnace
SUSTAINABLE DEVELOPMENT REPORT 2019
4 Eurasian Resources Group S.à r.l. at Aktobe Ferroalloys Plant’s Smelting workshop No. 4
ABOUT THIS REPORT INTRODUCTION This annual Sustainable Please note that this report is 2 At a glance Development Report covers ERG’s produced in English, Kazakh 4 CEO statement sustainability performance during and Russian. In the event of 6 Our business model the 2019 calendar year.2 It covers any inconsistencies, the English- ERG’s mining, processing, power language version shall take 8 Our strategy generation, project development precedence. 10 Business performance and transportation activities. 12 COVID-19 Notes on the preparation 14 External environment This report has been informed by of this report the Global Reporting Initiative (GRI) 16 Risk management All references to ‘ERG’ or the ‘Group’ Standards and as such, is focused 18 Our material issues on our most material Sustainable refer to Eurasian Resources Group Development issues (p. 18). The S.à r.l. and/or its subsidiaries. 1: PREPARING OUR BUSINESS report has not been subject to third party assurance. For all FOR THE FUTURE queries in relation to this report, 22 Organisational transformation please contact: [email protected]. 24 Portfolio development 27 Technology and efficiency
1 Excluding contractors. 2 This follows our last Sustainable Development Report, published in 2019 and covering the 2018 calendar year. INTRODUCTION
FOR THE FUTURE PREPARING OUR BUSINESS 1
OUR VISION
An international, sustainable, socially responsible and efficient PEOPLE THRIVE HELPING OUR natural resources company 2 AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 2: HELPING OUR PEOPLE THRIVE 5: OUR RELATIONSHIP WITH BROADER SOCIETY 32 Health and safety 37 Skills, capabilities and development 72 Value generation and distribution 41 Labour relations 78 Compliance 82 Responsible supply chains 3: COMMUNITY DEVELOPMENT 86 Government relations and policy AND WELL-BEING 46 Community impacts APPENDIX 49 Community social investment 88 Governance, management STEWARDSHIP 55 Our approach to artisanal and structures and risk management ENVIRONMENTAL small-scale mining 90 Management approach 4 94 What are ERG’s most material 4: ENVIRONMENTAL issues and why? STEWARDSHIP 96 Stakeholder engagement overview 60 Managingimpacts on air and water 98 Key examples of participation in
64 Energyand climate change multi-stakeholder organisations 99 67 Wastemanagement Key operational assets 100 GRI content index 104 UN Global Compact reference table WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 1 5 AT A GLANCE
ERG is a leading diversified natural resources group
KEY HIGHLIGHTS
US$1,538M 67,272 US$4,183M UNDERLYING EBITDA GROUP HEADCOUNT 1 TOTAL ECONOMIC VALUE DISTRIBUTED TO STAKEHOLDERS (2018: US$1,913 million) (2018: 69,253) (2018: US$4,381 million)
0.83 US$118M 24.2Mt CO2e LOST TIME INJURY COMMUNITY SOCIAL DIRECT AND INDIRECT FREQUENCY RATE (LTIFR) 2 INVESTMENT GREENHOUSE GAS (GHG) EMISSIONS
(2018: 0.58) (2018: US$115 million) (2018: 24.7Mt CO2e)
Salvador
WHAT MAKES US DIFFERENT?
An enduring A diversified Integrated mining, presence in portfolio, with processing, Kazakhstan, with a low-cost operations energy, logistics global operational and significant and marketing footprint growth potential operations
Participation in A diverse and long- Poised to become China’s Belt and standing global a major player Road Initiative – customer base in responsibly strategically produced cobalt positioned in the heart of Eurasia
1 Excluding contractors. 2 Including employee fatalities.
2 PRODUCTION REGIONS DEVELOPMENT REGIONS KEY CUSTOMER MARKETS CORPORATE OFFICES DRC Brazil China Kazakhstan Mali European Union Zambia Mozambique Japan
South Africa Kazakhstan INTRODUCTION Zimbabwe Russia
FOR THE FUTURE PREPARING OUR BUSINESS 1 Moscow
Amsterdam Luxembourg Nur-Sultan Steinhausen
Beijing PEOPLE THRIVE HELPING OUR Dubai 2
Lubumbashi AND WELL-BEINGAND
Mauritius COMMUNITYDEVELOPMENT 3 Johannesburg
KEY OPERATIONS3
Alumina and Other Ferroalloys Iron ore Energy Logistics 4 aluminium non-ferrous STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
Number of key operational assets
Key countries DRC and of operation Kazakhstan Kazakhstan Kazakhstan Zambia Kazakhstan Kazakhstan
3 Details on specific business units and operations are available on p. 99. 4 Our logistics entity Sabot is included in Other non-ferrous as it primarily acts in a supporting capacity for our operations in Africa. Note: Production/development regions as well as key customer markets are listed in alphabetical order. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 3 5 CEO STATEMENT
The events of 2020 have further underlined the importance of managing our operational, financial and sustainability performance in an integrated way.
Benedikt Sobotka Chief Executive Officer
In this context, in late 2019 our credit rating Similarly, whilst ramp-up did not progress Strategic context was downgraded by Standard & Poor’s as quickly as planned in 2019, Metalkol RTR In 2019, we marked the 25th anniversary of from B to B-, reflecting the volatile market remains on course to be a game-changer, our business in Kazakhstan – and we look environment (amongst other factors). not only for ERG but for the broader battery forward to continuing our approach, which value chain. is focused on business sustainability and Additional external factors driving this long-term value generation. mixed performance included US-China With respect to our people, it is with sincere trade tensions, which affected demand for regret that I have to report 11 fatalities in In this context, we continued to embed our our products. On the supply side, we saw an 2019 (2018: 5). Four cases occurred as a 2025 Strategy, placing particular focus on increase in the global supply of ferrochrome, result of a road traffic accident involving organisational transformation, meeting the chrome ore and alumina/aluminium. SSGPO employees. I send my deepest expectations of our stakeholders, digital Similarly, oversupply and weaker than condolences to the families of those lost. technology and the enhancement of our expected electric vehicle sales in China We have investigated each fatal incident financial position. Whilst we are continuing had a negative impact on cobalt prices. and applied measures to prevent their to make positive progress in this regard, reoccurrence. For more information, our safety performance worsened. As such, In this context, we took steps to enhance see p. 35. this area will continue to be our top priority. our financial resilience, including through a debt refinancing agreement as well as Furthermore, we completed a Furthermore, in 2020 we had to perform an expansion of new credit lines (p. 11). comprehensive audit of our safety a rapid ‘pivot’ to address the challenges These measures proved particularly timely management systems in Kazakhstan, presented by the COVID-19 outbreak (see given the economic impact of the COVID-19 which produced a range of concrete below). The situation clearly has significant pandemic. actions aimed at improving our future implications for our people, our business safety performance. We continue to and for our host societies – and we are actively manage safety in all our regions. actively working to manage these. Broader Sustainable Development performance We also continued to take steps to meet our current and future skills requirements Despite what has been a relatively Business performance and promote opportunities for young challenging year, in 2019 ERG maintained people in Kazakhstan. This included Despite a relatively promising start, 2019 momentum in terms of embedding its support for the launch of the Atlas of New was characterised by a challenging market 2025 Strategy. Professions (p. 38), as well as our ongoing environment and downward price support of the Student Entrepreneurship pressures. Overall, we saw a 9% fall in our We made further progress, for example, Ecosystem programme (p. 51). revenues, a 19.6% fall in our EBITDA and in terms of preparing our business for the mixed production trends. Nonetheless, future. This included the rollout of our ERG Our commitment to our communities is we managed to generate US$561 million Way Production System (focused on the demonstrated by our ongoing community in operating cash, whilst capex amounted continuous improvement of our operational social investments, which reached to US$869 million. This was focused on performance and an enhanced working US$118 million in 2019 (2018: US$115 ramping-up production at Metalkol RTR culture) and the saving of US$68 million million) – as well as the launch of our and sustaining production at our assets through our efficiency programmes. new, three-year regional development in Kazakhstan and at Frontier in Africa. programme in Kazakhstan (p. 49).
4 OUR VISION OUR VALUES An international sustainable, socially responsible and efficient natural INTRODUCTION resources company. Safety Development
OUR MISSION Be the best at what we do. Navigate global change whilst holding true to Unity Responsibility our values. Responsibly unlocking the potential of the Earth and its people, ensuring the prosperity of For further details on those who rely on us. Efficiency our Values see p. 90 FOR THE FUTURE PREPARING OUR BUSINESS 1
We are continuing to take action to COVID-19 and business 2020 and beyond improve our environmental performance. This includes our 10-year, approximately resilience Our immediate focus is on keeping our US$350 million programme to reduce In early 2020, and in line with our employees and local communities safe, emissions to air in Kazakhstan – and commitment to ‘Zero Harm’, we took whilst minimising the impacts of COVID-19 in Pavlodar in particular. The programme immediate steps to minimise employee risk on our business. Furthermore, we will forms part of our new Environmental exposure. These included disinfection, continue building on our existing efforts Strategy, which is focused on emissions social distancing, the issuing of additional to enhance our resilience, not only in terms reduction, water conservation, land personal protective equipment, the use of our finances, but more broadly. Indeed, restoration, waste management and of thermal scanners and active awareness- the events of 2020 have further underlined PEOPLE THRIVE HELPING OUR biodiversity. Furthermore, we carried raising. In addition, we protected ‘at-risk’ the importance of managing our out a Group-wide risk assessment of our employees by temporarily removing them operational, financial and sustainability 2 large-scale waste storage facilities – plus from production, applied remote working performance in an integrated way. subsequent third-party assessments of and established safer shift patterns that individual facilities – to help ensure their reduced human contact. Whilst the short- to medium-term global ongoing integrity and safety. economic situation is highly uncertain, At the same time, we managed to we are confident that we can weather Finally, in terms of our broader relationship successfully minimise production the storm. Nonetheless, it will also be with society, we distributed a total of disruption, including through deferred important to learn from this experience US$4,183 million to our stakeholders – maintenance, stripping and repair activities; to make sure that our strategy actively including our host governments, succession-planning; and the establishment supports future resilience. This may require employees, communities, suppliers and of ‘quick response’ teams to address refocusing, as well as organisational change. finance providers (2018: US$4,381 million). operational gaps. Our payments to governments in the Beyond this, we will continue to invest in AND WELL-BEING form of taxes and duties amounted to We have also further enhanced our the modernisation of our core assets in COMMUNITYDEVELOPMENT US$812 million (2018: US$827 million). financial position, through the creation of Kazakhstan, which are likely to continue an additional ‘liquidity buffer’ based on to benefit from the Belt and Road Initiative. 3 We also made significant steps in terms of working capital management, the securing Similarly, Metalkol RTR and our BAMIN ensuring we maintain a responsible supply of new credit lines, reduced capex (except project leave us well-positioned for the chain and are able to deliver assurance for capex focused on maintaining stable future. Together, these will do much to help to our customers (and other downstream production), cost optimisation and other ERG to continue to evolve and prosper. actors). This included the adoption of our related measures. first Group Supplier Code of Conduct, as Our Sustainable Development efforts will well as the first independent, third-party Finally, it is worth reflecting on how continue to be guided by the Ten Principles assurance of our Clean Cobalt Framework. sustainability can support resilience. of the UN Global Compact, to which we Our ongoing participation in the Cobalt By building and maintaining positive, remain committed. Our 2019 Sustainable Institute and the Global Battery Alliance trust-based relationships with our Development Report represents our further supports our efforts in this regard. employees, communities, governments Communication on Progress. STEWARDSHIP and finance providers we can protect ENVIRONMENTAL our business from external shocks. 4
Benedikt Sobotka Chief Executive Officer
WITH BROADERSOCIETY OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 5 5 OUR BUSINESS MODEL
How we create value
INPUTS INTEGRATED BUSINESS
Finance We seek to use all funds efficiently, whether obtained through financing or generated from operations and investments.
People We rely on the skills, well- Exploration and acquisition Development being and motivation of employees, contractors and service providers to generate value.
Relationships We seek to build and sustain constructive relationships with all our stakeholders, based on mutual respect, Mining Processing and beneficiation transparency and trust.
Natural resources It is critical that our businesses responsibly manage all the natural resources used in our processes, given their finite nature.
Capital assets Smelting and metallurgy Sales Significant financial investment in the purchase, Energy development and Generation of power for our operations maintenance and third parties in Kazakhstan. of property, plant and equipment has provided us with the Logistics capacity to generate Logistics and transportation services long-term returns. to support our own operations, as well as third-party businesses. Post-mining reclamation
EXTERNAL ENVIRONMENT STAKEHOLDERS RISKS Read more on p. 14 Read more on p. 96 Read more on p. 16
6 INTRODUCTION
Our integrated mining, metals, energy and transport business creates products that support the manufacturing, construction, infrastructure and logistics sectors – and that will help ensure that we support, and benefit from, the transition towards a green economy. FOR THE FUTURE PREPARING OUR BUSINESS 1 KEY PRODUCTS KEY MARKETS 1 OUTPUTS
Ferroalloys Social Steel industry China LTIFR 0.83
Cobalt TAXES PAID Lithium-ion batteries M
US$812 PEOPLE THRIVE HELPING OUR COMMUNITY SOCIAL INVESTMENT 2 European Union US$118M Copper Infrastructure and construction Environmental Transportation
Electrical and electronics CO2 EMISSIONS
Aluminium 24.2Mt CO2e Infrastructure ENERGY CONSUMPTION and construction Japan AND WELL-BEINGAND COMMUNITYDEVELOPMENT Transportation 270,939 TJ 3 WATER WITHDRAWAL Iron ore Mm3 Steel industry 1,862
Financial Kazakhstan Coal UNDERLYING EBITDA Energy US$1,538M Heat STEWARDSHIP REVENUE ENVIRONMENTAL US$4,872M 4
FREE CASH FLOW Russia US$234M
1 in alphabetical order
2025 STRATEGY MATERIAL ISSUES GOVERNANCE Read more on p. 8 Read more on p. 18 Read more on p. 88 WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 7 5 OUR STRATEGY
An integrated approach towards business sustainability
OUR APPROACH STRATEGIC PRIORITIES
For ERG, Sustainable Development is about more than Balanced portfolio growth ■ ■ the responsible management of our environmental, ■ ■ Host governments social and governance impacts; it is also about: Steady growth and development of the asset portfolio in Kazakhstan and beyond ■ ■ ■ Ensuring our business is resilient, fit for the future and/or divestment ■
and can generate long-term value ■ ■ ■ Achieving the ongoing delivery of benefits to our stakeholders – including employees, shareholders, ■ customers, business partners, local communities and host countries
As such, Sustainable Development is integral to our A happy and professional team ■ ■ ■ business model – and increasingly integrated into our Development of our employees’ competencies and the ■ ■ ■ Host governments core business processes. This is best demonstrated by and well-being maintenance of their safety and well-being ■ our 2025 Strategy, which is ultimately aimed at achieving ■ ■ ■ ‘business sustainability’. ■ ■
Furthermore, we are supportive of the United Nations and leadership pipeline Sustainable Development Goals (SDGs) and seek to maximise our positive impacts and minimise any negative impacts in this regard. ■ Improve the well-being and prosperity of communities in our regions of operation ■ This includes the identification of relevant SDGs for ERG, Sustainable development of our host regions ■ ■ selected on the basis of: Contribution to the socio-economic development and air and soil – to support local well-being in our regions of operation ■ ■ well-being of communities in our regions of operation Potential synergies between the achievement of the ■ ■ relevant SDGs and our own business performance in our host countries ■ Our ability to positively or negatively impact the achievement of relevant SDGs
■ The degree to which the achievement of each SDG is relevant to our areas of operation
These efforts will help us align our actions more closely Efficiency in all that we do ■ ■ with international stakeholder expectations – to the A strong focus on pursuing efficiency across the Group ■ ■ benefit of both our business and broader society. ■ Further details regarding relevant SDGs are set out on ■ p. 94–95 as well as within each of the thematic chapters. and mechanisms All references to associated UN targets are for the contextualisation of our impacts, risks, opportunities and performance only – and do not represent formal corporate targets. Financial stability ■ ■ The maintenance of financial resilience, whilst delivering ■ ■ STRATEGY REVIEW: ■ ■ sustainable shareholder returns ■ ■ Please note that our 2025 Strategy is currently under Maintain high levels of liquidity to support resilience in the face of changing review as we address the immediate impact of the market conditions ■ Host governments
2020 COVID-19 outbreak and the longer-term ■ implications for the Group.
8 INTRODUCTION
SUSTAINABLE DEVELOPMENT PRINCIPLES
Zero harm Innovation Leadership Integrity Accountability Balance FOR THE FUTURE PREPARING OUR BUSINESS 1 STRATEGIC GOALS KEY STAKEHOLDERS
■ Further develop existing assets in Kazakhstan ■ Shareholders Steady growth and development of the asset portfolio ■ Increase returns on the existing portfolio of international assets ■ Host governments in Kazakhstan and beyond ■ Optimise our portfolio through new natural resource opportunities ■ Local communities
and/or divestment ■ Customers
■ Further develop the Group’s power generation business ■ Suppliers/contractors
■ Finance providers PEOPLE THRIVE HELPING OUR
■ Deliver safe working conditions ■ Improve employee benefits ■ Employees 2 Development of our employees’ competencies and the ■ Improve employee health ■ Improve ERG’s employee proposition ■ Host governments and well-being and status as an employer maintenance of their safety and well-being ■ Regulators ■ ■ Deliver comfortable workplaces Further develop our corporate culture ■ Local communities ■ Develop strategic skills and ■ Develop our talent pool competencies and leadership pipeline
Sustainable development of our host regions ■ Improve the well-being and prosperity of communities in our regions of operation ■ Local communities ■ Maintain international environmental standards – including those relating to water, ■ Regulators AND WELL-BEINGAND
Contribution to the socio-economic development and COMMUNITYDEVELOPMENT air and soil – to support local well-being in our regions of operation well-being of communities in our regions of operation ■ Regional governments ■ Support entrepreneurship and the development of the business environment ■ Civil society in our host countries 3
■ Reduce unit costs by eliminating bottlenecks and improving productivity ■ Shareholders A strong focus on pursuing efficiency across the Group ■ Improve organisational effectiveness ■ Customers ■ Improve sales effectiveness
■ Develop a culture of continuous improvement supported by relevant tools and mechanisms STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
■ Maintain a sustainable level of dividend yield for shareholders ■ Shareholders The maintenance of financial resilience, whilst delivering ■ Maintain high returns on invested capital ■ Finance providers sustainable shareholder returns ■ Achieve and maintain an acceptable level of debt ■ Employees ■ Maintain high levels of liquidity to support resilience in the face of changing ■ Suppliers/contractors
market conditions ■ Host governments
■ Local communities WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 9 5 BUSINESS PERFORMANCE
Operational performance
COVID-19 +7.3 % For information on how we have managed the immediate impact of the COVID-19 IRON ORE outbreak in 2020, including with respect to our production and our business planning CONCENTRATE AND – please see p. 12. PELLET PRODUCTION
GROUP PRODUCTION PERFORMANCE
Commodity 2019 (kt) 2018 (kt) Change Saleable ferroalloys 1 1,639 1,613 1.6% Saleable iron ore concentrate and pellets 13,195 12,292 7.3% +1.9% Alumina 1,393 1,481 (5.9%) ALUMINIUM Aluminium 263 258 1.9% PRODUCTION Saleable copper (contained) 141.5 139.5 1.4% Cobalt metal 1.50 1.61 (6.8%) Saleable cobalt hydroxide 6.7 0.30 2,133.3% Coal 27,503 28,724 (4.2%)
1 Total net ferroalloys production. +1.6% In 2019, we increased saleable ferroalloys reduced, the impact on production was production by 1.6% to 1,639 kt (2018: offset by the ramping up of production FERROALLOYS 1,613 kt). This reflected improved efficiency at Metalkol RTR (p. 24) and slightly higher PRODUCTION at Workshop No.4 at our Aktobe Ferroalloys volumes at Frontier (141.5 kt compared Plant (as well as our ongoing efforts to to 139.5 kt in 2018). achieve its full production capacity) and optimisation initiatives at our other Meanwhile, the suspension of production at workshops. Boss Mining meant our total saleable cobalt metal production decreased by 6.8% to We also responded to stronger market 1.5 kt (2018: 1.6 kt). Whilst we did not achieve INITIATION OF COBALT demand by increasing production of full planned production at Metalkol RTR, HYDROXIDE PRODUCTION saleable iron ore concentrate and pellets we were able to increase output significantly AT METALKOL RTR by 7.3% to 13,195 kt (2018: 12,292 kt). to 6.7 kt of cobalt hydroxide (excluding 1.7 kt used for internal consumption). Lower internal demand for thermal coal (in combination with the use of coal substitutes in a number of Western countries) led us to reduce coal production by 4.2%.
Aluminium production reached a record 263 kt (2018: 258 kt). This reflected a range of technological improvements (including increased amperage during electro winning) to safely take the smelter beyond its original designed capacity.
Total saleable copper contained production remained broadly steady compared to the previous year. Whilst Boss Mining was moved into care and maintenance and production at Chambishi Metals was
10 INTRODUCTION
Financial resilience FOR THE FUTURE PREPARING OUR BUSINESS
Whilst market conditions in the first In the first half of 2020, the COVID-19 1 quarter of 2019 were largely favourable outbreak had a material impact on US$4,872M for ferroalloys, iron ore and copper, this commodity prices. Whilst this will inevitably changed in the second quarter – with the impact our EBITDA, we have taken steps to REVENUE exception of iron ore, which saw increased enhance our financial resilience even further. prices. This shift was driven by, amongst This includes the bolstering of our liquidity -9% other things, US-China trade tensions, position, including through working capital
record Chinese ferrochrome production, management and optimisation of our costs. an oversupply of cobalt and weaker than In addition, we entered a US$700 million expected electric vehicles sales in China. debt refinancing agreement with Sberbank Similarly, the US-China trade war and coal and accessed up to US$300 million of substitution in Western countries also put additional new financing from other lenders.
downward pressure on thermal coal prices. Furthermore, we have optimised capex to PEOPLE THRIVE US$ HELPING OUR 1,538M focus on the maintenance of our existing UNDERLYING EBITDA Year-on-year average price performance production targets. 2 was largely negative, contributing to a 9% fall in our revenues to US$4,872 million -19.6% 2 (2018: US$5,353). This resulted in a 19.6% Credit rating
reduction in our underlying EBTIDA to ■ S&P: B- (downgraded from B on US$1,538 million (2018: US$1,913 million). 10 December 2019) In this context, we generated US$561 ■ Moody’s: B2 million of net cash from our operating activities (2018: US$641 million). In addition, The downgrade by S&P reflected a US$ M we increased capex to US$869 million 869 challenging market environment, heavy (2018: US$752 million). This was mainly capex and cash generation delays at CAPEX focused on the ramping up of production Metalkol RTR. Nonetheless, ERG’s debt at Metalkol RTR in the DRC and sustaining AND WELL-BEINGAND
is manageable and the company remains COMMUNITYDEVELOPMENT +15.6% capital investments at our existing assets. able to meet its obligations and repayments in a timely manner. 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
2 As of end of reporting period. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 11 5 COVID-19
Our response to COVID-19
We undertook a range of immediate measures to keep our people safe, minimise operational disruption and ensure the sustainability of our business amid the COVID-19 pandemic. These were coordinated through our specially established Anti-Crisis Control Centre.
CONTRIBUTING TO LOCAL EFFORTS TO ADDRESS COVID-19
ERG has committed more than In Africa, we are supporting the Good Meanwhile in Brazil, we donated US$10 million to the creation of a national Shepherd International Foundation to help US$40,000 of aid to our local foundation in Kazakhstan aimed at them provide 10,000 reusable face masks municipalities, including food and minimising the socio-economic impacts for use by local communities (including the hygiene baskets, more than 300,000 of the outbreak. This is in addition to families of employees) near Metalkol RTR. gloves and hand sanitiser gel. a contribution of US$230,000 to support The masks are being delivered through the fight against the virus in Nur-Sultan. a vocational training programme, which supports the economic empowerment of local women.
PROTECTING OUR PEOPLE
We focused on a range of Group-wide ■ The purchase of testing equipment measures to help secure the health of to be used in new ERG laboratories our workforce – as well as the continuity in Kazakhstan that we plan to open of our operations. These included: in 2020
■ The disinfecting of our production sites, In addition, we applied a range of offices, canteens, camps and buses preventative organisational measures, ■ The use of thermal scanners and including: touch-free thermometers at entrance checkpoints, on buses and in our ■ The temporary removal of ‘high-risk’ offices employee groups (i.e. +55 years of age or with chronic illnesses) from their usual ■ The provision of additional personal operational roles protective equipment (including reusable masks) and hand sanitisers ■ The closure of offices, remote working for office-based employees and the placing ■ The application of social distancing of selected office-based employees on in the workplace annual leave ■ The rental of additional buses to ■ Changes to shift patterns to minimise transport employees from their homes human contact to work sites safely
■ The acquisition of a local medical centre in Kazakhstan to provide free medical support to employees with COVID-19 or other respiratory diseases
■ Daily monitoring of those confirmed to have COVID-19, as well as those in quarantine or in self-isolation
■ Employee awareness-raising
■ Development of a testing programme for shift-workers
12 INTRODUCTION
The health and safety of our employees and contractors – as well as their families and our local communities – is an absolute priority. We continue to take rapid precautionary action as necessary. This focused approach has helped ensure the continuity of our operations and supported our ability to produce the materials needed to drive long-term, post-pandemic growth.
Benedikt Sobotka Chief Executive Officer FOR THE FUTURE PREPARING OUR BUSINESS 1 ENSURING OPERATIONAL CONTINUITY
A comprehensive approach was taken ■ The creation of ‘quick response’ teams Execution of capital projects towards operational continuity, which to address operational gaps We analysed the impact of the outbreak helped ensure our operations were not ■ The postponement of non-urgent in terms of deferred delivery of equipment materially impacted. Measures included: maintenance, repair and stripping activity
and/or contractor availability. Plans have been developed (and are being Sales planning In addition, we: implemented) to reduce any backlogs in the project implementation schedule – We carried out scenario analysis to better ■ Implemented emergency succession understand – and manage – the impact planning for key managers and including through the use of alternative local contractors for specific tasks and of the outbreak on our sales. This operational personnel PEOPLE THRIVE HELPING OUR included benchmarking and stress- the application of remote working by ■ Created an operational ‘reserve’ using project contractors. testing, the identification of key triggers repair personnel, in case immediate 2 likely to affect sales (such as closed personnel replacements were required borders, customer disruption, etc.), the confirmation of planned sales volumes with key customers and contingency Supply chain continuity planning. We also investigated the We carried out extensive planning to development of alternative markets – help ensure we could maintain adequate and supporting logistical arrangements. supplies of raw materials, goods, materials and equipment. Amongst other things, Maintenance of production this included: We introduced a continuity plan ■ The maintenance of optimal levels of to ensure at least three months of critical inventory items AND WELL-BEINGAND
uninterrupted production in the event ■ The confirmation of planned deliveries COMMUNITYDEVELOPMENT of a significant decrease in personnel with suppliers availability (i.e. up to a 35% reduction ■ The identification of alternative suppliers 3 in total employee availability, or up to a if/where necessary 20% decrease in operational employee availability). Key actions included: ■ Analysis of potential logistical constraints and the development of alternative ■ The transition to a 12-hour shift system arrangements and the introduction of additional overtime arrangements STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL
IMPROVING OUR FINANCIAL RESILIENCE 4
In the first half of 2020, it became Further details on how we are enhancing obvious that the COVID-19 outbreak our financial resilience following the
poses a significant threat to the global outbreak can be found on p. 11. economy. Given this has the potential to impact Group EBITDA and liquidity, we are applying measures to further enhance our financial position. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 13 5 EXTERNAL ENVIRONMENT
Understanding and navigating global challenges and opportunities in 2019
GLOBAL METALS MARKETS KAZAKHSTAN AND THE AND THE IMPACT OF US-CHINA BELT AND ROAD INITIATIVE (BRI) TENSIONS AND COVID-19
As US-China trade tensions evolved, global economic growth China’s total BRI-related investment over 2013-2019 reached slowed, causing concerns around a steeper deceleration in 2020. US$730 billion, according to the China Global Investment Tracker.
In this context, prices for most ERG products (including aluminium, The land-based ‘Silk Road’ across Eurasia is a key pillar of the BRI, ferroalloys, copper, cobalt, and thermal coal) showed year-on-year with partner countries accounting for US$1.34 trillion of China’s declines. trade in 2019. Rail-borne trade between China and Europe is likely to increase materially over the decade, with Kazakhstan becoming Iron ore performed strongly, however, with year-on-year price gains the key crossroads. of more than 30%. According to a World Bank research paper,1 Kazakhstan could This slowdown is in fact proving more acute than was expected for ultimately see a net increase in its GDP of up to 6% a s a result key commodities, due to the global impact of the COVID-19 pandemic. of BRI-related infrastructure investments. Nonetheless, in the short-term the impact of the COVID-19 outbreak may have Nonetheless, the reopening of the Chinese economy and huge a dampening effect on both Chinese commodity demand, national stimulus programmes helped mitigate some of these as well as domestic investment in BRI projects. price drops.
Implications and responses: Business sustainability – Implications and responses: A strategic growth driver and resilience for ERG – in Kazakhstan and beyond Weak market conditions in 2019 (with even stronger economic China is, alongside Russia, the largest buyer of ERG’s raw material headwinds in 2020) underline the importance of preparing our inputs. As such, the BRI is likely to play an important role in helping business for the future. Our efforts in this respect, include: drive our future sales demand – as well as our future growth.
■ The embedding of our 2025 Strategy and the strengthening of our organisational culture (p. 8) Indeed, Chinese financing and technical capabilities continue to support the development of our portfolio. Most notably, this includes ■ The launch of our ERG Way Production System (p. 22), our Ideas ongoing financing and construction support for our Metalkol RTR Factory and Innovators’ Forum (p. 28), and operational innovation cobalt and copper operation in the DRC (p. 24). In 2019, we sold (p. 28) our first volumes of cobalt hydroxide to major refineries in C hina – ■ Implementation of our Digital Strategy to support digital innovation marking one of the key milestones for Metalkol RTR. across our organisation (p. 28)
In addition, we continue to:
■ Optimise our portfolio, including through investments that will help the Group support and benefit from the transition towards a global ‘Green Economy’ (p. 6–7)
■ Pursue financial resilience through the enhancement of our liquidity (p. 11)
1 World Bank, Common Transport Infrastructure – A Quantitative Model and Estimates from the Belt and Road Initiative, Policy Research Working Paper 8801, April 2019: http://documents.worldbank.org/curated/en/879031554144957551/Common-Transport-Infrastructure-A-Quantitative-Model-and-Estimates-from-the-Belt-and-Road-Initiative
14 INTRODUCTION
COVID-19
The COVID-19 outbreak is having a profound effect on the Fund has forecast a 5% contraction in the global economy global economy. National governments and central banks in 2020, with a subsequent 5% rebound in 2021. 2 implemented major stimulus packages to mitigate the impact, including lower interest rates and the direct stimulation of For further information on how we have managed the impact national economies. In this context, the International Monetary of the COVID-19 outbreak in 2020 and are preparing for its economic consequences, please see p. 12. FOR THE FUTURE PREPARING OUR BUSINESS 1 TECHNOLOGICAL CHANGE GLOBAL DECARBONISATION – AND BATTERY DEMAND AND ASSOCIATED OPPORTUNITIES FOR ‘TRANSITION METALS’
PEOPLE THRIVE HELPING OUR
The electric vehicle (EV) revolution is driving strong demand for There is a growing consensus around the importance of cobalt – with global sales of new EVs 3 rising to 2.3 million units decarbonising the global economy – as expressed in the 2015 Paris 2 in 2019 (2018: 2.1 million units).4 Agreement on Climate Change (of which Kazakhstan is a signatory).
The use of cobalt in EV batteries is expected to almost triple The metals and mining sector – and, more notably, the coal-fired by 2022 (compared to 2019) – and increase four-fold by 2025.5 energy generation sector – faces increasing stakeholder pressure This trend will be supported by China’s planned investment in with respect to its emissions performance. EV charging networks and its extension of EV subsidies, as well as the European Union’s ‘Green Deal’ and the introduction of However, decarbonisation also presents a number of potential EV subsidies by several Member States in 2020. growth opportunities for ERG and the sector more broadly – including increased demand for cobalt, aluminium and copper. Demand for energy storage systems for wind and solar farms is also helping drive this dynamic – with installed lithium-ion battery AND WELL-BEINGAND capacity rising to 455GWh by the end of 2019 (end of 2018: COMMUNITYDEVELOPMENT 295GWh).6 3
Implications and responses: Metalkol RTR to Implications and responses: Working to reduce our transform ERG into a major, trusted cobalt supplier carbon footprint – and providing the raw materials ERG is exceptionally well placed to support the development of to support the energy transition affordable, responsibly produced battery technology – and, by In 2019, our efforts to reduce our carbon footprint in Kazakhstan extension, the EV revolution – through its operations in the DRC. included:
Most notably, this includes Metalkol RTR. In 2019, we ramped up ■ Energy efficiency: The application of our 2016-2020 Energy Efficiency production at the site and initiated Phase 2 of development (p. 24). Programme (p. 64) Much of this output will be processed in China and used by customers ■ Renewable energy: The advancement of a project to construct wind across the world – supporting battery manufacturing and the gradual power generation facilities with installed capacity of 150-180MW global substitution of internal combustion technology.
(p. 65) STEWARDSHIP ERG is considering the possible construction of a lithium-ion battery ENVIRONMENTAL precursor plant, to be supplied with cobalt hydroxide from Metalkol Beyond this, ERG’s products means it is well positioned to play a broader 4 RTR. This would support the vertical integration of ERG’s cobalt role in facilitating the transition to a lower carbon economy. business and enhance our ability to deliver responsible value chain assurance to the EV industry. In particular, Metalkol RTR will help satisfy growing global cobalt demand and put ERG at the centre of the EV revolution. Our CEO is co-chair of the Global Battery Alliance, which is hosted by the World Economic Forum.
2 As of June 2020. 5 Based on internal research by ERG. 3 i.e. electric vehicles and highly electrified plug-in hybrids. 6 Benchmark Mineral Intelligence: benchmarkminerals.com 4 EV-Volumes: ev-volumes.com WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 15 5 RISK MANAGEMENT
Identification, assessment and control
Our risk management framework helps us identify and understand potential threats to our business sustainability – and thus our most material Sustainable Development issues (p. 18).
In 2019, we advanced our risk management practice through a range of new measures, including the application of new methodologies and information systems. For further details, please see p. 89 in the Appendix.
ERG’s principal risks relevant to Sustainable Development are set out in the table below. Please note that there may be additional risks yet unknown to the Group and other risks currently not believed to be material, which could have a significant impact on our business performance and financial results.
PRINCIPAL RISKS AND KEY MITIGATION ACTIONS RELEVANT TO SUSTAINABLE DEVELOPMENT
RISK AREA AND DESCRIPTION SELECTED MITIGATION ACTIONS
Political risks ■ Monitoring and analysis of political and macroeconomic trends in our regions of operation There are varying degrees of political stability in our host countries. We conduct our business in complex environments, which are characterised by ever-changing political dynamics.
Regulatory and legal risks ■ Monitoring of potential legislative and regulatory changes There are a number of factors that could affect our regulatory ■ Representation of our interests through professional context. This includes the introduction of new (or changes to bodies/associations existing) laws and regulations by our host governments. ■ Monitoring of compliance with our licence and permit obligations
Price risks ■ Maintenance of long-term sales contracts that link commodity prices to benchmarks A substantial decline in – or volatility around – commodity prices could materially affect our business, including our financial ■ Hedging of commodity prices results and our liquidity. ■ Development of alternative sales channels
Production and operational risks ■ Risk-based reliability planning and maintenance Challenging operational environments have the potential to ■ Independent technical diagnostics focused on machinery result in business interruption, damage to physical property, ■ Maintenance of a resilient power supply system/long-term unplanned downtime, asset shutdown, uncertainty in geological contracts with reliable suppliers formations and mineralisation, serious safety incidents and ■ Control of input materials (quality and specification) environmental harm. ■ Implementation of business continuity management processes
■ Infill drilling and ore body modelling
■ Maintenance of property damage/business interruption insurance
Supply chain and logistics risks ■ Quality/specification/completeness controls related to the supply of goods and services The Group’s large supply chain exposes it to risks relating to contractual non-compliance by suppliers, including non-delivery; ■ Long-term contracts and category strategies for key goods/ changes in prices for purchased goods; shortage of services (including formula pricing) transportation for goods. ■ Maintenance of own fleet of railway wagons
16 INTRODUCTION
RISK AREA AND DESCRIPTION SELECTED MITIGATION ACTIONS
Capital project execution risks ■ Systematic, transparent and stage-gated project implementation process A failure to deliver major capital projects within planned timeframes, budgets and quality criteria could negatively affect ■ Enhanced project due diligence, independent project reviews long-term profitability and reputation (including our ability to and mine planning process attract future financing). ■ Monitoring/control of project deadlines, budgets, etc.
Financial risks ■ Maintenance of strong relationships with existing lenders, the FOR THE FUTURE
expansion of our credit lines, as well as improvements to our PREPARING OUR BUSINESS There are a number of financial risks the Group is exposed to, debt portfolio, funding opportunities and conditions including liquidity risk, i.e. inability to meet our existing financial obligations; risk of non-compliance with loan covenants; foreign ■ Regular updating of our cash flow plan and control of the Group’s 1 exchange risk; tax risks; credit risk; and interest rate risk. liquidity level ■ Compliance with our covenants
■ Monitoring of the Group’s open FX position
■ Monitoring of tax legislation compliance
■ Credit control implementation
Personnel management risks ■ Maintenance of competitive remuneration packages The fact we operate in remote locations poses risks in terms ■ Training and development to maintain the skills pipeline of our ability to attract personnel with the skills and experience ■ Implementation of an effective incentivisation and retention system we need, as well as the outflow of qualified personnel. PEOPLE THRIVE HELPING OUR Social risks ■ Application of community social investment Our business activities may negatively affect nearby communities. ■ Application of the Participatory Rural Appraisal programme 2 Therefore, there is a risk that this could affect our social licence and Clean Cobalt Framework in the DRC to operate. In addition, we provide social benefits to Group ■ Monitoring of social attitudes within our host regions – employees (many of whom are from our local communities) as and community grievance mechanisms part of our broader human resources management approach.
Health, safety and security risks ■ Implementation of OHSAS 18001-certified and/or aligned occupational health and safety management systems The nature and location of our operations mean they have, in absence of appropriate controls, the potential to affect the ■ Zero Harm approach towards critical health and safety risks physical well-being and health of our employees, contractors ■ Safety management system audits and community members. ■ Integration of safety targets into managers’ KPIs AND WELL-BEINGAND Environmental and climate change risks ■ Implementation of ISO 14001-certified and/or aligned COMMUNITYDEVELOPMENT environmental management systems The nature of our activities and processes mean they have, 3 in the absence of appropriate controls, the potential to harm ■ Implementation of ISO 50001-certified energy management the environment. systems in Kazakhstan Furthermore, our substantial greenhouse gas emissions mean ■ Implementation of renewable energy projects we face direct and indirect risks in relation to future regulatory ■ Carbon footprint analysis attempts to limit organisations’ emissions.
Compliance risks ■ Monitoring of adherence to Group compliance policies The Group has a presence and does business in locations that ■ Extensive training and awareness programme are considered to pose higher levels of legal compliance risks ■ Regular counterparty and supply chain due diligence in terms of bribery and corruption; sanctions; human rights; ■ Application of a Sanctions Compliance Programme personal data protection; anti-money laundering and counter-
■ STEWARDSHIP financing of terrorism. Compliance with the EU General Data Protection Regulation ENVIRONMENTAL (GDPR) and other applicable laws ■ Maintenance of a whistleblower system, including an anonymous 4 and confidential 24-hour, independently operated Group Hotline
IT and information security risks ■ Building of a robust cyber resilience framework In the context of our digitalisation and the enhancement of our ■ Prompt responses to IT failures and cyber security incidents
Information Technology (IT) landscape, we recognise that this ■ Implementation of continuity plans for critical IT processes exposes us to potential risks including in relation to loss of access ■ Monitoring of software licence compliance to IT infrastructure; disruption of business processes; internal and/or external fraud; data leakage and data breaches; non- compliance with information security regulations; and other related risks. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 17 5 OUR MATERIAL ISSUES
Understanding what matters
In 2019, we completed our first structured ■ Desk-based analysis carried out by ■ The potential/actual impact of materiality process to inform our reporting third-party sustainability specialists stakeholders on ERG and the and broader management approach – ■ Further engagement of key executives achievement of its business objectives including the engagement of a range of and managers across the Group external stakeholders. In 2020, we updated If an issue does not appear as material, this assessment using: Our material issues are prioritised using it does not mean it is irrelevant or is not being managed, but only that it is not of ■ ERG’s ongoing risk assessment process a quantitative scoring system based on sufficient significance to be addressed and stakeholder engagement activity the following criteria: in detail in this report. ■ The potential/actual impact of ERG on stakeholders and their interests
ASSESSMENT OUTCOMES
The assessment resulted in a number In addition, it resulted in the reconfiguration In addition, ‘Human rights’ cuts across of relatively minor changes in the of issues subject to the assessment, multiple thematic issues (e.g. employees, prioritisation of ERG’s most material including the following: value chains and local communities). issues, including the following: As such, we have integrated human ■ The inclusion of ‘Financial resilience’ rights into these areas of analysis where ■ Increased prioritisation of ‘Energy as a distinct issue. This reflects the need relevant, rather than treating it as a and climate’ for ERG, reflecting the for ERG to actively manage its financial distinct, separate issue. An overview of long-term impact on ERG as investors position to ensure it can successfully our broader approach to human rights and customers factor climate change navigate ongoing market uncertainty can be found on p. 80. into their decision-making – plus ■ The inclusion of ‘Portfolio development’ commercial opportunities with respect as a distinct issue. Whilst the issue has Similarly, as ‘Governance’ and ‘Risk to those ERG metals that will support been addressed in previous reporting, management’ are integral to all our the transition to a low-carbon economy this is in recognition of the key role it is business processes, and thus to all ■ Increased prioritisation of ‘Community likely to play in terms of longer-term of the issues in the assessment, they social investment’ for ERG, reflecting business sustainability were not treated as standalone issues. the company’s key socio-economic role ■ The inclusion of ‘Responsible supply in Kazakhstan, and the integration of chains’ as a distinct issue. This reflects For further information on/analysis social investment requirements into broad stakeholder interest in companies’ of our material issues, please see p. 94 the DRC’s new Mining Code ‘indirect’ impacts (including those relating of the Appendix. ■ Increased prioritisation of ‘Health and to human rights), as well as a more safety’ for ERG, due to the worsening specific focus on responsible mineral of safety performance in 2019 sourcing and value chain assurance
■ Increased prioritisation of ‘Labour relations’ for stakeholders, reflecting high levels of employee/community dependency and the importance of enhanced working conditions
■ Increased prioritisation of ‘Managing impacts on air and water’ for ERG, reflecting the anticipated impact of a new Environmental Code in Kazakhstan and rising social pressure in the country
18 INTRODUCTION
LIST OF MATERIAL ISSUES
ISSUES ASSESSED MATERIAL ISSUES DESCRIPTION
Preparing our Organisational ■ Enhanced organisational performance through improved business for transformation structures, processes and culture
the future Portfolio development ■ Acquisition, development and/or maintenance of production, processing and other assets that collectively support ERG’s ■ Organisational transformation business sustainability
■ ■ FOR THE FUTURE Portfolio development Technology and efficiency Enhanced operational performance through improved practices PREPARING OUR BUSINESS ■ Technology and efficiency and processes 1 ■ Financial resilience Financial resilience ■ The maintenance of sufficient capital/access to capital, financial flexibility and acceptable debt levels
Helping our Health and safety ■ Delivery of a safe and healthy workplace – and the promotion people thrive of safe working practices
■ ■ Health and safety Skills, capabilities and Development of skill and capability levels within our workforce development ■ Skills, capabilities and
development Labour relations ■ Relations with our workforce and their legitimate representatives ■ Labour relations on salient workplace and non-workplace (e.g. quality of life, family
■ Diversity and inclusion welfare, etc.) issues PEOPLE THRIVE HELPING OUR Community Community impacts ■ ERG’s positive and negative impacts on local communities development (excluding dedicated social investment, which is dealt 2 with separately) and well-being Community social ■ Voluntary and/or mandatory spending aimed at enhancing ■ Community impacts investment socio-economic conditions in our countries of operation 1 ■ Community social investment Artisanal and small-scale ■ The presence of – and interaction with – artisanal and small-scale ■ Artisanal and mining mining (ASM) communities within or near ERG’s concession areas small-scale mining in Africa
■ Indigenous people
Environmental Managing impacts on air ■ Responsible management of emissions to the environment 2 and water
stewardship WELL-BEINGAND COMMUNITYDEVELOPMENT
■ ■ Managing impacts on Energy and climate change The minimisation of energy consumption and greenhouse gas air and water emissions, plus the management of climate change impacts 3
■ Energy and climate change Waste management ■ Responsible approaches to waste generation, management ■ Waste management and disposal (e.g. overburden, tailings, slag, general industrial
■ Responsible closure waste, etc.) and transfer
■ Water availability
■ Biodiversity
Our relationship Value generation and ■ The generation of economic value by ERG – and the distribution with broader society distribution of such value to its stakeholders
■ ■ Compliance Maintenance of Group/employee compliance with regulatory STEWARDSHIP
Value generation and ENVIRONMENTAL distribution requirements and ERG’s compliance commitments
■ Compliance ■ 4 Responsible supply chains The avoidance and or/mitigation of indirect supply chain ■ Responsible supply chains impacts – and the delivery of assurance to downstream value
■ Government relations chain actors regarding the responsible sourcing of minerals and policy Government relations ■ Relations between ERG and host – plus other third-party – and policy governments, including positive and negative mutual impacts
1 Please note that community-focused spending linke d to our employees is addressed under ‘Labour relatio ns’. 2 Excluding carbon emissions, which are addressed s eparately under ‘Energy and climate change’. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 19 5 PREPARING OUR BUSINESS FOR THE FUTURE
SECTION 1: PREPARING OUR BUSINESS FOR THE FUTURE
2019 HIGHLIGHTS
Rollout of the Production ramp-up ERG Way Production at Metalkol RTR and US$68M System in Kazakhstan initiation of Phase 2 saved through our of development Operational Efficiency programmes in Kazakhstan
20 MATERIAL ISSUES INCLUDE
ORGANISATIONAL PORTFOLIO TECHNOLOGY
TRANSFORMATION DEVELOPMENT AND EFFICIENCY INTRODUCTION
Read more on p. 22 Read more on p. 24 Read more on p. 27
Under our 2025 Strategy,1 we have prioritised financial stability. Amongst other things, this means maintaining acceptable leverage and sufficient liquidity. Two additional priorities identified in our 2025 Strategy are of particular relevance:
■ Efficiency in all that we do through unit cost reductions, organisational effectiveness and a culture of continuous improvement
■ Balanced portfolio growth through the development of our existing assets, improved asset returns, and the development of new opportunities FOR THE THE FUTURE FUTURE PREPARING OUR BUSINESS 1 1 Please note that our 2025 Strategy is currently under review as we address the immediate impact of the 2020 COVID-19 outbreak and the longer-term implications for the Group.
THRIVE PEOPLE THRIVE HELPING OUR PEOPLE 2 AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 STEWARDSHIP STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4ENVIRONMENTAL
WITH BROADER SOCIETYWITH BROADER BROADER SOCIETYBROADER OUR RELATIONSHIP OUR RELATIONSHIP WITH Eurasian Resources Group | Sustainable Development Report 2019 21 5 SECTION 1: PREPARING OUR BUSINESS FOR THE FUTURE
ORGANISATIONAL TRANSFORMATION
Efficiency in all that we do: Under our 2025 Strategy, we have prioritised the pursuit of efficiency at Group and asset level. This includes enhanced organisational effectiveness and the development of a culture of continuous improvement – supported by relevant management tools and processes.
Our organisational transformation ■ Improve site-level management efficiency Knowledge gained through this training process is aimed at applying incremental through the application of common will cascade into all parts of the relevant improvements to our business structures principles and effective employee/ operations, as participants apply it in and processes on a continuous basis – team interaction practice. To help this process, the project and through the application of international ■ Encourage employees to engage team are offering hands-on assistance and standard systems, practices and proactively in production improvement will support the formal integration of the organisational structures. In 2019, this processes ERG Way Production System into each site’s included our ongoing embedding of our business processes. ■ Support systemic change management in 2025 Strategy (p. 8), which is currently the production process, including through under review in light of the 2020 COVID-19 Further applications are planned to ensure employee empowerment and cross- outbreak. full coverage of both Kazchrome’s and functional collaboration SSGPO’s operations. We plan to roll the system out to all parts of our business In 2019, we initiated pilot applications Key issues and initiatives in Kazakhstan, supported by dedicated of the ERG Way Production System at training for supervisors and managers Kazchrome’s Aksu Ferroalloys Plant The ERG Way Production System at every level. in Kazakhstan and Aktobe Ferroalloys Plant, as well as at SSGPO’s Kacharsky mine. This involved: The ERG Way Production System is one Driving cultural change through of the key tools we are using to promote ■ Improvements to on-site working the ERG Academy in Kazakhstan a more effective working culture in conditions (including facilities) to support Kazakhstan (where most of our assets employee effectiveness and morale The ERG Academy plays a key role in supporting cultural transformation within and people are located). This supports ■ The promotion of effective communication our business in Kazakhstan – and the efficiency across the product lifecycle, and cooperation via a three-pronged including through the application of lean broader implementation of our 2025 training process involving the most senior Strategy. Key activities include internal management principles. In particular, to the most junior management levels. the ERG Way Production System aims to: awareness raising, the evolution and This was organised around: communication of ERG’s Values, input ■ Promote continuous improvement in – People (i.e. organisational structure, into the development of functional production efficiency, with a focus on safety, etc.) sub-strategies, the holding of large-scale equipment productivity and sustainable – Processes (i.e. goals, bottlenecks, etc.) employee events in Kazakhstan and the cost reduction delivery of training to support the – Tools (i.e. lean management) implementation of the ERG Way Production System.
ERG Business System in Kazakhstan We continued to enhance the efficiency of our business processes in Kazakhstan and achieve continuous improvement through the implementation of our ERG Business System (first launched in 2018). The system is focused on:
■ Improving engagement and empowering managers at all levels to improve organisational efficiency
■ Simplifying and enhancing our management processes, including through the development of universal standards and processes, enhanced cross-functional collaboration, process automation and reduced bureaucracy
22 INTRODUCTION
In 2019, application of the ERG Business Furthermore, we continued to apply our ERGA SHIFT>> is made up of three System resulted in: Maintenance and Repair Operations (MRO) workstreams: transformation programme. This is aimed at ■ Enhancements to our systems, which ■ The building of leadership capabilities to optimising our service approach, improving will improve organisational transparency drive change and business performance equipment reliability and enhancing the and functional accountability efficiency of existing processes. ■ The establishment of a stronger working ■ Process optimisation, with a particular culture, including through better ways of focus on procurement and repair and working, improved communication and maintenance processes MRO transformation programme an improved physical environment in Kazakhstan ■ The pursuit of continuous improvement FOR THE FUTURE Organisational design and resource In 2019, we implemented over 170 projects with respect to financial performance, PREPARING OUR BUSINESS planning in Kazakhstan to reduce repair time across our business cultural alignment, safety and units in Kazakhstan. This increased the sustainability 1 In Kazakhstan we continued to build available operating time of relevant effective organisational structures to equipment by around 8,000 hours, saving In future, we plan to expand the ERGA improve the transparency of our processes, more than US$19 million in otherwise lost and to help meet the current and future SHIFT>> programme to other operations income. Examples of projects, many of in Africa. needs of our business. This included the which integrated lean manufacturing following measures: principles, included the:
■ Planning for the future The remodelling of our organisational ■ Overhaul of Furnace No. 11 of Smelting design to create flatter and more efficient workshop No. 1 at Kazchrome’s Aksu In 2020 we plan to: management structures Ferroalloys Plant, with a 30% reduction ■ Pilot the integration of an impact ■ The ongoing standardisation of role in repair time assessment process into our portfolio profiles and grading structures to provide ■ Repair of the exhaust on EEC’s Boiler management system, with the ultimate aim PEOPLE THRIVE a more transparent framework for No. 4, with a 45% reduction in repair time HELPING OUR performance benchmarking of ensuring that each investment project ■ Repair of Power Unit No. 3 at EEC, with is assessed for its sustainability impacts ■ 2 The creation of a single service centre a 50% reduction in repair time ■ Enhance our sustainable development to support the standardisation of human resources service provision across our management practices, including operations (e.g. recruitment, payroll and Driving organisational effectiveness through the establishment of robust other administration processes) in Africa – ERGA SHIFT>> programme methodologies to evaluate social projects In 2019, we initiated a programme in our and manage our sustainability metrics ■ Functional transformation Johannesburg office focused on improving Continue to embed and develop the ERG Business System and ERG Way Production programmes in Kazakhstan organisational effectiveness and strengthening our internal culture. The System in Kazakhstan In addition to these initiatives, we initiative (‘ERGA SHIFT>>’) supports ERG ■ Optimise our management of human implemented a number of functional Africa’s journey towards business resources, including through the transformation programmes to support sustainability and aligns it more closely elimination of inefficient processes our Group objectives. These included: WELL-BEINGAND with our Group 2025 Strategy. COMMUNITYDEVELOPMENT ■ Continue to standardise and centralise ■ The establishment of a dedicated ERG our functional processes through the Capital Projects company to enhance ongoing rollout of single service centres 3 project delivery ■ The establishment of ERG Recycling to We will also seek to better understand the grow our waste reprocessing, recycling implications of the COVID-19 outbreak for and marketing activities (p. 68) how we organise and manage our business. ■ Multiple measures to enhance our management of risk,1 including: – The enhancement of our business continuity, capital project risk and group internal control methodologies – Implementation of our risk management STEWARDSHIP
information system ENVIRONMENTAL – Implementation of our Hazard Identification (HAZID) project 4 (a live database of hazards, risks and mitigation actions, which assigns relevant responsibilities and resources for the management of risks)
1 See Appendix (p. 89) for further details. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 23 5 SECTION 1: PREPARING OUR BUSINESS FOR THE FUTURE
PORTFOLIO DEVELOPMENT
Balanced portfolio growth: Under our 2025 Strategy, we have prioritised steady portfolio growth and development. This includes the development of our assets in Kazakhstan, as well as increased returns on our international assets. Furthermore, we are focused on optimising our portfolio through new natural resource opportunities and/or divestment, whilst further developing our energy business.
Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 8.2 Achieve higher levels of economic productivity through diversification, technological upgrading and innovation
9.2 Promote inclusive and sustainable industrialisation and, by 2030, significantly raise industry’s share of employment and gross domestic product 9.4 By 2030, upgrade infrastructure and retrofit industries to make them sustainable
In 2019 we took a number of actions to support the balanced growth of our portfolio, including:
NEW ERG CAPITAL EFFICIENT MINE PROJECT ENHANCEMENT OF OUR PROJECTS COMPANY We continued to ramp up our Group-level project due EXPLORATION PORTFOLIO This company consolidates diligence and mine planning team, overseen by our IN KAZAKHSTAN and enhances our project Chief Technical Officer. The team (and its third-party We enhanced our portfolio of management capabilities in experts) are updating our geological models and exploration projects, including Kazakhstan and will, in enhancing our mining plans. through the addition of new combination with the licences. Our portfolio now recruitment of highly qualified In 2019, work included extensive exploration and includes more than 30 personnel and process a transition towards international-standard 3D targets at different stages development, support future geomodelling at our Kacharsky (SSGPO) and 10th of development, focusing on project delivery. Anniversary (Kazchrome) mines. A less extensive a range of minerals, such as programme is taking place at Aluminium of Kazakhstan chromite, bauxite, iron ore, We also continued to and Shubarkol Komir. manganese and others. implement our Capital Expenditure Governance We also completed an extensive exploration This is with the aim of Policy through the programme at Metalkol RTR, supporting a JORC 2012 replenishing our Mineral development of an associated compliant Mineral Resources and Ore Reserves Resource and Ore management system. estimate. Reserve base.
At Frontier, we optimised the life of mine schedule, aimed at minimising waste stripping and improving overall project economics.
Furthermore, by reprocessing and In 2019, we continued to ramp up Cobalt and copper responsibly storing these tailings production at Metalkol RTR, achieving in a safe, modern facility, we will: 100% of the Phase 1 design tailings feed Ramp-up and expansion rate. However, volumes were affected at Metalkol RTR (DRC) ■ Support the development of affordable by lower than expected grades from the battery technology and, by extension, Metalkol RTR reprocesses historical Kingamyambo tailings deposit, initial water the electric vehicle revolution (p. 15) cobalt-copper tailings near Kolwezi. supply challenges and the illegal invasion These accumulated over decades of ■ Deliver responsible value chain assurance of artisanal miners (p. 56). We are mining at the site by previous operators, through our Clean Cobalt Framework implementing a number of initiatives to including at the existing Kingamyambo (p. 84) help Metalkol RTR achieve its designed tailings deposit and in the Musonoi River. ■ Reduce local pollution risks by reclaiming capacity, including the overhaul of its belt Once it reaches full production, this poorly stored and managed legacy tailings, filters and the upgrading of its production strategically important operation will and relocating them to a modern, infrastructure. make us a major player in the global responsibly managed facility (p. 68) cobalt market.
24 INTRODUCTION
Construction also started on Phase 2 of the Work included the continued development operation, with plant fabrication completed Alumina and aluminium of a pre-feasibility study, including the in Q2 2020. Phase 2 will add 6ktpa of cobalt gathering of additional geo-technical Adding value through the and 28ktpa of copper once it achieves full data. The study is focused on a potential KAS-2 project (Kazakhstan) production in Q3 2020. transition to higher productivity mining We continued to advance our major KAS-2 methods (including mechanised block-cave We are now exploring potential upgrade project at Kazakhstan Aluminium mining, amongst others). Once the study opportunities for the construction of a Smelter. If it proceeds, the project will is complete, we aim to select the most lithium-ion battery precursor plant, to be more than double our overall aluminium effective development method in 2021 exclusively supplied with cobalt hydroxide smelting capacity. This will help us meet and move into the design phase. FOR THE FUTURE from Metalkol RTR. an anticipated increase in demand, whilst PREPARING OUR BUSINESS also laying the groundwork for the potential Furnace reconstruction at production of aluminium alloys. This is in 1 Expansion of the Frontier mine Kazchrome’s Aksu Ferroalloys Plant a context in which we have successfully through the Cut 3 project (DRC) diversified our alumina customer base, (Kazakhstan) In 2019, we continued to develop our with China and Tajikistan now accounting In August 2019, we commissioned the Aksu Frontier copper mine through the for a significant proportion of our sales. Ferroalloys Plant’s smelter furnace No. 64 expansion of its open pit – referred to following a major reconstruction process. as Cut 3. The majority of waste stripping We substantially completed two parallel This marks the completion of Phase 1 of was undertaken in 2019 to support the bankable feasibility studies for this the broader Workshop No. 6 renovation production of more than 350kt of copper US$1.0-1.5 billion project, resulting in project, which aims to increase production contained in concentrate over the life of the the selection of a development approach. at the workshop by over 20% by 2026. project. In combination with the processing We are now focused on arranging financing of ore stockpiles, Cut 3 is expected to and selecting a project contractor. The rebuild included the gastight sealing extend the life of mine to 2024. of the furnace, which will allow us to harvest PEOPLE THRIVE HELPING OUR off-gas from our ferroalloy production We also conducted an additional Ferroalloys process and use it to help heat charge 2 geotechnical drilling campaign and a slope materials during feeding. This is expected stability assessment. These will support Development of Kazchrome’s to improve furnace productivity, and to th a further pit expansion (‘Cut 4’, which has 10 Anniversary mine (Kazakhstan) reduce energy consumption, costs and the potential to extend the life of mine by In 2019, we advanced this project, which is (in conjunction with the installation of approximately 10 years) and will inform a aimed at increasing production at this two advanced filters) emissions to air. pre-feasibility study that is to be completed world-class chrome ore body. This will help in 2020. address projected production reductions The reconstruction of the other three at other mines supplying our ferroalloys furnaces at Workshop No. 6 is planned plants – and help increase Kazchrome’s to take place by 2026. Upon completion overall production volumes. (and in combination with a range of operational efficiency measures), the workshop is expected to produce 480ktpa AND WELL-BEINGAND of ferrochrome and reduce electricity COMMUNITYDEVELOPMENT consumption by 10%. 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 25 5 SECTION 1: PREPARING OUR BUSINESS FOR THE FUTURE
PORTFOLIO DEVELOPMENT CONTINUED
Key activities in 2019 included: Other projects New special coke plant at Shubarkol Komir (Kazakhstan) ■ Preparation for the 2020 FIOL bidding Other growth and renewal projects process (delayed from 2019). If our bid We continued to pursue the potential that support the sustainability of our is successful, it will help underpin the development of a new 400ktpa special business include: integrated nature of the overall project coke plant at Shubarkol Komir, as well as the reconstruction of our existing 210ktpa Advancement of the BAMIN ■ Ongoing engagement with potential co-investors and joint venture partners special coke plant. This would help us project (Brazil) meet internal demand for cost-effective BAMIN, a wholly-owned ERG subsidiary, is reductants used during the smelting developing what will be an 18mtpa low-cost, Upgrading of SSGPO’s processing process, and to support potential high-margin greenfield iron ore project in facilities (Kazakhstan) external sales. Brazil, consisting of: Our existing iron ore processing facility Plans are in place to complete the project at Rudny, which has a production capacity ■ The fully owned and licensed Pedra feasibility study in 2020 and to start of 17 million tonnes of concentrate and de Ferro iron ore mine construction in 2021. 8 million tonnes of pellets a year, requires ■ The Porto Sul deepwater port, significant investment to continue over which BAMIN has the relevant Major upgrade of EEC’s Aksu Power operations. In this context, we carried development licences Plant (Kazakhstan) out pre-feasibility studies on two strategic In 2019, we commissioned Power Unit ■ The first stage of the multi-user West-East options to support future production No. 5, following the replacement of its Integration Railway (FIOL), which is volumes, whilst also reducing future boiler, turbine and generator equipment. currently owned and being constructed production costs and improving This will increase its capacity from 300MW by the Federal Government – but which product quality: is due to be auctioned in 2020 to 325MW, helping address an anticipated ■ The construction of a modern processing internal power supply shortfall. In addition, facility at our Kacharsky mine As configured, this integrated project the replacement of the filters at the power enjoys high-grade, low-impurity ore, ■ The modernisation (and extension of life) unit will reduce its emissions to air (p. 61). giving it an important advantage in terms of the existing Rudny processing facility We also carried out a feasibility study for of competing against Australian ore exports the reconstruction of Power Unit No. 7 and to China. This is particularly the case given These studies were completed in the first approved a contracting strategy. In 2020, the Chinese Government’s prioritisation half of 2020. Once approved, the selected we plan to move to a design phase, with of higher-quality iron ore imports to option will be moved to the design phase. commissioning planned for 2025. help reduce the domestic iron sector’s greenhouse gas emissions and impacts on air quality.
26 INTRODUCTION
TECHNOLOGY AND EFFICIENCY
Efficiency in all that we do: Under our 2025 Strategy, we have prioritised the pursuit of efficiency at Group and asset level. This includes reducing our unit costs by eliminating bottlenecks and improving productivity. FOR THE FUTURE PREPARING OUR BUSINESS 1 Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 8.2 Achieve higher levels of economic productivity through diversification, technological upgrading and innovation
9.5 Enhance scientific research, upgrade the technological capabilities of industrial sectors in all countries, in particular developing countries PEOPLE THRIVE HELPING OUR
We seek to achieve efficiency in all that efforts, p. 22) of lean management Key issues and initiatives 2 we do, including through: principles and collaboration with employees at all levels to improve ‘how things are done’. ■ The optimisation of our mineral deposits, Operational Efficiency initiatives Under this system, the best improvement infrastructure and equipment In 2019, our Operational Efficiency team opportunities identified by employees are ■ The pursuit of innovative technical solutions in Kazakhstan continued to take a systems- selected every month, quarter and year – ■ The renewal of legacy capital assets based approach to achieving ongoing, with prizes offered in return. (see p. 25–26) incremental improvements in efficiency and productivity. This includes the application (in the context of our broader transformation AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3
TOP 5 ONGOING OPERATIONAL EFFICIENCY INITIATIVES IN KAZAKHSTAN
Anticipated annual Business unit economic impact (US$M) Examples of initiatives
KAS 1.9 ■ Increase in electric current during electrolysis The achievement and maintenance of a higher, 340kA current resulted in increase production volumes of primary aluminium.
SSGPO 1.5 ■ Reduction of overburden transportation distances This included the establishment of a new transformation scheme that reduced the unit cost of transporting overburden.
■ STEWARDSHIP Kazchrome 1.4 Improved slag composition ENVIRONMENTAL This used peripheral furnace bunkers to improve the composition of the operation’s slag, resulting in both improved furnace productivity 4 and ferrochrome quality.
Kazchrome 1.2 ■ Productivity improvement at Workshop No. 6 This was achieved through a reduced maintenance schedule, which reflected the stabilisation of the high ferrochrome production process and the identification/elimination of furnace components that require frequent repairs.
Shubarkol Komir 0.7 ■ Reduction in coke furnace downtime A reconfiguration of maintenance shifts – from an eight-hour shift to two four-hour shifts – enhanced team productivity. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 27 5 SECTION 1: PREPARING OUR BUSINESS FOR THE FUTURE
TECHNOLOGY AND EFFICIENCY CONTINUED
Such opportunities are communicated In 2019, we also implemented new Operational innovation by a variety of means, including through: efficiency initiatives, including: Our dedicated Research & Development ■ Ideas Factory: The Ideas Factory concept ■ New ferroalloy casting process: This Centre in Kazakhstan helps drive is used to gather employee-identified project uses innovative equipment to technological innovation to support our improvement ideas at our operations in remove the need for crushing (as well as operations. Examples of ongoing projects Kazakhstan. In 2019, it was used to collect the reprocessing of resulting fines) from in 2019 are listed below. In addition, the over 8,000 employee ideas, of which the ferroalloy casting process at Aksu Centre is working on a range of projects 4,462 were accepted for implementation Ferroalloys Plant (Kazchrome). By doing to, amongst other things, reduce the ash – with anticipated savings of US$14.9 so, it reduces costs, dust emissions and content of our coal at Shubarkol Komir million (2018: Over 3,000 employee ideas energy consumption, whilst improving and EEC, and upgrade coal from Shubarkol submitted and 1,600 accepted). This working conditions Komir so it can be used in metallurgical processes. increase in numbers suggests that the ■ Vibro-diagnostics: This project saw the application of the ERG Way Production installation of 1,185 vibration sensors System (p. 22) is positively impacting to 89 units of static equipment at Digital innovation employee engagement in this regard Kazchrome, Aluminium of Kazakhstan In 2019, we finalised our Group-level Digital ■ ERG Innovators’ Forum: During our and KAS to help us pre-empt equipment Strategy, which will guide us as we use fourth Innovators’ Forum in Kazakhstan, failures and avoid unplanned downtime. digital technology to improve what we do instead of focusing on the generation of Collectively, this resulted in US$2.1 million and how we do it – and move ERG further new, innovative initiatives to support our of cost savings towards Industry 4.0. This will be supported business, participants focused on the by well-aligned digital sub-strategies at a practicalities of implementing innovation We also expanded our Smart Mine initiative functional level, as well as our parallel, in practice – including through the to Shubarkol Komir, following its application ongoing efforts to further enhance our identification and addressing of at SSGPO’s Kacharsky Mine (where it cyber security arrangements. common ‘implementation barriers’ improved mining and transportation productivity). The initiative uses specialist The new Digital Strategy places particular In 2019, this approach helped dispatching systems and software to focus on the development of key employee deliver cost savings of US$68 million enhance the management of dump capabilities (including with respect to (2018: US$91.7 million) in Kazakhstan. trucks and other moving equipment. robotisation and big data), ensuring However, our approach to operational cost-effective digital investment decisions efficiency is ultimately about cultural and the building of adaptive/modular change that will, over time, affect everything digital architectures to support our broader that we do – thereby generating long-term business and production processes. benefits on an ongoing basis.
EXAMPLES OF OPERATIONAL INNOVATION PROJECTS Donskoy GOK Slimes 2 SSGPO Liquid Natural Gas EEC greenhouse gas (GHG) Aluminium of Kazakhstan project (LNG) fuel conversion project capture project Syngas generation project The development and testing Assessment of the potential Review of methods to capture Assessment of the potential of flotation technology to conversion of SSGPO’s diesel GHGs at our EEC power use of coal-derived synthetic significantly improve the truck fleet to an LNG system – generation operations. gas (‘Syngas’) to replace fuel enrichment of chrome with the aim of reducing both This was found to be oil in our calcination furnaces. oxide-bearing tailings. costs and emissions to air. technologically possible This will help reduce costs but currently economically and emissions to air. This will supplement our This project is now ready for unviable on a full-scale basis. chrome concentrate output, piloting, with works expected Industrial testing has now whilst helping reduce the site’s to start in 2021. Nonetheless, we are exploring confirmed the viability of tailings footprint. alternative options, including this approach. We are now the planned piloting of a exploring financing options smaller-scale gas treatment for the project. solution at one of our boiler facilities at our Vostochny coal pit (p. 63).
28 INTRODUCTION
Our growing capability in this area – Exploring how blockchain technology Planning for the future including our application of artificial can support value chain assurance intelligence technology to our iron ore In 2019, we continued to explore how In 2020, we plan to: processing operations – helped us become blockchain technology could enhance the ■ Continue to apply our operational a finalist in the 2019 OEE Awards 1 for the traceability of the cobalt we produce at efficiency programmes and initiatives CIS ‘Artificial Intelligence in Production’ Metalkol RTR in the DRC. This work has ■ Continue rolling out our Smart Mine category. the potential to strengthen the assurance initiative to Aluminium of Kazakhstan, provided through our Clean Cobalt SSGPO’s Sarbay and Kurzhunkul mines More broadly, we are continuing to explore Framework by leveraging the unique data how we can leverage new digital technology as well as EEC’s Vostochny coal pit protection, security and resilience FOR THE FUTURE PREPARING OUR BUSINESS to support independent, sustainable properties of this decentralised technology. ■ Integrate the Digital Strategy into our development in our local communities – We also worked with a consortia of large functional strategies to help embed 1 including through the facilitation of local cobalt players to investigate whether a the Industry 4.0 concept throughout entrepreneurship (p. 52). blockchain-based solution could help the business, whilst building the support broader traceability from the mine digital capabilities of our teams site to end users – including with respect ■ Continue to identify and fund start-ups to electric vehicle batteries (p. 66). that could benefit our business (p. 52) – and pursue the development of artificial
intelligence technology PEOPLE THRIVE HELPING OUR 2
1 https://oee-conf.ru/ AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 29 5 HELPING OUR PEOPLE THRIVE
SECTION 2: HELPING OUR PEOPLE THRIVE
2019 HIGHLIGHTS
Completion of a Investment of Launch of the Atlas comprehensive approximately of New Professions safety management US$20.5 million to in Kazakhstan system audit at all modernise employee our operations in facilities at our sites Kazakhstan in Kazakhstan
30 MATERIAL ISSUES INCLUDE
HEALTH AND SAFETY SKILLS, CAPABILITIES LABOUR RELATIONS
AND DEVELOPMENT INTRODUCTION
Read more on p. 32 Read more on p. 37 Read more on p. 41
Under our 2025 Strategy,1 we have prioritised the development and maintenance of a happy and professional team. This includes the development of our employees’ competencies and the maintenance of their safety and well-being.
ERG is fully committed to achieving Zero Harm and to developing our employees’ skills and competencies. Furthermore, our approach to labour relations is driven by the significant interconnectivity between our workforce and local communities in Kazakhstan. FOR THE FUTURE PREPARING OUR BUSINESS 1 1 Please note that our 2025 Strategy is currently under review as we address the immediate impact of the 2020 COVID-19 outbreak and the longer-term implications for the Group.
PEOPLE THRIVE HELPING OUR 2 AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3
Workforce profile STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL
■ At the end of 2019, we directly employed NUMBER OF EMPLOYEES BY REGION 67,272 people 2 – of which over 90% are located 4 Region 2019 2018 in Kazakhstan Kazakhstan 63,194 62,422 ■ 24% of our workforce is female Africa 3,709 6,446 ■ Over 90% of the Group’s employees are trade Brazil 98 99
union members Corporate offices3, 4 271 286
2 i.e. employees holding a written contract of employment with ERG as at 31 December 2019. This figure does not include contractors. 3 Includes offices in Europe, Russia, UAE and China. 4 Headcount of corporate offices in Kazakhstan, Africa and Brazil are included within each relevant region. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 31 5 SECTION 2: HELPING OUR PEOPLE THRIVE
HEALTH AND SAFETY
A happy and professional team: Under our 2025 Strategy, we have prioritised the maintenance of our employees’ safety and well-being. This includes the delivery of safe working conditions and the improvement of employee wellness and health.
Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 3.8 Achieve universal health coverage
8.8 Protect labour rights and promote safe and secure working environments for all workers
COVID-19
For information on how we have managed the immediate impact of the COVID-19 outbreak in 2020, including with respect to the health and safety of our workforce – please see p. 12.
The audit results will inform the following Key issues and initiatives WE AIM TO ACHIEVE activities:
ERG experienced a highly challenging year ■ The implementation of an integrated, zero harm in respect of our safety performance. risk-based occupational and process We are deeply saddened that this included safety management system, aligned an increase in fatalities at our operations with the ISO 45001 management (p. 35). We have set out below the measures system standard we are taking to improve our performance ■ The rollout of the HAZID risk assessment and minimise the risk of such fatalities methodology across our operations in reoccurring. Kazakhstan We are fully committed to delivering a ■ The development and implementation healthy, safe, productive and stable working Employee safety in Kazakhstan of an enhanced fatal risk control environment for all our employees and Enhanced safety management system management programme contractors. This includes our ongoing In 2019, we completed a comprehensive efforts to achieve Zero Harm. ■ The development and rollout of a safety audit of our safety management system training programme to support the at all our operations in Kazakhstan. Our operations in Kazakhstan are certified development of enhanced employee This included: to the OHSAS 18001 occupational health competencies ■ and safety management systems standard. Gap analysis: An in-depth diagnostic of ■ The implementation of enhanced our safety management system across contractor and transport safety In Africa, our Safety, Health and all our operations and our corporate management systems Sustainability (SHS) management office to assess their maturity levels ■ The rollout of safety culture and and to identify gaps in safety processes system is informed by OHSAS 18001. leadership development programmes and controls
For further information on how we address ■ Risk assessment: The piloting of an health and safety issues in our supply chain, enhanced Hazard Identification (HAZID) please see p. 82. assessment process at our Aktobe Ferroalloys Plant (Kazchrome) and Aksu Power Plant (EEC). In 2019, we trained 56 employees in the process and developed an assessment plan for 2020
32 INTRODUCTION
Other key safety initiatives Workforce engagement, motivation Employee safety in Brazil During the year, we also implemented and awareness In Brazil, we implemented measures to several other measures to help improve Embedding a safety first culture is a key support the safe development of the safety, including the mitigation of fatality component of our safety management forthcoming construction phase at our risks. This included: strategy. In 2019, we continued to evolve BAMIN iron ore project. This included:
■ and strengthen our approach. This included: Working at heights: ■ The strengthening of contractor safety – The development and rollout of a ■ Operations-level Key Performance standards, including enhanced safety standard for working at heights Indicators (KPIs): The integration of a procedures for reporting contractor- ‘zero fatalities’ target into the KPIs for – The application of independent safety related safety incidents (in preparation FOR THE FUTURE
operations-level senior managers, PREPARING OUR BUSINESS audits for all elevated work sites for a significant increase in our contractor extending the integration of lost time numbers during the construction phase) – The establishment of dedicated training injury frequency rate (LTIFR) performance ■ The implementation of enhanced safety 1 facilities at a further five operations,1 that was completed in 2018 inductions for all new employees and as well as the provision of role-specific ■ Communication and training: The safety training contractors, as well as role-specific safety ongoing integration of safety dialogues training relating to higher risk activities ■ Transport safety: The development of a into our large-scale employee events, ■ The running of weekly safety dialogues transport safety procedure, as well as the such as our League of Professionals between management and operational rollout of a satellite control, analytics and programme (p. 38) – as well as the staff to support effective communication transport management system to reduce conducting of safety training for and safety incident reporting the frequency and severity of traffic production personnel across various incidents. This included the installation levels as part of the ERG Way Production of automated safety tracking systems System (p. 22) Contractor management on 277 vehicles ■ Data management and reporting: The Regrettably, a contractor fatality occurred ■ PEOPLE THRIVE Personal protective equipment (PPE): ongoing improvement and centralisation at our operations in Kazakhstan (p. 35). This HELPING OUR The rollout of a new programme to of our data management and reporting tragic incident demonstrates the need for provide enhanced PPE across our systems – including the rollout of an constant vigilance and action on contractor 2 operations until 2021. This included enhanced database to monitor building safety. In this context, we place particular the provision of enhanced PPE for higher and construction safety, as well as the emphasis on improving contractor safety at risk roles, as well as the development and automation of reporting on hazardous/ our operations in Kazakhstan. This includes rollout of a corporate standard for PPE unsafe conditions our ongoing efforts to understand potential gaps between contractor and employee ■ Control of fatal risks: The strengthening safety standards and/or behaviours. of requirements related to higher risk Employee safety in Africa works, including the integration of In Africa, we continued to enhance our information on key risks and mitigation Key steps in Kazakhstan included: integrated SHS management system. actions into our permit to work process ■ The application This included the implementation of: Contractual measures: ■ Underground explosives work: The of more stringent contractual terms ■ installation of underground positioning Internal safety audits at our Metalkol RTR, (e.g. the integration of a penalties system AND WELL-BEINGAND systems for personnel and equipment Frontier, Chambishi Metals, Comide and for cases of non-compliance with ERG’s COMMUNITYDEVELOPMENT at SSGPO’s Sokolovskaya mine Boss Mining operations to assess the safety standards, as well as the right to strength of our fatal risk protocols and conduct spot safety audits) 3 ■ Enhanced monitoring: The ongoing related procedures (e.g. relating to ■ Work schedules: The ongoing improvement of our video surveillance electrical safety, traffic management management of contractor work practices, including the provision of 109 and working at heights) personal video surveillance systems for schedules to help ensure that dedicated ■ employees in higher risk roles at our Our Visible Felt Leadership safety ERG safety specialists are on site to Aktobe Ferroalloys Plant programme at Metalkol RTR and Frontier, oversee higher risk activities including the undertaking of regular site ■ Supervision: The hiring of additional visits by senior operations-level managers safety managers to provide 24/7 monitoring of contractor activities during In addition, at Metalkol RTR we also the renovation of the power units at EEC implemented: ■ Communication: The ongoing hosting of ■ An internal audit of our safety contractor safety forums – as well as STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL management system larger-scale annual forums – to help ■ An integrated Isometrix software reinforce contractor safety standards 4 programme. This supports the ‘plan-do- check-act’ cycle by tracking SHS audits In addition, we implemented a new traffic and improving central oversight and management programme at Metalkol RTR data analytics. Isometrix is now fully in the DRC to enhance safety controls for
operational across our Africa region, contractors transporting hazardous waste following its rollout to our other and other materials. The programme operations in 2018 includes regular driver safety assessments and the rollout of an automated vehicle tracking system.
1 Aktobe Ferroalloys Plant, Shubarkol Komir, Aksu Power Plant, Krasno-Oktyabrskoye Mining Unit and Donskoy GOK. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 33 5 SECTION 2: HELPING OUR PEOPLE THRIVE
HEALTH AND SAFETY CONTINUED
Occupational health At Metalkol RTR, we launched an Industrial This includes, for example, dental care, Kazakhstan Hygiene Programme, which includes dust, additional medication allowance and acid mist and noise monitoring. Dust certain preventative treatments. In 2019, Some of our workplace activities – if not exposure analysis carried out under the we invested around US$9 million in these proactively managed – can present latent programme identified levels of silica dust programmes (2018: around US$10 million). risks to the health of our employees (e.g. at the Kingamyambo tailings facility that potential exposure to dust, noise, vibrations were in excess of internally set limits. Finally, we continue to help increase and heat). As such, we implement In response, we strengthened our dust employee involvement in sports and comprehensive occupational health control measures, provided enhanced improve lifestyle choices through our programmes for all our employees. PPE to our employees and increased Health, Sports and Wellbeing Center (p. 42). the frequency of employee medical In Kazakhstan, this includes: examinations from annual to biannual. Africa and Brazil ■ Mandatory annual medical examinations In Africa, we provide free medical support ■ On-site, pre-shift, role-specific medical At our BAMIN iron ore project in Brazil, to employees and their families. We also: examinations we continue to run annual occupational ■ Participate in government vaccination health assessments for all employees. ■ Workplace health risk assessments campaigns, as well as HIV/AIDS and ■ The provision of relevant medical treatment tuberculosis programmes Personal health ■ Implement malaria prevention During the year, we also took steps to Kazakhstan measures for employees at Metalkol support the continuous improvement We are committed to addressing non- RTR and Frontier of our occupational health procedures. occupational diseases that can impact ■ Provide antenatal healthcare at some This included: the health of our employees. In 2019, this of our ERG Africa clinics included the introduction of a preventative ■ The remodelling of our organisational examination programme, which includes structures to support the rollout of In Brazil, we provide vaccinations to diagnostic examinations for detecting more standardised medical services employees against seasonal flu and H1N1 coronary heart disease in men over 40 flu. In addition, we provide a partially ■ The development of new health protocols and screening for breast cancer in women funded employee health insurance plan, to embed standardised guidance on over 40. health improvement measures relating as well as fully funded dental care, for all to working conditions In addition, we provide enhanced healthcare employees and their families. Finally, we cover for our employees in Kazakhstan operate a health programme (‘Saúde de ■ The development and testing of a new (in excess of what is required by law). Ferro’), through which we provide physical mobile health app (‘ERG Health’) to activity clubs to employees. provide employees with up-to-date information on healthcare services
In addition, we implemented several measures to help our employees proactively manage non-occupational health issues (see below).
Africa and Brazil In Africa, we continued to implement an Industrial Hygiene Programme at Frontier and Chambishi Metals to protect employees’ health at work, monitor and maintain regulatory compliance, and manage key health risks. The Industrial Hygiene Programme at Boss Mining was suspended, in line with operational changes that resulted in reduced activity at the site (p. 10). However, we continued to undertake dust and water monitoring.
34 INTRODUCTION
KEY SAFETY INDICATORS BY YEAR Performance 2019 2018 2017 2016 Fatalities Fatalities (employees only) 10 1 3 10 We are deeply saddened by the loss of Fatalities (contractors only) 1 4 3 5 11 of our colleagues in 2019 (10 employees LTIs (employees only) 85 70 83 84 and one contractor). Four of these fatalities LTIs (contractors only) 17 13 10 6 occurred in one traffic-related incident at
SSGPO in Kazakhstan. Regretfully, this LTIFR (employees only) 0.83 0.58 0.69 0.76 marks a regression on 2018, during which KEY SAFETY INDICATORS BY REGION IN 2019 FOR THE FUTURE we had 5 fatalities (one employee and four PREPARING OUR BUSINESS contractors). We would like to express our Kazakhstan Africa Brazil sincere condolences to all those affected by Fatalities (employees only) 8 2 0 1 these tragic events. This has given renewed Fatalities (contractors only) 1 0 0 impetus to our efforts to achieve Zero LTIs (employees only) 80 5 0 Harm – and highlights the need for LTIs (contractors only) 13 3 1 constant vigilance and action. LTIFR (employees only) 0.87 0.53 0 Each incident was subject to a thorough investigation in order to inform appropriate ■ The enhancement of our production Lost time injuries prevention measures and minimise the control procedures, including those risk of recurrence. Our investigations in In 2019, we also experienced 95 lost time relating to the monitoring of pipe pressure Kazakhstan resulted in the following injuries (LTIs) involving employees (2018: 71), responses: ■ The installation of additional physical resulting in a lost time injury frequency 2
safety barriers rate (LTIFR) of 0.83 (2018: 0.58). Whilst PEOPLE THRIVE ■ The development of a fatality risks control HELPING OUR this marks a regression in our safety standard (including enhanced work In addition, we applied further measures performance, these trends also partially permit procedures) in Kazakhstan and Africa to enhance our reflect improvements in our safety data 2 ■ The rollout of additional standards related management of/engagement with collection processes. to working at heights and production contractors (p. 33). control At Metalkol RTR in the DRC, we recorded ■ The revision of safety risk management 8.6 million consecutive LTI-free hours procedures (employees and contractors) during 2019. This strong performance reflects our ■ Strengthened speed limit requirements ongoing application of consistent safety and the continued rollout of a satellite management systems and controls. control, analytics and transport management system
In addition, we enhanced our region-wide WELL-BEINGAND COMMUNITYDEVELOPMENT risk assessment processes in Kazakhstan. This included optimising the number and 3 scope of risk assessments, to develop deeper analysis of risk exposure across the entire production process, as well as the ongoing rollout of the HAZID methodology (p. 32).
In Africa, our investigations into the causes of the two fatalities at our operations resulted in the following responses (amongst other measures):
■ The review and enhancement of standard STEWARDSHIP
operating procedures for transport safety ENVIRONMENTAL
■ The implementation of biannual safety refresher training for truck drivers 4
■ The communication of lessons learnt from incidents and investigations to minimise the risk of reoccurrence
2 Employees only and including employee fatalities. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 35 5 SECTION 2: HELPING OUR PEOPLE THRIVE
HEALTH AND SAFETY CONTINUED
■ The ongoing rollout Planning for the future Transport safety: Africa and Brazil of our satellite control, analytics and In Africa, we plan to further strengthen transport management system to all Kazakhstan our safety performance by: operations, as well as the development We are planning further measures to of a new corporate standard for transport ■ Continuing to undertake biannual internal improve our safety performance and safety and a related driver training safety audits, with a focus on enhancing reduce the risk of harm to our employees, programme our SHS management system and fatal including: risk protocols ■ Enhanced PPE programme: The ongoing ■ Strategy: This will include the region- rollout of the programme, including the ■ Conducting an external audit of our safety wide rollout of a new Safety Strategy, region-wide implementation of our new management system at Metalkol RTR supported by the implementation of PPE safety standard against the ISO 45001 management our enhanced safety management system standard, with a view to achieving ■ Access controls: The rollout of automated certification by mid-2021 system and the automation of core access controls for higher risk works safety processes ■ Enhancing our Industrial Hygiene ■ Enhanced training: The implementation ■ Programme at Metalkol RTR, including Safety standards: The development of an online distance learning system to through the delivery of employee of new corporate safety standards and expand the scope of our employee safety awareness training on dust, noise the revision/enhancement of existing training programme standards (where required). This will and acid mist exposure ■ Personal health and well-being: The include a particular focus on: ■ Introducing safety audits for key acquisition of a medical centre to improve contractors (aligned to internal audit – Change management the quality of employee medical services; standards) at Metalkol RTR, as well – Safety training the provision of free counselling services as enhanced contractor fleet controls and training events focused on well-being; – Employee motivation and driver risk assessments and the piloting of our new ERG Health – Internal safety audits app for our operations in Aksu, prior At our BAMIN iron ore project in Brazil, – Road safety management to its rollout across our operations we will continue to strengthen our health – Contractor management ■ Incident reporting: The rollout of an and safety management team, including ■ Working at heights safety programme: entity-wide incident reporting standard through external hires, as well as The ongoing implementation of the to improve the speed and consistency implementing new training programmes programme, including the purchase of reporting – and to better inform focused on higher risk activities. of enhanced PPE (based on 2019 immediate mitigating actions audit findings); the establishment COVID-19 of new dedicated training facilities at Aksu Ferroalloys Plant and SSGPO; In 2020, we will continue to assess the and training employees across all implications of the COVID-19 outbreak operations on working at heights in terms of how we manage the health and safety of our employees and contractors, their families and local communities – and take appropriate action. For further information on our response to COVID-19, please see p. 12.
36 INTRODUCTION
SKILLS, CAPABILITIES AND DEVELOPMENT
A happy and professional team: Under our 2025 Strategy, we have prioritised the development of our employees’ competencies. This includes the building of their strategic skills and capabilities, the evolution of our corporate culture and the development of our talent pool and
leadership pipeline. FOR THE FUTURE PREPARING OUR BUSINESS 1 Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 4.4 By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship
8.6 By 2020, substantially reduce the proportion of youth not in employment, education or training PEOPLE THRIVE HELPING OUR
We focus on embedding innovative ways ■ Ongoing financial support for vocational Key issues and initiatives 2 of working throughout every level of our colleges and universities, with a focus on organisation. In line with our strategic supporting our current and future skills Comprehensive approach to priorities, we place particular emphasis requirements (see ‘The Atlas of New talent management in Kazakhstan on the development of our employees’ Professions’ case study, p. 38) strategic skills and competencies, as well Our approach to talent management as our high-potential individuals and focuses on continuously building our In 2019, these initiatives helped to identify leadership pipeline. current – and future – skills pipeline across 1,170 students for inclusion in our new a broad spectrum of age groups, levels of ‘external talent pool’. This provides a We take a comprehensive approach to experience and disciplines. framework for ERG to engage with high- talent management to ensure we have the potential external candidates regarding right skills mix to drive the growth of our In 2019, key initiatives included: future employment opportunities.
business. We also analyse – and proactively Schools WELL-BEINGAND adapt our approach to – emerging labour Young professionals: COMMUNITYDEVELOPMENT ■ The provision of 21 educational market trends, to strengthen our future tours at ERG facilities for 220 pupils ■ The hosting of three large-scale corporate 3 skills pipeline on an ongoing basis. under our Open Days with ERG initiative events to develop the core management/ leadership competencies of 500 high- ■ The delivery of 19 presentations to These efforts are particularly important in potential young employees, and to over 500 pupils at local schools to raise the context of a shortage of young mining support their career progression specialists (particularly in our operating awareness around careers in mining ■ The ongoing implementation of an regions), the ongoing transformation of our internal mentoring programme in which business, and the impact of technological Colleges and higher education experienced managers provide coaching change in reshaping future mining institutions and guidance to young employees professions. ■ The provision of technical internships to around 2,000 students at ERG operations ■ The establishment of a region-wide – around 850 of whom were hired into ‘Youth Council’ to provide enhanced full-time positions across a range of communication, networking and STEWARDSHIP
disciplines development opportunities for ENVIRONMENTAL young employees ■ The delivery of presentations at colleges and universities to around 3,000 students ■ The establishment of a discussion 4 to raise awareness around careers at ERG platform for ERG’s young employees and the rollout of a pilot of ERG Debates ■ Participation in graduate job fairs and conferences, including the Harvard-run 1
HPAIR Conference in Nur-Sultan
1 HPAIR: hpair.org/asia-conference-homepage WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 37 5 SECTION 2: HELPING OUR PEOPLE THRIVE
SKILLS, CAPABILITIES AND DEVELOPMENT CONTINUED
Experienced professionals: ■ The ongoing implementation of our The Atlas of New Professions in Kazakhstan League of Professionals programme to support the development of our Globalisation, technological development In addition, we worked with the Ministry production specialists, with over and demographic shifts are transforming of Labour and Social Protection of the 1,000 employees participating in 2019 global labour markets. In the context of Republic of Kazakhstan to define nine ■ The expansion of our performance- this ‘Fourth Industrial Revolution’, new key sectors of the national economy that linked motivation system (p. 41) industries and professions are emerging would benefit from the application of the
■ The launch of our new ERG Leader – while others are changing or becoming Atlas methodology. These were identified programme for senior and mid-level obsolete. This creates new challenges for as mining and metallurgy, oil and gas, managers, with external support from governments, businesses, educational agriculture, transport and logistics, lecturers at the Moscow School of institutions and young job seekers. engineering, information and Management SKOLKOVO in 2019 communications technology, energy, As part of our response to these tourism and construction. As the ■ The holding of professional skills dynamics, ERG supported the launch largest metals and mining company competitions (‘Altyn Kor’) across of the ‘Atlas of New Professions’ in 2019. in Kazakhstan, ERG will lead the Atlas nine operational competencies The Atlas provides a strategic planning methodology for the sector in 2020 tool to forecast the most critical and and beyond. The outputs from these In addition, we have established strategic in-demand professions over the next workstreams are hosted on an online ‘talent pools’ to support the rapid 5-10 years – as well as helping to identify Government portal (enbek.kz). development of our high-potential new technologies and management individuals, and to support our talent practices. It is based on the Skills In future, under the leadership of the pipeline and succession planning. These Technology Foresight (STF) methodology, Ministry of Education and Science of are grouped into the following categories: which was developed by the International the Republic of Kazakhstan, the results ■ Business leaders (i.e. executive Labour Organization, the Russian Agency of the Atlas will be introduced into management) for Strategic Initiatives (ASI) and the a vocational guidance system for
■ Operational leaders (i.e. senior managers Moscow School of Management secondary education organisations, at operations level) SKOLKOVO. through the edunavigator.kz platform. The Ministry will also support the ■ Middle management In May 2019, ERG undertook the first creation of educational programmes Atlas pilot study in Kazakhstan at for new mining professions. We identify individuals for inclusion in Donskoy GOK in the mining town of these talent pools on an ongoing basis Khromtau – the outputs from which Over the long term, the Atlas will enable through our annual employee evaluation will be used to inform a range of young people to make better informed programme (see opposite), as well as management actions. For example, in career choices, based on current and through large-scale events – such as 2020 we plan to provide funding for a future labour demand. At the same time, the League of Professionals and other new course at Khromtau College to train it will help to reduce systemic imbalances leadership programmes. operators of unmanned aerial vehicles. in the country’s labour market and Following the success of the pilot study, address future skills gaps. Finally, it we rolled out the methodology to all will help ERG to proactively adapt our our operations in Kazakhstan. recruitment and training strategies – and to identify specialist educational institutions and qualifications that we will support externally.
38 INTRODUCTION
People management in Africa In Brazil, we rolled out individual ENHANCED EMPLOYEE and Brazil professional development plans for all employees as part of our ongoing E VA L UAT I O N Operational changes at our Africa assets resulted in the suspension of many of implementation of a performance evaluation programme across all We continued to roll out our our skills development programmes in organisational levels. structured, competency-based the region. employee evaluation programme, with We also continued the rollout of a cultural more than 5,000 employees assessed In this context, we focused on ensuring we change programme to support our BAMIN during the course of the year (2018: have the right structures and competencies project’s forthcoming construction phase. more than 3,000 employees). in place to support our current and future FOR THE FUTURE PREPARING OUR BUSINESS operational requirements. For example, we Finally, we continued to implement the This programme aims to support: launched our ‘ERGA SHIFT>>’ programme at 1 our office in Johannesburg. This is focused Mining Talent programme at the Porto Sul ■ The development of corporate and on improving organisational effectiveness port development in Brazil (as part of our individual training and development and strengthening our internal culture mandatory obligations under our licence programmes (p. 37), and address (p. 23). agreement). This will help train local gaps in critical employee communities in transferable technical competencies At Metalkol RTR, our efforts were framed disciplines and improve access to ■ The identification of individuals employment opportunities, while
by the transition of the project from for inclusion in our talent pools commissioning to production. As such, supporting our skills pipeline for (see opposite) we continued to run technical skills the project (p. 54). assessments for our new and existing In addition, we undertake a structured, employees – and rolled out targeted training comprehensive evaluation process for programmes to fill identified skills gaps. PEOPLE THRIVE all new hires in Kazakhstan. HELPING OUR 2 AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 39 5 SECTION 2: HELPING OUR PEOPLE THRIVE
SKILLS, CAPABILITIES AND DEVELOPMENT CONTINUED
At Metalkol RTR in the DRC, we continue Performance Planning for the future to develop a range of new leadership, In Kazakhstan, we invested around In Kazakhstan, we plan to: competency and technical training US$6.5 million in training and skills programmes. These will help support ■ Launch our Corporate Digital University – development for our employees localisation, the development of our an intranet-based platform that will host (2018: around US$5 million). This includes leadership pipeline, and employee talent online training courses, support the mandatory training delivered under ERG’s development. rollout of tailored development plans and subsoil licensing obligations, as well as enable enhanced corporate networking large-scale employee development events. The increase in investment against the prior ■ Continue the development of clear and year primarily reflects an increase in the transparent career paths to support number and scale of employee training career planning and development and development events in 2019. ■ Continue the implementation of the Atlas of New Professions. In addition, we will In Africa, we spent US$304,000 on such participate in the Future of Work Initiative efforts (2018: US$295,000). of the World Economic Forum 2 to share lessons learned from the Atlas project
2 WEF, Preparing for the Future of Work: weforum.org/projects/future-of-work
40 INTRODUCTION
LABOUR RELATIONS
A happy and professional team: Under our 2025 Strategy, we have prioritised the development of our employees’ competencies and the maintenance of their safety and well-being. This not only includes employee wellness and health, but also the delivery of comfortable workplaces, enhanced benefits and an improved employee proposition. FOR THE FUTURE PREPARING OUR BUSINESS 1 Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 8.8 Protect labour rights and promote safe and secure working environments for all workers
11.1 By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums PEOPLE THRIVE HELPING OUR In Kazakhstan, our approach to labour The assessment will inform the measurement 2 relations is framed by the significant Key issues and initiatives of transparent, performance-linked bonuses inter-connectivity between our workforce – based on defined key performance Labour relations in Kazakhstan and local communities. We place strong indicators (KPIs), including corporate emphasis on the social needs of our Our comprehensive approach to labour and individual targets. This builds on the employees and their families in our relations means we focus on the provision successful rollout of the system to over operating regions (many of which are of comfortable working conditions, as well 1,500 management-level employees in 2018. geographically remote and highly reliant as on the social needs of our employees on ERG’s activities). This supports the and their families. Priority areas include: Delivering comfortable workplaces development of a motivated, safe, ■ The ongoing enhancement and In 2019, we continued to enhance workplace productive, stable and loyal workforce – standardisation of the physical working conditions in Kazakhstan, with the aim whilst also contributing to regional conditions of our employees – as well of ensuring our operations are raised
socio-economic development. as the improvement of our employee up to a common standard. This included: WELL-BEINGAND COMMUNITYDEVELOPMENT benefits ■ On-site facilities: Investment of Our Group-wide approach to labour ■ The raising of living standards for US$19.5 million in the renovation relations is underpinned by constructive 3 our employees and their families of on-site facilities across engagement with our employees’ unions. all of our operations (e.g. bathrooms, ERG respects the right of all employees to We use the findings from comprehensive sports facilities and dormitories) join unions and to freely engage in collective socio-economic surveys in our operating bargaining. More than 90% of the Group’s ■ Catering: Investment of US$1 million regions to prioritise actions in these areas employees are trade union members, and in the renovation of 12 canteens, as (p. 42). collective bargaining agreements are in well as the ongoing region-wide auditing place at the majority of our operations. of canteens to ensure compliance with Employee motivation and remuneration Group standards In 2019, we implemented differentiated pay Finally, we are fully committed to the ■ Transportation: The ongoing rises for all production employees, following principle of equal opportunity and implementation of our transport a round of pay rises in the previous year. the maintenance of a fair and non- standardisation programme. Key STEWARDSHIP
This was based on analysis of employee ENVIRONMENTAL discriminatory work environment. initiatives included: salaries across our entities, as well as We treat our employees fairly, equally and external peer benchmarking. In addition, – The staged modernisation of ERG- without prejudice, irrespective of gender, 4 we continued to expand the scope of our owned and contracted transport, race, age, disability or sexual orientation. employee motivation system in Kazakhstan including the purchase of 14 new buses to help further embed our performance- (2018: 31) based culture and to help cascade our – The rollout of a new service ERG Bus
Group-level strategic objectives across the (through the SmartERG app) to provide organisation. This included the rollout of up-to-date journey information and our structured performance assessment enable employees to give feedback on to all corporate (i.e. non-production) service standards. This was successfully personnel in Kazakhstan (totalling piloted at KAS, before being rolled out around 4,500 employees). across eight other operations and our corporate office WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 41 5 SECTION 2: HELPING OUR PEOPLE THRIVE
LABOUR RELATIONS CONTINUED
We also worked with local governments in the Pavlodar, Aktobe and Kostanay regions Supporting employee well-being in Kazakhstan to implement relevant public transport improvement programmes. This included In Kazakhstan, we focus on increasing ■ The hosting of a charity running event the introduction of a new public transport employee participation in sports and in which ERG employees tracked their route in Aktobe (which will primarily be used improving lifestyle choices through running distances using the Strava by ERG employees), as well as the purchase our Health, Sports and Wellbeing Center. mobile app. Around US$6,000 was of eight new buses that were handed over The programme is aligned with raised (through this event and the to the municipality to service the route. our commitment to invest in mass above mentioned Run Fest) and participation in sport to maximise donated to a children’s health charity Finally, in 2019 we undertook two employee our positive impacts on community surveys to gauge levels of satisfaction with well-being. 2. Sports infrastructure modernisation our ongoing workplace standardisation ■ The ongoing rollout of our sports programmes. The majority of employees The programme focuses on three infrastructure modernisation surveyed felt the standard of on-site facilities main areas: and standardisation programme. had improved over the past year – while In 2019, we invested US$48,000 in employees at some operations reported that 1. Sports events the development of new sports facilities standards of catering and transportation ■ The hosting of our annual charity at Shubarkol, including a football pitch, required further improvement. running event (ERG Run Fest), held wrestling facilities and gym equipment. simultaneously in the Aktobe, Pavlodar Raising living standards and Kostanay regions – with around 3. Digital solutions to support healthy In 2019, we continued to raise living 5,000 employees and community lifestyles standards for our employees and their members taking part ■ Participation in the Virgin Pulse Global families in our operating regions. This ■ The hosting of our first winter and Challenge through a pilot programme included: summer health festivals, where involving 3,000 employees. The employees and their families competed initiative included an app-based ■ Housing: The construction of multi-storey in various sports events – with platform that helps track fitness and accommodation building in Kostanay approximately 2,500 and 3,000 educate employees about healthier region – as well as the provision of 61 participants, respectively lifestyle choices. apartments to employees in Karaganda ■ The hosting of the Eurasian Regional region (provided on preferential financial Games, a corporate sports competition terms under our Affordable Housing held in Khromtau, Aksu, Rudnyi and Programme 1). Around 775 employees Nur-Sultan and their families have benefited from the programme since 2015, including 175 employees and their families in 2019 (2018: 186)
■ Social infrastructure: Investment in social infrastructure across our operating regions, including health centres, sports facilities, and cultural and recreational areas (p. 51). These facilities are available to our employees and their families, with discounts provided for retired workers and disadvantaged and/or large families
■ Education and entrepreneurship: Investment in a range of educational and entrepreneurship programmes to support regional socio-economic development and future job prospects for community members, including the children of employees (p. 50)
1 We are implementing our Affordable Housing Programme as part of a national housing programme, and in partnership with third party financial institutions.
42 INTRODUCTION
Employee relations in Africa EMPLOYEES AT METALKOL RTR BY CATEGORY and Brazil Category 2019 2018 Africa DRC nationals – permanent employees 789 738 At Metalkol RTR in the DRC, we continued to DRC nationals – fixed term employees 45 16 expand our full-time operational workforce Contractors 2 2,182 2,212 to support the project’s transition from construction to production. This Expatriates 95 72 contributed to a further increase in the proportion of DRC nationals employed on a Brazil In addition, during 2019:
At our BAMIN iron ore project, we ■ FOR THE FUTURE full-time basis. Nonetheless, we applied for We did not identify any of our operations PREPARING OUR BUSINESS an extension to local content exemptions established a new employee-led Diversity as presenting risks to workers’ rights to (which only apply during the construction Committee to support the development of freedom of association and collective 1 phase), as we are still making progress a new diversity programme (see ‘Planning bargaining towards relevant targets for the for the future’, below). In addition, we ■ There were no reported incidents employment of DRC nationals – the continued our efforts to enhance two-way of discrimination at our operations operation is still in the construction communication between management and stage for Phase 2. our workforce. This included working with an expert third party to roll out our first Planning for the future
In this context, we continued to implement employee engagement survey. a comprehensive succession/localisation In Kazakhstan, we plan to focus our activity plan and induction process at Metalkol RTR, on the following areas: Performance with a focus on the development of a ■ Motivation system: The further cascading common corporate culture and the On 6 July 2019, around 300 employees at of our motivation system to management- embedding of safe behaviours. We Shubarkol Komir in Kazakhstan launched a level production employees, including PEOPLE THRIVE HELPING OUR also continued the rollout of our ‘Pamoja short-term collective action that resulted in workshop supervisors tuta Weza’ 3 programme to help build a a two-hour delay in their shift commencing. ■ Housing: The completion of apartment bottom-up, shared corporate culture to 2 The issues they raised primarily related to complexes, benefiting more than 457 support the forthcoming production phase. a perceived lack of communication from employees and their families – as well The programme includes workshops and operational senior management (the as supporting disadvantaged employees training sessions focused on developing operation’s corporate office is located and their families (e.g. single parent shared understanding, collaborative offsite in the city of Karaganda). families or those raising children with problem-solving and teamwork. disabilities) to purchase apartments Following constructive dialogue with the under the ‘Bakytty Otbasy’ 4 national At our other assets in Africa, employee employees, all issues raised were resolved housing programme relations continued to be framed by the and there was no impact on production. ■ Transportation: The ongoing following operational changes/contexts: In addition, we have relocated some senior standardisation of ERG-owned and ■ management roles to the mine in order to Boss Mining: The operation was placed contracted transport, including the provide a constant management presence into care and maintenance in 2019 WELL-BEINGAND purchase of additional buses COMMUNITYDEVELOPMENT and to facilitate improved two-way ■ Comide: The operation was placed into communication (including a more frequent ■ Enhanced communication: The rollout care and maintenance in 2017 schedule of engagement meetings). of new mobile apps to provide digital 3 ■ CCC: The operation was scaled back, platforms for employees to give feedback following the placement of Boss Mining In Kazakhstan, we did not experience any regarding onsite conditions into care and maintenance other industrial action or strikes. This ■ Chambishi Metals: Production was reflects the consistent and constructive In Brazil, we plan to finalise and commence reduced at the operation, and it was relations we maintain with our employees’ the rollout of our employee diversity placed into care and maintenance in labour unions, as well as our commitment programme, including enhanced policies January 2020 to address the social challenges faced by and procedures covering gender, sexual employees and the maintenance and orientation and race, among other aspects ■ Johannesburg head office: The office was of diversity. restructured in the context of the above strengthening of social stability. noted operational changes We did not experience any strike action STEWARDSHIP All of these operational changes were in Africa or Brazil in 2019. We continue to ENVIRONMENTAL conducted in full compliance with local actively engage unions at our operations labour laws, as well as our collective in the DRC regarding conditions of 4 bargaining agreements. employment through the statutory collective bargaining framework.
2 Including employees of Sabot and CCC (which provide services to Metalkol RTR). 3 ‘Together through teamwork’ in Swahili. 4 ‘Bakytty Otbasy’ means ‘Happy Family’ in Kazakh. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 43 5 COMMUNITY DEVELOPMENT AND WELL-BEING
SECTION 3: COMMUNITY DEVELOPMENT AND WELL-BEING
2019 HIGHLIGHTS
Continued to support Continued to support US$118M the Good Shepherd economic Group community International diversification through social investment Foundation – helping the Student to protect children Entrepreneurship from child labour in Programme in the DRC Kazakhstan
44 MATERIAL ISSUES INCLUDE
COMMUNITY IMPACTS COMMUNITY SOCIAL OUR APPROACH INVESTMENT TO ARTISANAL AND INTRODUCTION SMALL-SCALE MINING
Read more on p. 46 Read more on p. 49 Read more on p. 55
Our 2025 Strategy 1 commits us to the sustainable development of our host regions. This is particularly important, as many local communities in Kazakhstan have effectively developed around our operations, whilst our local communities in the DRC face significant socio-economic challenges.
More broadly, we actively manage our impacts on local communities – and seek to address the socio-economic drivers behind / the negative impacts of child labour that can be associated with artisanal and small-scale mining (ASM) in the DRC. FOR THE FUTURE PREPARING OUR BUSINESS 1 1 Please note that our 2025 Strategy is currently under review as we address the immediate impact of the 2020 COVID-19 outbreak and the longer-term implications for the Group.
PEOPLE THRIVE HELPING OUR 2 AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 45 5 SECTION 3: COMMUNITY DEVELOPMENT AND WELL-BEING
COMMUNITY IMPACTS
Sustainable development of our host regions: Under our 2025 Strategy, we have prioritised our contribution to the socio-economic development and well-being of communities in our regions of operation. This includes the maintenance of international environmental standards, as well as support for entrepreneurship and the development of the business environment in our host countries. © Photo courtesy of Good Shepherd International Foundation / Nyokabi Kahura
Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 3.9 By 2030, substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination
6.3 By 2020, substantially reduce the proportion of youth not in employment, education or training
11.4 Strengthen efforts to protect and safeguard the world’s cultural and natural heritage
12.4 By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle
We are committed to minimising the In 2019, we held a range of public Managing planned closure at Arkalyk negative impacts of our activities, where consultations related to operational In 2019, we continued to actively manage these cannot be avoided. This is not only changes, including: the potential socio-economic impacts of the right thing to do; it also directly ■ The expansion of our Kacharsky, the 2021 closure of our Torgayskoe Mining supports our social licence to operate. Kurzhunkul, Sarbay and Sokolovskaya Unit (Aluminium of Kazakhstan) in the At the same time, we seek to maximise our mines (SSGPO) mining town of Arkalyk (Kostanay region) positive impacts – ranging from job creation on our employees and local communities. ■ Engineering works at KAS to local procurement (p. 73). These efforts The closure is anticipated to result in the are underpinned by transparent and ■ The reconstruction of furnaces at retrenchment of around 600 employees constructive engagement to help ensure Workshop No. 4 (Aktobe Ferroalloys Plant) (representing approximately 2.3% of the we remain responsive to the concerns population of Arkalyk). and priorities of local stakeholders. In addition, we carry out large-scale surveys of community members (including ERG Our ongoing efforts are focused on: employees) and undertake benchmarking ■ Employee transfer within ERG: Helping Key issues and initiatives of socio-economic conditions in our mining employees transition to new roles within towns. These efforts help us to proactively the business. This will include the phased Managing our impacts – Kazakhstan identify stakeholder priorities, and have transition of 430 employees to new jobs Community consultation directly informed the focus areas for our at SSGPO and Krasnooktyabrsk Bauxite We conduct comprehensive impact new regional development programme Mine (Aluminium of Kazakhstan). Their assessments and community consultations (p. 49). terms of employment, including whenever undertaking any major remuneration, will remain unchanged, developments or operational changes. and retraining will be provided as required These are conducted in line with national legal requirements and relevant international standards.
46 INTRODUCTION
■ Support for small- and medium-sized Environmental and Social Impact During the year, we also undertook a enterprises: Implementing a joint Assessments (ESIAs) Participatory Rural Appraisal (PRA) with programme with the National Chamber of We continued to develop and implement the Kamimbi II community to help establish Entrepreneurs of Kazakhstan ‘Atameken’ social and environmental management their development priorities and to ensure to help former employees establish programmes identified through our ESIAs they are not negatively impacted by the new businesses in Arkalyk. In 2019, in the DRC. Our updated ESIA for Comide resettlement. Identified priorities included this included the provision of start-up was finalised in 2019 and is under community cohesion, income-generating training for 18 employees management review.1 opportunities and agricultural production. ■ External employment opportunities: We plan to support the Kamimbi II In 2019, ESIA-related activities at Boss community in the delivery of a sustainable Working with the local government FOR THE FUTURE in Arkalyk and Kostanay region, as Mining, Frontier and Comide focused on, Community Action Plan (CAP) to address PREPARING OUR BUSINESS well as the National Chamber of for example: these priorities. 1 Entrepreneurs of Kazakhstan, to identify ■ Capacity building for local, community-led alternative employment opportunities water committees, which manage potable Legacy complaint against ENRC in the city and the broader region water distribution facilities that ERG In 2019, ERG continued to actively engage helped fund (p. 53) with Rights and Accountability in These activities are based on the outputs ■ The establishment of community-based Development (RAID), a UK-based non- of a comprehensive employee survey, as voluntary savings groups to provide governmental organisation, regarding well as an in-depth diagnostic of the local micro-financing for local development a legacy complaint against ENRC. The business environment – both of which projects complaint was originally made in 2013 were conducted in 2018. on behalf of the chiefs of the Kisankala ■ Continued implementation of our and Lenge villages and their communities Sustainable Agricultural Programme Managing our impacts – Africa near the Comide concession. In April 2018,
the UK National Contact Point (NCP) for PEOPLE THRIVE Impact and grievance management At Metalkol RTR, we launched a pilot HELPING OUR the OECD Guidelines for Multinational In Africa, we manage our community project for a new Sustainable Agricultural Enterprises issued a Follow-Up Statement impacts through our Safety, Health and Programme (p. 53). 2 relating to the complaint. Whilst the Sustainability (SHS) management system. complaint relates to ENRC legacy issues, This includes dedicated policies, Resettlement at Metalkol RTR we remain committed to responding to procedures and management plans for At Metalkol RTR, we continued to support the concerns of our local communities. human rights and ASM management (p. 56). 16 resettled families from the Samukonga community. The families were successfully In this context, we continue to address We continued to use Isometrix software resettled into a new village in the Kamimbi II the UK NCP recommendations on an to help record, centralise and analyse SHS community in 2018 – in line with local ongoing basis. This includes: data and to facilitate more effective impact law and the IFC Performance Standards. and grievance management. Following its The need for resettlement was identified ■ Regular engagement with community rollout at Metalkol RTR in the DRC in 2019, through our ESIA, due to the proximity of chiefs, elected sustainable development Isometrix is now fully operational at all our the families to Metalkol RTR’s new tailings committees and impacted groups in active Africa operations. Kisankala and Lenge WELL-BEINGAND storage facility. ERG funded the COMMUNITYDEVELOPMENT construction of the village, which offers a ■ The delivery of human rights training to In addition, we apply a community better standard of accommodation than all private and public security personnel 3 grievance procedure across our Africa the families previously enjoyed. operating at Comide, including training operations, which supports the continuous, on our Code of Conduct for security timely identification of our actual and Activities in 2019 included: personnel (which is based on the potential impacts. This has also been Voluntary Principles on Security ■ The completion of the acquisition of integrated into the Isometrix software and Human Rights) platform, which has helped enhance 35 hectares of agricultural land, which will ■ The ongoing maintenance of solar- our community grievance oversight be used as part of a livelihood restoration powered water installations provided and management. programme by ERG in Kisankala and Lenge (these ■ The provision of monthly supplies of food installations are managed by two Community compensation and essential products to the 16 families, community-led water committees) We paid compensation to 1,438 community which will continue until the livelihood restoration programme is in operation ■ Ongoing investment in community-led members near Metalkol RTR, whose STEWARDSHIP development – in line with our PRA and ENVIRONMENTAL agricultural land and crops have been ■ The development of a nursery project affected by the construction of the new to support the planting of fruit trees CAP processes – to ensure these efforts 4 tailings storage facility. This compensation on the Metalkol RTR concession – are fully led by the communities totalled approximately US$580,000. These and, by extension, income-generating themselves. In 2019, this included: community members also benefit from our opportunities for the families – The ongoing rollout of our Sustainable alternative livelihood programmes (p. 53). Agricultural Programme at Comide
(p. 53) – The establishment of community-based voluntary savings groups
1 The updated ESIAs for Frontier and Metalkol RTR were accepted by regulators in 2018, while the updated ESIA for Boss Mining was accepted in 2017. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 47 5 SECTION 3: COMMUNITY DEVELOPMENT AND WELL-BEING
COMMUNITY IMPACTS CONTINUED
Managing our impacts – Brazil Performance Planning for the future At our BAMIN iron ore project in Brazil, we continued to implement In Kazakhstan, we conducted 21 public In Kazakhstan, we plan to: consultations related to project changes. the recommendations from our ESIA ■ Continue to mitigate the impact of the No significant grievances were raised (which was completed and accepted planned closure of Torgayskoe Mining during these hearings or through any of by government in 2014). Unit in the mining town of Arkalyk the available community relations channels. ■ Conduct a range of public consultations, In addition, we operate a community including in relation to operational activity engagement programme under which, we: In the DRC, 104 grievances were raised by local community members. These primarily at SSGPO, EEC, Shubarkol Komir ■ Continued to host a multi-stakeholder related to complaints around compensation Kazchrome and Aluminium of Kazakhstan working group, comprised of payments, local employment opportunities representatives from BAMIN, the and damage to property. A total of 82 of In Africa, we plan to expand our alternative local mayor’s office, the environmental these were resolved, with the remaining livelihoods programme to support the regulator and local communities. This 22 requiring additional follow-up action. Samukonga resettlement village, as well as meets on a quarterly basis to discuss planning to construct additional boreholes potential challenges relating to project No significant grievances were raised in the communities near Metalkol RTR in development through the grievance mechanism the DRC. ■ Implemented new communications and established at the Samukonga village awareness raising initiatives, with a focus near Metalkol RTR.2 on addressing potential community concerns ahead of the construction Finally, we did not register any significant of the Porto Sul terminal (p. 26) grievances via our dedicated community telephone line at our BAMIN iron ore Finally, we continued to operate a phone project in Brazil. line to enable local community members to raise complaints.
2 Any issues raised related to straightforward administrative issues concerning the facilities at the village.
48 INTRODUCTION
COMMUNITY SOCIAL INVESTMENT
Sustainable development of our host regions: Under our 2025 Strategy, we have prioritised our contribution to the socio-economic development of communities in our regions of operation. This includes improving community well-being and prosperity, whilst also supporting entrepreneurship and
the development of the local business environment. FOR THE FUTURE PREPARING OUR BUSINESS 1 Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 1.1 By 2030, eradicate extreme poverty for all people everywhere 1.2 By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty
2.3 By 2030, double the agricultural productivity and incomes of small-scale food producers
PEOPLE THRIVE 4.4 By 2030, substantially increase the number of youth and adults who have relevant skills, HELPING OUR including technical and vocational skills, for employment, decent jobs and entrepreneurship 2
6.1 By 2030, achieve universal and equitable access to safe and affordable drinking water for all 6.B Support and strengthen the participation of local communities in improving water and sanitation management
8.3 Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises
By 2030, empower and promote the social, economic and political inclusion of all, irrespective WELL-BEINGAND 10.2 COMMUNITYDEVELOPMENT of age, sex, disability, race, ethnicity, origin, religion or economic or other status 3
11.1 By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums
In Kazakhstan, our community social In Africa, our CSI efforts are focused on investment (CSI) strategy is driven by addressing the most material development Key issues and initiatives – our long-standing and deep relationships challenges facing communities in our Kazakhstan with our local communities. In addition operating regions, many of which live in STEWARDSHIP to providing employment opportunities, conditions of extreme poverty. In 2019, Regional development programme ENVIRONMENTAL we place particular emphasis on improving ongoing operational challenges – including in Kazakhstan the lives of our employees and their families some operations being placed into care and In 2019, we commenced the rollout of 4 outside work (i.e. as local community maintenance (p. 43) – have contributed to our three-year programme to support members). We also invest in initiatives the suspension of some of our community long-term socio-economic development that support regional socio-economic investment activities in the region. in our operating regions. The programme development and diversification, as well as is being implemented through partnerships youth job creation (including for employees’ Finally, we place significant focus on with government at the national and children). This helps reduce community addressing the socio-economic drivers regional levels, including through our dependency on our operations over the behind, and negative impacts of, child regional memoranda of understanding long term. labour that can be associated with ASM (Regional MoUs). mining (see ‘Our approach to artisanal and small-scale mining’ on p. 55). WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 49 5 SECTION 3: COMMUNITY DEVELOPMENT AND WELL-BEING
COMMUNITY SOCIAL INVESTMENT CONTINUED
OUR APPROACH TO CSI IN KAZAKHSTAN
Our regional development programme ■ Employees living in our local ■ Regional government partnerships: is being implemented in the context communities: Our unique community A significant proportion of our CSI of our long-standing approach to CSI context means we actively target part of spending is invested through Regional in Kazakhstan. This is focused on: our CSI spending on improving the living MoUs that we sign annually with regional standards of our employees and their governments. These strategic ■ Legacy communities: Many local families outside of work. These efforts partnerships are critical for delivering communities have effectively developed aim to ensure that our operating regions broader socio-economic development as a result of our operations. As such, are places where multiple generations we aim to reduce community ■ National-level social investment: will choose to live and work dependency on ERG over the long We also contribute to national-level term through investment in regional social investment initiatives to help economic diversification and youth address some of the principal socio- skills development economic challenges facing the country and to help preserve our national cultural heritage
The programme is based on in-depth Examples of projects supported by ERG We are also helping employees develop analysis of the specific development in 2019 included: small- and medium-sized businesses in needs of each operating region, developed the mining town of Arkalyk in Kostanay ■ Infrastructure and sanitation: through a series of comprehensive region, ahead of the planned 2021 closure The maintenance of heating, water supply large-scale social surveys held annually. of our Torgayskoe Mining Unit (p. 46). and sewage systems in Aktobe region (US$575,000); the upgrading and repair These workstreams identified the following of the heating supply system in Kostanay Education priorities: region (US$380,000); and the purchase We invest in local educational programmes ■ Housing and utilities infrastructure of new garbage disposal trucks in Aktobe to support future-orientated youth ■ Public transport region (US$262,000) employment and regional economic ■ diversification. These efforts are also vital ■ Improvement of urban spaces Improved urban spaces: The construction of a pedestrian/bicycle pathway in a for the development of ERG’s own future ■ Education and youth skills development park in Nur-Sultan (US$439,000); the skills pipeline, and provide assurance to ■ The modernisation of medical institutions installation of playground equipment current and future employees that their and the provision of advanced medical and park sports facilities in Aktobe children can look forward to promising training for doctors region (US$51,000); and the futures in their home towns. ■ The promotion of sports and well-being, reconstruction of the central river including the development of community embankment of Aksu city in Pavlodar In 2019, we continued to support STEM 2 infrastructure and youth leagues region (US$124,000) education. This included an investment of US$38,000 in a training programme Projects that benefit our local communities Entrepreneurship and business for 10 STEM teachers, which was facilitated by a UK-based training provider. The (including, where relevant, employees and incubation their families) are set out below. Projects programme will benefit a range of We invest in the future of our local that only focus on employees are covered secondary schools in various regions communities through our support of in ‘Labour Relations’ on p. 41–42. of Kazakhstan. entrepreneurship, business incubation and capacity-building programmes. This In addition, over 9,000 pupils continued Improving living standards includes a particular emphasis on youth- to benefit from 11 STEM laboratories that We invest in improving living standards focused initiatives to generate alternative were constructed in 2018 with support in our mining towns and our broader (i.e. outside of our operations) economic from ERG. The laboratories are used to operating regions, much of which takes opportunities for future generations. provide education in engineering, computer place through our Regional MoUs. programming, robotics, 3D modelling and Over the long term, we aim to support In addition to our ongoing support for related skills. the development of our mining towns the Student Entrepreneurship Ecosystem into comfortable urban environments programme (see opposite), we invested a We also invested US$261,000 to support where multiple generations (including further US$16,000 to sponsor a Makeathon an endowment fund for a specialist physics the children of our employees) will Tikkun Olam Makers (TOM) event in and mathematics educational institution 1 choose to live and work. Shymkent city. TOM events help young based in Nur-Sultan and Almaty. inventors develop commercially viable technologies to support people with Separately, we support a range of disabilities. The inventors with the best educational institutions (and their students) ideas are offered scholarships to help in Kazakhstan. In 2019, this included bring their ideas to fruition. In 2019, support for: specialist equipment developed by TOM inventors was purchased by a rehabilitation ■ The Khromtau Mining and Technical 1 Tikkun Olam Makers: tomglobal.org centre in Pavlodar. In total, we have invested College, including additional funding 2 Science, Technology, Engineering, Maths. over US$62,000 in TOM events since 2017. for teachers and external tutors, as
50 INTRODUCTION
well as the purchase of training materials Healthcare Sports, culture and well-being and equipment (US$87,000) We finance modern healthcare True community well-being is about more ■ The Aksu College of Ferrous Metallurgy infrastructure to support the well-being than narrow economic development. (US$24,000), including the funding of of our current and retired employees, In recognition of this, we make strategic building repairs, payments to tutors their families and the wider communities in investments in the broader social fabric and training equipment our operating regions. of our operating regions.
Finally, we provided funding for the iQanat In 2019, this included investment of: Key investments in regional sports projects programme to help improve access to higher included: ■ US$261,000 to fund the purchase of education for children studying in rural FOR THE FUTURE modern medical equipment at a hospital ■ Support for the development of regional PREPARING OUR BUSINESS schools in Pavlodar region (US$40,000). in Khromtau (Aktobe region), as well as football in Pavlodar (US$3.4 million)
US$26,000 to support young doctors ■ The construction of a community football 1 working at the hospital arena in Pavlodar Region (US$3.1 million)
■ US$32,000 to fund the renovation ■ Support for the development of amateur of buildings, as well as the purchase of youth football in Kostanay Region wheelchairs and other medical equipment (US$567,000) (including the equipment developed by ■ Support for the development of regional TOM inventors mentioned earlier) for a
volleyball in Pavlodar Region (US$797,000) healthcare centre in Pavlodar Key investments in cultural activities The Student Entrepreneurship Ecosystem programme and infrastructure included: in Kazakhstan ■ The construction of a national cultural PEOPLE THRIVE
centre in Kostanay (US$1.1 million) HELPING OUR One of the most pressing challenges In addition, we work closely with ■ The undertaking of archeological and facing Kazakhstan is how to generate universities to support the development restoration works at Kultobe settlement 2 opportunities for a growing youth of their transformation strategies and in Turkestan (US$2.5 million) demographic through high-tech study programmes. We also offer our ■ The ongoing renovation of a museum industrial growth. This is a particular facilities for student-led research and in Pavlodar (US$337,000) issue in our remote operating regions, development, and engage senior as many young people seek opportunities business experts to mentor students in major domestic cities or abroad. on the commercialisation of their ideas.
Part of our response to this challenge is Since its launch in 2017, more than 5,000 the Student Entrepreneurship Ecosystem students from seven universities and two programme.3 This programme supports colleges located in ERG’s operating the transformation of regional regions have benefited from the AND WELL-BEINGAND universities and colleges into hubs of programme. This has already contributed COMMUNITYDEVELOPMENT entrepreneurial excellence, with the to the launch of several successful long-term goal of helping to develop new business ventures, including a support 3 start-up businesses throughout our centre for stroke patients in Karaganda operating regions. region and a social media marketing agency in Kostanay region. In 2019, we invested a further US$131,000 in the programme, which is 3 Student Entrepreneurship Ecosystem programme: being implemented in partnership with ecosystemerg.kz the Tel-Aviv University Friends Association in Kazakhstan and the Almaty Management University. STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 51 5 SECTION 3: COMMUNITY DEVELOPMENT AND WELL-BEING
COMMUNITY SOCIAL INVESTMENT CONTINUED
Socially vulnerable and Together, the services delivered by the ERG Town programme in disadvantaged groups Fund’s portfolio of companies form the Kazakhstan We invest in initiatives to help socially Aitu Digital Ecosystem, which includes: vulnerable and disadvantaged groups ■ Online services aimed at helping people In 2019, we rolled out our ERG Town in our operating regions. In 2019, this find employment through enhanced programme in Kazakhstan. This included: knowledge and skills. By helping identify future employment roles (i.e. over the programme aims to give employees – ■ Continued sponsorship of the SOS and, over the longer term, community Children’s Villages of Kazakhstan next 10 to 15 years) we can help people members – the opportunity to shape organisation to support children prepare themselves for future local development priorities. The without parental care and families opportunities programme evolved out of a social at risk (US$34,000) ■ A range of applied technology to support project competition previously held 4 local communities, businesses and ■ Sponsorship of ‘Ana uyi’, a foundation as part of the Innovators’ Forum (p. 28). that provides shelter, health essentials, institutions. This includes digital payment vocational training and counselling for services focused on financial inclusion The programme includes an annual disadvantaged mothers in Pavlodar and online marketplaces to promote competition in which employees submit region (US$81,000) market efficiency and regional ideas for new social investment projects entrepreneurship and local government representatives ■ Social media projects focused on the help select winning submissions. It is Digital Ecosystem in Kazakhstan production and dissemination of local expected that these projects will be Global experience has demonstrated online content – including Kazakh subsequently implemented under that digital technology can act as a catalyst language content. This is with the aim our Regional MoUs. for economic, social and cultural growth. of supporting local creative communities In this context, ERG is a partner in the ■ In future, we plan to engage community Digital Ventures fund (‘the Fund’). The Fund An online communication platform members in this participatory budget invests in a range of digital initiatives that to improve interaction between users process, which will be digitalised and enable Kazakh citizens, including those and promote an online market open to public oversight. from disadvantaged parts of society, to benefit from digital technology by being Collectively, these initiatives are expected able to access online content and services to help support employment, economic tailored to local needs. development and online social and cultural exchange in ERG’s local communities – The Fund engages and supports innovative and beyond. start-ups to develop an ever-growing range of new solutions that can benefit both ERG and a wide range of stakeholders.
4 ‘Ana uyi’ means ‘Mother’s House’ in Kazakh.
52 INTRODUCTION
Many of these areas are already being Outside of the scope of community social Key issues and initiatives – addressed under existing Community investment, we also offered short-term Africa Action Plans (CAPs) managed by employment (i.e. on a day rate basis) to In Africa, our CSI efforts are focused on community-led committees. more than 1,000 people from communities addressing the most material development surrounding Metalkol RTR. challenges facing communities in our The impact of operational change operating regions. A key component of this In 2019, we continued to manage Clean water distribution is our support for external initiatives that operational change in our Africa region At Metalkol RTR, we focus on improving help address the socio-economic drivers – including the placing of some sites into clean water infrastructure for our local
behind, and the potentially negative impacts FOR THE FUTURE
care and maintenance (p. 43). We are communities. In 2019, for example, we PREPARING OUR BUSINESS that can be associated with, ASM. This evaluating this situation on an ongoing basis. invested US$19,000 to fund maintenance includes a particular focus on alternative work on wells and solar-powered water 1 livelihoods and the transitioning of children Where feasible, we continued to support distribution facilities, which were installed in and young people out of ASM activity (further certain CSI projects – with priority given to 2018 under our potable water programme. details on our ASM-focused CSI efforts are higher impact agricultural and community provided in ‘Our approach to artisanal and capacity building programmes. Details We launched the programme in response small-scale mining’ on p. 56). on these projects are set out below. to community priorities identified through our PRAs – and in light of some of our own
New community investment Alternative livelihoods and project impacts, including the fencing of framework in the DRC food security the Kingamyambo tailings, which restricted water access for some community The updated DRC Mining Code (published In the DRC, we support alternative local in 2018) incorporates new community members. Programme facilities are livelihoods – with a focus on sustainable managed by community-led water investment obligations for the mining agriculture. These efforts aim to address committees, with community members PEOPLE THRIVE sector. This includes a requirement for HELPING OUR food insecurity, a lack of formal paying a small fee that is reinvested into all mining companies to contribute 0.3% employment opportunities and the of turnover to a community sustainability ongoing maintenance. Drilling work to 2 potentially negative impacts that can be significantly expand the scope of the fund that will be managed by relevant associated with ASM activity. This includes stakeholders – including the government, programme is planned to commence in our support for alternative livelihood 2020. In line with the requirements of our impacted communities, civil society and programmes through our partnerships the companies themselves. ESIAs, we also continued to fund capacity with the Good Shepherd International building for community-led water Foundation and Pact development committees at our other operations in the Community investments will be identified organisations (p. 56–57). through extensive engagement and DRC. These committees manage facilities that were constructed using ERG funding. consultation with the relevant stakeholders in In 2019, we continued to roll out our order to establish a legally binding framework Sustainable Agricultural Programme (or a ‘Commitments Register’) to help address at Comide and Boss Mining, while the Improving educational access local development priorities. Progress programme was discontinued at Frontier. Access to adequate formal education is made against these commitments will WELL-BEINGAND We prioritised the continuation of the an acute challenge for local communities COMMUNITYDEVELOPMENT be subject to independent monitoring on programme at Comide and Boss Mining in the DRC. Despite Boss Mining being in an annual basis. This process applies to all to help partially mitigate the employment care and maintenance, we continued to 3 new mining licences and/or licence renewals. impacts of these operations being placed fund educational initiatives in Kakanda into care and maintenance. (albeit in a reduced capacity). This included Accordingly, in 2019 we commenced supporting more than 4,900 students formal consultations at Metalkol RTR. We launched the Sustainable Agricultural (2018: 7,000) and 150 teachers (2018: 200). The priorities identified are aligned with Programme in 2018 to help boost local those already established through our agricultural productivity. This includes Under our partnership with the Good existing Participatory Rural Appraisals the provision of seeds, equipment and Shepherd International Foundation, 5 (PRAs) and Environmental and Social technical support to farm maize on around we funded the construction of a Child Impact Assessments (ESIAs) – the results 500 hectares of land located near our Protection Centre in Kolwezi near Metalkol of which were integrated into the process. operations. In 2019, we funded training in RTR that will support up to 1,000 children Most notably, these include: maize farming techniques for community from ASM communities (p. 57).
■ members. This helped contribute to a STEWARDSHIP
Support for local farming to enhance ENVIRONMENTAL food security significant increase in maize yields. Healthcare ■ Potable water distribution The prevalence of relatively weak health 4 At Metalkol RTR, we launched a pilot project ■ indicators in our local communities in Educational access for a Sustainable Agricultural Programme the DRC means we also focus efforts ■ Healthcare to help improve food security for around on improving healthcare services and ■ 300 households in nearby communities. Infrastructure behaviours. This includes the provision
Unfortunately, the rollout of the programme of support to government vaccination was delayed until early 2020, due to campaigns, and HIV/AIDS/tuberculosis procurement challenges. programmes.
5 We successfully completed PRAs with 19 local communities in the DRC in 2017. The process helps local communities to identify their own development priorities – and supports them in the delivery of CAPs to address these needs. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 53 5 SECTION 3: COMMUNITY DEVELOPMENT AND WELL-BEING
COMMUNITY SOCIAL INVESTMENT CONTINUED
GROUP CSI CONTRIBUTIONS BY REGION (US$M) GROUP CSI CONTRIBUTIONS BY YEAR 2019 2018 (US$M) Kazakhstan 109.8 107.9
Africa 7.9 6.9 118 115 111 Brazil 0.3 0.3
CSI CONTRIBUTIONS IN KAZAKHSTAN BY TYPE (US$M)
2019 2018 56 Direct investment 91.3 87.5 Regional memoranda of understanding 6 18.5 20.4
6 Including projects outside our operational regions in Kazakhstan. 2019 2018 2017 2016
In addition, we continued to provide Key issues and initiatives – support to the São José – Santa Casa de Planning for the future Brazil Misericórdia Hospital in the city of Ilhéus, We plan to build on our existing CSI In Brazil, we continued to implement our which faces significant funding challenges. programmes in Kazakhstan through Mining Talent programme at the Porto Sul This includes funding to support catering a range of strategic initiatives including: for employees, patients and visitors. port development, in partnership with the ■ The ongoing rollout of our three-year In 2019, we invested around US$200,000 Brazilian Government and local technical regional development programme (p. 49). in this regard. schools. The programme forms part of In 2020, this will include two additional our mandatory obligations under our social surveys to help ensure the strategy licence for the project. It aims to build Performance remains aligned to local priorities technical capacity and improve access ■ The piloting of a new community to employment opportunities for local In 2019, ERG’s worldwide CSI contributions engagement programme in Khromtau communities, while strengthening our were US$118 million (2018: US$115 million). (‘ERG Town programme’) to closer align own skills pipeline. This included investment of US$18.5 million community investment expenditure to to fund Regional MoUs with local local development priorities (p. 52) Under the programme, around 200 governments in Kazakhstan. We also community members were selected from continued to support national-level social ■ The ongoing transfer of our sports educational institutions, based on the investment projects. Most notably, this and well-being initiatives away from the results of written exams. These exams included a donation of US$53 million to sponsorship of professional sports teams were structured around ERG’s anticipated the Foundation of the First President and towards mass participation sports, operational requirements during the of the Republic of Kazakhstan – Elbasy community sports infrastructure and construction phase of the port (2018: US$59 million), which was primarily youth sports development. Successful candidates were used for educational, cultural and subsequently provided with specialist skills infrastructure projects. At Metalkol RTR in the DRC, we are training across a range of electrical and planning to: mechanical disciplines. This will support ■ Launch a range of new initiatives to their future employment – whether with support priorities identified through our BAMIN or otherwise. new Commitments Register (i.e. focused on local farming and food security, potable water distribution, educational access and healthcare)
■ Continue the livelihood restoration programme – as well as the planned expansion of our potable water distribution programme
In Brazil, we are planning to expand the scope of our Mining Talent Programme to train additional community members in relevant technical disciplines.
Beyond this, we will seek to better understand the implications of the COVID-19 outbreak for our local communities and what this means for our approach towards social investment.
54 INTRODUCTION
OUR APPROACH TO ARTISANAL AND SMALL-SCALE MINING
Sustainable development of our host regions: Under our 2025 Strategy, we have prioritised our contribution to the socio-economic
development and well-being of communities in our regions of operation. This includes FOR THE FUTURE PREPARING OUR BUSINESS a focus on the responsible production of cobalt in t he DRC, and on addressing the potential risks that can be associated with artisanal mining. Furthermore, we seek to 1 harness opportunities to drive sustainability along the cobalt value chain, including in partnership with others. Photo courtesy of Pact
Relevant UN Sustainable Development Goals UN SDG Associated UN Targets
8.7 Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour 8.8 Protect labour rights and promote safe and secure working environments for all workers PEOPLE THRIVE
16.1 Significantly reduce all forms of violence and related death rates everywhere HELPING OUR 16.2 End abuse, exploitation, trafficking and all forms of violence against and torture of children 2
17.16 Enhance the global partnership for sustainable development 17.17 Encourage and promote effective public, public-private and civil society partnerships
None of our cobalt or copper production We acknowledge the important role that As such, we support: comes from artisanal and small-scale ASM plays in supporting much-needed ■ External initiatives focused on addressing mining (ASM). Our Clean Cobalt Framework livelihoods. This need is driven by structural the socio-economic drivers and potentially (p. 84) ensures that no cobalt is sourced conditions in the DRC, including inadequate negative impacts that can be associated AND WELL-BEINGAND from ASM, whilst also helping improve access to technical education and related COMMUNITYDEVELOPMENT with ASM – with a particular focus on conditions for local people. This is in the employment opportunities for a growing alternative livelihood programmes and the context of ongoing concern amongst youth demographic. The challenge is transitioning of children and young people 3 international cobalt value chain actors particularly acute in our operating regions, out of ASM activity about the potential social and which have experienced high levels of environmental risks associated with cobalt inward economic migration. ■ Advocacy for the achievement of supplied from the DRC (a country which responsible external value chains for accounts for more than 65% of global cobalt (i.e. outside of our own production) supply). This is often linked to the negative (p. 84–85) impacts that can be associated with ASM, including child labour and other human rights, safety and environmental issues.
While ASM production is absent from our value chain, ASM activity is present STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL in the vicinity of all our DRC sites, with the exception of Frontier. The situation has 4 been highly dynamic, and in 2019 resulted in a number of illegal ASM occupations of formal mining concessions in the Kolwezi region (including at Metalkol RTR, p. 56).
© Photo courtesy of Good Shepherd International Foundation WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 55 5 SECTION 3: COMMUNITY DEVELOPMENT AND WELL-BEING
OUR APPROACH TO ARTISANAL AND SMALL-SCALE MINING CONTINUED
These details are documented and The Government of the DRC took the Key issues and initiatives managed by an internal ASM specialist and decision to undertake an involuntary reviewed by the Joint ASM Working Group. eviction, which resulted in the peaceful Addressing ASM activity at our eviction of all the illegal miners – in line operations in the DRC ASM occupation at Metalkol RTR with DRC law and without any injuries We manage ASM activity and its associated being reported. risks through our integrated Safety, Health In 2019, a significant number of artisanal and Sustainability (SHS) Management miners occupied areas of our concession External partnerships at System. This includes dedicated policies, at Metalkol RTR for a period of around procedures and management plans for four months. This was caused, in part, by Metalkol RTR human rights and ASM management. military-led evictions of large numbers of In line with our Clean Cobalt Framework We also maintain ongoing dialogue illegal miners at neighbouring industrial (p. 84), we support a range of initiatives to with ASM communities to help build mining concessions. The occupation was help improve the lives of local communities constructive relations. primarily focused on the Musonoi River near Metalkol RTR. This includes a focus area, a large submerged historical copper on helping children transition out of small- Any potential grievances are managed tailings deposit. scale mining, and on strengthening the through our established grievance capacity of local communities to address procedure (p. 47). In 2019, we received None of the illegal miners entered Metalkol this important challenge. In 2019, this one grievance from small-scale mining RTR’s securely fenced working sites. As support included: communities. This related to a pipe such, no ASM material entered our supply ■ The Good Shepherd International chain. However, a fire that was started dislocation at Metalkol RTR, which Foundation (‘GSIF’): Ongoing support during the occupation damaged the caused flooding at a nearby ASM site. for our three-year partnership, which Kingamyambo pipeline and resulted This grievance was resolved in 2019, aims to improve living conditions in local in the loss of approximately five days including through the payment of communities, especially for women and of production. compensation to the impacted parties. children. Since its launch in 2017, ERG has pledged more than US$1 million to During the occupation, we maintained close We have established a dedicated ASM support the programme. During the year, engagement with the miners and impacted policy and ASM Management Plan, this included the provision of funding for: which outline our approach to managing local communities. We also requested an – The ongoing implementation of the ASM activities on and around our increased presence from the state police Bon Pasteur intervention programme in concessions. In addition, at Metalkol RTR to supplement our security provisions. Kolwezi near Metalkol RTR. This provides we have established a cross-departmental All state police officers received training on educational support to children involved Joint ASM Working Group. This group meets the application of the Voluntary Principles in ASM activities, capacity building for regularly and is responsible for reviewing on Security and Human Rights, and no young women, and support for and assessing ASM-related information, rights issues were reported as a result alternative livelihoods risks and incidents – and for developing of the increased presence. recommendations for remediation and/or mitigation measures.
© Photo courtesy of Good Shepherd International Foundation/Nyokabi Kahura.
56 INTRODUCTION
– The construction of the Bon Pasteur ■ ‘Children Out of Mining – Northern Performance Child Protection Centre in the Kolwezi’ programme: In 2019, we community of Kanina in Kolwezi. The continued to support a major one-year Our investment in GSIF is helping centre, which will support the activities partnership with Pact, an international vulnerable children access basic education of the above-mentioned programme, development organisation and co- and other services – including counselling, was opened in September 2019 and founding member of the Global Battery healthcare and referral systems for physical will support up to 1,000 children from Alliance (p. 85). 1 The programme aims abuse. During the year, these activities ASM communities in 14 newly equipped to strengthen child protection in contributed to: classrooms. This includes the provision communities in Northern Kolwezi 2 near ■ The protection of 2,263 children from of free education as well as healthcare, Metalkol RTR through a range of tailored FOR THE FUTURE
the worst forms of child labour, including PREPARING OUR BUSINESS nutrition, counselling and human rights capacity-building interventions. It will where it is linked to ASM activity training. The project also included the support 120 miners aged between 15 construction of two boreholes to supply and 17 (over 50% of whom are girls) by ■ The training of 182 girls and 64 women 1 clean water to communities in Kanina delivering six-month vocational training to help them access the labour market – Scoping studies for a further child programmes (including in mechanics, ■ A total of 529 women gaining alternative protection centre in the community welding and sewing). This will be livelihood skills and enhanced incomes of Tshala in Kolwezi accompanied by short-term remuneration to help them transition into alternative In addition, in late 2019 and early 2020 the – A pre-feasibility study for the employment ‘Children Out of Mining – Northern Kolwezi’
development of a new social business programme delivered awareness training model in Tshala, with a focus on In 2019, we also continued to support on the risks associated with child labour agricultural and fish farming. The advocacy for the achievement of to 4,435 community members. full feasibility study was completed responsible global cobalt supply chains. in 2019, and the programme will be This includes our membership of the Global
launched in 2020 3 PEOPLE THRIVE Battery Alliance (GBA) as well as the Cobalt Planning for the future HELPING OUR – The rollout of the Bon Pasteur Institute, through which we implement the Future planning in the DRC is currently intervention programme in Tshala. Cobalt Industry Responsible Assessment focused on: 2 This included the launch of two farming Framework (CIRAF).4 These initiatives are cooperatives (involving 120 community covered in further detail in ‘Responsible ■ Ongoing support for the Bon Pasteur members), the provision of training in supply chains ’ on p. 84–85. intervention programme in Kolwezi financial management, and the communities establishment of two community savings groups. In addition, the ■ Commencing construction of a new child programme provides capacity-building protection centre in Tshala near Metalkol support for young women, as well as RTR to help the Good Shepherd community awareness training on International Foundation expand its Bon women and girls’ rights Pasteur intervention programme, as well as the launch of the new social business model programme AND WELL-BEINGAND COMMUNITYDEVELOPMENT ■ Continued support for the rollout by Pact of the ‘Children Out of Mining – Northern 3 Kolwezi’ programme. This will include the completion of vocational training for 120 young people
■ Ongoing advocacy for responsible cobalt supply chains, including the establishment of a Child Labour Coalition Fund and standards for ASM through the Global Battery Alliance (p. 85) STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
1 Pact: pactworld.org 2 The programme focuses on 12 villages in Northern Kolwezi, selected because of the close proximity of residential areas to active mine sites, and therefore high risk of child labour in mining. 3 World Economic Forum Global Battery Alliance: weforum.org/projects/global-battery-alliance 4 The Cobalt Institute: cobaltinstitute.org WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 57 5 ENVIRONMENTAL STEWARDSHIP
SECTION 4: ENVIRONMENTAL STEWARDSHIP
2019 HIGHLIGHTS
Ongoing implementation The launch of multiple Implementation of of a 10-year, waste reprocessing a Group-wide risk approximately US$350 initiatives at assessment of our million programme Kazchrome large-scale waste to significantly reduce storage facilities our emissions to air in Kazakhstan
58 MATERIAL ISSUES INCLUDE
MANAGING IMPACTS ENERGY AND WASTE MANAGEMENT
ON AIR AND WATER CLIMATE CHANGE INTRODUCTION
Read more on p. 60 Read more on p. 64 Read more on p. 67
Under our 2025 Strategy,1 we have prioritised the sustainable development of our host regions. Amongst other things, this means minimising any environmental harm – including through the management of our climate change impacts and waste.
The majority of our operations in Kazakhstan are certified to the ISO 14001 environmental management systems standard. In Africa, our existing Safety, Health and Sustainability (SHS) management system is informed by ISO 14001. FOR THE FUTURE PREPARING OUR BUSINESS 1 1 Please note that our 2025 Strategy is currently under review as we address the immediate impact of the 2020 COVID-19 outbreak and the longer-term implications for the Group.
PEOPLE THRIVE HELPING OUR 2 AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 59 5 SECTION 4: ENVIRONMENTAL STEWARDSHIP
MANAGING IMPACTS ON AIR AND WATER
Sustainable development of our host regions: Under our 2025 Strategy, we have prioritised our contribution to the well-being of communities in our regions of operation. This includes a focus on avoiding and/or minimising any potential negative environmental impacts, including through the maintenance of relevant international standards.
Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 3.9 By 2030, substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination
6.3 By 2030, improve water quality by reducing pollution, eliminating dumping and minimizing release of hazardous chemicals and materials
8.4 Improve progressively, through 2030, global resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation
9.4 By 2030, upgrade infrastructure and retrofit industries to make them sustainable
12.4 By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle
Our international standard environmental Aksu Ferroalloys Plant and EEC’s Vostochny management systems are heavily focused coal pit. Despite being compliant with NEW ENVIRONMENTAL on the detection, prevention and/or regulatory emission limits, these minimisation of harmful discharges to local contribute to a larger collective impact STRATEGY IN water systems and to the air. on local air quality, involving other actors. KAZAKHSTAN This includes peer companies involved in Key control measures include, amongst oil refining, chemical production and heavy In 2019, we developed – in support other things: manufacturing, local transportation activity of our Group 2025 Strategy – a new and domestic households that rely on coal Environmental Strategy. Amongst ■ The treatment of emissions to air for domestic heating. other things, this is focused on the ■ Ongoing air and water quality monitoring following five pillars: ■ The treatment and recycling of process In this context, we are working actively ■ Emission reduction water to better understand and reduce our ■ Water conservation ■ Technical and engineering controls to emissions to air. The delivery of assurance minimise pollution risks to a range of stakeholders in Kazakhstan ■ Restoration of disturbed lands is important given evidence of growing ■ Waste management stakeholder concern over air pollution ■ Key issues and initiatives outside of our operating regions. Biodiversity conservation In Kazakhstan, our most significant impact In addition, heavy industrial, metallurgical on air quality takes place in and around discharges to the environment, the and mining operations carry a range of the industrial city of Pavlodar. The area potential for unplanned discharges, inherent risks in relation to their potential hosts Pavlodar Aluminium Plant and KAS. the potential seepage of process water to impacts on water quality, which require our Furthermore, the broader region hosts the environment, and other related issues. ongoing management. These include risks EEC’s Aksu Power Plant, Kazchrome’s relating to the quality of our planned water
60 INTRODUCTION
Managing our emissions In 2019 we undertook multiple initiatives In addition, we developed a staged filters in Kazakhstan to improve our emissions performance upgrade programme at Aluminium of Air emissions in Pavlodar – with a particular focus on Kazakhstan’s power station, with plans to Kazchrome’s Aksu Ferroalloys Plant. do the same at the power station in Aksu. We are actively implementing the emission These included: reduction pillar of our new Environment Outside Pavlodar, we continued preparing Strategy (see opposite). This is intended to ■ Completion of a major rebuild of smelter for the conversion of SSPGO’s Kacharsky bring our operations in Kazakhstan – and furnace No. 64, including the gastight boiler house from coal to gas. This project, our metallurgical and power generation sealing of the furnace (p. 25). This will – which is due for completion in the 2021- operations in particular – closer in line with in conjunction with two new gas filters – 2022 period, will: result in fewer emissions to air FOR THE FUTURE
relevant EU air quality standards relating PREPARING OUR BUSINESS ■ to particulate matter. ■ Preparation for filter upgrades at three Reduce its particulate emissions furnaces at Smelting workshop No. 4 ■ Significantly reduce its NOx 1 and 1 For example, whilst particulate emissions 2 ■ A pilot project that eliminates the SOx emissions from our existing power generation and crushing, tromelling and melting process ■ Significantly reduce its GHG emissions metallurgical plants are in line with local for fines at Smelting workshop No. 4 regulatory requirements, they are ■ Improve overall efficiency through the use of innovative casting nonetheless significant. We plan to reduce equipment. This will, in combination these markedly to within EU limits ahead Water emissions with the fitting of modern filters, reduce of the imposition of Kazakhstan’s new We apply a range of measures to avoid or particulate emissions – whilst also Environmental Code. This ambitious minimise our emissions to water, including: reducing energy consumption and initiative is expected to require expenditure unit costs ■ Ongoing water quality monitoring of approximately US$350 million over to identify irregular discharges a 10-year period. We plan to apply similar measures at our ■ Treatment and recycling of wastewater PEOPLE THRIVE
other operations in the region. Indeed, in HELPING OUR Key areas of focus include the application and process water early 2020, we completed the installation of advanced gas treatment technologies ■ The application of engineering controls of an advanced filter at Pavlodar Aluminium and the conversion of selected boiler and the ongoing auditing of our hydraulic 2 Plant’s sintering shop. A second filter houses to gas (where possible). structures is to be installed during 2020. Once commissioned, these filters are expected ■ Measures to minimise our water to remove up to 2,500 tonnes of particulate discharges, including the expansion matter per furnace. of our in-pit drainage
1 Nitrogen oxides. 2 Sulphur oxides. AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 61 5 SECTION 4: ENVIRONMENTAL STEWARDSHIP
MANAGING IMPACTS ON AIR AND WATER CONTINUED
We are planning a range of additional Water emissions In terms of water quality, we carry out measures under our Environmental At Frontier we pump significant volumes of both discharge monitoring, as well as Strategy. Examples include: groundwater from the pit into the natural groundwater monitoring. In the latter case, this includes the use of observation ■ Aksu Ferroalloys Plant: Construction of environment. A decantation system is in wells around potential pollution sources – wastewater treatment plants, the output place to remove suspended solids when including our reservoirs, waste landfill of which will be reused in the production needed and the water is monitored on sites, tailings storage facilities, slag process a regular basis to ensure quality remains within regulatory limits. dumps, ash dumps and similar structures. ■ Aluminium of Kazakhstan: Reconstruction of the ash dump, including For further details on how we manage Africa the installation of underground barriers pollution risks at Metalkol RTR, please We apply a range of measures to monitor to prevent groundwater seepage see p. 68. air and water emissions, including: ■ Aluminium of Kazakhstan: Construction ■ The preparation of air and water of enhanced wastewater treatment Pollution monitoring monitoring plans by independent third facilities Kazakhstan parties, covering both the sites themselves ■ Donskoy GOK: Construction of mine and local communities. These plans are water treatment facilities at Sump No.8, We apply a range of air quality monitoring measures, including regular monitoring compliant with national standards, with the output again to be reused in and are implemented through our SHS production of gas and particulate emissions to air, at and around our major plants. We also use management system (including detailed spectrometry to generate additional insight requirements such as parameters to be Managing our emissions in Africa into the exact composition of our emissions. monitored, monitoring locations, etc.) Air emissions ■ The application of Isometrix SHS Each of our active sites in the DRC has a Furthermore, we have established management software. This helps us legally mandated Environmental and Social automated air quality monitoring around manage and analyse our monitoring Impact Assessment (ESIA) in place, prepared Aluminium of Kazakhstan’s operations in results, take action where needed and by third-party experts. These contain air Pavlodar. A remote station delivers real-time ensure the proper resolution of any quality management plans, which include data from the edge of defined ‘sanitary identified issues relevant requirements for the regular protection zones’. This real-time data ■ Annual reporting of our monitoring monitoring of our air emissions (e.g. enables us to adjust production activity results to the DRC Government. Where particulates, SOx and NOx – see below). if there is a risk of excessive emissions. needed, results are independently We also carry out preparatory work to roll reviewed by third-party consultants out similar systems at EEC and Kazchrome. to assure monitoring quality
Furthermore, we carry out on-site air quality monitoring at Metalkol RTR using an online monitoring station. Supplementary air quality monitoring is carried out in local villages, as required by the operation’s ESIA.
62 INTRODUCTION
FOR THE FUTURE PREPARING OUR BUSINESS 1
PEOPLE THRIVE HELPING OUR Whilst some excessive dust depositions Performance Preparing for changes were identified near Frontier’s treatment 2 to Kazakhstan’s In 2019, our particulate and gas emissions facilities, corrective actions have been regulatory environment to air in Kazakhstan were well within implemented, including the installation permitted limits. Nonetheless, we of dust suppression systems. experienced an increase in our emissions Kazakhstan’s new Environmental Code compared to the prior year, primarily driven Operational change at Boss Mining, Comide is expected to enter into force in 2021. by the use of more locally-sourced reducing and Chambishi Metals (p. 43) meant their The Code is likely to require us to agents at Aksu Ferroalloys Plant. Likewise, emissions to air were reduced. apply ‘best available techniques / our water emissions in Kazakhstan were technologies’ (or BAT) where necessary, within permitted limits. and will be enforced through a new Planning for the future system of integrated environmental At Frontier, water discharged from the pit We will continue to advance our ongoing
permits. It is expected that these WELL-BEINGAND is generally of adequate quality, although projects, including: COMMUNITYDEVELOPMENT new requirements will be aligned with occasional heavy precipitation events relevant EU environmental standards. ■ The rollout of advanced particulate during the rainy season did result in 3 filtration technology at metallurgical (anticipated) increases in the concentration In 2019, we initiated a technical review plants and selected power stations of suspended solids. Water quality to assess our alignment with relevant in Pavlodar and Kostanay regions monitoring was subject to independent EU BAT reference documents, as well third-party review (including supervised ■ The piloting of our GHG capture the Russian BAT directory. The first sampling) and no further issues were (and filtration) technology (p. 28) at the technical audits took place at the observed or recorded. The ramp-up at boiler facility of EEC’s Vostochny coal pit end of 2019 at EEC and Aluminium Metalkol RTR meant the air and water ■ The conversion of SSPGO’s Kacharsky of Kazakhstan. This will be followed emissions at this site were increased as a boiler house from coal to gas by audits at Kazchrome’s ferroalloys consequence of volumes processed and plants in Aktobe and Aksu in 2020. ■ The establishment of automated air are subject to regular monitoring as well monitoring around the boundaries of as sample analysis by an independent The results will provide insight into EEC’s and Kazchrome’s ‘sanitary zones’ accredited laboratory. An independent STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL the investments required to achieve third-party review of relevant processes future compliance with the expected In addition, we plan to execute a and performance at Metalkol RTR is requirements of the new Code. Key comprehensive environmental lifecycle 4 planned for 2020. areas of focus include particulate assessment of our ferrochrome production. emissions, energy efficiency, This is with the aim of ensuring we better Dust deposition continues to be a general environmental management systems understand, manage and communicate challenge at our sites in the DRC, primarily and automated monitoring systems. the full scope of our product impacts. during the dry season. This reflects the local environment, as well as bushfires, slash and burn agricultural practices, and a general lack of paved roads, etc. In terms of our own dust emissions, we use water bowsers and chemical suppressants to reduce the impact of onsite traffic. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 63 5 SECTION 4: ENVIRONMENTAL STEWARDSHIP
ENERGY AND CLIMATE CHANGE
Sustainable development of our host regions: Under our 2025 Strategy, we have prioritised our contribution to the well-being of communities in our regions of operation. Our focus on maintaining international environmental standards to support local well-being includes the management of our carbon emissions and the use of renewable energy.
Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 7.2 By 2030, increase substantially the share of renewable energy in the global energy mix 7.3 By 2030, double the global rate of improvement in energy efficiency
8.4 Improve progressively, through 2030, global resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation
9.4 By 2030, upgrade infrastructure and retrofit industries to make them sustainable
12.2 By 2030, achieve the sustainable management and efficient use of natural resources
13.2 Integrate climate change measures into national policies, strategies and planning 13.3 Improve education, awareness-raising and human and institutional capacity on climate change
ERG remains one of Kazakhstan’s largest Key issues and initiatives Energy efficiency electricity producers (16% of national Kazakhstan generation). Most of our total installed Policy context In 2019, we applied 95 energy-saving capacity of 3,362 MW is used to service our measures across our operations in own operations. Of the power we consume Kazakhstan’s 2017 National Plan and Kazakhstan under our 2016-2020 Energy 82%1 (2018: 83%) is generated using coal emissions trading scheme do not currently Efficiency Programme. These are in produced by EEC. apply restrictions on our emissions. Nonetheless, Kazakhstan is a signatory addition to other projects referenced in the ‘Technology and efficiency’ (p. 27) and The majority of our energy-producing to the 2015 Paris Agreement on climate ‘Managing impacts on air and water’ sections operations in Kazakhstan are certified change and plans to reduce national GHG (p. 60), that are likely to improve our carbon to the ISO 50001/EN 16001 energy emissions by 15% (unconditional)/25% emissions. Examples of our energy-saving management system standard.2 (conditional) by 2030. This means that we could face future restrictions. As such, we measures included: In the DRC, the majority of electricity are working to reduce our GHG emissions. ■ The replacement of lighting with energy- we use is generated from hydropower. saving lamps at EEC, Kazchrome, Our GHG emissions in the region largely Aluminium of Kazakhstan, Shubarkol relate to the operation of our vehicles Komir and KAS and emergency generators. ■ Optimisation of an air separation unit at Aktobe Ferroalloys Plant
■ Installation of a reactive power compensator at SSGPO
■ Reconstruction of the thermal insulation on steam pipelines at Aluminium of 1 The slight decrease against the prior year is due to increased non-coal energy production at 3-Energoortalyk. Kazakhstan and Kazchrome 2 In 2019 we continued to prepare for the re-certification of relevant assets in Kazakhstan to the 2018 update of the standard by 2021. All other operations in Kazakhstan apply energy management systems that are otherwise aligned with the standard.
64 INTRODUCTION
Collectively, these 95 initiatives reduced We are planning to establish renewable Energy security in Africa our total consumption by more than energy capacity of 150-180MW using In 2019, DRC and the Zambian Copper 600 terajoules and saved us around wind turbines. In 2019, wind monitoring Belt experienced power shortages due to US$1 million (2018: 2,021 terajoules/ at two potential sites for wind farms in the droughts in Zambia (a key supply country) US$2.2 million). Aktobe and Pavlodar regions – one near that affected hydropower generation Kazchrome’s Donskoy GOK operation there. A regional power surplus is expected We also continued to upgrade (through and one near EEC’s Vostochny coal pit – in 2020 once Zambian utility ZESCO energy service contracts) our lighting demonstrated strong potential. We completes its 750MW Kafue Gorge systems using high-efficiency LED bulbs are now examining the possible transition Lower hydropower project. at SSGPO. In 2020 we plan to sign similar of these projects to a feasibility stage. FOR THE FUTURE PREPARING OUR BUSINESS energy service contracts to cover lighting In 2019, we focused on optimising the replacement at all SSGPO subsidiaries In the interim, we carried out a pilot project collective power supply arrangements of 1 and Kazchrome. at Shubarkol Komir that saw the installation our operations in the region. This was in a of a mini solar- and wind-powered lighting context in which Boss Mining was placed In addition, we initiated energy audits at system. In addition, we have implemented, into care and maintenance and Frontier’s all of our operations in Kazakhstan, which alongside the Coalition for Green Economy power supply contract came to an end. are planned to be completed by the end of and Development (‘G-Global’), a Green Changes included a transfer of power 2020. The outcomes will inform an energy Office project at our corporate office in generated by DRC utility SNEL from Boss efficiency action plan. Nur-Sultan. This includes the installation to Frontier, reducing the latter’s reliance
of solar panels and LED lights, amongst on more expensive imported power. Renewable energy other environmentally friendly measures. The overall result has been lower costs and ongoing supply stability. Kazakhstan has national targets in place Metalkol RTR is investigating the potential to produce 3% of energy from alternative integration of photovoltaic solar panels into energy by 2020 (wind, solar), 10% by 2030 PEOPLE THRIVE its (diesel) emergency power arrangements, HELPING OUR (wind, solar) and 50% by 2050 (wind, solar, to both reduce costs and emissions to air hydro and nuclear). In this context, (including GHGs). As noted, the fact that 2 conventional energy producers – including our other operations in the region largely EEC – are required to purchase defined rely on hydropower significantly reduces amounts of renewable energy (which can their carbon footprint. significantly increase their cost base) or to establish their own renewable energy generation capacities. AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
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ENERGY AND CLIMATE CHANGE CONTINUED
ENERGY CONSUMPTION BREAKDOWN (terajoules) Performance Type Energy source 2019 2018 2017 2016 DIRECT Coal 217,768 227,368 226,405 225,288 In 2019, we used 270,939 terajoules of energy globally (2018: 275,596 terajoules), Petrol 138 147 144 160 with around 82% of direct energy sourced Residual fuel 7,130 7,284 7,185 6,909 from coal (2018: 83.5%). This slight decrease Diesel 9,599 8,606 8,038 8,079 in consumption reflects decreased heat Natural gas 31,306 28,949 19,921 18,338 and steam consumption (driven by lower production and warmer weather), as well Kerosene 14 9 15 15 as the impact of our energy efficiency Liquefied gas (new) 1 measures and furnace modernisation SUBTOTAL 265,956 272,362 261,708 258,789 efforts. This was partially offset by increased INDIRECT 1 Electricity 4,716 2,943 2,537 2,377 gas-powered electricity generation at 3- Energoortalyk and indirect electricity Heat 204 211 207 278 consumption (due to delayed Steam 63 80 69 77 commissioning of EEC’s Power Unit No.5). SUBTOTAL 4,983 3,234 2,813 2,732 TOTAL 270,939 275,596 264,521 261,521 Furthermore, enhanced production efficiency at Kazchrome meant that we 1 Excluding internal purchases of internally-generated power. were able to increase output there using similar amounts of electricity – enhancing GREENHOUSE GAS EMISSIONS (tonnes CO2e) the energy and carbon intensity of our 2019 2018 2017 2016 ferroalloy products. Direct emissions 24,026,847 24,672,108 24,014,808 23,768,926 Indirect emissions 224,837 59,026 55,572 365,746 Planning for the future TOTAL 24,251,684 24,731,134 24,070,380 24,134,672 In 2020, we plan to further explore how to reduce our GHG emissions in Kazakhstan – including through energy efficiency and potential renewable energy opportunities. In addition, we will continue examining the generation of energy using off-gas from our ferroalloy production process. This includes:
■ The potential construction of an off-gas-fuelled power station at Aktobe Ferroalloys Plant
■ The conversion of the boiler house at Aksu Ferroalloys Plant to off-gas
Furthermore, we plan to enhance our internal capabilities with respect to the assessment and management of our carbon footprint. World Economic Forum project: Using blockchain to promote responsible sourcing and manage the carbon lifecycle In Africa, the fact that some of our sites have been placed into care and ERG was one of the seven founding Key areas of focus include: maintenance means emissions from members of the Mining and Metals the region are expected to fall in 2020. ■ Cross-lifecycle carbon emissions tracking Blockchain initiative, launched by the World Economic Forum in 2019. ■ Supply chain transparency and ERG is working actively with Glencore, traceability Tata Steel, Anglo American, Minsur, ■ Enhanced efficiency Antofagasta and Klöckner & Co to apply blockchain technology to promote The initiative pools resources and costs, sustainability practices in the metals increases speed-to-market and improves and mining sector. industry-wide trust in a way that cannot otherwise be achieved by The initiative is focused on the pursuit acting individually. It aims to promote of value chain transparency and standardisation and improve efficiency connectivity, in order to strengthen – whilst also helping satisfy ever-growing industry trust and reputation, whilst stakeholder demand for greater insight also delivering value for the entire metals into the sustainability performance of and mining ecosystem. entire value chains.
66 INTRODUCTION
WASTE MANAGEMENT
Sustainable development of our host regions: Under our 2025 Strategy, we have prioritised our contribution to the well-being of communities in our regions of operation. Our focus on maintaining international environmental standards with respect to water, air and soil includes strict regulatory compliance regarding the physical and environmental management of our waste. FOR THE FUTURE PREPARING OUR BUSINESS 1 Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 9.4 By 2030, upgrade infrastructure and retrofit industries to make them sustainable
12.2 By 2030, achieve the sustainable management and efficient use of natural resources 12.4 By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle PEOPLE THRIVE 12.5 By 2030, substantially reduce waste generation through prevention, reduction, recycling HELPING OUR and reuse 2
Tailings and other high-volume waste As part of this programme, we also: As part of this process, we check:
Our mining and metallurgical operations ■ Initiated a third-party risk assessment ■ Contractors have appropriate processing produce large volumes of waste rock, programme covering 14 existing facilities areas, equipment, transport and qualified tailings and sludges – whilst our generation in Kazakhstan, with the first phase of staff to take and process relevant waste, of coal-fired power produces large volumes the process focused on Aluminium of as well as relevant environmental permits of ash. These deposits are managed in line Kazakhstan’s sludge storage facility in ■ That the recycling or processing method with our established environmental Pavlodar. Assessment work on the other to be employed by the contractor or management systems and local regulations facilities will continue in 2020. their subcontractors is specified in (including an annual audit conducted by ■ Commissioned a third-party risk review our contracts external experts). This includes a focus on
of our new tailings storage facility (TSF) WELL-BEINGAND preventing groundwater and surface water COMMUNITYDEVELOPMENT at Metalkol RTR against applicable In 2019, it was discovered that three waste pollution, the management of fly ash/dust, international standards contractors serving the Aktobe Ferroalloys as well as the physical integrity of large- Plant had not disposed of Amber category 3 scale waste storage facilities. ■ Had all of our other TSFs in Africa independently risk assessed by waste (which had been transferred to them in 2018) as per the terms of their contracts. The fatal dam collapse at Vale’s Córrego specialists. Identified issues are in the process of being resolved Instead, the waste was dumped on open do Feijão mine near Brumadinho, Brazil, in plots of land and in a rented warehouse January 2019 highlighted the potential risks in Aktobe. Although this waste no longer associated with the management of such In addition, we achieved the extension of our environmental permit at our BAMIN legally belongs to Kazchrome, we are structures. In 2019, we implemented a considering various options to ensure Group-wide, internally-managed risk iron ore mine, despite a significant its proper disposal. assessment of our large-scale waste toughening in the regulation of TSFs storage facilities. This prompted the post-Brumadinho. This partially reflected the fact that we had already changed the In Africa, scrap steel from Frontier is development of a management action plan, collected by a government-approved
TSF design from an upstream model to STEWARDSHIP as well as the engagement of third-party company and waste oil is collected by ENVIRONMENTAL international experts to support our risk a safer, more stable downstream model. our supplier or used (with government management efforts. approval) by a local cement factory. 4 Other industrial waste Meanwhile Metalkol RTR has implemented Our operations also produce a range of a Solid Waste Management Plan, which operational waste such as metal scrap, includes the responsible collection and wood, metal and other materials. In disposal of hydrocarbon wastes by a Kazakhstan, this is categorised as ‘Green’, contractor, and the safe incineration ‘Amber’ or ‘Red’ to reflect relative levels of hazardous wastes. of potential hazard. Red or Amber waste is collected, transported, recycled and/or disposed of by suitably qualified specialist service providers. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 67 5 SECTION 4: ENVIRONMENTAL STEWARDSHIP
WASTE MANAGEMENT CONTINUED
We apply a comprehensive air quality Waste reprocessing Key issues and initiatives and upstream/downstream water quality In 2019, ERG Recycling focused on monitoring system at the site, to ensure we Cleaning up legacy waste expanding our waste reprocessing efforts, do not contribute to existing water quality at Metalkol RTR including through the following new challenges. Metalkol RTR reduces its annual programmes concentrated on Kazchrome: Our Metalkol RTR tailings reprocessing water consumption through the re-use ■ The launch of a project to process the facility near Kolwezi in the DRC will actively (using an on-site water treatment facility) 14.7 million tonne slag stockpiles at remediate decades’ worth of historical, of process water. third-party waste mismanagement and Aktobe Ferroalloys Plant (see box below). land degradation that took place prior This project will process ever-increasing ERG Recycling: Driving waste to our ownership. This involved: volumes until the slag dump is completely reprocessing and commercialisation disposed of ■ The dumping of tailings into the Musonoi in Kazakhstan River valley, with more than 83.2 million In 2019, the establishment of ERG tonnes of tailings spread over an area 11km Recycling marked a major expansion Slag reprocessing at long and up to 2.5km wide – impacting of our waste reprocessing, recycling Aktobe Ferroalloys Plant the local water system and beyond and commercialisation efforts. (Kazchrome) ■ The dry-stacking of tailings at the Kingamyambo Tailings Dam, which ERG Recycling not only supports the In 2019, ERG Recycling reprocessed contains 41.1 million tonnes of tailings ‘circular economy’ concept, but also and enriched 50,000 tonnes of stale and produces dust emissions helps reduce our environmental liabilities. slag from Aktobe Ferroalloys Plant’s waste stockpiles. This produced Metalkol RTR is extracting (through hydraulic Waste commercialisation around 2,800 tonnes of 28% mining and dredging), reprocessing and We sell aluminium slag, carbon foam, re-depositing these tailings into a modern, ferrochrome metal concentrate, carbon-bearing aspiration powder, which contained approximately closely-managed and centralised TSF. microsilica, used refractory linings and This facility is operated by a dedicated 800 tonnes of pure ferrochrome bauxite tailings, as well as other industrial and a large volume of inert materials international contractor and third-party waste. All sold products are used as raw specialist. It is subject to regular inspection, for use in construction. In addition, materials in other industries. In addition, ERG Recycling reprocessed crust slag, monitoring and reporting, supported in 2019 ERG Recycling continues to explore other by the appointment of a dedicated Engineer producing around 3,000 tonnes high-tech opportunities, including a focus of pure ferrochrome. of Record and an independent laboratory. on rare earths, the production of specialised cement from metallurgical waste as well as ERG Recycling plans to expand this other potentially profitable opportunities. process in 2020 by reprocessing 100,000 tonnes of stale slag to produce 6,000 tonnes of metal concentrate – which in turn is expected to contain 1,500 tonnes of pure ferrochrome. Similarly, ERG Recycling aims to produce more than 6,500 tonnes of pure ferrochrome from crust slag.
68 INTRODUCTION
■ The processing of our (previously) closed Management of our ash dump Planning for the future Vostochny Kamys mine’s approximately We are in the process of raising Aluminium 1 million tonne manganese dumps in the of Kazakhstan’s power station’s existing In 2020, we plan to continue work on the Karaganda region, and the production ash dump. This will avoid the need for third-party audits of our tailings storage and sale of concentrates to third parties the establishment of a new ash dump, (and similar) facilities in Kazakhstan and both within and outside Kazakhstan helping minimise the operation’s footprint. at Metalkol RTR. We will also investigate ■ The establishment of a process to We are also installing a modernised dust opportunities for the future rehabilitation produce chrome from slag at Aktobe suppression system, as well as a new water of those areas around the Musonoi River Ferroalloys Plant’s smelting workshops. collection and return system around the that will gradually be cleaned up by Metalkol RTR in the DRC. This will see to the extraction of 700 dump perimeter. FOR THE FUTURE tonnes of saleable chrome per month PREPARING OUR BUSINESS In addition, ERG Recycling is planning to ■ The beginning of construction of a new Furthermore, ERG Recycling conducts a further its activities in Kazakhstan, including: 1 workshop at Aktobe Ferroalloys Plant to number of value-adding projects focused reprocess slag, dust and other fine waste, on ash, including the production and sale ■ The construction of a fine slag enrichment feed it back into primary production of microspheres from EEC’s and Aluminium facility at Aksu Ferroalloys Plant, which and produce building materials. of Kazakhstan’s ash dumps. (once operational in 2021) will enable the The commissioning of the workshop processing of 748,000 tonnes of fine slag is planned for 2020 Performance per year to produce more than 70,000
tonnes of concentrate with at least 60% These projects supplement our existing The ramping up of production at Metalkol metal content programmes, including those focused RTR meant that we reprocessed a total ■ The launch of a workshop at Aktobe on reprocessing: of 5,154 kt of legacy tailings in 2019 Ferroalloys Plant to produce building (2018: 1,328 kt), prior to their relocation ■ High-grade waste and dust produced materials using slag and create chromium
to our centralised, modern tailings dam. PEOPLE THRIVE during ferroalloys production, which is briquettes by vibro-pressing pulverised HELPING OUR fed back into the production process ferroalloy dust captured in the plant’s gas In Kazakhstan, we sold around 177kt filters. This is planned for commissioning ■ Chrome oxide slimes at Donskoy GOK, 2 of waste to third parties (2018: 158kt) worth in 2020. with the aim of adding 700,000 tonnes around US$10.8 million (2018: US$9 million). ■ The use of unique polymer technology of concentrate production per year The two largest contributors in this at EEC to produce building materials from 2022 (‘Slimes 2’ p. 28) regard included ferrous and nonferrous from fly ash scrap, as well as dry ash. In addition, these sales reduced our waste disposal costs by ■ The construction of an enrichment facility around US$1.4 million (2018: US$0.8 million). at the Vostochny Kamys mine. Once fully operational, the facility is expected to produce around 80,000 tonnes of manganese ore concentrate per year
■ The identification of further recycling opportunities at our other operations AND WELL-BEINGAND in Kazakhstan COMMUNITYDEVELOPMENT
In addition, ERG Recycling – in collaboration 3 with ERG’s R&D team – will continue to examine opportunities for the production and marketing of new products from waste, including:
■ Cement and mineral powders from ferrochrome slag (Kazchrome)
■ Rare earths from ash (EEC)
■ Fertilisers and sorbents from weathered coal and rare earths from fly ash (EEC)
■ Construction materials from waste (KAS) STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
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SECTION 5: OUR RELATIONSHIP WITH BROADER SOCIETY
2019 HIGHLIGHTS
US$4,183 M Adoption of our first First independent, Group Supplier Code third-party distributed to our of Conduct assurance of stakeholders our Clean Cobalt Framework at Metalkol RTR in the DRC
70 MATERIAL ISSUES INCLUDE
VA L U E COMPLIANCE RESPONSIBLE GOVERNMENT
GENERATION SUPPLY CHAINS R E L AT I O N S INTRODUCTION AND DISTRIBUTION AND POLICY
Read more on p. 72 Read more on p. 78 Read more on p. 82 Read more on p. 86
Our generation and distribution of economic value represents one of the most important benefits we deliver to our host societies. It is in this context that we have made financial stability a Group priority under our 2025 Strategy.1
We have also prioritised the sustainable development of our host regions – including through community social investment, employment generation, tax payments and the promotion of local content.
In this context, we are committed to nurturing relations of trust and respect with our partners, including our host governments. FOR THE FUTURE PREPARING OUR BUSINESS 1 1 Please note that our 2025 Strategy is currently under review as we address the immediate impact of the 2020 COVID-19 outbreak and the longer-term implications for the Group.
PEOPLE THRIVE HELPING OUR 2 AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
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VALUE GENERATION AND DISTRIBUTION
Sustainable development of our host regions: Under our 2025 Strategy, we have prioritised our contribution to the socio-economic development of communities in our regions of operation. This includes our distribution of economic value, locally, regionally and – more broadly – nationally.
Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 1.2 By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty
8.1 Sustain per capita economic growth in accordance with national circumstances 8.5 By 2030, achieve full and productive employment and decent work for all women and men
9.2 Promote inclusive and sustainable industrialisation and, by 2030, significantly raise industry’s share of employment and gross domestic product
10.2 By 2030, empower and promote the social, economic and political inclusion of all
Our long-term ability to generate Similarly, in Kazakhstan the power we Tax and payment transparency shareholder value is ultimately contingent generate, the rail services we provide Amongst other things, our Group Tax Policy on our generation of shared economic and the machinery we manufacture are commits us to complying not only with the benefits for our other stakeholders. not only used by our own operations, letter but also the spirit of all local laws. This includes our host governments, but also benefit a range of domestic In terms of transfer pricing, we conduct host societies, contractors and suppliers, and industrial customers. all internal transactions on an arm’s length and employees. basis and determine pricing in line with In terms of direct, measurable value the nature of the economic functions distribution, our most important impacts Key issues and initiatives performed by each company (including include the: capital use). Furthermore, we follow the Promotion of broader methods and principles set out in the ■ Delivery of wages and benefits to our economic development OECD Transfer Pricing Guidelines. workers (most of whom live in our local The Board of Managers has approved Our activities generate a range of benefits communities) the Group Tax Policy. The Group Tax for our host economies – and beyond. ■ Payments to our contractors and Department reviews the Tax Policy on The most important example of this is suppliers (many of which are based an annual basis and re-approves it with our production and sale of high-quality, in our countries of operation) the Board of Managers, if necessary. responsibly sourced minerals and metals ■ Payment of interest to finance providers to industrial customers in China, Russia, and dividends to stakeholders In 2019, we rolled out a new ERG Group Tax the European Union and elsewhere. Code of Conduct, aimed at ensuring proper ■ Payment of taxes and royalties to This supports a wide range of third-party implementation of our Group Tax Policy, our host governments activities, ranging from infrastructure legal compliance and the effective development to the application of ■ Distribution of community social management of our risks. This includes affordable battery technology in investment spending to our local detailed guidance with respect to tax electric vehicles (p. 15). communities and beyond reporting, transfer pricing, tax dispute resolution and tax risk management, amongst other issues. The Group Tax Code of Conduct also sets out the Group’s tax assurance process.
72 INTRODUCTION
3 The internal audit function will report any EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI) STATUS OF HOST COUNTRIES non-compliance with the Group Tax Code Actual/potential of Conduct to the Audit Committee and mining locations EITI status (assessment) Board of Managers, as well as to the Group Brazil Non-participant CFO, who will designate the appropriate DRC Participant (meaningful progress) course of remedial action. Kazakhstan Participant (meaningful progress) We continue to engage with the Extractive Mali Participant (meaningful progress) Industries Transparency Initiative (EITI) Mozambique Participant (meaningful progress) 4 processes in our main countries of South Africa Non-participant FOR THE FUTURE operation (DRC, Kazakhstan and Zambia). PREPARING OUR BUSINESS Furthermore, we file the following with Zambia Participant (meaningful progress) the Luxembourg authorities: Zimbabwe Non-participant 1
3 Extractive Industries Transparency Initiative, Countries: eiti.org/countries. ■ Report on Payments to Governments under the EU Accounting Directive 4 As of June 2020. (2013/34/EU) 1 We recognise that some local companies ■ Support local entrepreneurship via our ■ OECD Country-by-Country Report need help in terms of achieving the community social investment (p. 50) under OECD BEPS Action 13 requisite capacity and competitiveness to ■ Engage with local manufacturers to help access commercial opportunities at ERG. them navigate our procurement processes Supporting local economies In 2019, we continued to: through local content ■ Work with the Ministry of Industrial In addition, in 2019 we partnered with In line with relevant local content Development, the National Chamber of the Digital Ventures fund, through which
we support innovative start-ups (p. 52). PEOPLE THRIVE requirements – and subject to our equal Entrepreneurs of Kazakhstan ‘Atameken’ HELPING OUR opportunities policies – we seek to employ and National Centre for Industry and and develop nationals and to purchase Export ‘QazIndustry’ to promote the 2 goods and services from companies in development of new local businesses our host countries.2 to support our activities ■ Implement the Student Entrepreneurship Key categories of products and services Ecosystem Programme (p. 51) that we currently source from suppliers in Kazakhstan include raw materials, fuel and industrial clothing as well as stripping, exploration, drilling and blasting.
1 EU Directive 2013/34/EU: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32013L0034 2 In Kazakhstan, for example, our guidelines note that when choosing between local (i.e. defined, in line with Kazakhstan’s legislation, as Kazakhstan-based producers) and foreign producers, preference will be given (all other things being equal) to local producers. In addition, local law integrates measures to encourage the selection of local producers during AND WELL-BEINGAND COMMUNITYDEVELOPMENT tender processes, whilst our contracts and subsoil licences also incorporate local content requirements. 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
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VALUE GENERATION AND DISTRIBUTION CONTINUED
A total of 46% of the goods, works and Performance Planning for the future services we buy for our operations in In 2019, we generated US$4,872 million Kazakhstan originate from within the Key portfolio development projects in revenues (2018: US$5,353 million) and country (2018: 47%). In 2019, we purchased will continue to deliver benefits to our distributed a total of US$4,183 million to 13% 5 of our goods, works and services stakeholders. This includes, for example: our stakeholders (2018: US$4,381 million). from local producers operating in our ■ Phase 2 of Metalkol RTR (p. 24–25) local mining towns (2018: 15%). 6 Whilst Lower revenues reflected reduced our spending on local producers fell ■ The ongoing expansion of production prices for our high margin products, slightly in 2019, this was reflective of at Kazchrome (p. 25) most notably for ferroalloys and aluminum exchange rate fluctuations. ■ The construction of a new aluminium (p. 14). Our performance was also impacted smelter in Kazakhstan under the KAS-2 by the placing of Boss Mining into care and Where appropriate, we involve local project (p. 25) producers from disadvantaged groups maintenance, as well as reduced production ■ The development of the BAMIN iron ore in our value chain, such as the Society at Chambishi Metals – with resulting project in Brazil (p. 26) reductions in revenue and royalties. of the Blind in Kostanay, Aktobe and Pavlodar regions. Nonetheless, this was partially For further details on these and other offset by the ramp-up of Metalkol RTR. portfolio development projects, please In the DRC and Zambia, our procurement see the ‘Portfolio development’ section spending with locally registered companies In 2019, we paid US$812 million to on p. 24. governments in taxes and duties was around 63% of our overall procurement spend in 2019. Local suppliers were (2018: US$827 million). Our effective In 2020, we will also seek to better contracted for the supply of diesel corporate income tax rate reflects the understand how the COVID-19 outbreak statutory corporate income tax rates in and lubricants, as well as power and (and its economic consequences) is engineering services. the countries where we have our mining likely to affect our ability to generate and processing operations, and where and distribute value – and what action In Brazil, almost 100% (2018: 98%) of we pay more than 94% of our Group we need to take in response. taxes (2018: more than 93%). our procurement spend is on Brazilian suppliers and contractors, and around 28% (2018: 35%) is on companies located in the state of Bahia itself.
5 Including intra-Group purchases. 6 The following mining towns are included in calculations: Aksu, Ekibastuz, Arkalyk, Lisakovsk, Rudnyi and Khromtau.
TAX PAYMENTS AND ROYALTIES BY LOCATION (US$M) TAX PAYMENTS AND ROYALTIES BY TYPE (US$M)
812 297 Total 827 883 Income taxes 269 403 658 Kazakhstan 606 713 26 WHT collected 54 0 from suppliers 30 China 0 0 181 4 Mining taxes 169 Russia 4 1 170 8 Payroll taxes – 88 Switzerland 0 2 borne by 86 75 10 employer Netherlands 12 6 Payroll taxes – 124 collected from 144 10 125 Luxembourg 21 employees 11 26 102 Customs 35 DRC 164 duties 129 16 4 28 Zambia 4 Environmental 6 27 taxes 24 11 Rest of Africa 9 11 19 Property taxes 21 1 21 UK 2 0 23 4 Other taxes 22 Brazil 5 4 19
2019 2019 2018 2018 2017 2017
74 INTRODUCTION
ECONOMIC VALUE GENERATED AND DISTRIBUTED (US$M)
2019 7 2018 2017 Type Detail Kazakhstan Africa Brazil Other Total Total Total Economic value generated Revenue 3,915 776 – 181 4,872 5,353 5,048 Payments to suppliers (operating costs) (1,302) (527) (2) (252) (2,083) (2,155) (1,791)
Economic Employee wages and benefits (547) (203) (1) (83) (834) (857) (754) value Payments to providers of capital (273) (11) – (259) (543) (665) (628) FOR THE FUTURE PREPARING OUR BUSINESS distributed Tax expenses 8 (492) (95) – (18) (605) (589) (660) Community investment spending (110) (8) –– (118) (115) (111) 1 TOTAL (2,724) (844) (3) (612) (4,183) (4,381) (3,944) Economic value retained 1,191 (68) (3) (431) 689 972 1,104
7 For 2019, the margin of ERG’s marketing companies is allocated to ‘Other’ due to the nature of these operations while the sales value (including sales to internal marketing companies) is allocated to the country of products’ origin. 8 This line excludes capitalised costs and employee taxes borne by employees.
LOCAL CONTENT SPENDING IN KAZAKHSTAN (US$M)
Procurement spend type 2019 2018 2017 Total volume of purchases from local producers (including intercompany procurement) 1,541 (-1.2%) 1,559 1,183 PEOPLE THRIVE Total volume of purchases from local producers HELPING OUR (excluding intercompany procurement) 867 (-5.5%) 918 574 2 Share of local procurement in overall procurement 9 46% (-1%) 47% 39%
9 Includes goods, works and services.
AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 75 5 OUR 25 YEAR JOURNEY SECTION 5: OUR RELATIONSHIP WITH BROADER SOCIETY
Supporting socio-economic development in Kazakhstan
In 2019, we commissioned The study analysed ERG’s economic ERG was evaluated in terms of its direct impact across five categories, including impacts as well as its indirect (i.e. the EY to undertake a study its contribution to: impact of our spending on local suppliers and contractors) and induced impacts (i.e. of ERG’s impact at both a ■ The production of goods and services the impact of spending by our employees, as well as our contractors and suppliers). national level and within our ■ Gross Domestic Product (GDP) and Gross Regional Product (GRP) 1 In addition, the study focused on ERG’s four key operating regions. ■ Employment social investment programmes, including ■ Personal income more than 1,400 regional projects ■ Tax revenues focused on social services and utilities, infrastructure and education.
Our national impact
th 2% 5 1.53 US$88M Approximate 5th highest taxpayer Each job in National-level contribution to in Kazakhstan ERG corresponds social investment Kazakhstan’s GDP (2018) to an additional projects (2019) (2013–2018) 1.53 jobs in other economic sectors in Kazakhstan (2018)
BREAKDOWN OF ERG’S TOTAL CONTRIBUTION TOTAL SHARE IN REGIONAL PRODUCTION OUTPUT (2018) TO EMPLOYMENT (2018)
Region % Key products 27% 100% Pavlodar 31 Ferroalloys, Aluminium, 42,200 153,507 Alumina, Energy, Coal 33% Aktobe 14 Ferroalloys, 50,585 Chrome ore 40% Kostanay 16 Iron ore, 60,722 Bauxite Karaganda 2 Coal, Manganese ore Direct Indirect Induced Total
1 Please note that this study did not focus on Nur-Sultan and the Turkistan region. The latter is due to the acquisition of 3-Energoortalyk in 2018.
76 INTRODUCTION
KOSTANAY REGION PAVLODAR REGION
■ US$400 million total impact 2 on GRP in 2018 ■ US$1.4 billion total impact 2 on GRP in 2018 (or 24% of the (or 9% of the regional total) regional total)
■ 46,000 jobs maintained 2 in 2018 (or 9% of the regional total) ■ 40,000 jobs maintained 2 in 2018 (or 10% of the regional total)
■ ■ US$209 million paid in taxes in 2019 US$118 million paid in taxes in 2019 FOR THE FUTURE (or 50% of the regional total) (or 20% of the regional total) PREPARING OUR BUSINESS
■ US$3.3 million in community social investment in 2019 ■ US$8.7 million in community social investment in 2019 1
Rudniy Pavlodar Lisakovsk Aksu PEOPLE THRIVE Nur-Sultan HELPING OUR Ekibastuz 2 Arkalyk
Aktobe Khromtau Karaganda Shubarkol AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3
Almaty
Shymkent
Key operating regions STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL AKTOBE REGION KARAGANDA REGION 4 ■ US$455 million total impact 2 on GRP in 2018 ■ US$125 million total impact 2 on GRP in 2018 (or 7% of the regional total) (or 1% of the regional total)
■ 24,000 jobs maintained 2 in 2018 (or 6% of the regional total) ■ 6,000 jobs maintained 2 in 2018 (or 1% of the regional total)
■ US$234 million paid in taxes in 2019 ■ US$50 million paid in taxes in 2019 (or 31% of the regional total) (or 6% of the regional total)
■ US$4.9 million in community social investment in 2019 ■ US$0.1 million in community social investment in 2019
2 Direct, indirect and induced. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 77 5 SECTION 5: OUR RELATIONSHIP WITH BROADER SOCIETY
COMPLIANCE
Compliancewith the laws of our host countries – and t heapplication of strong ethicalstandards – underpins all that we do. Any fail urein this regard not only has serious legal implications, but has the potential to damage our reputation, undermine our business relationships and impact the achievement of our long-term business objectives. This, and the cross-cutting nature of our compliance requirements, makes it a key area of business focus.
Selected UN Sustainable Development Goals UN SDG Associated UN Targets 10.2 By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status
16.3 Promote the rule of law at the national and international levels and ensure equal access to justice for all 16.5 Substantially reduce corruption and bribery in all their forms 16.6 Develop effective, accountable and transparent institutions at all levels
Other key projects undertaken in 2019 ■ Transactions in US Dollars carried Compliance approach included: out through the US clearing system,
ERG is committed to operating in a manner 1 including contractual obligations with ■ A review of our Code of Conduct (p. 93) compliant with all applicable regulatory third parties (e.g. banks) to comply ■ Development and approval of the Group requirements and to applying high ethical with US sanctions and the application Supplier Code of Conduct 2 (p. 82–83) standards of business conduct. The Board of secondary sanctions of Managers’ Compliance Committee drives ■ The updating of our Group Compliance The realisation of these sanctions risks our compliance efforts, including: Programme (p. 79–80) may result in the placing of restrictions on some of ERG’s economic activities and its ■ Oversight and approval of our Group We also enhanced our compliance risk relationships with existing vendors, Compliance Programme, policies, systems management capabilities through the customers and creditors. and controls development of a risk-based Sanctions ■ Personal data protection requirements: Compliance Programme ■ Monitoring of the effectiveness of our This includes compliance with the Compliance function European Union’s (EU) General Data Overview of our risks Protection Regulation (GDPR), which Our executive-level Risk and Compliance Risk-based management sits at the heart came into force on 25 May 2018. Committee supports the Board of of our Group Compliance Programme. Amongst other things, this requires us Managers’ Compliance Committee, Key risks include those relating to: to implement appropriate and effective including with respect to the analysis of measures, demonstrate the effectiveness ■ Sanctions regimes: We operate in more compliance trends, risks and specific cases, of these measures, balance the rights than 15 countries (including Kazakhstan, as well as the linking of compliance issues and freedoms of data subjects with the DRC, Brazil, the Netherlands, and activities to the Group’s 2025 Strategy. nature, scope, context and purpose of Luxembourg, Russia, Switzerland, etc.), any data processing, and conduct objective which creates a complex landscape in In 2019, our Compliance function continued risk assessments. The GDPR applies to terms of: to develop real-time monitoring of dynamic anyone who handles relevant EU data compliance risks and to align our evolving – Local sanctions programmes and carries significant penalties in the compliance practices with the ISO 19600 – The extraterritorial application of certain case of non-compliance – including fines compliance management systems standard sanctions programmes, including those representing up to 4% of global turnover. and ISO 37001 anti-bribery management applied by the United States (US). For systems standard. example, key areas of compliance risk in this regard include:
■ The selling of raw materials to parties on US sanctions lists and to US- sanctioned countries
1 See: https://www.eurasianresources.lu/en/pages/group-compliance/erg-code-of-conduct 2 See: https://www.eurasianresources.lu/en/pages/group-compliance/supplier-code-of-conduct
78 INTRODUCTION
■ Human rights infringements: Potential asset- and process-level, and areas of risk in this regard relate mainly How we manage our risks established more frequent compliance to ERG’s responsible mining commitments Our Group Compliance Programme is monitoring including the testing of and the presence of artisanal and maintained and implemented by dedicated existing compliance controls small-scale mining in the vicinity of its professionals at Group-, regional- and – Revised our Agents Policy to highlight sites in Africa (particularly with respect asset-levels. In 2019, we continued to intermediary-driven compliance risks to cobalt mining in the DRC). Responsible enhance our competencies through – Adopted a new Group Supplier Code cobalt mining remains a top priority for internal and external training, a review and of Conduct addressing responsible ERG – further details can be found in restructuring of roles and responsibilities, sourcing matters and supply chain the ‘Responsible supply chains’ section and the recruitment of specialists focused FOR THE FUTURE
risks (see p. 82–83) PREPARING OUR BUSINESS on p. 84. on (for example) data protection and third
■ party diligence. The Group Head of Anti-bribery and corruption. This ■ Training and communication: In 2019, Compliance reports to the CEO and the 1 remains a priority risk due to the fact that: we communicated our compliance Board of Managers’ Compliance Committee – A number of jurisdictions in which we policies and procedures to business (p. 88). Key elements of our Compliance operate are assessed by Transparency partners, governance body members framework include: International as posing relatively high and employees via e-learning, face-to- levels of exposure to corruption ■ Tone at the top: The Chair of the face engagement and onboarding – Related regulatory requirements Compliance Committee continues to assessments. Individuals who frequently are being systematically tightened participate in the Partnering Against interact with third parties (including Corruption Initiative’s (PACI) The Future clients, vendors, regulators) receive – We actively develop relationships of Trust and Integrity project, which aims additional training hours. Our senior with new business partners on to identify and develop practical solutions management was frequently informed an ongoing basis that promote trust and integrity. This on key risk areas. Areas that are more exposed to this includes a focus on behavioural change, PEOPLE THRIVE
Training was delivered to two key groups HELPING OUR risk (together with potential conflicts organisational innovation and the of employees: of interest) include community social adoption of technology. investment (CSI) activities, giving/receiving – General employees, who were provided 2 ■ Policies and procedures: Our Code of gifts, business travel and entertainment. with a basic awareness course focused Conduct, new Group Supplier Code of on the Code of Conduct ■ Anti-money laundering (AML): Conduct (see below) and supporting – Subject matter experts involved in This represents a risk to ERG as: policies and procedures are subject to processes with a higher level of risk – A number of jurisdictions in which we regular review. Our Code of Conduct is exposure (including CSI, procurement, operate have (according to the Basel binding on all our employees, managers sales and finance), with training focused Institute on Governance) relatively and Board members. on – amongst other things – third-party high AML risks In 2019, we: due diligence, personal data protection, – EU Directive 2018/843 on the prevention – Updated our existing compliance risk human rights and sanctions regimes of the use of the financial system for management procedure to drive the purposes of money laundering or compliance risk assessment at an AND WELL-BEINGAND
terrorist financing (AML 5) came into COMMUNITYDEVELOPMENT force in January 2020, which (amongst other things) introduces new ultimate 3 beneficial ownership-related measures that will be transposed by Member States by December 2020 – Our business relationships and international partnerships are highly sensitive to negative reputational exposure STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
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COMPLIANCE CONTINUED
■ Sanctions Compliance Programme: We have implemented a comprehensive Sanctions Compliance Programme, which consolidates our existing sanctions management efforts and principles (including those in our International Economic Sanctions Compliance Policy). The programme is aligned with the US Office of Foreign Assets Control (OFAC) Framework for Compliance Commitments (2019) and the Guidelines on Implementation and Evaluation of Restrictive Measures (Sanctions) in the Framework of the EU Common Foreign and Security Policy (2018), and has been reviewed by external legal advisors. Key elements of the programme include: – Ongoing risk assessment and monitoring – The development and application of risk management strategies – Training on sanctions compliance – Ongoing sanction checks against our Counter-Party Due Diligence (CPDD) database ■ – Scenario-planning to support business Expense approvals: Some types of SFO Investigation into ENRC continuity ‘high-risk’ expenses (such as those The Serious Fraud Office (SFO) launched associated with CSI, gifts and an investigation into ENRC (the Company) It is the first in a series of upcoming entertainment, as well as mergers and programmes aimed at addressing key on 25 April 2013 with a proclaimed focus on acquisitions) are subject to process- allegations of fraud, bribery and corruption compliance risks and was prioritised due based compliance controls. to the inherently severe nature of risks relating to the acquisition of mineral assets ■ associated with sanctions regimes. Whistleblowing: We offer a confidential, in Africa. On 14 May 2015, the SFO anonymous Group Hotline operated by confirmed that the Company’s Kazakhstan ■ Third party due diligence: Dedicated an independent third party (see http://erg. operations are out of scope and on 23 compliance managers conduct CPDD ethicspoint.com). This offers a safe and October 2018 re-confirmed this scoping reviews across the Group, using reputable direct communication channel between limitation. No further changes occurred in information providers and professional ERG employees and our Compliance 2019. During the course of the investigation, compliance databases, covering such function. We are committed to protecting the Company has complied with all aspects as sanctions violations, conflicts whistleblowers who report suspected statutory requests made by the SFO in of interest, money laundering, bribery violations in good faith and to maintaining addition to voluntarily providing a large and corruption, data leakage and the confidentiality where requested. volume of material at the request of the infringement of human rights. This allows SFO. us to assign risk ratings in each case and identify appropriate mitigation actions. We are carrying out a complete review HUMAN RIGHTS of our CPDD procedures (including those relating to risk assessment, escalation and Under our Human Rights Policy, we are We assess this risk on an ongoing contractual clauses), in a process that will committed to respecting universally basis through supplier assessments continue into 2020. We have also started recognised human rights and labour undertaken during the CPDD process. to develop additional electronic tools to standards (p. 90). These requirements Suppliers are selected based on their full optimise our CPDD process and updated are also embedded in the Group Supplier compliance with our Human Rights Policy. our CPDD Manual to reflect evolving Code of Conduct, which is being best practice and to integrate additional progressively rolled out across the Group In addition, our regional compliance risk-based assessment processes. as a legally binding commitment for officers conduct office/asset human suppliers. We do not employ bonded, rights risk assessments at appropriate In addition, we have progressively forced or compulsory labour or child intervals, and identified risks (and introduced a Group Supplier Code of labour. We conduct ongoing risk associated controls) are recorded Conduct, initially in ERG Africa and then assessments and monitoring, and have in our regional and Group compliance (in 2019) across the whole Group (see a robust action plan in place to prevent risk registers. p. 82–83). The Supplier Code of Conduct any form of these practices. will be further integrated into the CPDD We conduct training amongst our process in 2020. We do recognise, however, the risk that employees on these expectations, such practices could exist in some areas and in 2019 we commenced targeted of our business, predominantly in Africa. audits and training of suppliers based on our risk assessment process.
80 INTRODUCTION
SFO investigations may take years due ■ Received 368 reports and queries from Planning for the future to their complexity. One of the possible our employees and business partners via outcomes to an SFO investigation is no our Hotline (2018: 351). These were largely Key areas of focus in 2020 will include: charge being brought against any party. focused on procurement procedures, ■ The further development of our As of now, it is hard to make any predictions labour relations and fraud/theft. compliance training and awareness on how long the SFO’s investigation into programme, with an ongoing focus on ENRC will last and what a resolution will be. Our compliance efforts ensured we risk-based management. This will include were able to to manage compliance risks the development of an internal appropriately across the business, despite ‘Ambassador Institute’ in partnership with Performance an increasingly complex and volatile FOR THE FUTURE
ERG Academy. The Institute is aimed at PREPARING OUR BUSINESS external environment. In this context, In 2019, we: ensuring that process owners consciously ERG was not subject to any: ■ Provided onboarding and annual Code own compliance risks. 1 ■ Material judicial findings or regulatory of Conduct training to more than 7,000 ■ The continued delivery of compliance sanctions (including those linked to our employees. We also delivered additional initiatives that support our 2025 Strategy social, economic and/or labour impacts) training focused on third-party due and that: diligence, personal data protection, ■ Investigations, legal actions or findings – Are integrated into business workflows/ human rights and sanctions to more in relation to internationally applicable coordinated with related assurance sanctions than 800 employees activities
■ Completed more than 16,000 third-party – Deliver real-time insight into risk due diligence reviews (CPDD) exposure – and associated data analytics PEOPLE THRIVE HELPING OUR 2 AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
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RESPONSIBLE SUPPLY CHAINS
Our commitment to contribute to the socio-economic development and well-being of communities in our regions of operation extends beyond our own activities. We also seek to promote responsible behaviours amongst our business partners, including our contractors and suppliers.
In addition, we want to deliver assurance to our own customers (and their own value chain partners) that the products we sell have been responsibly mined and processed, and are not associated with negative environmental, social or governance impacts. This is particularly the case with respect to the cobalt we produce in the DRC, given growing stakeholder demand for transparency and responsible performance around battery supply chains.
Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 8.7 Eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour 8.8 Protect labour rights and promote safe and secure working environments for all workers 12.2 Achieve the sustainable management and efficient use of natural resources 12.4 Achieve the environmentally sound management of chemicals and all wastes throughout their life cycle 12.6 Encourage companies, especially large and transnational companies, to adopt sustainable practices 16.5 Substantially reduce corruption and bribery in all their forms
In Kazakhstan, we rely on contractors In Africa, key products and services include: Responsible supply chain (most of whom are based in Kazakhstan, management in Kazakhstan ■ Sulphuric acid see p. 75) to carry out construction, The new Group Supplier Code will ■ Limestone and other reagents overburden works, exploration, drilling supplement our existing responsible supply ■ and blasting, reclamation, and equipment/ Power chain management practices in Kazakhstan. vehicle overhauls and maintenance. ■ Engineering services Prior to onboarding, each supplier and contractor is assessed in relation to its Key products procured for our operations legal standing, commercial viability and in Kazakhstan (a significant proportion Key issues and initiatives compliance criteria, and is also subject to of which are procured in-country, see p. 75) our Counter-Party Due Diligence (CPDD) ERG Supplier Code of Conduct 1 include: process (p. 80). ■ Mining equipment (trucks, excavators, In late 2019 we adopted a new ERG Supplier drill rigs, etc.) Code of Conduct (Group Supplier Code), In addition, our contracts with companies which is in the process of being providing on-site services integrate a range ■ Production equipment implemented. This follows the successful of ‘beyond compliance’ health, safety and ■ Explosives and blasting supplies piloting of an earlier version of the code environment (HSE) elements, including ■ Fuels and lubricants in Africa. those relating to:
■ Natural gas ■ Compliance with relevant ERG policies ■ Technical materials (such as caustic soda, ■ The provision of certifications in electrode compound, filtering fabrics relation to company qualifications and other) and worker training
■ The right for ERG to carry out occupational health and safety audits
1 ERG Supplier Code of Conduct: https://www.eurasianresources.lu/uploads/1/files/Supplier%20Code%20of%20Conduct%20document_English.pdf
82 INTRODUCTION
■ The provision of occupational health and safety incident data to ERG ERG SUPPLIER CODE OF CONDUCT
■ Waste removal and disposal Under the Group Supplier Code, all ■ Have a zero tolerance of bribery and ■ The use of low-energy equipment suppliers are required (as a condition corruption, including any offering, and technology of doing business with ERG) to adhere to paying, soliciting or accepting of its requirements and to ensure that their bribes, kickbacks, or other prohibited In 2019, we also: subcontractors agree to do the same. payments or activities to or from ■ Defined penalties for any contractor any person safety violations Amongst other things, the Group ■ Not engage in any use of forced or FOR THE FUTURE
Supplier Code requires suppliers PREPARING OUR BUSINESS ■ Defined requirements to initial compulsory labour or child labour and contractors to: assessments, to ensure contractors are ■ Comply with the ERG Human Rights 1 compliant with relevant safety regulations ■ Provide their workers with a safe and Policy, UN Guiding Principles on – and that they are qualified to perform healthy work environment consistent Business and Human Rights, the OECD the relevant works with the relevant ERG policies or Due Diligence Guidance on Responsible ■ Developed a new type of agreement to be procedures or applicable national Supply Chains of Minerals, and the applied to contractors performing higher and international standards, Voluntary Principles on Security and risk work types, which offers us higher whichever is higher Human Rights
levels of oversight and control ■ Cooperate with ERG’s requests for due diligence information in relation to Responsible supply chain the supply of ore and mineral product management in Africa In 2018 and 2019, we piloted the PEOPLE THRIVE contractually enforceable ERG Africa HELPING OUR Supplier Code of Conduct (ERGA Supplier Code). 2 This was partly to support the 2 Clean Cobalt Framework and to address the higher-risk nature of our supply chains in Africa.
As part of our risk-based CPDD process (p. 80), in 2019 we used an enhanced questionnaire at ERG Africa to screen new and existing suppliers and contractors (on-site, local, national and international) against the ERGA Supplier Code. We also incorporated these requirements into AND WELL-BEINGAND our contracts and standard terms and COMMUNITYDEVELOPMENT conditions. 3
2 See https://www.ergafrica.com/procurement/ STEWARDSHIP Driving value chain assurance through the Re|Source project ENVIRONMENTAL
ERG is working with major cobalt industry Re|Source is currently extending the 4 players on the Re|Source project. application of the prototype solution Re|Source leverages blockchain (built in 2018-2019) further upstream technology to deliver ‘mine to market’ and is engaging with electric vehicle traceability in the cobalt value chain. producers to test its applicability.
This project supports ERG’s vision of driving industry-wide collaboration in the field of sustainable cobalt sourcing. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 83 5 SECTION 5: OUR RELATIONSHIP WITH BROADER SOCIETY
RESPONSIBLE SUPPLY CHAINS CONTINUED
In addition, we commenced supplier Risk Categories Risk Area auditing and training with respect to Environment Air/water/soil environmental impacts the ERGA Supplier Code, with a focus on Metalkol RTR’s larger, higher-risk and Biodiversity impacts site-based suppliers and contractors. This Occupational health OHS and working conditions included DRC, South African and Zambian Human rights (as defined Conflict and financial crime companies with a strong on-site presence, in Annex II of the OECD Serious human right abuses which recruit significant numbers of local DDG) 4 people or nationals, transport hazardous Worst form of child labour materials, use labour brokers or provide Community Artisanal and small-scale mining security services. Livelihoods Resettlement In this context, if any issue of concern is identified with respect to a supplier, we 4 Annex II of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and will work with them to remediate it or, High-Risk Areas, Third Edition. failing that, would take steps to terminate In 2019, we implemented the Framework in Application the contract as per the terms of the ERGA practice and published our inaugural Clean Supplier Code. We are keen to apply an Metalkol RTR has already undertaken Cobalt Performance Report,3 which has approach that does not automatically a risk assessment and identified all nine been independently assured by PwC. This exclude the majority of local suppliers and Risk Areas below as material. It has also are willing to work with them constructively found that as of 1 March 2019, Metalkol RTR implemented policies and management had established and implemented systems so they can meet our requirements. systems to manage all of these Risk Areas and procedures aligned with the Clean and any other human rights risks beyond Cobalt Framework and that conform with those referenced in Annex II of the OECD Delivering customer assurance the OECD Guidance. Guidance. through our Clean Cobalt Framework In addition to ensuring responsible Enhancing risk management through Performance practices in our own supply chain, our the Cobalt Industry Responsible All contractors and suppliers in Kazakhstan Clean Cobalt Framework (developed in Assessment Framework 2018) will help satisfy customer demand for were subject to initial onboarding checks. assurance regarding the ethical provenance As a leading member of the Cobalt Institute, Similarly, ERG carried out more than 16,000 and production of our responsibly ERG supported the development of the CPDD checks over the course of 2019. produced cobalt – whilst also helping Cobalt Industry Responsible Assessment improve conditions for local people. Framework (CIRAF). CIRAF is a management At ERG Africa, we screened 100% of framework to support enhanced risk suppliers involved in contracts of more than This is particularly important given that management and reporting focused on US$25,000 against the terms of the ERGA Metalkol RTR in the DRC is expected to the responsible sourcing and production Supplier Code. In 2019, our audits of a become one of the major global sources of cobalt. number of Metalkol RTR’s suppliers and of cobalt, helping drive the electric vehicle contractors against these requirements did revolution. CIRAF provides guidance on how to identify not identify any material issues that required and respond to nine priority Risk Areas in remediation or the termination of contracts. At the core of the Framework is Metalkol the cobalt supply chain, which are listed RTR’s compliance with the requirements in the table above. In addition, we received independent, of the OECD Due Diligence Guidance for Amongst other things, each member is third-party assurance regarding the Responsible Supply Chains of Minerals from required to annually assess these risks and application of our Clean Cobalt Framework Conflict-Affected and High-Risk Areas (OECD demonstrate that they are being managed – at Metalkol RTR – the first time we have Guidance) – in addition to supplementary whilst also obtaining third-party assurance applied this process. Plans to publish a measures to support environmental of their relevant management systems second third-party-assured Clean Cobalt protection and social development. against the OECD Guidance. Performance Report have been temporarily The seven goals are as follows: delayed due to the ongoing impact of the COVID-19 pandemic. ■ We comply with the OECD Due Diligence Guidance We expect to have initial performance data ■ Our Clean Cobalt is free of child labour regarding the implementation of the Group ■ Our Clean Cobalt is traceable Supplier Code for our 2020 Sustainable ■ Our Clean Cobalt does not come Development Report. from artisanal and small-scale mining
■ We restore the environment
■ We collaborate to promote sustainable community development
■ We lead our industry towards more sustainable cobalt value chains
3 https://www.eurasianresources.lu/uploads/1/files/Metalkol%20Performance%20report.pdf
84 INTRODUCTION
FOR THE FUTURE PREPARING OUR BUSINESS 1
PEOPLE THRIVE HELPING OUR 2
ERG endorses 10 Principles developed AND WELL-BEINGAND by the Global Battery Alliance Photo courtesy of World Economic Forum COMMUNITYDEVELOPMENT
ERG joined 42 other organisations at The Global Battery Alliance’s 10 Principles 3 the 50th Annual Meeting of the World are organised around three key pillars: Planning for the future Economic Forum in Davos (in early 2020) ■ Establish a circular battery value In 2020, we plan to: to endorse the 10 Principles developed chain as a major driver to achieve by the Global Battery Alliance 5 (of which ■ Complete the rollout of the Group the Paris Agreement ERG is a founding member) to support Supplier Code ■ Establish a low-carbon economy the development of a sustainable battery ■ Continue to roll out supplier monitoring value chain. Other endorsees of the in the value chain, create new jobs and auditing against the Group 10 Principles include Volvo, BASF, BMW, and additional economic value Supplier Code Enel, Groupe Renault, Honda, Trafigura, ■ Safeguard human rights and economic ■ Continue implementing and embedding Umicore, Volkswagen Group. development in line with the UN the Clean Cobalt Framework at Metalkol Sustainable Development Goals RTR, with a particular focus on STEWARDSHIP establishing chain of custody/traceability ENVIRONMENTAL 5 For more information on the Global Battery Alliance, see https://www.weforum.org/global-battery-alliance/ home and http://www3.weforum.org/docs/WEF_A_Vision_for_a_Sustainable_Battery_Value_Chain_in_2030_ through the value chain 4 Report.pdf ■ Continue implementing the Cobalt Industry Responsible Assessment Framework
■ Continue working with the Global Battery
Alliance to promote a sustainable battery value chain WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 85 5 SECTION 5: OUR RELATIONSHIP WITH BROADER SOCIETY
GOVERNMENT RELATIONS AND POLICY
Our host governments count amongst our most important stakeholders. This reflects the actual and potential impact of public policy, legislation, regulation and the awarding of new licences on our business. Furthermore, the Government of the Republic of Kazakhstan’s significant shareholding in ERG makes this a particularly important relationship.
Relevant UN Sustainable Development Goals UN SDG Associated UN Targets 16.5 Substantially reduce corruption and bribery in all their forms
17.16 Enhance the global partnership for sustainable development, complemented by multi- stakeholder partnerships 17.17 Encourage and promote effective public, public-private and civil society partnerships
ERG adheres to the highest principles of ■ Alignment with – and support of – the Furthermore, in 2019 we have been ethical business conduct with respect to Government’s ‘Green Economy’ concept, working with the Ministry of Labour and its relationships with its host (and other) as well as its climate change commitments Social Protection and the Ministry of governments. These are set out in our under the Paris Agreement and the Education and Science of the Republic Code of Conduct (Code) and compliance forthcoming update of the Environmental of Kazakhstan to develop a national ‘Atlas of policies (p. 93). Code (which will align the country with the Professions’. This aims to to identify and international good practice and EU help guide young people towards promising regulatory standards) (p. 63) future employment roles in the mining and Key issues and initiatives ■ The promotion of social development metals sector (p. 38). Relationship with the Government in our regions of operation – including of the Republic of Kazakhstan through our memoranda of understanding Belt and Road Initiative with regional authorities (Regional ERG participates in China’s strategic Belt The Government of the Republic of MoUs) – and beyond (p. 49–52) Kazakhstan holds a 40% interest in ERG and and Road Initiative (BRI), which is focused ■ is represented on our Board of Managers. Participation in China’s Belt and Road on improving trade links with a wide range Furthermore, our business plays a strategic Initiative (p. 14) of countries in Eurasia and Africa, and role in Kazakhstan’s economy, particularly promoting economic growth. Kazakhstan’s in relation to mining and metals, power More specific areas of engagement in 2019 location, logistical infrastructure, natural generation and logistics. included participation in Government resources and trade networks makes it working groups focused on: an important player in the initiative.
In this context, we engage constructively ■ Ensuring the new Environmental Code with the Government with respect to our strikes an effective balance between In 2019, we attended the Second Belt and business plans, corporate strategy and requiring companies to apply best Road Forum for International Cooperation, support (where it fits with our business available environmental technologies chaired by President Xi Jinping, as well as objectives) of the Government’s broader (p. 63), whilst maintaining the commercial the Second China International Import national vision and strategy. sustainability of their operations Expo. At the latter event, we signed a memorandum of understanding with ■ The creation of a tax residency Key areas of ongoing engagement include: state-owned bank ICBC to strengthen programme to promote foreign direct our strategic partnership with respect ■ Efforts to boost economic growth and investment into Kazakhstan. This would to the financing of ERG’s assets in the DRC, national capabilities, including the pursuit deliver tax benefits to foreign investors Kazakhstan and Mozambique. of digital innovation (p. 28) to encourage them to make investments through the Astana International Financial Center (AIFC)
■ Amendments to the Code on Subsoil and Subsoil Use that will support a shift towards a licence-based model for mining activities
86 INTRODUCTION
We are committed to investing in the Government relations in Africa Performance We are continuing to engage constructively DRC – and to ensuring that the country (via the Chamber of Commerce) with the and its people, along with ERG, benefit In 2019, ERG did not make any contributions DRC Government in relation to how the from our operations there. (financial or in-kind) to political parties. updated 2018 Mining Code is applied to ERG. Boss Mining in the DRC We continue to work with regional Other key focus areas for our engagement In February 2019, we announced that we governments in Kazakhstan to support with the DRC Government include: were placing Boss Mining (in which state socio-economic development in our areas mining company Gécamines has a 49% of operation. These include: ■ Our delivery of benefits to local interest) into care and maintenance. ■ FOR THE FUTURE communities, including utilities, Community projects implemented in PREPARING OUR BUSINESS We are working on commercially feasible partnership with regional governments healthcare, education, housing and ways to recommence and enhance (p. 49–52) infrastructure. This includes ongoing operations at Boss Mining in future. 1 government oversight of our community ■ Mandatory socio-economic and Commitments Register and CSI plans Elections in the DRC infrastructure development contributions (p. 53), as well as the consideration of in the regions, as required under our In 2018, there was concern about the new, government-proposed projects operating licences potential for political tensions over the ■ Our employment and development DRC’s delayed presidential elections to of local community members and DRC result in serious disruption. Nonetheless, Planning for the future nationals, in line with the requirements stability was maintained and an orderly of the Labour Code. This includes the transition of power took place in In 2020, we plan to: prioritised employment of local January 2019. ■ Continue working with Gécamines to community members where possible explore options that could support the ■ The implementation of our Clean Cobalt commercial sustainability of Boss Mining PEOPLE THRIVE Framework at Metalkol RTR (p. 84) HELPING OUR ■ Continue participating in working groups focused on the development of 2 Kazakhstan’s new Environmental Code AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 87 5 APPENDIX GOVERNANCE, MANAGEMENT STRUCTURES AND RISK MANAGEMENT
controls and risk mitigation actions, the Corporate governance Executive Committee (ExCom) effectiveness of its Internal Audit function ExCom is a permanent, collegial ERG is guided by its Board of Managers and the engagement of external auditors management body, which operates (the Board), comprised of three founding ■ Compliance Committee: Responsible at Group-level. It is authorised to shareholders and two representatives for review, oversight and approval pass resolutions on matters within of the Government of the Republic of the Group compliance systems, its competence and to provide of Kazakhstan. policies and controls – and for consultations and recommendations monitoring the effectiveness of in relation to matters pertaining to The Board is committed to ensuring that the Group compliance function the Group’s business. Its resolutions, the Group strives to meet the highest ■ Remuneration Committee: Responsible consultations and recommendations business and ethical standards, and for overseeing the remuneration of ERG’s are necessary for the coordination of complies with local and international senior managers and monitoring the the Group’s business and the provision laws wherever ERG operates. The Board Group remuneration system of assistance to the management bodies approved our Code of Conduct and of relevant Group Companies. Group Compliance Policies. ■ Sustainable Development and Mergers and Acquisitions (M&A) Committee: The Board has established four committees Responsible for overseeing M&A activity to help it discharge its responsibilities in key (including due diligence, the assessment governance areas. All Board committees and mitigation of related risks, structuring have clearly defined terms of reference, and implementation of projects, and which describe in detail their duties and the post-acquisition integration), as well as the extent of their authority: integration of Sustainable Development principles into our business (through ■ Audit Committee: Responsible for the Sustainable Development Council) overseeing the integrity of ERG’s financial reporting, the effectiveness of its internal
Corporate governance structure
Board of Managers
Sustainable Compliance Remuneration Sustainable Audit Committee Development and Committee Committee Development Council M&A Committee
CEO
ExCom
Risk and Compliance Marketing Committee Investment Committee Finance Committee Management Committee
88 INTRODUCTION
ExCom’s strategic function is to: Similarly, the Industrial and Occupational Regional Health, Safety, Safety Committee examined issues in ■ Guide the overall performance Environment and Communities relation to the investigation of fatalities, of the Group Management performance indicators, hazard ■ Act in line with targets and strategies identification, transportation safety, approved by the Board Kazakhstan working at height procedures, and building ■ Approve a long-term financial plan We have established the following safety. The Committee also integrated and key performance indicators committees, which are made up of safety performance indicators into the
■ Appoint key managers senior regional management and remuneration framework for the general the CEOs of our business units: managers of our business units. ■ FOR THE FUTURE
Implement standards and policies for key PREPARING OUR BUSINESS processes, including their communication ■ Environmental Protection Committee Africa to regional level ■ Industrial and Occupational Safety 1 ■ Identify and allocate key resources for the Committee In Africa, our Safety, Health and Group to fulfil its key obligations and tasks Sustainability (SHS) performance is reported These committees: on a monthly basis to regional Executive Committee members, including ERG Africa’s Business Sustainability leadership ■ Define our environmental and CEO; site General Managers; site SHS safety strategy Our Sustainable Development Council managers; and selected senior employees. ■ (SDC) acts as the working body of the Review relevant policies, procedures Participants in this process meet to analyse Board’s Sustainable Development and M&A and initiatives and discuss the cause of serious incidents, Committee. Reflecting our more integrated ■ Receive regular progress reports on as well as preventative measures. approach to Sustainable Development, the implementation and improvement the SDC is responsible for considering key of controls Specific attention is given to:
issues and initiatives in the following areas, PEOPLE THRIVE
■ The causes of incidents HELPING OUR all of which are aimed at supporting our In 2019, our Environmental Protection ■ Environmental compliance business sustainability: Committee oversaw a range of issues, 2 ■ ■ Strategy development and strategic including the introduction of best available Progress against internal/external planning technologies, the obtaining of complex audit reports environmental permits, alignment with ■ ■ Architecture improvement and innovation Corporate social responsibility European Union environmental regulation, ■ Artisanal and small-scale mining ■ Leadership programmes anticipated legislative changes in Russia, ■ ■ Financial and non-financial key cross-Regional audit results and internal Human rights performance indicators waste management practices. At our operations in the DRC, we operate ■ Business transformation a formal Safety and Hygiene Committee as required under local law. AND WELL-BEINGAND COMMUNITYDEVELOPMENT RISK MANAGEMENT 3 Our risk management framework defines Our ongoing efforts to identify and ■ The implementation of our Risk the oversight responsibilities of the Board manage risks are critical for the successful Management Information System and the ExCom. They are supported achievement of our objectives. Our key at business unit-, Regional- and in this role by our Risk and Compliance risks are regularly reviewed by our Risk Group-levels
Management Committee, as well as and Compliance Management Committee, ■ The implementation of our Group our Risk Management, Internal Control ExCom and Board to ensure visibility of Internal Control methodology and Internal Audit teams. Our risk our overall risk exposure and to support ■ The initiation of our HAZID project in management system is designed to help the prioritisation of our mitigation actions. Kazakhstan. The objective is to create ERG to identify, assess and manage risks The risk management function helps a ‘live’ database of hazards, risks and affecting our business sustainability – to implement these actions in a timely associated mitigation actions, to assign as well as our most material Sustainable manner, thus ensuring the proactive personal responsibilities and to assign Development issues – in accordance with mitigation of our key risks in accordance STEWARDSHIP
resources (budgets) needed to ENVIRONMENTAL our approved levels of risk appetite. with approved levels of risk appetite. manage risks Our Group Risk Management Policy is informed by the International Standard In 2019, we advanced our management ■ The development of capital project risk 4 for Risk Management (ISO 31000). of risk through: analysis approaches, including project risk analysis tools ■ The approval of our Business Continuity Management methodology. We launched ■ The certification of most risk managers in Kazakhstan as Certified Risk
the trial application of business continuity plans in Africa (at Metalkol RTR), Management Professionals by Kazakhstan (at Aktobe Ferroalloys Plant) Russia’s Risk Management Association and at our Amsterdam corporate office WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 89 5 APPENDIX MANAGEMENT APPROACH
OUR VALUES
Our Values reflect how we want to do business and guide us on our journey towards true business sustainability. We apply our Values in every decision we make, at all levels of our business – from the most senior manager to the most junior employee:
Safety Efficiency Responsibility
■ We put safety first ■ We do not work for the sake of it – ■ We fulfil our obligations to our
■ We ensure safe labour conditions for we are focused on delivering results employees, their families, customers, all our employees and contractors, ■ We manage our resources carefully partners, shareholders and society continuously working to prevent any to achieve results ■ We carefully manage the resources and
injuries occurring in the workplace ■ We prioritise the most relevant issues the environment entrusted to us
■ ■ We minimise tasks that do not add value We build a culture of mutual confidence Unity and respect in the Group, as well as with partners and customers ■ We work together as a team of Development passionate people aiming to achieve ■ We appreciate our employees and create our set goals conditions for their development ■ We respect the cultural and regional ■ We efficiently implement new traditions where we operate technologies and develop as a company
■ We ensure the sustainable development of the Group
The sections below outline our approach Under our Human Rights Policy, we are Key external management to managing each of the thematic areas set committed to respecting universally system standards applied out in this report. recognised human rights and labour by ERG in Kazakhstan standards. The policy includes How we manage our people commitments in relation to: ■ OHSAS 18001 Occupational health and safety management system See ‘Helping our people thrive’ on p. 30 ■ The provision of safe and healthy standard work conditions
■ ■ ISO 50001/EN 16001 Energy Our commitment Respect for employees’ rights to freedom management system standard 1 of association and collective bargaining We are committed to delivering a safe, ■ ■ ISO 14001 Environmental attractive, productive and stable working The provision of a secure work place management system standard environment for all our employees and ■ The prevention of forced and child labour
■ ISO 9001 Quality management contractors. Our commitments in this ■ Respect for equality, diversity and system standard regard are supported by the requirements non-discrimination of our Health, Safety and Environment ■ ISO/IEC 27001-2015 Information (HSE) Policy Statement, Human Rights security management standard These commitments are supported by Policy and our Code of Conduct. the terms of our Code of Conduct, as well 1 Energy generating assets only (i.e. Kazchrome, as our collective bargaining agreements. SSGPO, EEC and Aluminium of Kazakhstan) with Our HSE Policy Statement commits us to: the exception of 3-Energoortalyk. ■ Continually improving our performance
■ Assessing and managing our risks
■ Carrying out training, communication and reporting
■ Implementing audit and review processes
90 INTRODUCTION
Implementation of our commitments We manage artisanal and small-scale How we manage community mining (ASM) activity at our operations 2 In Kazakhstan, our overall approach to development and well-being employee management is defined by our in the DRC through an integrated SHS business units’ human resource policies See ‘Community development and well-being’ Management System, which includes: and frameworks. Our Staff and on p. 44 ■ A dedicated ASM Policy Remuneration Committee in Kazakhstan, ■ Related ASM procedures, including those which meets on a monthly basis, supports Our commitments concerning: regional-level coordination in relation to We are committed to supporting a range of areas, including: organisational – Engagement with ASM communities community social investment (CSI) and relevant governmental authorities planning; recruitment; employee FOR THE FUTURE programmes that maximise our positive PREPARING OUR BUSINESS motivation; remuneration; talent – The responsible management of ASM socio-economic impacts. In line with our management; and social benefits. activities on our concessions (where it Group Corporate Social Responsibility (CSR) takes place). This includes procedures to 1 Projects and Sponsorship Policy, we focus Furthermore, our operations in Kazakhstan ensure our operations do not purchase on a range of issues including: are certified to the OHSAS 18001 or profit from ASM-sourced ore occupational health and safety ■ Healthcare management system standard. ■ Safety and environmental programmes Implementation of
■ Infrastructure and social welfare our commitments In 2019, we completed a comprehensive
■ In Kazakhstan, we implement our Group audit of our existing safety management Education and support for youth initiatives CSR Projects and Sponsorship Policy system in Kazakhstan (p. 32). This will ■ Sports and promotion of healthy lifestyles inform the development of our integrated, through a systematic process framework. ■ Preservation of cultural heritage risk-based occupational and process safety This ensures a comprehensive, well- management system in Kazakhstan. ■ Economic development, as well as targeted approach to the identification, PEOPLE THRIVE
community training and development implementation, monitoring and review HELPING OUR We apply a Safety, Health and programmes of our CSI spending. Sustainability (SHS) management system ■ Support for our Human Rights Policy 2 at our African operations that is informed (e.g. external programmes focused on In Kazakhstan, our CSI takes place through by OHSAS 18001. the elimination of child labour) two channels: ■ Direct social investment: Targeted at At our BAMIN iron ore project in Brazil, This is underpinned by close, ongoing maximising our positive impacts and we have established health and safety community engagement to help us align minimising our negative impacts on procedures that apply to both our our programmes with community concerns, local communities employees and contractors. needs and aspirations (p. 46–48). ■ Regional memoranda of understanding: Negotiated strategic partnerships with We respect the right of our employees to We are equally committed to minimising regional authorities targeted at broader join trade unions and bargain on a collective our negative impacts on host communities. socio-economic development of local basis. More than 90% of our employees In line with our Human Rights Policy, this communities (some of which are AND WELL-BEINGAND across the Group are trade union members. includes: undertaken as part of our licensing COMMUNITYDEVELOPMENT ■ Respecting the rights, cultural heritage obligations). Emergency preparedness and customs of local communities 3 In Africa, we implement an SHS Emergency preparedness plans have ■ Engaging with local communities to assess been rolled out across our operations in the potential impact of our activities – management system. Amongst other Kazakhstan. We conduct regular emergency including a focus on risks, impacts, things, this provides a systematic scenario exercises in line with these plans, remediation, mitigation and monitoring framework to: as well as periodic risk assessments. ■ ■ Integrating engagement feedback Identify, assess and manage negative This helps ensure the competency of into project planning and community impacts on communities our emergency response teams, identify investment activities ■ Manage, monitor and control community additional training needs and ensure our ■ grievances and issues response equipment is fit for purpose. Seeking to avoid involuntary resettlements, and, where this is ■ Maintain open and enduring relationships In Africa, we maintain an emergency unavoidable, constructively engaging with community leaders STEWARDSHIP
with local communities in line with ENVIRONMENTAL management system procedure that ■ Proactively engage and consult with forms part of our integrated SHS relevant laws and international standards communities through the project lifecycle 4 management system. ■ Recognise the value of cultural heritage and cultural diversity, and protect Emergency response plans will also be cultural sites developed prior to the execution phase ■ Identify and support the development of our BAMIN iron ore project in Brazil. of sustainable social projects, with a focus on education, health, alternative livelihoods and the prevention of child labour
2 ASM activity is present in the vicinity of all our DRC sites, with the exception of Frontier. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 91 5 APPENDIX MANAGEMENT APPROACH CONTINUED
■ Comply with and, where appropriate, In 2019, Metalkol RTR conducted a How we manage our exceed applicable laws and regulations gap analysis against the ISO14001 environmental stewardship in the countries in which we operate. environmental management system See ‘Environmental stewardship’ on p. 58 This includes working towards full standard, the results of which are compliance with applicable international informing our management efforts. good practice guidelines, such as the IFC Our commitment Performance Standards and the relevant Community engagement We are committed to preserving and SHS components of the OECD Guidelines maintaining healthy, natural environments for Multinational Enterprises. We recognise the close link between through the application of sustainable our environmental performance and practices wherever we operate. Our In 2019, BAMIN started to implement an our social licence to operate, and thus the commitment is supported by the Environmental Management System need for us to engage with our community requirements of our HSE Policy Statement, designed to manage the environmental stakeholders and civil society organisations which, amongst other things, requires us to: aspects of both its mining and port in a transparent and constructive manner. operations. The system supports the For example, in Pavlodar (one of our main ■ Develop, implement and improve HSE operating regions in Kazakhstan), we work management systems and programmes proactive management of all environmental licence requirements, as well as relevant closely with a range of local community that are consistent with international representatives and NGOs on best practice environmental and social management plans. The system also integrates a environmental management issues. This ■ Ensure the accountability of senior ERG Geographic Information Systems platform, includes, for example, multiple community managers at all sites for improving HSE which enhances BAMIN’s management engagement events, such as those relating performance through risk assessment effectiveness by visualising spatial data. to biodiversity, conservation, planting and ■ Ensure that all personnel understand awareness-raising with respect to our environmental management programmes. their HSE responsibilities Implementation of our ■ Ensure HSE issues are taken into account commitments Since 2016, we have submitted our in business planning and decision-making The majority of our operations in environmental monitoring results to Kazakhstan are certified to the ISO 14001 the national authorities for publishing via Our Group policy is supplemented by ERG environmental management system Kazakhstan’s National Pollutant Release Africa’s SHS Policy, under which we have standard. In 2019, we started a process to and Transfer Register, a structured committed to: centralise, homogenise and automate the database that provides transparency ■ Systematically identify, assess and manage collection of our environmental management and facilitates public scrutiny. all negative environmental impacts data – including data relating to discharges,
■ Strive for continuous improvement in emissions, events, and monitoring results. In both Kazakhstan and Africa, we also environmental performance through the This process is currently ongoing. carry out community consultations focused ‘plan, implement, check and review’ steps on the environment in the context of our In Africa, we are committed to striving to impact assessment activity. ■ Minimise the pollution, disturbance and/ continuously improve our environmental or degradation of ecosystems performance and to work towards compliance with relevant international standards. Our existing SHS Management System (embodied in our SHS Management Manual and associated procedures) is informed by the ISO 14001 environmental management system standard.
92 INTRODUCTION
■ We have also adopted a Group Supplier How we manage our relationship Competition Compliance Policy: This commits us to not engaging Code of Conduct, which sets out our with broader society in or tolerating any form of conduct expectations in relation to our suppliers See ‘Our relationship with broader society’ that fails to comply with applicable and contractors, as set out in more detail on p. 70 competition laws on p 82–83. ■ CSR Projects and Sponsorship Policy: Our policy framework is based on our This sets out the process, criteria and Our compliance policies and guidelines are Values, Code of Conduct and all our policies approvals necessary for ERG to commit implemented by our Group, regional and and procedures, and are subject to regular to and manage corporate social local Compliance managers, with assurance oversight provided at Group level. review. responsibility (CSR) projects or FOR THE FUTURE sponsorship arrangements Compliance managers are full-time PREPARING OUR BUSINESS compliance employees who provide Relevant Group policies include, but are not ■ International Economic Sanctions professional, dedicated compliance support 1 limited to, the following: Compliance Policy: This commits us to the business. ■ Anti-bribery and Corruption Policy: This to avoiding breaching international economic sanctions imposed by relevant commits us to always acting responsibly, Our Group Tax Policy commits us to: honestly and with integrity, and to not governments, as well as supranational or engaging in or tolerating any form of international organisations ■ Complying with all applicable laws, rules and regulations bribery or corruption ■ Data Protection Policy: This commits
■ ■ Agents Compliance Policy: This requires us to complying with all data protection Taking account of the spirit as well as the agents acting on our behalf to comply and privacy legislation and regulations letter of relevant tax laws and regulations with applicable laws and regulations, as applicable to the jurisdictions in which ■ In the context of transfer pricing: we operate well as our policies and Code of Conduct – Conducting all transactions between ■ Anti-Money Laundering Policy: This Group companies on an arm’s length PEOPLE THRIVE
These are in addition to our Code of Conduct, HELPING OUR commits us to not knowingly engaging in basis which is binding on all our employees, transactions involving money laundering managers and Board members. It applies – Determining pricing in accordance with or terrorism financing 2 a range of obligations with respect to: the nature of the economic functions ■ Human Rights Policy: This requires ERG performed by each company (including and its employees and contractors to ■ Compliance with laws, rules and the use of capital) and following the abide by human rights norms. For further regulations specific methods and principles outlined information on how we manage human ■ Anti-bribery and corruption in the OECD Transfer Pricing Guidelines
rights and responsible supply chains, ■ International trade, export controls and/or local transfer pricing laws please see p. 80 and p. 83 and financial and political sanctions – Retaining adequate documentation
■ Human rights for each intercompany transaction to establish the terms and conditions of ■ Political and non-political contributions, the transaction and to demonstrate donations and sponsorships by ERG that the company has complied with the
transfer pricing principles set out above WELL-BEINGAND COMMUNITYDEVELOPMENT
Our Group Tax Policy is supported by our new ERG Group Tax Code of Conduct, 3 which supports policy implementation, legal compliance and the effective management of our risks. STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 93 5 APPENDIX WHAT ARE ERG’S MOST MATERIAL ISSUES AND WHY?
THEME ISSUE RELEVANCE TO ERG STRATEGY GOAL Preparing our Organisational ■ Support of medium- and long-term business sustainability – including through enhanced ■ business for the transformation resilience, effectiveness and decision-making future Portfolio ■ Replacement and growth of Mineral Resources and Ore Reserves, maintenance/renewal ■ development of existing projects and access to new commercial opportuni ties
Technology and ■ Support of medium- and long-term business sustainability – including through reduced ■ efficiency costs, enhanced competitiveness and higher levels of productivity
Financial resilience ■ Ongoing ability of the business to successfully navigate external shocks and continue as ■ a successful growing concern the settlement of debts and payment of other financial liabilities and commitments Helping our Health and safety ■ The right thing to do – as well as the maintenance of our operational continuity, efficiency ■ people thrive and the motivation of our employees as well as occupational illnesses
Skills, capabilities ■ Maintenance of our ability to generate value and to transform our business (see above) ■ and development by attracting, developing, motivating and retaining high-quality, skilled employees
Labour relations ■ Nurturing of a productive, positive workplace culture that directly supports our productivity, ■ efficiency and profitability a responsive management culture – as well as the meeting of the
are highly reliant on ERG’s activities) Community Community impacts ■ Responsible management of ERG’s impacts, as well as the maintenance of constructive ■ development stakeholder relations as the need to ensure mining does not undermine the interests of our host regions of local people and well-being Community social ■ Maintenance of our social licence to operate and the delivery of positive living standards for ■ investment our workers in our local communities – many of which have historically grown around our of our host regions operations. This is in addition to the fulfilment of legal obligations relating to mandatory socio-economic development contributions required under our operating licences of poverty)
Artisanal and ■ Delivery of assurance to our customers regarding the provenance and conditions of ■ small-scale mining extraction of our cobalt and copper. This is in addition to the need to address the potentially of our host regions negative impacts that can be associated with ASM activity on our operating environment
Environmental Managing impacts ■ Legal compliance and the maintenance of our social licence to operate through the ■ stewardship on air and water avoidance/minimisation of our negative environmental impacts of our host regions in discharges to the environment that result in possible human and ecological harm
Energy and ■ Compliance with current and/or future emissions regulations, minimisation of future carbon ■ climate change tax liabilities, reduced costs (associated with energy consumption) and the maintenance of to climate change and its associated negative environmental and of our host regions our broader social licence to operate Waste management ■ Compliance and operational continuity requirements around the physical and environmental ■ management of large volumes of waste (including waste rock, tailings, sludges and industrial of our host regions waste) – plus potential commercial opportunities around waste processing Our relationship Value generation ■ The need to generate revenue and profits in order to sustain ERG as a going concern – ■ with broader and distribution and achieve future growth of our host regions
society Compliance ■ Compliance with relevant law, the maintenance of the trust of our partners and the ■ protection of our reputation – as well as the enhancement of our operating environments
Responsible ■ The avoidance of reputational harm as a result of any indirect negative impacts that may ■ supply chains take place in ERG’s supply chain – plus the delivery of assurance to customers and other supply chain are not negatively impacted – plus the need to avoid of our host regions downstream actors that its own products are responsibly sourced
as a result of company activities and/or relationships
Government ■ The potential impact of governments on ERG’s revenue generation and profitability via ■ relations and policy public policy, taxation legislation and regulation – as wel l as the awarding of new licences. In addition, the status of the Government of the Republic of Kaza khstan as a 40% shareholder in ERG
94 INTRODUCTION
RELEVANT 2025 RELEVANCE TO STAKEHOLDERS STRATEGY GOAL RELEVANT UN SDGS
■ ■ Impact on returns, the protection of shareholder/finance provider Efficiency in all that we do N/A value and the sustainability of economic value distribution (see below)
■ ■ Establishment of new projects (with all attendant positive and/or Balanced portfolio growth of existing projects and access to new commercial opportunities negative impacts), the continued commercial viability of existing projects and the maintenance of long-term value generation and distribution.
■ ■ FOR THE FUTURE Impact on returns, the protection of shareholder/finance provider Efficiency in all that we do PREPARING OUR BUSINESS value and the sustainability of economic value distribution (see below) 1 ■ ■ Continued ability to generate and distribute value, as well as Financial stability N/A a successful growing concern the settlement of debts and payment of other financial liabilities and commitments
■ ■ Protection of employees and contractors from occupational injury, Happy and professional as well as occupational illnesses team
■ ■ The professional advancement of employees – and their ability to Happy and professional by attracting, developing, motivating and retaining high-quality, skilled employees reach their full socio-economic, technical and personal potential team
■ ■ Delivery of positive working conditions, fair pay and benefits, and Happy and professional a responsive management culture – as well as the meeting of the team PEOPLE THRIVE
social needs and living standards of our employees and their families HELPING OUR (many of whom reside in remote communities in Kazakhstan that are highly reliant on ERG’s activities) 2 ■ ■ The delivery of positive impacts by ERG’s operations, as well Sustainable development as the need to ensure mining does not undermine the interests of our host regions of local people ■ ■ The addressing of socio-economic challenges in local communities Sustainable development in Kazakhstan (which are remote, economically undiversified and of our host regions rely on ERG for employment and public services) and Africa (which lack formal employment opportunities and suffer from high levels of poverty)
■ ■ The addressing of the potentially negative social and environmental Sustainable development impacts that can be linked to ASM activity – on artisanal miners, of our host regions
local communities and the environment. This is in addition to the WELL-BEINGAND need for customers to demonstrate high levels of due diligence. COMMUNITYDEVELOPMENT ■ ■ The potential for ERG activities (including mining, smelting, refining, Sustainable development 3 power generation and the operation of railway systems) to result of our host regions in discharges to the environment that result in possible human and ecological harm
■ ■ The potential for ERG activities to contribute (over the long term) Sustainable development climate change to climate change and its associated negative environmental and of our host regions socio-economic impacts ■ ■ The need to responsibly manage waste that could otherwise result Sustainable development in ground, water or air contamination – and/or serious physical of our host regions impacts with human and/or environmental consequences.
■ ■ The positive impact of direct payments to suppliers, employees, Sustainable development and achieve future growth capital providers, government and communities – as well as of our host regions
associated indirect and induced economic impacts STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL ■ ■ The potential undermining of legitimate economic, social, political Compliance is a cross- and business interests – as well as the undermining of the broader cutting issue that is 4 governance environment. In addition, the avoidance of association relevant to all aspects of with such behaviour and related reputational harm our 2025 Strategy
■ ■ The need to ensure workers and other stakeholders in the Sustainable development take place in ERG’s supply chain – plus the delivery of assurance to customers and other supply chain are not negatively impacted – plus the need to avoid of our host regions reputational harm as a result of any indirect negative impacts
(including those relating to human rights) that may take place as a result of company activities and/or relationships
■ ■ The need for transparent and constructive interactions between Government relations and public policy, taxation legislation and regulation – as well as the awarding of new licences. business and government to avoid the undermining of the policy is a cross-cutting In addition, the status of the Government of the Republic of Kazakhstan as a 40% legitimate interests of other stakeholders – and to support issue that is relevant to all balanced, well-informed public policy aspects of our 2025 Strategy WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 95 5 APPENDIX STAKEHOLDER ENGAGEMENT OVERVIEW
Stakeholder engagement CATEGORY STAKEHOLDER GROUP REPORT SECTION We select stakeholders for engagement on the basis of: Commercial Customers ■ ■
■ ■ ■ Their actual/potential impact on ERG’s achievement of its business objectives ■
■ ERG’s actual/potential impact (positive Suppliers, business partners ■ ■ and negative) on them and contractors ■ ■ The identification, prioritisation and engagement of our stakeholders helps us: Financial Shareholders ■ ■ ■ Understand the impact we have on others ■
■ ■ Minimise our negative impacts and ■
maximise our positive impacts ■ ■ ■ Monitor the effectiveness of our management activities Lenders ■
■ Understand the risks and opportunities ■
that our stakeholders represent to our ■ business – and how these are influenced by our own activities and impacts ■ ■ Identify and support partnerships Government National governments ■ ■
■ Engagement takes place at the ■ following levels: ■ ■ ■ Corporate (i.e. strategic issues) Regional governments ■
■ Regional (i.e. strategic/operational issues) ■ Regulatory bodies ■ ■ Site (i.e. operational issues) to air
■
Society Local communities ■ ■
■ ■
■ ■
■ ■
■ ■ in the DRC
NGOs, civil society organisations ■ ■ and media ■ and environmental education
■ ■
■ ■
■ (Kisankala and Lenge)
Broader society ■
■
Workforce Employees and their representatives ■ ■
■ ■
■
■ ■ ■ and families
■ Senior managers ■ relations channels ■ ■
■
96 INTRODUCTION
RELEVANT ENGAGEMENT CHANNEL ISSUES OF INTEREST REPORT SECTION
■ Interaction relating to product development ■ Supply stability/predictability Introduction, 1, 5
■ Responding to customer surveys ■ Product quality/price
■ Responsible production of cobalt
■ Engagement through business associations and initiatives ■ Contract stability Introduction, 5 and contractors ■ Ongoing dialogue in relation to health and safety, training ■ Predictable payments FOR THE FUTURE
and auditing of performance PREPARING OUR BUSINESS
■ Updates to website, posting news, statements and ■ Sustainable business development Introduction, 1 1 operational reports ■ Dividend generation
■ Meetings and road shows ■ Corporate reputation
■ Engagements focusing on financial services, their ■ Cost performance structure, volumes and value ■ Business performance Introduction, 1
■ Successful project execution
■ Borrower risks
■ Interest payments and principal debt
■ Engagement regarding the issuing of permits, compliance ■ Development of domestic skills and capabilities 1, 2, 3, 5
with regulations and supervision of activities ■ PEOPLE THRIVE
Innovative production approaches HELPING OUR
■ Development of regulations and public policy ■ Legal/fiscal regime for mining in the DRC ■ Development of business/government partnerships 2 (e.g. Regional memoranda of understanding in Kazakhstan) ■ Regional socio-economic development Introduction, 3
■ Implementation of projects for socio-economic ■ Environmental impacts, including emissions 2, 4 development to air
■ Workplace fatalities and injuries
■ Public hearings and meetings ■ Quality of life Introduction, 2, 3,
■ Socio-economic surveys ■ Employment generation 4, 5
■ Community social investment projects ■ Emissions to air
■ Information in local media ■ Access to water
■ ■
Participatory Rural Appraisals Security and artisanal and small-scale mining WELL-BEINGAND in the DRC COMMUNITYDEVELOPMENT
■ Membership in industry sector initiatives ■ Conservation, biodiversity 3, 5 3 and media ■ Multi-stakeholder initiatives and partnerships and environmental education
■ ■ Implementation of CSI projects Information access and transparency
■ ■ Press releases and other publications on CSI projects, Business ethics financial information, information on project development ■ ENRC legacy impacts in the DRC (Kisankala and Lenge)
■ Environmental impacts Introduction, 2, 4
■ Employment generation
■ Ongoing dialogue between management and teams ■ Conditions of employment Introduction, 2
■ ■ STEWARDSHIP
Internal communication channels (intranet, corporate Training and development ENVIRONMENTAL
publications, internal events, etc.) ■ Occupational health and safety
■ Suggestions for ideas to improve productivity ■ 4 External living conditions for employees ■ Meetings and surveys and families
■ Ongoing dialogue through established industrial ■ Skills development 2 relations channels ■ Professional development ■ Collective bargaining agreements
■ Accident investigations WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 97 5 APPENDIX KEY EXAMPLES OF GROUP- AND REGIONAL-LEVEL PARTICIPATION IN MULTI-STAKEHOLDER ORGANISATIONS
Level of participation Organisation
Group-level ■ World Economic Forum (Strategic Partner Associate), including: – Global Battery Alliance (founding member) – Partnering Against Corruption Initiative – Platform for Shaping the Future of New Economy and Society – Mining and Metals Blockchain Initiative (founding member) – Mining and Metals Governors
■ International Chromium Development Association
■ UN Global Compact
Kazakhstan ■ Eurasian Industrial Association
■ Association of Mining and Metallurgical Enterprises
■ National Chamber of Entrepreneurs of Kazakhstan ‘Atameken’
■ Association of Taxpayers of Kazakhstan
■ Kazakhstan Foreign Investors’ Council
■ Kazakhstan Business Council for Sustainable Development
DRC and Zambia ■ Cobalt Institute (UK – Board representation)
■ Chamber of Mines of the DRC
■ Zambia Chamber of Mines
■ Zambia Institute of Human Resource Management
Brazil ■ Brazilian Mining Institute
■ Bahia Ports User Association
■ Federation of Industries of the State of Bahia
■ Agency for Technological Development of the Brazilian Mining Industry
■ Brazilian Center For International Relations
■ Brazil China Business Council
98
KEY OPERATIONAL ASSETS INTRODUCTION
Number of key Commodity/division operational assets Name of key operational asset Principal activity Country of operation Ferroalloys 4 Aksu Ferroalloys Plant (TNC Kazchrome JSC) Metals processing Kazakhstan Aktobe Ferroalloys Plant (TNC Kazchrome JSC) Metals processing Kazakhstan Donskoy Gornoobogatitelny plant 1 Mining and processing Kazakhstan (TNC Kazchrome JSC) Kazmarganets (TNC Kazchrome JSC) Mining and processing Kazakhstan Iron ore 1 Sokolovsko Sarbaiskoye Ore Mining and Processing Mining and processing Kazakhstan 2
Association JSC FOR THE FUTURE PREPARING OUR BUSINESS Alumina and 4 Torgayskoye Mining Unit (Aluminium of Kazakhstan JSC) Mining and processing Kazakhstan Aluminium Krasno-Oktyabrskoye Mining Unit Mining and processing Kazakhstan 1 (Aluminium of Kazakhstan JSC) Pavlodar Aluminium Plant (Aluminium of Kazakhstan JSC) Metals processing Kazakhstan Kazakhstan Aluminium Smelter JSC 3 Metals processing Kazakhstan Other Non- 5 Boss Mining SAS Mining and processing DRC ferrous Frontier SA Mining and processing DRC Chambishi Metals PLC Metals processing Zambia Metalkol SA 4 Mining and processing DRC Sabot Management Limited Transportation Seychelles Energy 4 Vostochny Open Pit Coal Mine Mining and processing Kazakhstan 5 (Eurasian Energy Corporation JSC) PEOPLE THRIVE HELPING OUR Aksu Power Plant (Eurasian Energy Corporation JSC) Power generation Kazakhstan Shubarkol Komir JSC Mining and processing Kazakhstan 2 3-Energoortalyk JSC Power generation Kazakhstan Logistics 1 TransCom LLP Transportation Kazakhstan AND WELL-BEINGAND COMMUNITYDEVELOPMENT 3 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL 4
1 Referred to as ‘Donskoy GOK’ throughout the report. 2 Referred to as ‘SSGPO’ throughout the report. 3 Referred to as ‘KAS’ throughout the report. 4 Referred to as ‘Metalkol RTR’ throughout the report . 5 Referred to as ‘EEC’ throughout the report. WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 99 5 APPENDIX GRI CONTENT INDEX
The following table presents the GRI Standards Disclosures and the GRI G4 Mining and Metals Sector Supplement Disclosures that were used to guide the contents of ERG’s 2019 Sustainability Report.
GRI STANDARDS 102: GENERAL DISCLOSURES
Disclosure No. Disclosure description Page(s) Comment Organisational profile 102-1 Name of the organisation Front and back cover; throughout the report. 102-2 Activities, brands products and services 2–3, 6–7 102-3 Location of headquarters ERG’s headquarters are in Luxembourg. 102-4 Location of operations 2–3 102-5 Ownership and legal form 86, 88–89 102-6 Markets served 2–3, 6–7 102-7 Scale of the organization Inside front cover, 2–3, 6–7, 10–11, 24–26, 99 102-8 Information on employees and other workers Inside front cover, 31, 43 102-9 Supply chain 6–7, 16, 82–85 102-10 Significant changes to the organization and its supply chain 13, 82–85 102-11 Precautionary Principle or approach 8–9, 17, 59, 60–62, 64, 90, 92 102-12 External initiatives 12, 38, 51, 56–57, 66, 82–85, 90 102-13 Membership of associations 98 Strategy 102-14 Statement from senior decision-maker 4–5 102-15 Key impacts, risks and opportunities 6–7, 8–9, 10–11, 12–13, 14–15, 16–17, 18–19, 46–48 Ethics and integrity 102-16 Values, principles, standards, and norms of behaviour 5, 90–93 102-17 Mechanisms for advice and concerns about ethics 17, 80, 81 Governance 102-18 Governance structure 88–89 102-19 Delegating authority 88–89 102-21 Consulting stakeholders on economic, environmental and 18–19, 88–89, social topics 96–97 102-29 Identifying and managing economic, environmental, and social impacts 18–19, 88–89 102-30 Effectiveness of risk management processes 16–17, 89 102-31 Review of economic, environmental, and social topics 18–19, 88–89 Stakeholder engagement 102-40 List of stakeholder groups 96 102-41 Collective bargaining agreements 41, 43, 90–91 102-42 Identifying and selecting stakeholders 96 102-43 Approach to stakeholder engagement 18, 46–48, 50, 52, 53, 92, 96–97 102-44 Key topics and concerns raised 18, 46–48, 50, 53, 97 Reporting practice 102-46 Defining report content and topic boundaries Inside front cover 102-47 List of material topics 19, 94–95 102-48 Restatements of information None 102-49 Changes in reporting 18–19 102-50 Reporting period 1 Jan 2019 – 31 Dec 2019 102-51 Date of most recent report October 2019
100 INTRODUCTION
Disclosure No. Disclosure description Page(s) Comment 102-52 Reporting cycle Annual 102-53 Contact point for questions regarding the report [email protected] 102-54 Claims of reporting in accordance with the GRI Standards This report is guided by the GRI Standards and the GRI G4 Mining and Metals Sector Disclosures. It does not make a ‘GRI-referenced’ claim, nor an ‘in accordance’ claim. 102-55 GRI content index This GRI content index 102-56 External assurance Inside front cover This report has not been subject to third-party assurance. FOR THE FUTURE GRI STANDARDS 200: ECONOMIC DISCLOSURES PREPARING OUR BUSINESS Disclosure No. Disclosure description Page(s) Comment 1 Management approach 103-1 Explanation of the material topic and its boundary 18–19, 94–95 103-2 The management approach and its components 8–9, 10–11, 13, 14, 16–17, 72–74, 78–81, 89, 91, 93 103-3 Evaluation of the management approach 16–17, 72–73,
76–77, 78–81, 88–89, 96–97 Economic performance 201-1 Direct economic value generated and distributed 74–75 Indirect economic impacts PEOPLE THRIVE 203-1 Infrastructure investments and services supported 41–42, 49–54, HELPING OUR 76–77, 86–87, 91 203-2 Significant indirect economic impacts 49–54, 72–75, 2 76–77, 91 Procurement practices 204-1 Proportion of spending on local suppliers 74–75, 76–77 Anti-corruption 205-1 Operations assessed for risks related to corruption During the year, we assessed 100% of our processes and transactions subject to relevant compliance procedures requirements in Africa, Brazil and Kazakhstan for corruption-related risks as part of the regional and Group-level application of our Group-wide risk management system (2018: 100%). 205-2 Communication and training about anti-corruption policies
and procedures 79–81 WELL-BEINGAND COMMUNITYDEVELOPMENT 205-3 Confirmed incidents of corruption and actions taken None Anti-competitive behaviour 3 206-1 Legal actions for anti-competitive behaviour, antitrust, and monopoly practices None Tax 207-1 Approach to tax 72–75, 76–77, 93 207-2 Tax governance, control, and risk management 17, 72–73, 93 207-3 Stakeholder engagement and management of concerns related to tax 73, 86, 87, 98
GRI STANDARDS 300: ENVIRONMENTAL DISCLOSURES
Disclosure No. Disclosure description Page(s) Comment STEWARDSHIP Management approach ENVIRONMENTAL 103-1 Explanation of the material topic and its boundary 18–19, 94–95 4 103-2 The management approach and its components 8–9, 15, 17, 59, 60–63, 64–66, 67–69, 90, 92 103-3 Evaluation of the management approach 17, 61, 63, 65, 67, 69, 84–85, 96–97
Energy 302-1 Energy consumption within the organization 66 302-2 Energy consumption outside of the organization 66 302-4 Reduction of energy consumption 25, 28, 61, 66 WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 101 5 APPENDIX GRI CONTENT INDEX CONTINUED
Water and effluents 303-1 Interactions with water as a shared resource 47, 50, 53, 54, 56–57, 96–97 303-2 Management of water discharge-related impacts 8–9, 34, 60–63, 67–69, 84 303-3 Water withdrawal 7 Emissions 305-1 Direct (Scope 1) GHG emissions 66 305-2 Energy indirect (Scope 2) GHG emissions 66 305-5 Reduction of GHG emissions 61, 66 Waste 306-1 Waste generation and significant waste-related impacts 67–69 306-2 Management of significant waste-related impacts 67–69 Supplier environmental assessment 308-1 New suppliers that were screened using environmental criteria 78–79, 82–85
GRI STANDARDS 400: SOCIAL DISCLOSURES
Disclosure No. Disclosure description Page(s) Comment Management approach 103-1 Explanation of the material topic and its boundary 18–19, 94–95 103-2 The management approach and its components 8–9, 12, 16–17, 32–36, 37–39, 41, 43, 46–48, 49–50, 53, 54, 55–56, 80, 82–85, 86, 89–91 103-3 Evaluation of the management approach 17, 32–36, 41–43, 46–48, 50, 53, 54, 80, 82, 84–85, 89, 90–91, 92, 96–97 Employment 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees 34 Occupational health and safety 403-1 Occupational health and safety management system 17, 32–33, 90–91 403-2 Hazard identification, risk assessment, and incident investigation 17, 32–33, 35, 36, 89 403-3 Occupational health services 17, 32, 34, 90–91 403-4 Worker participation, consultation, and communication on occupational health and safety 33, 89, 96–97 403-5 Worker training on occupational health and safety 33, 36 403-6 Promotion of worker health 12, 34, 36, 42 403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships 82–83 403-9 Work-related injuries 35 403-10 Work-related ill health 34 Training and education 404-2 Programs for upgrading employee skills and transition 22, 23, 37–40, assistance programs 46–47 404-3 Percentage of employees receiving regular performance and career development reviews 39 Non-discrimination 406-1 Incidents of discrimination and corrective actions taken 43 None Freedom of association and collective bargaining 407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk 43 None Child labour 408-1 Operations and suppliers at significant risk for incidents of child labour 80 Forced or compulsory labour 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labour 80
102 INTRODUCTION
Security practices 410-1 Security personnel trained in human rights policies or procedures 47, 56, 83–84 Human rights assessment 412-1 Operations that have been subject to human rights reviews or impact assessments 80, 84 412-2 Employee training on human rights policies or procedures 80–81 412-3 Significant investment agreements and contracts that include human rights clauses or that underwent human FOR THE FUTURE
rights screening 80 PREPARING OUR BUSINESS Local communities 413-1 Operations with local community engagement, impact 46–48, 49–54, 1 assessments, and development programs 76–77 413-2 Operations with significant actual and potential negative impacts on local communities 46–48 Supplier social assessment 414-1 New suppliers that were screened using social criteria 82–85 Public policy
415-1 Political contributions 87 None Socio-economic compliance 419-1 Non-compliance with laws and regulations in the social and economic area 81 None PEOPLE THRIVE HELPING OUR GRI G4 MINING AND METALS SECTOR SUPPLEMENT DISCLOSURES Indicator Indicator description Page(s) Comment 2 Labour/management relations MM4 Number of strikes and lock-outs exceeding one week's duration, by country None Local communities MM6 Number and percentage of significant disputes relating None to land use, customary rights of local communities and (for details on the 2013 legacy complaint made against indigenous peoples ENRC and how we are addressing the subsequent recommendations of the UK National Contact Point for the OECD Guidelines for Multinational Enterprises, see p. 47). MM7 The extent to which grievance mechanisms were used to resolve disputes relating to land use, customary rights of AND WELL-BEINGAND
local communities and indigenous peoples, and the outcomes 47-48 COMMUNITYDEVELOPMENT Emergency preparedness* DMA Report on the existence of emergency plans, how they are 3 prepared (consultation, rehearsal, regular review and modification), and their content (arrangements for the management of crises should they arise) 67, 91 Artisanal and small-scale mining* MM8 Number and percentage of company operating sites where artisanal and small-scale mining (ASM) take place on, or adjacent to, the site; the associated risks and the actions taken to manage and mitigate these risks 55-57, 84-85 Resettlement* MM9 Sites where resettlements took place, the number of households resettled in each, and how their livelihoods were
affected in the process 47 STEWARDSHIP ENVIRONMENTAL ENVIRONMENTAL Closure planning* DMA Report the scope of closure planning; its associated financial 4 provision, and its coverage of health, safety, social, environmental, legal, governance and human resource aspects. 46-47 Materials stewardship*
DMA Report on programs and progress relating to materials stewardship 28, 63, 66, 84-85
DMA: Disclosure on management approach * Represents sector-specific aspects, which may or may not contain indicators WITH BROADER SOCIETYWITH BROADER OUR RELATIONSHIP Eurasian Resources Group | Sustainable Development Report 2019 103 5 APPENDIX UN GLOBAL COMPACT REFERENCE TABLE
Category Principle Page(s) Human rights 1: Businesses should support and respect the protection of internationally proclaimed human rights 80, 90, 93 Human rights 2: Businesses should make sure that they are not complicit in human rights abuses 17, 47, 56–57, 78–81, 82–85, 89, 91 Labour 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining 41, 43, 90–91 Labour 4: Businesses should uphold the elimination of all forms of forced and compulsory labour 80, 82–85, 90 Labour 5: Businesses should uphold the effective abolition of child labour 56–57, 80, 82–85, 90–91 Labour 6: Businesses should uphold the elimination of discrimination in respect of employment and occupation 41, 43, 90 Environment 7: Businesses should support a precautionary approach to environmental challenges 8–9, 17, 59, 60–62, 64, 90, 92 Environment 8: Businesses should undertake initiatives to promote greater environmental 8–9, 15, 17, 60–63, responsibility 64–66, 67–69 Environment 9: Businesses should encourage the development and diffusion of environmentally 15, 24, 28–29, friendly technologies 61–63, 64–66, 68–69, 83, 84 Anti-corruption 10: Businesses should work against corruption in all its forms, including extortion 17, 78–81, 82–85, and bribery 93
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