Social, Ethics & Transformation Committee report

SOCIAL, ETHICS & TRANSFORMATION COMMITTEE REPORT

18597

Wendy Lucas-Bull

 
The board of Amplats and the Social, Ethics & Transformation Committee (the Committee) have pleasure in submitting its inaugural report for the financial year ended 31 December 2012.
 

The board took the decision on 14 December 2011 to dissolve and absorb the functions of the Transformation Committee into the Social, Ethics & Transformation Committee. The members of the previous Transformation Committee were appointed as the first members of the Committee and the composition is in line with the requirements of section 72(8) of the Companies Act, No 71 of 2008 (the Act), and its associated regulations.

THE ROLE OF THE COMMITTEE

As required by the Companies Act, the role of the Committee is to:

  • Oversee and monitor activities relating to:
  • Social and economic development : including the principles set out in the United Nations Global Compact, the OECD’s recommendations regarding corruption, employment equity and broad-based black economic empowerment.
  • Good corporate citizenship : including the promotion of equality, the prevention of unfair discrimination, and corporate social responsibility.
  • Safety, health and the environment.
  • Consumer relationships.
  • Labour, employment and skills development.
  • Recommend to the board, key policies and guidelines for the management of the abovementioned social, ethics and transformation priorities.
  • Consider reports and feedback from any other committees in relation to social, ethics and transformation priorities and contribute to other committee initiatives where there is an overlap of responsibility.
  • Evaluate management’s performance against the board-approved targets and/or policies on matters relating to social, ethics and transformation priorities.
  • To report to shareholders at the Company’s annual general meeting on the matters relating to social, ethics and transformation priorities.

COMPOSITION

The Committee is made up of executive members as well as non-executive directors and includes the following members: Wendy Lucas-Bull (Chairman), Richard Dunne, Dorian Emmett, Khanyisile Kweyama, Bongani Khumalo, Lorato Mogaki, Valli Moosa and Sonja Sebotsa.

Invitees to the Committee include Chris Griffith (chief executive), Mary-Jane Morifi (head of corporate affairs) and Fiona Edmundson (legal counsel).

MAIN INITIATIVES UNDERTAKEN DURING THE YEAR

2012 has been challenging year for the Company with many socio-economic challenges coming to the fore. The unprotected industrial action that has spread across the industry and the tragic events at Marikana, have brought into sharp focus the need to improve working conditions, build labour relationships, and engage more meaningfully with the communities in which we operate. These challenges exist as the Company faces pressure on the platinum price in light of continued global macroeconomic weakness. Notwithstanding these challenges, social development and the addressing of the historical imbalances of the past continue to be a high priority on the South African transformation agenda, and have been at the heart of the Committee’s activities.

The following sets out the key highlights of the activities of the Committee:

  • Committee formation activities : Reviewing the Committee’s terms of reference and associated work plan for the year.
  • Oversight of Alchemy transaction : The Committee deliberated on matters pertaining to the ongoing role out of the Alchemy transaction and the establishment of the four development trusts (Development Trusts).

Alchemy is a R3.5 billion transaction which was concluded in 2011, and is aimed at ensuring the long-term sustainable development of four of our host communities and major labour-sending areas. The transaction is notionally vendor-financed over 10 years at a fixed 9.5% notional interest rate and includes an upfront discount of 5%. Amplats issued a total of 6,290,365 ordinary shares of 10 cents each to an umbrella trust named Lefa La Rona (Our Inheritance) at the end of 2011. The Development Trusts are in the process of being set up to benefit the host communities within an approximate radius of 15 km from the Amandelbult, Rustenburg, Twickenham and Mogalakwena mines and a non-profit company has been incorporated for the benefit of the labour-sending areas.

These Development Trusts and the non-profit company will benefit from the following cash flows once established:

  • Annual dividend receipts.
  • A guaranteed minimum dividend flow of R20 million per annum to provide an annual cash amount to the Development Trusts and the non-profit company, after taking into consideration the annual dividends received.
  • Rechannelled CSI spend of R30 million to the extent that the development trusts secure approval for development projects within the host communities.
  • Health and safety cash-flow benefits for the development trusts where key performance indicators relating to on-and-off-mine health and safety targets are achieved.
  • Proceeds from the potential increase in the Amplats share price after settling of the notional vendor funding, to the extent that the shares are disposed of by the development trusts and the non-profit company at the expiry of the term of the transaction.
  • Review of transformation and employment equity initiatives and the Mining Charter : The Committee reviewed the Company’s employment equity report and compliance with the amended Mining Charter to ensure adequate programmes and plans are in place. From the review it is evident that the Company’s transformation programme, and its associated initiatives have the desired outcome and will continue to be monitored. A comprehensive overview of the Company’s transformation policy and programme is included on page 153 of this report.

Results of the values and cultures survey, which were conducted in the latter part of 2011 and evaluated by the Committee during 2012, were analysed and guidance was provided on appropriate organisational cultural transformation programmes. This guidance included ensuring the results were cascaded to all levels within the organisation at all operations through a structured set of forums. Operations and teams were encouraged to develop bottom-up actions and plans to address cultural change initiatives. Further details of the overall plan are included on page 183 of this report and page 57 of the Sustainable Development Report.

  • Review of labour unrest : Labour at Rustenburg, Union and Amandelbult mines embarked on an unprotected strike for two months in 2012. The Committee was kept appraised of all aspects pertaining to the unprotected strike and the possible underlying socio-economic conditions which may have been one of the root causes of the strike. Details are included from pages 6 of the Sustainable Development Report.

The Committee will continue to review labour developments and incorporate the findings in future social-economic development initiatives.

  • Development of a social plan framework : A comprehensive proposed social plan framework was prepared by management to limit the social impact of any potential retrenchments coming from the proposed organisational changes. The Committee reviewed the proposed social plan and provided guidance around key aspects of its effectiveness. Details of the plan are described from page 9 of the Sustainable Development Report.

 

COMMITTEE’S REPORT CROSS-REFERENCING TABLE

As some of the Committee’s responsibilities and deliberations overlap with the responsibilities of other committees, detailed policy and performance information may be included in other sections of both the annual and sustainable development reports.

The following table sets out items where they are cross-referenced in either the full annual or sustainable development reports (both of which are available on www.angloamericanplatinum.com), highlighting the Social, Ethics & Transformation Committee’s role in contributing to these responsibilities.

table11

The Committee is satisfied that the overall principles laid down by the King Code of Governance for South Africa (King III) and the Companies Act, 2008, have been adhered to unless specifically stated. This Committee’s report has been approved by the board on the recommendation of the Committee.

  19366

Wendy Lucas-Bull

Social, Ethics & Transformation Committee chairman

Johannesburg

1 February 2013