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SUSTAINABLE DEVELOPMENT REPORT 2013  

The chief executive’s review of the business

As a responsible corporate citizen, we are deeply conscious at Northam of compliance with legislation, regulations, reporting standards and norms, and we keep abreast of changes in the thinking around reporting. I alluded last year to the growing number of “sustainable” and “responsible” indices and guidelines we need to consider in our reporting and my concern about reporting for reporting’s sake.

This concern has not gone away and, indeed, the headwinds we encounter as a metals producer in South Africa have intensified to such a degree, that the very sustainability of our prime business activity is threatened. And without our business activities, we have to be sanguine about this, we will have no impact whatsoever, positive or negative for that matter.

So, in this stand-alone sustainable development report (our sixth consecutive one), we have, for the first time, sought to disclose our performance in terms of the five capitals approach. We have found this to be a useful departure from the tickbox approach, and we hope that the story that the narrative attempts to capture, provides a more revealing window into the company, its people, its business, its products and their impacts. I am pleased also to have included, for the first time, the performance of our new Booysendal mine on the eastern limb. Booysendal management has embraced the processes and information gathering systems we have put in place and honed at Zondereinde over a number of years, and indeed these have become just another part of the business, certainly no longer an add-on.

Notwithstanding our concerns about arduous reporting requirements, we have continued to work in alignment with the GRI third generation G3.1 guidelines, and once again we have identified key assurance indicators. The report of the external assurers, ERM, is available in the Independent assurance report section.

The material issues for our business have remained constant, notwithstanding the fact that certain issues may have moved up the rankings and others dropped. Once again we have assessed our performance against these measures, which can best be described as mixed. I have discussed these in more detail in my review in the integrated report. For the purposes of this review, however, I would like to focus exclusively on the single most concerning material issue which we have been grappling with for years now and which focuses on employee relations and peaceful engagement with employee and community stakeholders in order to avoid work stoppages and ensure the smooth functioning of our business. We have previously articulated this material issue as:

In the first half of the financial year our operations remained unscathed by the strife and conflict elsewhere in the industry, and which dominated the mining landscape over the past year. We remained on our guard, however, and operational management in particular was constantly alive to any issues which could have been used to foment any industrial unrest. What has become apparent is a trend for employees seemingly being aggrieved or dissatisfied with unions and their structures, preferring to select leaders amongst their rank and file locally, and seemingly also without union representation, to lead them in any industrial action. For us as management this presents further difficulties in our attempts to resolve any such disputes within the parameters of South Africa’s labour relations legislation (notably the Labour Relations Act (LRA)) which is not designed to deal with such workers’ committees and their actions.

Our policy at Northam is to grant organisational rights to any union with not less than 15% representivity of a relevant employee category; bargaining rights are granted to a union which can prove representation of not less than 33.3% of the relevant constituency. I must emphasise too that we are committed at Northam to treating all unions with bargaining rights fairly, and we will consult with any worker representatives or committees to resolve matters arising. At our operations, management has made effective strides in increasing and enhancing its direct communication with employees.

At a senior executive level, I have been personally involved, working with my peers in the industry to consider the current climate where we direct our efforts towards resolving the impact of inter-union rivalry and other disputes, and to stabilise the platinum industry.

Nonetheless, and albeit peaceful, the three-week strike in April this year by rock drill operators at the Zondereinde operation was protracted and resulted in the loss of some 17 000oz. The rock drill operators’ dispute centred on the payment methodology of production-related bonuses.

At the time of going to print, the wage negotiations at Zondereinde had begun. It is disappointing to note that little progress has been made to date and, once again, I remain cautious about predicting the outcome of these talks. Given the inter-union rivalry I have referred to earlier, and the continued dominance of the NUM at Zondereinde against the background of the strides made by AMCU amongst our peers in the platinum sector, we have to be alive to the possibility of the unsettled labour environment persisting for a while yet.

IN CONCLUSION

The past year has been one of the toughest in the industry for a number of years, with external pressures continuing to pose unprecedented challenges, particularly for our operational management teams. I must congratulate management and employees at both our operations for sustaining an operational recovery at Zondereinde on the one hand and, on the other, for the timely commissioning of our new asset on the eastern limb.

Glyn Lewis
Chief executive officer
27 September 2013