Annual Integrated Report 2016

Reporting in line with GRI

This report has been prepared in accordance with the GRI’s G4 guidelines which were launched in 2013. The company reports in line with the core format.

G4 places greater emphasis on the importance of materiality and improves the level of harmonisation with other reporting standards.

External assurance of sustainability reporting was provided by Ernst & Young Inc. Data indicators were selected for assurance on the basis of the company’s assessment of the issues and indicators that are most significant to the sustainability performance of the business.

Data which has been externally assured is indicated in the GRI content index. See Ernst & Young Inc’s sustainability assurance statement.

Scope

The primary purpose of our integrated report is to explain how we create value over time

REPORTING PARAMETERS

Northam Platinum Limited (Northam or Northam Platinum or the group or the company) is listed on the JSE Limited (JSE) in South Africa. This integrated report, together with the company’s notice of annual general meeting (AGM) and abridged annual financial statements, is published in compliance with the JSE’s listings requirements and the provisions of the South African Companies Act No 71 of 2008 (Companies Act).

Northam is committed to reporting in line with the King Report on Corporate Governance in South Africa 2009 (King III). The application of these guidelines is reviewed in the corporate governance section of this report.

In its financial disclosure, the group reports in terms of International Financial Reporting Standards (IFRS), the Companies Act and the South African Code for Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC).

Northam’s financial year runs from 1 July to 30 June. In this 2016 financial year (the 2016 reporting period), Northam has continued with its integrated approach to reporting, first embarked upon in FY2012. This approach seeks to present to stakeholders a holistic overview of the group’s financial and non-financial performance for the reporting period and incorporates the recommendations of the International Integrated Reporting Council (IIRC) and the Global Reporting Initiative (GRI) fourth generation (G4) guidelines. This holistic overview provides a summary of the business, its performance and the value it creates for stakeholders and an assessment of the group’s governance, economic, social and environmental impacts and performance during the reporting period.

The primary purpose of our integrated report is to explain how we create value over time, through a combination of quantitative and qualitative information. We have chosen to use the capitals concept to convey this information, as we believe this provides users of the report with a good understanding of how we create value for all stakeholders. The International Integrated Reporting Framework defines capitals as stocks of value that are affected or transformed by the activities and outputs of an organisation. In our report, we have focused on financial, human, social and natural capital and combined manufactured and intellectual capital.

In formulating our strategy and determining our strategic priorities, we continue to consider those issues that are most material to the business and stakeholders, influence the sustainability of our business and the social, economic and physical environments in which we operate and which fundamentally influence the assessments and decisions of stakeholders.

The financial statements include the group’s subsidiaries, joint ventures and associates. The non-financial disclosure is limited to the group’s two wholly-owned operations, the Zondereinde and Booysendal mines. Discussion on performance is confined to those entities where the group is the operator.

AUDITING AND ASSURANCE

Northam’s internal and external auditing functions are critical areas of governance. The internal audit function is outsourced to KPMG Services Proprietary Limited (KPMG) for independent appraisal. KPMG’s specific tasks are to:

  • examine and evaluate the group’s systems of internal control in the mitigation of business and financial risks; and
  • assist members of management with discharging their duties effectively.

The group’s consolidated annual financial statements have been audited by the external auditor, Ernst & Young Inc. The independent auditor’s report may be found in the annual financial statements.

Certain non-financial key performance indicators in this report have also been assured by independent assurance provider Ernst & Young Inc in respect of Northam’s application of GRI’s G4. The group reports in line with the ‘core’ format. The reporting process has also been underpinned by the AA1000 AccountAbility Principles Standards 2008, which include Inclusivity, Materiality and Responsiveness. See the independent assurance report.

Except where specifically stated otherwise, Northam reports ore resources, reserves, production and grades in terms of its platinum, palladium, rhodium and gold elements/metal content. This is expressed as 3PGE+Au or 4E.

In this report, employees are those people directly employed by Northam. Indirect employees are those people employed by contracting companies i.e. providers of specialised and/or technical services to the operations.

Both ZAR and R signify rands, the South African currency. Non-financial reporting indicators are defined in a glossary available on the Northam website at www.northam.co.za

GENERAL STANDARD DISCLOSURES Section Reporting level

Strategy and analysis

G4–1 Provide a statement from the most senior decision-makerof the organisation (such as CEO, chair, or equivalentsenior position) about the relevance of sustainability to theorganisation and the organisation’s strategy for addressing sustainability Chairman’s statement
Chief executive’s review
Fully
G4-2 Provide a description of key impacts, risks and opportunities Managing material risk and opportunities Fully

Organisational profile

G4-3 Report the name of the organisation Scope
Throughout the report
Fully
G4-4 Report the primary brands, products, and services Focus on the Northam group Fully
G4-5 Report the location of the organisation’s headquarters Administration and contact information Fully
G4-6 Report the number of countries where the organisation operates, and names of countries where either the organisation has significant operations or that are specifically relevant to the sustainability topics covered in the report Focus on the Northam group Fully
G4-7 Report the nature of ownership and legal form Focus on the Northam group Fully
G4-8 Report the markets served (including geographic breakdown, sectors served, and the types of customers and beneficiaries) Focus on the Northam group Fully
G4-9 Report the scale of the organisation, including:
  • Total number of employees
  • Total number of operations
  • Net sales (for private sector organisations) or net revenues (for public sector organisations)
  • Total capitalisation broken down in terms of debt and equity (for private sector organisations)
  • Quantity of products or services provided
Our business model
Focus on delivery
Fully
G4-10 Report the composition of the workforce, including:
  • Total number of employees by employment contract and gender
  • Total number of permanent employees by employment type and gender
  • Total workforce by employees and supervised workers and by gender
  • Total workforce by region and gender
  • Whether a substantial portion of the organisation’s work is performed by workers who are legally recognised as self-employed, or by individuals other than employees or supervised workers, including employees and supervised employees of contractors
  • Any significant variations in employment numbers (such as seasonal variations in employment in the tourism or agricultural industries)
Five-year sustainability review
Human capital
Fully
G4-11 Report the percentage of total employees covered by collective bargaining agreements Human capital
Remuneration report
Fully
G4-12 Describe the organisation’s supply chain Focus on the Northam group
Social capital: Stakeholder engagement summary
Social capital: Consolidated report on HDSA expenditure
Partially
G4-13 Report any significant changes during the reporting period regarding the organisation’s size, structure, ownership, or its supply chain, including:
  • Changes in the location of, or changes in, operations, including facility openings, closings, and expansions
  • Changes in the share capital structure and other capital formation, maintenance, and alteration operations (for private sector organisations)
  • Changes in the location of suppliers, the structure of the supply chain, or in relationships with suppliers, including selection and termination
Focus on the Northam group Fully
G4-14 Report whether and how the precautionary approach or principle is addressed by the organisation Natural capital
Managing material risk and opportunities
Partially
G4-15 List externally developed economic, environmental and social charters, principles, or other initiatives to which the organisation subscribes or which it endorses

Scope
Human capital
Social capital
Natural capital
Corporate governance

Fully
G4-16 List memberships of associations (such as industry associations)
and national or international advocacy organisations in which
the organisation:
  • Holds a position on the governance body
  • Participates in projects or committees
  • Provides substantive funding beyond routine membership dues
  • Views membership as strategic
Corporate governance
Natural capital

The South African mining industry, including Northam, is governed by various laws, codes and guidance initiatives. These include:

  • MPRDA
  • NEMA
  • Employment Equity Act
  • National Water Act
  • Mining Charter
  • ILO
  • Samrec

Voluntary codes Northam subscribes to include:

  • GRI
  • CDP
  • SRI
  • MOSH targets
  • Framework agreement on a sustainable mining industry
  • Framework for peace and stability in the mining industry
Fully

Identified material aspects and boundaries

G4-17
  • List all entities included in the organisation’s consolidated financial statements or equivalent documents
  • Report whether any entity included in the organisation’s consolidated financial statements or equivalent documents is not covered by the report
Focus on the Northam group
Approval of annual financial statements and company secretary’s confirmation
Fully
G4-18
  • Explain the process for defining the report content and the aspect boundaries
  • Explain how the organisation has implemented the reporting principles for defining report content
Scope Fully
G4-19 List all the material Aspects identified in the process for defining report content

Our material issues

Fully
G4-20 For each material aspect, report the aspect boundary within the organisation, as follows:
  • Report whether the Aspect is material within the organisation
  • If the Aspect is not material for all entities within the organisation (as described in G4-17), select one of the following two approaches and report either:
  • The list of entities or groups of entities included in G4-17 for which the Aspect is not material or
  • The list of entities or groups of entities included in G4-17 for which the Aspects is material
  • Report any specific limitation regarding the Aspect Boundary within the organisation
Our material issues
Financial capital
Manufactured and intellectual capital
Human capital
Social capital
Natural capital
Partially
G4-21 For each material Aspect, report the Aspect Boundary outside the organisation, as follows:
  • Report whether the Aspect is material outside of the organisation
  • If the aspect is material outside of the organisation, identify the entities, groups of entities or elements for which the aspect is material
  • In addition, describe the geographical location where the aspect is material for the entities identified
  • Report any specific limitation regarding the aspect boundary outside the organisation
Our material issues
Financial capital
Manufactured and intellectual capital
Human capital
Social capital
Natural capital
Partially
G4-22 Report the effect of any restatements of information provided in previous reports, and the reasons for such restatements Not applicable
G4-23 Report significant changes from previous reporting periods in the scope and aspect boundaries Scope Fully

Stakeholder engagement

G4-24 Provide a list of stakeholder groups engaged by the organisation Social capital Fully
G4-25 Report the basis for identification and selection of stakeholders with whom to engage Social capital  
G4-26 Report the organisation’s approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group, and give an indication as to whether any of the engagement was undertaken specifically as part of the report preparation process Social capital: Stakeholder engagement
Social capital: Booysendal community engagement
Natural capital
Fully
G4-27
  • Report key topics and concerns raised through stakeholder engagement, and how the rganisation has responded to those key topics and concerns, including through its reporting
  • Report the stakeholder groups that raised each of the key topics and concerns
Human capital
Social capital
Fully

Report profile

G4-28 Reporting period (such as fiscal or calendar year) for information provided Scope Fully
G4-29 Date of most recent previous report (if any) Scope Fully
G4-30 Reporting cycle (such as annual, biennial) Scope Fully
G4-31 Provide the contact point for questions regarding the report or its contents Administration and contact information Fully
G4-32 ‘In accordance’ option:
  • Report the ‘in accordance’ option the organisation has chosen.
  • Report the GRI Content Index for the chosen option.
  • Report the reference to the external assurance report, if the report has been externally assured. GRI recommends the use of external assurance but it is not a requirement to be ‘in accordance’ with the guidelines
This page
Independent assurance report
Fully
G4-33 Assurance:
  • Report the organisation’s policy and current practice with regard to seeking external assurance for the report
  • If not included in the assurance report accompanying the sustainability report, report the scope and basis of any external assurance provided
  • Report the relationship between the organisation and the assurance providers
  • Report whether the highest governance body or senior executives are involved in seeking assurance for the organisation’s sustainability report
Scope
This page
Independent assurance report
Fully

Governance

G4-34 Report the governance structure of the organisation, including committees of the highest governance body. Identify any committees responsible for decision-making on economic, environmental and social impacts Corporate governance report Fully
G4-36 Report whether the organisation has appointed an executivelevel position or positions with responsibility for economic, environmental and social topics, and whether post-holders report directly to the highest governance body

Directorate

Fully
G4-38 Report the composition of the highest governance body and its committees by:
  • Executive or non-executive
  • Independence
  • Tenure on the governance body
  • Number of each individual’s other significant positions and commitments, and the nature of the commitments
  • Gender
  • Membership of under-represented social groups
  • Competences relating to economic, environmental and social impacts
  • Stakeholder representation
Directorate  
G4-39 Report whether the chair of the highest governance body is also an executive officer (and, if so, his or her function within the organisation’s management and the reasons for this arrangement) Directorate
Corporate governance report
Fully
G4-41 Report processes for the highest governance body to ensure conflicts of interest are avoided and managed. Report whether conflicts of interest are disclosed to stakeholders, including, as a minimum:
  • Cross-board membership
  • Cross-shareholding with suppliers and other stakeholders
  • Existence of controlling shareholder
  • Related party disclosures
Corporate governance report Fully
G4-47 Report the frequency of the highest governance body’s review of economic, environmental and social impacts, risks, and opportunities Corporate governance report Fully
G4-48 Report the highest committee or position that formally reviews and approves the organisation’s sustainability report and ensures that all material aspects are covered Independent assurance report Fully
G4-51

Report the remuneration policies for the highest governance body and senior executives for the types of remuneration below:

  • Fixed pay and variable pay
  • Performance-based pay
  • Equity-based pay
  • Bonuses
  • Deferred or vested shares
  • Sign-on bonuses or recruitment
  • Incentive payments
  • Termination payments
  • Clawbacks
  • Retirement benefits, including the difference between benefit schemes and contribution rates for the highest governance body, senior executives, and all other employees

Report how performance criteria in the remuneration policy relate to the highest governance body’s and senior executives’ economic, environmental and social objectives

Remuneration report Fully
G4-52 Report the process for determining remuneration. Report whether remuneration consultants are involved in determining remuneration and whether they are independent of management. Report any other relationships which the remuneration consultants have with the organisation Remuneration report Fully

Ethics and integrity

G4-56 Describe the organisation’s values, principles, standards and norms of behaviour such as codes of conduct and codes of ethics

Human capital
Corporate governance report

Fully
G4-57 Report the internal and external mechanisms for seeking advice on ethical and lawful behaviour, and matters related to organisational integrity, such as helplines or advice lines

Human capital
Corporate governance report

Fully
G4-58 Report the internal and external mechanisms for reporting concerns about unethical or unlawful behaviour, and matters related to organisational integrity, such as escalation through line management, whistleblowing mechanisms or hotlines

Human capital
Corporate governance report

Fully
SPECIFIC STANDARD DISCLOSURES Section Reporting level External assurance

CATEGORY: ECONOMIC

Material aspect: Economic performance

G4-EC1 Direct economic value generated and distributed Our business model
Focus on delivery
How we distribute value
Human capital
Housing project
Social capital
SLP expenditure
Partially – SLP expenditure and housing project Yes
G4-EC2 Financial implications and other risks and opportunities for the organisation’s activities due to climate change Natural capital Partially No
G4-EC4 Financial assistance received from government Not applicable

Material aspect: Indirect economic impacts

G4-EC7 Development and impact of infrastructure investments and services supported Our business model
Manufactured and intellectual capital
Partially No

CATEGORY: ENVIRONMENTAL

Material aspect: Materials

G4-EN1 Materials used by weight or volume Natural capital Fully No
G4-EN2 Percentage of materials used that are recycled input materials Natural capital Fully No

Material aspect: Energy

G4-EN3 Direct energy consumption Our business model
Five-year sustainability review
Natural capital
Fully Yes
G4-EN4 Indirect energy consumption Our business model
Five-year sustainability review
Natural capital
Fully Yes
G4-EN6 Reduction of energy consumption Natural capital Partially No

Material aspect: Water

G4-EN8 Total water withdrawal by source Five-year sustainability review
Natural capital
Fully No
G4-EN10 Percentage and total volume of water recycled and reused Five-year sustainability review
Natural capital
Fully Yes

Material aspect: Biodiversity

G4-EN11 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas Natural capital Fully No
G4-EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas Natural capital Fully No
MM1 Amount of land (owned or leased, and managed for production activities or extractive use) disturbed or rehabilitated Natural capital Fully No

Material aspect: Emissions

G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) Five-year sustainability review
Natural capital
Fully Yes
G4-EN16 Energy indirect greenhouse gas (GHG) emissions (Scope 2) Five-year sustainability review
Natural capital
Fully Yes
G4-EN17 Other indirect greenhouse gas (GHG) Emissions (Scope 3) Five-year sustainability review
Natural capital
Fully No
G4-EN20 Emissions of ozone depleting substances Our business model
Five-year sustainability review
Natural capital
Fully No

Material aspect: Effluents and waste

G4-EN22 Total water discharge by quality and destination Natural capital Fully No
G4-EN24 Significant environmental incidents Natural capital Fully Yes

Material aspect: Compliance

G4-EN29 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations Natural capital Fully Yes

Material aspect: Environmental grievance mechanisms

G4-EN34 Number of grievances about environmental impacts filed addressed and resolved through formal grievance mechanisms Natural capital Fully No

CATEGORY: SOCIAL

Sub-category: Labour practices and decent work

Material aspect: Employment

G4-LA1 Total number and rates of new employee hires and employee turnover by age group, gender, and region Five-year sustainability review
Human capital
Partially, turnover by age group or gender is not collated and therefore not available No

Material aspect: Labour/management relations

G4-LA4 Percentage of employees covered by collective bargaining agreements Human capital
Remuneration report
Fully Yes
MM4 Number of strikes and lock-outs exceeding one week’s duration, by country Human capital Fully Yes

Material aspect: Occupational health and safety

G4-LA5 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programmes Human capital Partially, the figure is not reported as a percentage No
G4-LA6 Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work related fatalities, by region and by gender Our business model
Five-year sustainability review
Human capital: Safety performance in FY2016
Human capital: Health performance in FY2016
Partially – RIIR and LTIIR Yes

Material aspect: Diversity and equal opportunity

G4-LA12 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity Five-year sustainability review
Human capital
Partially, a breakdown of employees by age group is not available. A more critical measure in South Africa specifically, is the percentage of historically disadvantaged South Africans (HDSAs) in management roles and women in mining, which is reported

No

Material aspect: Labour practices grievance mechanisms

G4-LA16 Number of grievances about labour practices filed, addressed, and resolved through formal grievance mechanisms Not reported

Sub-category: Human rights

Material aspect: Freedom of association and collective bargaining

G4-HR4 Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and measures taken to support these rights Human capital Partially, no violations reported No

Material aspect: Child labour

G4-HR5 Operations and suppliers identified as having significant risk for incidents of child labour, and measures taken to contribute to the effective abolition of child labour Human capital

Partially, no incidents occurred.

Northam upholds the basic labour rights of the Fundamental Rights Convention of the ILO and in legislation, regulations and practices of South Africa.

The company does not employ child labour, nor does it employ workers younger than 18 years of age as all prospective employees are screened in terms of Northam’s employment policies and procedures

No

Material aspect: Forced or compulsory labour

G4-HR6 Operations and suppliers identified as having significant risk for incidents of forced or compulsory labour, and measures to contribute to the elimination of all forms of forced or compulsory labour Human capital

Partially, no incidents occurred.

Northam upholds the basic labour rights of the Fundamental Rights Convention of the ILO and in legislation, regulations and practices of South Africa.

No

Material aspect: Anti-corruption

G4-SO3 Total number and percentage of operations assessed for risks related to corruption and the significant risks identified Managing risk and opportunity
Corporate governance report
Fully, 100% of operations assessed for risks related to corruption and risks were identified No
G4-SO5 Confirmed incidents of corruption and actions taken Managing risk and opportunity
Corporate governance report
Fully - whistle blowers are protected in accordance with the provisions of the Protected Disclosures Act, No 26 of 2000 and these incidents cannot be disclosed No
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