Vision and values Contents Implats’ vision To be the world’s best platinum-producing company, delivering superior returns to shareholders relative to our peers. Implats’ values • Safeguarding the health and safety of our employees, and caring for the environment in which we operate • Acting with integrity and openness in all that we do and fostering a workplace in which honest and open communication thrives • Promoting and rewarding teamwork, innovation, continuous improvement and the application of best practice by being a responsible employer, developing people to the best of their abilities and fostering a culture of mutual respect among employees • Being accountable and responsible for our actions as a company and as individuals • Being a good corporate citizen in the communities in which we live and work. Scope of report The Implats 2010 annual report integrates the Group’s nancial and non- nancial performance for the rst time, applying global best practice in reporting to stakeholders. The previous year’s report was published in August 2009. The report has been compiled for the Implats Group and its subsidiaries and covers the financial year from 1 July 2009 to 30 June 2010. It includes the annual financial statements, an operational overview, a summarised mineral resources and reserves statement and a review of non-financial performance. In addition to this annual integrated report, Implats has also produced a mineral resource and mineral reserve statement 2010. Sustainability elements have been compiled in line with the guidelines of the Global Reporting Initiative (GRI G3). GRI reporting principles for de ning report content, quality and boundary setting have been used as guidelines. As a signatory to the principles of the United Nations Global Compact, Implats has submitted a report in line with its commitment to this compact (index on page 147). In accordance with GRI guidelines, Implats has declared a B+ level of reporting, con rmed by KPMG. The annual nancial statements were prepared according to International Financial Reporting Standards (IFRS), the requirements of the South African Companies Act, regulations of the JSE Limited (JSE) and recommendations of King II. Reporting Mineral Resources and Reserves estimates conforms to the South African Code for Reporting of Mineral Resources and Mineral Reserves (SAMREC) and the Australian On the cover, 17 Shaft, Rustenburg, South Africa. Code for Reporting of Mineral Resources and Ore Reserves (JORC), and was signed off by the competent persons, as de ned by these codes. In this report, production is reported in terms of platinum and platinum group metals (PGMs, which include platinum, palladium, rhodium, ruthenium and iridium as well as gold, also referred to as 5PGE+Au). Both historical and forwardlooking data is provided for information. Unless otherwise stated, information in this report is primarily for FY2010 while that relating to physical metals markets is provided by calendar year. There were no signi cant changes to organisational structure, or signi cant restatements of data, during the year. Where data has been restated, this is indicated. Certain statistical information is provided for comparative purposes for up to 10 years ( nancial years 2001 to 2010). Information covers all subsidiary, joint venture and investment companies. For sustainability elements, information relating to managed operations is disclosed, while that for joint ventures and associates is excluded. Where information is attributable to Implats it is highlighted. In all cases, $ or dollar refers to the US dollar. This report is available to identi ed stakeholders. Printed copies may be requested from the contacts listed at the end of this report. It is also available as an interactive online report on the corporate website, www.implats.co.za. Impala Platinum Holdings Limited (Implats) is one of the world’s foremost producers of platinum and associated platinum group metals (PGM). The Group has operations on the PGMbearing orebodies of the Bushveld Complex in South Africa and the Great Dyke in Zimbabwe. Implats contributes around 25% of global platinum output. Implats has a primary listing on the JSE in South Africa (IMP), a secondary listing on the LSE, United Kingdom (IPLA) and a level 1 American Depositary Receipt programme (IMPUY) in the United States of America. 4 5 6 8 10 13 20 24 32 38 42 44 Where we operate Our business and our products Group performance Operations at a glance Chairman’s statement Chief executive of cer’s review Ten-year statistics Financial review Engaging with stakeholders Management approach Strategic risk Board of directors Group overview Safety and health review Market review Operational review Impala Zimplats Marula Mimosa Two Rivers IRS Mineral Resources and Mineral Reserves –summary Human capital review Socio-economic development Environmental review Awards and achievements Corporate governance Audit and Risk Committee report Independent Assurance Report on Selected Sustainability Information 146 Reporting in line with the GRI 148 Management 48 60 70 76 80 84 88 92 96 104 113 118 131 134 142 144 153 Annual nancial statements 153 Forward-looking statements 243 Non-GAAP disclosures 248 Shareholder information 249 Reporting in line with United Nations global compact 250 Mining charter compliance index 252 Glossary of terms and acronyms 255 Notice to shareholders 259 Form of proxy 260 Notes to the form of proxy Performance overview Annual nancial statements Group overview To view the Implats integrated report online, please visit our website at: www.implats.co.za Engaging with stakeholders www.implats.co.za 1 Implats Integrated Annual Report 2010 Implats has a broad range of stakeholders who have material interests in the business. These stakeholders have been identi ed through structured and unstructured processes as well as ad hoc day-to-day interactions at different levels of the organisation. Implats engages with both internal and external stakeholders, through various designated structures in the organisation tabled below. Internal stakeholders include employees, unions and business partners. External stakeholders span government, the media, financial institutions, suppliers, advocacy groups and others. External stakeholders are primarily engaged through the Group stakeholder engagement and investor relations departments. The frequency and nature of these engagements is determined by the issues raised. Strategically, Implats focuses on proactively creating, building and maintaining effective relationships with all affected and interested stakeholders. Due to the nature of our business and the impact we have on our immediate surroundings, communities are considered as important stakeholders. We recognise the symbiotic relationship between the business and the community. Any social issues present in the community have a direct impact on the business, while the way in which we operate and the performance of our business directly influence the livelihoods of these communities. The types of engagement and material developments in South Africa during the year are summarised below. Group overview Media Shareholders and investing community Government – national, provincial and local Stakeholder engagement in South Africa Stakeholder Shareholders and investing community Type of engagements Annual and quarterly reports, interim results, website, fact sheets, roadshows, presentations and one-on-one conferences Equity, debt and insurance engagements Electronic, print, radio and television Material issues raised Market performance Metal prices Safety performance Action taken Responses are provided during the engagement process by providing relevant answers and data where available Banks, funders, insurance companies Performance overview Employees Communities Traditional council and land owners Community forums Banks, funders, insurance companies Media No material issues raised Safety performance Operations efficiency Dealt with through Investors Relations and media releases Formal presentations have been given during the visits and meetings Trade unions NGOs, CBOs Government – national, provincial, local Close liaison with and reporting to national, provincial, district and local government Public open days on mines, environmental hotline, community liaison offices, publications Feedback on SLP performance Safety performance Producer associations BEE partners Group overview End users Customers Producers and business partners Advocacy groups Suppliers BEE suppliers Non-governmental organisations (NGOs), community-based organisations (CBOs), and concerned groups, Chamber of Mines, North West Air Pollution Control Forum, Benchmarks Foundation (organises stakeholder meetings and symposiums) Issues relating to the impact of mining on the environment, health and implementation of socioeconomic projects Issues addressed through stakeholder engagement forums Monthly, quarterly meetings held as scheduled Annual nancial statements Management approach www.implats.co.za 32 Implats Integrated Annual Report 2010 www.implats.co.za 33 Implats Integrated Annual Report 2010 Understanding our business and sustainability footprint Implats is the second-largest producer of platinum in the world with the potential to impact the global PGM market. In the past two years, and amid a changing legislative and global operating environment, Implats has concentrated on deepening its understanding of the Group’s sustainability footprint. There is now heightened awareness that all aspects of sustainability – financial and non-financial – impact on our stakeholders and, therefore, on our business. All these initiatives are built on our principles of sustainability beyond a mining excavation. While we acknowledge the impact our business processes may have on the environment, we continue to look for positive contributions from our metals in enhancing sustainable development. Each year, through the risk process, we identify market risks related to our products and seek potential opportunities for growth. Over the • The move towards gasoline frugality is trending towards smaller-engined vehicles with similar performance characteristics of current larger engines. These technological innovations require similar and often higher PGM loadings to achieve the requisite emission standards. • Tightening emission standards across the world are expected to underpin long-term escalation in PGM demand, ably supported by a steadily increasing global vehicle fleet. • Although electrical cars pose a potential threat to PGM demand, the rapid development of the technology is constrained by several limiting factors ranging from the safety of their battery technology, costs of the vehicles, availability of raw materials, impact on the energy grid, practical size of the battery, associated driving range and limitations in logistical roll-out of charging stations. We expect full electric vehicles to account for less than 5% of vehicle sales over the 20-year horizon. • Historical and ongoing development work by the Platinum Guild International (PGI) in developing platinum jewellery demand has created a strong and growing jewellery sector, expected to sustain the industry over the longer term. • Anticipated growth in emerging economies (notably China, India and the next 11 nations) up to 2050 ensures that demand for PGMs from the automotive, jewellery and industrial sectors should remain robust. • Constraints on the long-term evolution of both petroleum and electric propulsion sources are expected to create a niche for other alternatives to vehicle propulsion. We therefore expect technologies like fuel cells to become increasingly prominent as feasible alternatives to petroleum-powered vehicles in future. Group overview Sustainability footprint Land disturbance and contamination, resource consumption, safety Land disturbance and contamination, water contamination, resource consumption, safety, land ownership, noise, access to land, job seekers Safety, emissions, water contamination/resource consumption, contamination of land, energy, noise Safety, noise, water resource consumptions, emissions review period, the following potential market risks have been identified: • The impact of constrained resource availability particularly in the South African context – given that 75% of the world’s PGM supply emanates from this region – concerns major consumers of these metals and exacerbates the risk of substitution as does the move into recycled metals which represents a growing threat to mine supply. • In line with this, the development of an alternative to PGMs in autocatalysts has been a threat for the last EXPLORATION MINING PROCESSING REFINING Quality, origin, reliability Quality, origin, environmental bene ts in terms of air quality Adding value, reducing long-term impact Rehabilitation, community sustainability 30 years and will remain so in the future, hence having a possible negative impact on sustainability. • High metal prices catalyse the search for alternatives to PGMs and we remain fully cognisant of the need for balance in the supply/demand equation. • With more than half of PGM production consumed by the automotive industry, this is, by association, a major long-term risk to industry sustainability. The development of full electric propulsion systems poses a risk to industry longevity as this technology uses minimal amounts of PGMs. This is supported by projections of steadily diminishing oil reserves, the slow pace of capital investment to create additional capacity for oil production and increasing demand from the emerging market component, ultimately resulting in short supply for both energy and propulsion. Performance overview MARKET END USER RECYCLING CLOSURE In the rst stages of the PGM process, impacts centre on environmental and social aspects. Once products reach market, the issue becomes quality and eco-friendliness. We understand that our view of our business process must be integrated across the life cycle of operations, from exploration, mining and mineral processing to refining, marketing and recycling. We also understand that while we do not control our products through their full life cycles, we are responsible for ensuring safe delivery and recycling as much as possible. We acknowledge that our business has a direct impact: • Environmentally – pollution of water, air, land and noise as well impact on availability of resources • Socially – the social impact and consequences of the migrant labour systems; inherent dangers of mining that have a direct impact on the safety of employees and the community • Economically – loss of land for community farming, mically animal grazing and generation of income Despite these impacts, through mining we contribute positively to society by: • Providing employment and drawing human resources from surrounding communities • Creating sustainable communities through our upliftment programmes such as enterprise and skills development, and implementing community projects • Developing infrastructure in our communities such as roads and electrification • Working jointly with stakeholders to provide required government capacity to deliver on its mandate Annual nancial statements Against this background, Implats continues to partner with Despite these risks, longer-term industry fundamentals are superb in light of developments below: • The move towards alternative propulsion sources depends heavily on hybrid technology over the next decade – hybrids could account for 30% of all vehicle sales over this period. Importantly, hybrid vehicles consume an equivalent amount of PGMs per vehicle compared with current engine technology. As an integral part of our business plan, and with other PGM producers and industry bodies in identifying potential areas for beneficiation in the application of PGMs. Group benefits for concomitantoverview our long-term growth, we are implementing a holistic strategy to address the obligations and opportunities inherent in our sustainability footprint. Strategic risk www.implats.co.za 38 Implats Integrated Annual Report 2010 www.implats.co.za 39 Implats Integrated Annual Report 2010 At Implats, our approach to risk is based on contextualising, identifying and managing risk within a broader understanding of our objectives and by following a standard process of objective-based risk assessment to identify and evaluate risks across the Group. Strategic risks FY2010 The strategic risk issues currently facing the Group and which inform Implats’ business planning, risk management and resource allocation priorities are noted below: Risk area • • Safety, health and environment Production Objective Who are our stakeholders, what are their objectives and how shall we involve them? Communicate and consult Group overview Continual improvement in safety, health and environmental performance Maintaining reliable and effective production processes and delivering product on time and to specification Maintaining effective project management processes and improving skills to ensure successful project implementation and delivery Continually identify, delineate, measure and optimise our mineral resources and reserves Sustaining unit production costs in the lowest quartile of the industry Understanding future demand for our products, and the corresponding industry supply-side profile Closely monitoring the effect of the rand/dollar exchange rate as a source of significant volatility for our business Attracting, developing, retaining and motivating the requisite management, operational, technical and business skills and pool of talent Achieving organisational diversity and improved employee engagement and participation in all business activities Establish the context What do we need to take into account and what are our objectives? Identify the risks What might happen? How, when and why? Analyse the risks What this will mean for our objectives? Evaluate the risks Which risks need treating and our priority for attention Treat the risks How should we best deal with them? • Project delivery • Minerals resource management • Unit costs Supply and demand Have the risks and controls changed? SOURCE BASED ON: Monitor and review AND • ISO 31000: 2009, RISK MANAGEMENT – PRINCIPLES GUIDELINES, GENEVA: INTERNATIONAL STANDARDS ORGANISATION, 2009 • • Establishing the context includes determining key objectives, key stakeholders and their interests, and considering all external and internal factors (from cultural and perceptual to regulatory and global) • Identifying the risk entails establishing both source and cause, and evaluating all possible consequences • Analysing risk – what does this mean for our objectives? • Risk evaluation encompasses determining the risk rating (by severity, exposure and frequency) using standard Implats tables, identifying controls (existing or new) and prioritising risks • Treating risk requires considering all options to establish the most appropriate response for every risk identified (avoid, change probability of exposure and/or frequency, transfer, retain) Ongoing review ensures the risk plan remains relevant. Factors that may affect consequences and the likelihood of an outcome, and the factors that affect the suitability or cost of treatment options may change. Implats therefore repeats the risk management cycle regularly. All information is captured into a group risk repository system, feeding into the Group risk profile. Risk reports are presented to the appropriate bodies and escalated as required, Implats has established key controls that focus on critical risk areas identified by line management, facilitated by risk management, assessed and evaluated by the internal audit function. Every critical risk and control, as well as any associated tasks, have a designated line management ‘owner’. The controls are designed to provide a costeffective assurance that Implats’ assets are safeguarded and that liabilities and working capital are efficiently managed. Established organisational policies, procedures, standards, guidelines, structures and delegation frameworks provide appropriate levels of direction, accountability and segregation of responsibility, which facilitate self-checking and monitoring mechanisms. Internal audit, in partnership with senior management, monitors these controls and risk management processes (page 139). • • The Board has ultimate responsibility for establishing a framework for internal controls, including appropriate risk management and good corporate governance frameworks and systems. • • culminating with the Board Audit and Risk Committee and the Board. • Rand/dollar exchange rate Performance overview Effective people Growth Retaining a focused and sustainable growth portfolio of assets to ensure Implats remains in the top quartile of performers in its areas of core competence Focus on cash management as a key to preserving the financial value of the business Scanning the environment for technological advances that may affect demand for Implats’ products (substitution), and instituting appropriate responses where possible Cash preservation Country risk Zimbabwe Managing the uncertainties that affect the Zimbabwe operations Social Addressing relevant issues on sustainability, corporate responsibility, and being recognised as a good corporate citizen in the countries and communities where we operate; maintaining sound and mutually beneficial relationships with these and the general public Retaining permission to operate, and full legal and regulatory compliance in a continually changing environment Annual nancial statements Infrastructure Continually monitoring the condition and future availability of infrastructure (power, water, roads) in both South Africa and Zimbabwe Details of Implats-specific risk factors are available on the corporate website (www.implats.co.za). www.implats.co.za 42 Implats Integrated Annual Report 2010 www.implats.co.za 43 Implats Integrated Annual Report 2010 www.blacksunplc.com © Black Sun Plc 2011 17
