Governance – embedded in mainstream management processes? Implats Platinum Basic Materials South Africa 2010 Integrated Annual Report I N T E G R AT E D A N N U A L R E P O R T 2 0 1 0 Group overview Management approach 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 mically • Economically – loss of land for community farming, 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 concomitant benefits for our long-term growth, we are implementing a holistic strategy to address the obligations and opportunities inherent in our sustainability footprint. other PGM producers and industry bodies in identifying potential areas for beneficiation in the application of PGMs. www.implats.co.za 38 Implats Integrated Annual Report 2010 www.implats.co.za 39 Implats Integrated Annual Report 2010 pp 38-39 Implats Platinum communicates a clear understanding at their business and sustainability footprint in the management approach. This is illustrated through the Group’s value chain which is clearly explained along with the impacts and issues apparent at each stage of the mining process. Further discussion is provided on the specific risks associated with each issue. 52 Integrated thinking in reporting
