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Richards Bay Minerals Communications Department P O Box 401 Richards Bay 3900 South Africa Tel: +27 35 901 3111 Fax +27 35 901 3442 email: communication@rbm.co.za www.rbm.co.za 2016 | Sustainable Development Report
RBM has invested R73 million in new roads in local communities RBM has spent R60 million since 2006 in a collaborative effort to improve the quality of education in host communities and in the broader region 2016 | Sustainable Development Report RBM accounts for half of KwaZulu-Natal’s mining output In 2010 Rio Tinto secured a majority shareholding with a 74 per cent stake in RBM. This was the single biggest foreign direct investment in the South African mining industry up to that time RBM work in partnership with stakeholders on a host of issues, from community development to environmental management Table Of Contents R1,5 billion+ has been spent on host community infrastructure, skills and 1 At a glance 2 enterprise development in the last 20 years 2 About us 4 RBM spends millions annually on improving the quality of education in host MD’s statement 4 communities and the wider region Organisational profile 6 Governance 17 RBM is a major employers and the single largest taxpayer in KwaZulu-Natal. 3 About this report 21 Over the past 10 years the company has contributed R8,5 billion, or five per cent of the province’s total Gross Domestic Product (GDP) Report profile 21 Sustainability framework 21 Material aspects and boundaries 22 Rio Tinto was the first mining company to eradicate mining hostels in Stakeholder engagement 22 Phalaborwa (PMC) in the 1980s. This led to better living conditions and improved quality of life for employees 4 Economic 25 Economic performance 25 Rio Tinto appointed the first black South African managing director, for Market presence 25 Richards Bay Minerals Indirect economic impact 26 Procurement practices 27 Rio Tinto appointed the first female managing director in the South African 5 Environment 35 mining industry Energy 36 Emissions 37 RBM’s enterprise development programme targets host communities, and over 60 Water 38 small and medium size enterprises have been developed in the last two years Biodiversity 39 Waste 40 Partnerships with municipalities extend to the provision of potable water to households in host communities, contributing R17 million since 2014 6 Social 42 Employment 42 Society 50 Human rights 51 7 GRI content index 55
Sustainable Development Report | 2016 At a Glance RBM’s 40th Anniversary Certified Top Employer 2017 by Top Employer’s Institute Gold Certificate (4-Star) and Team Merit Certificate from The Institute Of Waste Management South Africa Series of Work Stoppages due to Community Unrest Loss of Key Staff Members Rio Tinto-Led Investigation Into Allegations of Misconduct in Terms of our Code of Conduct - The Way We Work Best Safety Year Ever - Two Million All Injury Free Hours Zero Fatalities on Site Three Eco-Logic Awards Winner KZN Top Business Awards in the Mining and Quarrying Category 2 Successful ISO 9001 Audit Against New Standards
Sustainable Development Report | 2016 Sustainable Development Report | 2016 About Us We celebrated our 40th birthday this year. In 1975 it The safety of our employees, our contractors, our Water remains a critical issue for us as the drought was decided that the pilot plant, built in 1973, was visitors, and our communities is of paramount continues and rainfall unfortunately has not occurred worth scaling up to an industrial size, and on 1 April importance. Members of host communities also in catchment areas. Our work with government on the 1976 the company was born. tragically lost their lives during the year. RBM is Tugela Transfer Scheme holds great promise of relief committed to creating a better life for all, including for us, as well as the surrounding Zululand area. Since then our growth has been continuous, with our host communities. We are co-operating with, and safety at the core of everything we do. Over the past fully support, the South African Police Service to deal 40 years we have survived water shortages, smelter with these criminal matters. explosions, changing market conditions, and even a 2016 was another record-breaking cyclone. Each challenge was resolved in the same We experienced a number of plant shutdowns during year for us in safety. Solid way: with ingenuity, care, and commitment of the the year due to community unrest and cable theft, foundations created through our people who have worked here. resulting in further loss – loss of production and loss of equipment vandalized during the protests. We safety management systems and This year we celebrate the history of our company, remain committed to engaging in a transparent and strong leadership has ensured safety but also our future through the theme “40 Forward”. mutually respectful manner with all our stakeholders. is part of who we are. Through looking at our past, it is possible to see clues We have set up a number of platforms for to our future. That makes me certain we will chart a engagement and have been supported by government course towards future success, just as we have done to find consensus on ways forward when our own in the past. efforts to engage have not been unsuccessful. Realising our best safety year ever is a particularly great achievement given tough economic trading While the year was filled with celebration and Disruptions to operations have a significant impact conditions, which have driven a strong focus on recognition, including Employer of Choice on the company and its shareholders, who include efficiency and cost-savings. We recognize the certification and awards from the Waste Management employees and communities. Coupled with an contribution of our employees and contractors who Institute of South Africa, Eco-Logic and KZN Top uncertain global market, community instability hold safety as a core value, ensuring everyone arrives Business, it was also a year of tragedy and loss. We further threatens all our futures. The future life of home safely every day. were deeply saddened this year by the tragic passing the mine has a direct impact on job security for of our General Manager: Human Resources Ronny employees and contractors, procurement from Nzimande. We hold the accolade of Employer of suppliers, and investment and development in our Choice in his honour. host communities. The Zulti South expansion relies on market conditions improving and project approval. Our focus this year has been on extensive stakeholder engagement and progress toward obtaining relevant permits, as well as Mpho Mothoa resettling priority homesteads. Managing Director 4 5
Organisational profile A culture of zero harm disposal. Other areas in the district are characterised by adequate open storage for products as well as general- Sustainable Development Report | 2016 Sustainable Development Report | 2016 relatively low levels of urbanisation, and approximately purpose sheds and bulk storage bins. Richards Bay Minerals (RBM) is a subsidiary of Rio Tinto We have achieved year-on-year improvements in our 80 per cent of the population live in rural areas. The close proximity to rail and harbour links makes in South Africa, who has a shareholding of 74 per cent. safety record and have made a step-change in the the logistics of moving millions of tonnes of product organisation’s safety culture. RBM’s lease areas fall within the local uMfolozi and throughout the world cost-effective. We are a world leader in heavy mineral sands extraction uMhlathuze municipalities. This includes, as the host and refining, and South Africa’s largest mineral sands Strong safety management systems and programmes communities, the Traditional Councils of Mbonambi, At any one time, no fewer than 20 large ocean-going producer and beneficiation company. keep safety top of mind, ensuring safe behaviour Sokhulu, Mkhwanazi, and Dube. vessels are either at anchorage or on the high seas, and continuous improvement. These include the 12 transporting our products destined for customer RBM is a major contributor to the economy of KwaZulu- Lifesaving Commitments, Zero Harm Culture Change Operations began with the Tisand mineral lease in markets across the globe. Natal, accounting for 50 per cent of the province’s Workshops, the Fatality Prevention Programme, the KwaMbonambi area. In the late 1980s, operations mining output. We humbly accepted the winning and Critical Risk Management. Every employee and expanded to the KwaSokhulu area with the Zulti North position in the Mining and Quarrying Category for the contractor is empowered to stop work to address safety mineral lease. Planning for expansion to the KwaDube Ore reserves KZN Top Business Awards this year. first. Safety lies in everyone’s hands and we are all our and KwaMkhwanazi areas through the Zulti South brother’s keeper. mineral lease has been under way for some years, Ilmenite, rutile, and zircon are common minerals Our vision ‘to make a difference in our world by with good progress made on permits and landowner found all over the world, but not always in economic creating a brighter future for all our stakeholders’ and Location agreements during 2016. concentrations. One of the exceptions is the coastal area uncompromising mission ‘to be the safest, most reliable of northern KwaZulu-Natal on the Zululand coast. and sustainable industrial minerals supplier’ drives RBM is a leading mineral sands producer, extracting Products our team to conduct business with both passion and heavy minerals from the dune sands situated north of The heavy minerals found in the dunes along the compassion. We know that by creating a positive impact Richards Bay in Zululand, in the South African province Many of our products are used in the manufacture of coast of northern KwaZulu-Natal come from inland. on the environment and within our wider community, of KwaZulu-Natal. everyday items: from toothpaste, TVs, and artificial hip Over the years, weathering of host rock has released business success follows naturally. joints to the remarkable qualities of titanium used in the the minerals, which, because of their durability, We are located in Richards Bay, the largest industrial aerospace and aviation industries. relatively high density, and high chemical stability, Responsible beyond mining harbour in South Africa. RBM contributes 50 per cent of KwaZulu-Natal’s mining sector by value of output, and Through respecting and applying our values of trust, represents 3.3 per cent of the national mining sector caring, honesty, courage, respect, and fairness we aim to output. leave this area better than we found it. Richards Bay is the economic centre of the King The markets for our products are not static, and have Cetshwayo District Municipality. The district comprises been severely affected by the downturn in commodities. six local municipalities, namely uMhlathuze, Mbonambi, We can’t be sure when this will improve. But there are Mthonjaneni, Nkandla, Ntambanana, and Umlalazi. specific, proactive steps we can take – as individuals, as teams, and as a business – to make sure that we The area has a significant manufacturing sector and continue to perform well despite this uncertainty. hosts five smelter operations including RBM. Production for the area contributes 73.5 per cent of total gross Rio Tinto has defined the five priorities we all need to geographic product of the province and 5.5 per cent of focus on in order to deliver superior performance in the total formal employment. face of economic challenges. These priorities inform our sustainability framework detailed in the “About this The area has developed industrial infrastructure in the report” section. form of roads, railways, electricity, water, and waste We deliver superior performance when we put safety first in everything we do, when we learn form our mistakes, and by immediately stopping the job if it’s not safe RBM is highly competitive in world markets thanks withstand the weathering process and are transported to Rio Tinto’s proprietary smelting technology and down rivers to the ocean. We deliver superior performance when we value diverse points of view, when we lead from our core values, and by international marketing links through Rio Tinto Iron developing our commercial, operational and technical expertise and Titanium. Once in the sea, the sand is transported up the coast by currents and wave action. Waves deposit the sand We have distributors in most economically active containing the heavy minerals onto the beaches. From We deliver superior performance when we treat every Rand as though it’s our own, when we make more money than countries in the world. there, the sand is blown into dunes by onshore winds. we spend, and by spending less to produce more Our bulk products for export are transported 27 From a geological point of view, the ore bodies are We deliver superior performance when we listen to the needs of our stakeholders, when we set realistic kilometres to the harbour by rail. The Richards Bay highly complex and the behaviour of the minerals in expectations, and by delivering on the promises we make Harbour’s multi-purpose, bulk-handling plant is one of the plant may vary considerably across the ore body. the largest plants of its kind in the world and we are one Optimal performance of the separation processes of its major customers. The 26-kilometre long conveyor carried out in the plant is thus dependent on We deliver superior performance when we invest only in projects that will deliver the highest value, when we spend network, designed to handle a wide variety of products, investigating and characterising the behaviour of the less money on them, and by building them together with our partners 6 is fully computerised and centrally controlled. There is minerals as they flow through the plant. 7
ESTIMATED HEAVY MINERAL CONCENTRATES RESERVES (tonnes) 2016-2044 Being non-toxic and biologically passive, it is even Sustainable Development Report | 2016 Sustainable Development Report | 2016 used in sweets, cosmetics, toothpaste, and in 2044 17 951 sunscreens to absorb ultraviolet rays from the sun. It slows the weathering and fading action of the sun on 2041 - 2043 1 548 924 products such as paints and plastics. 2038 - 2040 3 042 661 2035 - 2037 144 670 3 238 037 Manufacturers mainly use rutile in welding rod fluxes as it stabilises the arc and protects the molten metal 2032 - 2034 2 977 821 3 468 202 from oxidation - forming a superior welding joint. 2029 - 2031 5 295 511 3 967 262 Zulti North (tonnes) In its titanium metal form, it is used extensively in 2026 - 2028 5 414 916 4 482 103 Zulti South (tonnes) the aerospace and aviation industries because of its lightness, strength, corrosion and heat resistance. 2023 - 2025 5 558 111 4 681 943 These properties also make it ideal for use in artificial 2020 - 2022 5 510 398 1 948 982 hip joints, pacemakers, and spectacle frames. 2017 - 2019 6 331 516 Our high purity pig iron, a bi-product of the smelting operation, is used as a raw material in foundries for the 0 2 000 000 4 000 000 6 000 000 8 000 000 10 000 000 12 000 000 production of ductile iron castings. Ductile iron is used Bruce Grierson, “Mr Titanium” extensively throughout the world for the production of safety critical automotive parts, such as brake callipers Bruce Grierson is the father of RBM. First employed by Quebec Iron and Titanium (QIT), he was appointed as the first managing director Zulti South expansion Product responsibility and steering knuckles in cars and trucks. of RBM, in which capacity he served from 1974-1981. He later became president of Rio Tinto. Apart from being instrumental in Sound stakeholder relations have yielded positive Material Safety Data Sheets (MSDS) for our products Zircon is used in the production of ceramic tiles and securing QIT’s involvement and bank financing at a critical time, as outcomes, resulting in the conclusion of the following are attached to all shipments, providing the following sanitary ware. Refined to zirconia, it is used in a wide well as a keen involvement in the management of the project, Bruce range of advanced ceramics, refractories, jewellery, almost single-handedly created the market for RBM’s products. critical permits and agreements for the proposed information: Zulti South expansion: electronic applications, and many other industrial and On the wall of Bruce’s house there is an aeroplane propeller, signed - Content; domestic products. Zircon sand is also used in the to “John, from Charles”. John Grierson, Bruce’s father, was a good - Water Use Licences for the corridor and mine - Safe use of the product; and foundry industry. friend of Charles Lindbergh, and the second person to fly the Atlantic lease; - Safe disposal of the product. solo. Bruce evidently inherited his father’s intrepid genes. - Environmental Assessments for the corridor Ownership His forte, according to those who worked with him, was securing and mine lease; We were recently audited against the ISO 9001 consensus of agreement among a variety of strong-willed and - Servitudes agreement; and standard and re-certified. We deliberately asked to Richards Bay Minerals is the trading name for two conflicting opinions. He had the ability to grasp all the implications - A Relocation and Resettlement Plan. be audited against the new ISO 9001:2015 standards, registered companies: of a complicated decision and articulate a convincing and principled even though they only come into effect in 2017, to argument for a certain choice. The conclusion of the remaining permits and confirm that we are well placed to be fully compliant. - Richards Bay Mining Proprietary Limited, which In July 1981 Bruce Grierson left RBM and returned to run QIT. He agreements is expected early in 2017. It is important for our customers to know that we undertakes mining and minerals separation; continued as chairman of RBIT and deputy chairman of Tisand. Roy have a rigorous system to assess the quality of the and Macpherson, who was appointed to succeed him in July 1981, said: For further details on resettlement, please see page 52 products we deliver to them. By moving early, we - Richards Bay Titanium Proprietary Limited, “Nobody in the world knows more about the titanium industry than also avoided the cost of conducting an expensive gap which is responsible for the smelting and Bruce does. He is knowledgeable about all the production aspects, beneficiation process. he is at home with the finance and personnel and has played a The project team undertook a Capital Intensity Review analysis exercise. major role in getting RBM’s products accepted on world markets, (CIR) process, realising a 22 per cent reduction in the and indeed developing many of those markets where they were project capital estimate. Markets Rio Tinto manages operations with a 74 per cent previously non-existent.” shareholding. An employee trust (two per cent) and Pending improvements in global market conditions Ninety-five per cent of our beneficiated product is Blue Horizon (24 per cent) hold remaining shares. Blue and supportive relationships with communities, the exported, yielding a world market share of about 25 per Horizon is a consortium consisting of lead investors Advisory Committee approved a project plan that will cent of titanium feedstock (titania slag and rutile), 33 and our four host communities via community trusts. Operations see construction beginning in the first quarter of 2018. per cent of the world’s zircon output, and 25 per cent of the world’s high purity pig iron. RBM OWNERSHIP Our operations commenced in 1977 with one dredge mining plant and two furnaces producing approximately Key activity Completion milestone date Titania slag, which comes from ilmenite, contains 85 400,000 tonnes per year of titania slag. In 1986, an per cent titanium dioxide and is our primary product, additional mining plant and furnace were added, Project approvals while rutile contains 94 per cent titanium dioxide. increasing slag output to 750,000 tonnes per year. Bridging funding Investment Committee May 2017 24% Execution funding March 2018 Rio Tinto Detail engineering Complete October 2018 Titanium dioxide is beneficiated by end-users most RBM’s titania slag capacity increased to one million Blue Horizon commonly to provide brilliance and opacity to tonnes per year and pig iron production went up to Procurement Complete June 2019 products such as paints, plastics, or paper. It imparts 2% RBM Employees 550,000 tonnes per year during the early 1990s, when a Construction, commissioning Start June 2018 Complete May 2020 a luminescence to glossy white electronic products fourth furnace and mining plant were installed. Production ramp-up start October 2020 such as ultra-modern phones and tablets and kitchen 74% appliances by reflecting and scattering light in the We currently have the capacity to produce visible spectrum like thousands of tiny mirrors. approximately two million tonnes of products annually, 8 9
including approximately 100,000 tonnes per year of Sustainable Development Report | 2016 Sustainable Development Report | 2016 Female Total Male Total Grand rutile and 250,000 tonnes per year of zircon. female male total EMPLOYMENT African Coloured Indian White African Coloured Indian White LEVEL The low-clay Richards Bay sands suit a wet-mining process. Artificial freshwater ponds are created in the Top management - - - - - 2 - 1 3 6 6 dunes several kilometres from the shoreline. On each Senior management 3 1 4 2 10 7 1 5 10 23 33 pond floats one or more dredgers and a concentrator Professional qualified and plant. The dredger burrows into the face of a dune, experienced specialists and 14 - 3 6 23 33 - 18 40 91 114 mid management advancing at a rate of a few metres a day. The sand Senior technical, junior face collapses into the pond and is sucked up and management, supervisors 75 5 19 20 119 379 18 94 149 640 759 pumped into the concentrator plant. There the heavy Semi-skilled and minerals (about three per cent of the dunes) are discretionary decision 97 3 11 14 125 835 4 18 14 871 996 making separated from the sand through a series of sieves and sluices. The sand is pumped out behind the plant to Temporary employees 29 - - - 29 12 - - 11 23 52 reform the dune for rehabilitation, and the valuable Grand total 218 9 37 42 306 1 268 23 136 227 1 654 1 960 heavy mineral concentrate is deposited next to each pond for transportation to the mineral separation plant. At any one time we have approximately the same We subscribe to and are guided by the following number of contractors as employees on site. standards, principles, and goals: MINING ACTIVITY (tonnes) 2010 - 2016 90 000 000 3 500 000 The majority of our workforce remains between the - International Council on Mining and Metals (ICMM) ages of 30 and 50. principles; 80 000 000 - The United Nation’s Precautionary Principle of the Heavy Mineral Concentrate Recovered 3 000 000 Age Total Rio Declaration and Environment Development, 70 000 000 2 500 000 Over 50 years 490 1992; 60 000 000 30 - 50 years 1 282 - The United Nation’s Sustainable Development Goals (SDG); Sand Mined 50 000 000 2 000 000 Under 30 years 188 - Rio Tinto’s Business Standards: Grand total 1 960 40 000 000 1 500 000 - The way we work; 30 000 000 Trade union membership has not changed significantly - Business integrity (anti-corruption) standard; 1 000 000 during the year. - Business integrity (anti-trust) standard; 20 000 000 - Business integrity (conflicts of interest) 10 000 000 500 000 Union Total Percentage standard; HMC Produced NUM Union 982 50.1% - Anti-bribery due diligence standard; Sand Mined 0 UASA 443 22.6% - Fraud standard; 2010 2011 2012 2013 2014 2015 2016 Non-Union 535 27.3% - ISO 14000, IS0 9001, and OHSAS 18001; and Grand total 1 960 100% - The Mining Charter. With an increase in sand mined and heavy mineral concentrate produced during 2016, there was a slight The ICMM Principles: drop in total beneficiated product supplied, with demand remaining largely unchanged since 2015 Principle Our contribution see page across products. 1 Implement and maintain ethical business practices and sound systems of corporate governance. 6, 14, 17-19 2 Integrate sustainable development considerations within the corporate decision-making process. 6, 21-22 TOTAL BENEFICIATED PRODUCT (tonnes) 2010 - 2016 3 Uphold fundamental human rights and respect cultures, customs and values in dealings with employees and 51-53 2 500 000 others who are affected by our activities. 4 Implement risk management strategies based on valid data and sound science. 13, 18, 25 2 000 000 5 Seek continual improvement of our health and safety performance. 42-45 1 500 000 6 Seek continual improvement of our environmental performance. 35-41 7 Contribute to conservation of biodiversity and integrated approaches to land use planning. 39-40 1 000 000 Iron produced 8 Facilitate and encourage responsible product design, use, re-use, recycling and disposal of our products. 8 500 000 Slag produced 9 Contribute to the social, economic and institutional development of the communities in which we operate. 6, 25-30, 50-53 Zircon produced 10 Implement effective and transparent engagement, communication and independently verified reporting 22 - 23 Rutile produced arrangements with our stakeholders. 0 12 2010 2011 2012 2013 2014 2015 2016 13
The Sustainable Development Goals agencies to impact on the SDGs at some scale. With a Sustainable Development Report | 2016 Sustainable Development Report | 2016 sustainable approach to development, we are able to As a subsidiary of a global mining company, located create jobs, spur innovation, and bring investment and within indigenous lands, we recognise our unique infrastructure to the area. ability to form partnerships with government and other Goal Our contribution 1 No poverty Jobs Enterprise development Supplier development Resettlement programme 2 Zero hunger Community agricultural development programmes Rehabilitation of land including growing commercial crops 3 Good health and well-being Occupational health and safety Community clinics, including specialised Prevention of Mother to Child Transmission Clinic (PMCT) 4 Quality education Technical training Apprenticeships Learnerships High school maths and science programme Bursaries Internships Graduate development programme 5 Gender equality Equal pay and opportunities 6 Clean water and sanitation Shared use Prevention of contamination Water recycling 7 Affordable and clean energy Efficiency Shared use 8 Decent work and economic growth Decent working conditions Mine expansion Enterprise and supplier development 9 Industry, innovation and infrastructure Development of roads Shared use Innovation in mining, rehabilitation, reuse, recycling methods 10 Reduced inequalities Community Trusts Participatory planning Social engagement 11 Sustainable cities and communities Positive land impact Reduced emissions Reduced water consumption Local economic development 12 Responsible consumption and production Materials stewardship Minimising waste 13 Climate action Reduced emissions 14 Life below water Zero water discharge 15 Life on land Managing biodiversity Risk management and mitigation Positive land impact 16 Peace, justice and strong institutions Transparent reporting Good governance Community complaints processes and resolution 17 Partnerships for the goals Partnerships with local, regional, and national government and civil society organisations 14 15
Broad-Based Black Economic Empowerment targets and introduced new categories for measured Sustainable Development Report | 2016 Sustainable Development Report | 2016 Catch-up Plan (2009 – 2013) entities. In many cases, companies measured against The Mineral and Petroleum Resources Development Act the revised codes have achieved a significantly lower Bulk water supply R17 000 000 R8 000 000 (MPRDA), enacted in 2002, and the Broad-Based Black B-BBEE rating. New SLP (2015 – 2019): Corporate Social Responsibility projects Economic Empowerment Act 53 of 2003 aim to advance economic transformation, increasing the participation of The RBM Board’s Social and Ethics Committee Project name Approved budget Spend 2016 Status black people in the South African economy. monitors and reviews the company’s overall approach Eco wash R3 000 000 R1 000 000 to transformation. The Employment Equity and The Ministry of Trade and Industry issued a Code Skills Development Committees are responsible for Sewing enterprise R2 100 000 R500 000 of Good Practice (CoGP) in February 2007, as an driving transformation and non-discrimination in Toilet paper making R3 000 000 R1 500 000 implementation framework for B-BBEE policy the workplace, with specific areas of implementation Concrete manufacturing R10 500 000 R3 500 000 and legislation. Specific industry charters were devolved to relevant business units. also developed to highlight industry-specific Land stewardship and agriculture R7 200 000 R1 200 000 transformation imperatives. The Mining Charter was RBM was rated against the amended B-BBEE Codes one of the first sector charters to be developed. in 2015/2016 and obtained a certificate as a Level 6 Status contributor to B-BBEE. This provides our clients with Completed On-going Behind schedule RBM’s commitment to transformation is measured the ability to claim 60% of spend with us in their own through our annual B-BBEE rating, as well as procurement score. progress made towards achieving targets and plans Governance set out in our Social and Labour Plan (SLP). These Year Codes B-BBEE rating indicators impact on both our business and social RBM Board of Directors 2013 Old codes 5 licences to operate. 2014 Old codes 6 South African Disabled Name Race Gender Title The CoGP was revised in 2013. The revised codes 2015 Old codes 5 (Yes / No) (Yes / No) came into effect in May 2015 and set even higher 2016 Revised codes 6 Marion Lesego Marole African Female Yes No Independent Director Jacko Preyser (replaced Mark Howard Davies on White Male Yes No Director 7 December 2016) 2016 Broad-Based Black Economic Empowerment rating Bongukuphiwa Mthethwa African Male Yes No Director Elements Score Weighting Comments Stephane Leblanc White Male No No Director Our ownership score includes black women at 2.59. Due to insufficient data submitted Emsley Manne Dipico African Male Yes No Director Ownership 14.59 20 for assessments on employee share participation scheme, the overall score for the ownership element was impacted. Gary Anthony O'Brien White Male No No Director One of the most significant transformation challenges RBM faces is achieving Johannes Bhekumuzi Magwaza African Male Yes No Director employment equity targets in top and senior management levels. A robust Human Management control 10.36 15 Resources strategy has been implemented to improve targets in the top and senior levels Mpho Lucas Mothoa African Male Yes No Managing Director through succession planning, graduate development, and by ensuring that open positions are offered to equity candidates whenever possible. We achieved full bonus points for absorbing black people as permanent employees after RBM Senior Leadership Team (SLT) Skills development 13.44 20 completing learnership programmes. The business has developed an HRD strategy that As at the end of December 2016, our SLT comprised: will focus more on learnership, apprenticeship, and internship programmes. Continuing to meet the DTI’s stringent B-BBEE targets for preferential procurement Mpho Mothoa Luke Colton Moses Thokwane Enterprise and supplier Managing Director Chief Financial Officer Acting General 28.37 40 is challenging. 13.37 of the points in this element are allocated to preferential development Manager: Communities procurement. We achieved full points for supplier and enterprise development. and Corporate Relations RBM’s commitment to empowering and improving the lives of members of our host Socio-economic development 5 5 communities, to ensure sustainable development, is evident full points for this element. Pregarsen Chinnu Joey Kunji-Behari Brigitte Ngobese TOTAL SCORE 71.76 100 Acting General Manager: General Manager Acting General Manager: Mining Smelting, Processing Human Resources and Logistics Social and Labour Plan (SLP) The Department of Mineral Resources (DMR) has RBM is engaging with the regulator to finalise the SLP. Jacques Venter Dawid Erasmus Peter Eaglen provisionally approved both our Catch–up Plan (2009- Apart from one project, all other projects have been General Manager General Manager General Manager Technical and Major Projects Health, Safety, Environment 2013) and new SLP (2015-2019). completed under the Catch-up Plan (2009-2013). Asset Management and Security 16 17
Board Committees Ethics and integrity Sustainable Development Report | 2016 Sustainable Development Report | 2016 Board Committees include the Board Audit Committee, the RBM Audit Forum, and the Board Social and Ethics Committee. We were faced with a number of business integrity cases during the year including fraud, conflicts of Board Audit Committee interest, and collusion. We adhere strictly to due This committee oversees compliance and audit matters on behalf of the Board process, as prescribed by Rio Tinto, to investigate and resolve such matters. In some instances third parties were found to have committed these breaches 3 Non-Executive Directors of policies, standards, and law. In other instances, disappointingly, RBM employees were responsible and have since left the business. We view matters of ethics and integrity in an extremely serious light. Manager : Specialist: Managing Chief Financial Legal and Manager : External Director Officer Administrative Compliance and Finance Auditor Internal Controls We focused efforts this year on strong internal and Services external communication and training around the requirements of our code of ethics, ‘the way we work’ and our intolerance for fraud and corruption. RBM Audit Forum Ethics and integrity form an integral part of our The objective of the RBM Audit Forum is to oversee the group business compliance programme. It has the induction programme and employees attend following responsibilities and provides guidance with respect to: refresher training each year as a compulsory training - Integrity and compliance; requirement. - Compliance risk management; - Internal control environment; and The Community and Corporate Relations’ Economic - Insurance risk management. Development team took the Anti-Corruption Campaign to our four host communities in order The Audit Forum reports and makes recommendations to the Board Audit Committee on significant matters. to heighten awareness. It is critical that our host communities understand what the business regards as corruption and fraud. Managing Director The team shared posters describing how the community can blow the whistle in the fight against fraud. This communication was also shared internally with our employees to make sure everyone is aware of what is acceptable and what is not, and everyone is Manager: empowered to report it. Senior Specialist: External Legal and Manager: Leadership Team Compliance and Auditor Administrative Finance Internal Controls Services Employees, contractors, suppliers, and customers of Rio Tinto managed sites can report concerns anonymously through an independently operated whistleblowing programme called Speak-OUT. Any Board Social and Ethics Committee significant concerns about the business, or behaviour of individuals, including suspicion of violations This committee assists the Board in fulfilling its oversight responsibilities in respect of the company’s social of financial reporting, safety or environmental and economic development programme, good corporate citizenship, human rights standards, anti-corruption procedures, or general business integrity issues can measures, environmental, health and public safety, product stewardship, and labour and employment be reported. practices. The committee is established pursuant to the requirements of the Companies Act 71 of 2008. Speak-OUT reports are investigated internally and the General Manager: Human Resources reports closeout to the Executive Team and provides a summary to the 3 Non-Executive Directors Board Audit Committee and Audit Forum. General Chief General Manager: General Specialist Manager: Legal Managing Financial Manager: Communities Manager: Compliance and Director Officer Technical and Corporate Human and Internal Administrative Relations Resources Controls Services 18 19
Sustainable Development Report | 2016 About this report Report profile Sustainability framework This report covers the 2016 calendar year and is our sixth Global Reporting Initiative (GRI)-aligned report. This report is produced in accordance with the GRI G4 Our mission, vision and leadership values, while Core Option. underscoring principles needed for operational sustainability, are biased toward compassion We publish our Sustainable Development Report and care for our people and the annually on-line and print a limited number of reports. natural environments within which we operate The report covers the two entities that make up RBM: Leadership values: Community trust,caring, - Richards Bay Mining (Pty) Ltd, which development honesty, courage, respect, fairness undertakes the mining and minerals separation; - Richards Bay Titanium (Pty) Ltd, which is responsible for smelting and beneficiation Stakeholder A Culture of processes. engagement Zero Harm The report is not externally assured, but rather Sound internally reviewed. environmental practices There are no significant re-statements or changes in scope and boundaries. For any comments or queries, please contact: Material aspects and boundaries communication@rbm.co.za Our reporting process begins with a materiality review. Using the GRI’s guidelines on materiality and completeness, we review issues impacting business in general, the context of mining and doing business in South Africa, the matters we have reported on in the past, those that we have engaged stakehold- ers on over the year, and those that substantively influence the assessments, actions, and decisions of our business and our stakeholders. These represent the most significant economic, environmental, and social issues. Our materiality matrix plots the level of importance to our stakeholders with the impact on the business. 21
An action plan was developed during the workshop. Sustainable Development Report | 2016 Sustainable Development Report | 2016 Structure Frequency Objective Health, safety & security Progress will be monitored with the guidance and Traditional Council (TC) Monthly Gain buy-in on projects Air emissions Community relations support of COGTA. The next workshop will take place - Mkhwanazi Provide update on projects Waste Economic value - Dube Promote partnership High Materials Water with the Mkhwanazi community. - Mbonambi Share information stewardship Ethics & integrity - Sokhulu Promote good relationships IMPACT ON THE BUSINESS Skills Employee retention Achieve a social license to operate development Energy The Dube Community Imbizo was held in November Continue the Zulti South engagement Compliance 2016. The purpose of the imbizo was to create a Reach relocation & resettlement agreements, land takes, compensation principles & rates platform where both RBM and the Dube Traditional Community Trust Monthly Partnership Industrial relations Council reported on what was accomplished in 2016. - Mkhwanazi As necessary Empowerment Medium - Dube Relationship building Biodiversity - Sokhulu Low As part of RBM’s stakeholder engagement plan, Local Recruitment Committee Bi-weekly To address employment, education skills, and training the Managing Director (MD) and other RBM - Dube - Mbonambi Low Medium High representatives met with His Majesty, King Goodwill - Sokhulu Zwelithini, at his residence in Nongoma. The King King Cetshwayo District Municipality As necessary Partnership LEVEL OF IMPORTANCE TO STAKEHOLDERS acknowledged the good work that RBM is doing in Information sharing his communities and committed to strengthening Social license to operate Service delivery support for RBM. Mhlathuze Municipality Quarterly Partnership on LED projects Zulti South project plans Stakeholder engagement Rio Tinto Iron and Titanium (RTIT) MD Stephane Umfolozi Municipality Quarterly Partnership on LED projects Leblanc joined by MD Mpho Mothoa and Acting Community engagement and projects support RBM is always committed to engage in a transparent General Manager: CCR Moses Thokwane also visited Environmental Forums Quarterly Promote partnership and mutually respectful manner with all our the Premier of KwaZulu-Natal, the Hon Willies Community information Control encroachment stakeholders, and we have specific platforms in place Mchunu. He expressed his support for the company Land use management & future developments to engage with all. and its contribution to the province. ZS Resettlement Advisory Committee Quarterly Consultative agreements RRP Steering Committee Monthly Consultative agreements 2016 was unfortunately marked with a number We were pleased to engage with a number of other of community protests despite on-going robust high profile representatives from various stakeholder Affected Committees Forum Monthly As necessary discussions with Traditional Councils, Business groups, including: Mbonambi Heritage Task Team Monthly Preservation of cultural heritage resources Forums, and newly elected Youth Committees. Sokhulu Heritage Task Team Monthly Preservation of cultural heritage resources - The Department of Mineral Resources Regional Community protests and plant shutdowns have a Office; Amafa KZN Twice per year Engagements on heritage issues Compliance with legislation negative impact on all parties and every effort is - The MEC for Economic Development, Tourism DEDTEA As necessary Engagements on environmental issues being made to strengthen engagement to ensure and Environmental Affairs; Compliance with legislation equal commitment to a common goal of prosperity - KZN Ezemvelo and the Department of DAFF As necessary Regulatory compliance & best practice for all. Agriculture, Forestry and Fisheries; DWS As necessary Regulatory compliance & best practice - The Ingonyama Trust Board; Sound relationships with our host communities are a - The National Religious Association for Social DMR Regularly Regulatory compliance & best practice Social Labour Plan high priority for us. While setting up structures and Development; Premier’s Office As necessary Government support and Partnership agreeing to terms of engagement are important, so is - COGTA; Zululand Chamber of Commerce & Bi-annually Business support and industry partnership building capacity and leadership in our communities - King Cetshwayo District Mayor; Industry to enable effective engagement. To support this, - Umfolozi District Mayor; Provincial Police Commissioner Bi-annually Business support in crime prevention against business a capacity building, governance, and leadership - Chamber of Mines; and Ingonyama Trust Board Regularly Regulatory compliance & best practice programme is being developed in collaboration with - Amakhosi from host communities. the KZN Department of Cooperative Governance and Mthunzini Community Forum Regularly Compliance & Social License to Operate Traditional Affairs (COGTA). The expected outcomes Almost 200 RBM suppliers attended an MD Municipal Administrator Quarterly To ensure alignment and collaboration on projects implementation (Manager) of the programme are a better understanding of Townhall session this year. They were given a roles and responsibilities among RBM, Traditional business update, which included an overview of Ward Committee Bi-annually Information sharing on projects and RBM plans Councils, and COGTA, the strengthening of traditional current market conditions, our safety initiatives, COGTA As necessary On-going support and effective working relationships Traditional Authorities leadership institutional accountabilities through the and achievements. They were also reminded about Ezemvelo KZN Wildlife Regularly Partnership on environmental conservation and development projects establishment of mandated and authorised structures the importance of adhering to the principles of our of engagement, and the long-term sustainability of business integrity guidelines, and our zero-tolerance Wildlands Conservation Trust Regularly Partnership on environmental conservation and development projects host communities beyond RBM’s mining activities. approach to intimidation of any RBM employee RBM departments namely Monthly Alignment & collaboration with internal customers - Engineering; when it comes to tenders or any other business - HSE&S; Sokhulu community leadership structures and opportunities. - Mine; - HR; committees attended an intensive three-day - ZS Project; and workshop during November 2016. Attendees, who Our engagement channels vary across stakeholders, - SP&L included representatives from the Sokhulu Youth but include face-to-face meetings, interviews, Department of Health As necessary Provision of infrastructure & health promotion Committee, Traditional Council, Inkosi, and Trust, community izimbizo, rollout programmes, Student nurse practical training indicated appreciation for the opportunity to engage workshops, MD Townhall sessions, newsletters, DramAidE Quarterly Health promotion, HIV & TB prevention openly on important issues. conferences, and site visits. Sports associations As necessary Health & wellness Promote good relationship and social cohesion 22 23
Sustainable Development Report | 2016 Lillian Mkhize, Matthew Orchard, and Andrew Palmer have formed a joint venture to establish African Elangwe and employ 12 local community members. Mkhize’s son also works for the company. The company designs, installs, and maintains bag houses. Their offices are at RBM. “I’m a Dube citizen. Since RBM helps a lot of our communities, my company is part of their database, that’s how I met Andrew. He is like a son to me. He didn’t mind my age or my skin colour,” Mkhize says. “It has been a challenge to complete the paperwork to set up the new company, but I’m glad about the social and economic impact we Economic can have on local communities,” Palmer said. Economic performance focusing on improving efficiencies and reducing waste in areas they have control over, with safety as top Tough global economic trading conditions continue to priority, enables us to function as a lean operation, challenge us to improve efficiencies, while reducing with a quick market-led response. loss and waste. Efficiency improvements never come at the cost of safety. Now, more than ever, being our It is important that improvements be identified brother’s keeper is crucial. throughout the business and at all levels. In order to engage employees, our management team Project 2020, launched in 2015, aims to achieve a $300 recognises and rewards not only water- and energy- per tonne unit cost of production by the year 2020. saving solutions, but each quarter our Managing This project is led by our Chief Financial Officer, Luke Director, Mpho Mothoa, also presents a Continuous Colton, and supported by the Senior Leadership Team Improvement Project award in the following categories: as sponsors. safety; business; and innovation. At the 2015 launch, six areas of opportunity were For financial performance, please refer to our Annual identified and make up the project’s key work streams. Financial Statements for 2016. WORKSTREAM OBJECTIVE To improve overall equipment reliability and performance by implementing best-practice asset management Asset management strategies To achieve delivery of energy savings in line with the ELP 1 and ELP 2 initiatives, and to realise the forecasted Energy saving savings for 2016 and over the five-year plan Procurement To obtain cost reduction and manage cost inflation Productivity improvements To plane and execute initiatives to deliver sustainable plant performance and efficiencies Revenue generation To advance projects that deliver additional revenue generation Workforce optimisation and effectiveness To fully utilise the current workforce in a more productive and efficient manner Improvements have also been made to our Market presence procurement system with the implementation of a Demand Management process and procurement Seventy-two per cent of RBM’s workforce is from representative assigned to each department as a KwaZulu-Natal, including 34 per cent from our Demand Management Liaison. The procurement four host communities. We employ approximately representative’s role is to ensure we are making the 2,000 people and the same number of contractors, right purchases, in the right quantities, at the right impacting on the lives of an estimated 30,000 people. time. RBM is committed to providing reasonable job Our global market demand has shifted from chloride opportunities. All contractors and end users source slag to sulphate slag, with demand for zircon and labour from the local host communities through the rutile remaining strong. Each department continuously RBM Community Recruitment office. 25
Indirect economic impacts Literacy LOCAL SPEND (%) 2012 - 2016 Sustainable Development Report | 2016 Sustainable Development Report | 2016 A group of 31 people with disabilities completed a 16 COMMUNITY SPEND (ZAR) 2012 - 2016 CASE STUDY: THUSONG CENTRE OPENING Fundamental Literacy course funded by the Mining 14 Qualifications Authority (MQA) 120 000 000 12 In June 2016, the honourable Minister of Mineral Resources, Mr Mosebenzi Zwane, together with RBM 10 100 000 000 Managing Director Mpho Mothoa, officially handed 8 80 000 000 over the Port Dunford Thusong Centre to the Mayor CASE STUDY: BOOK COLLECTION FOR 6 of uMhlathuze, Mr Mduduzi Mhlongo, and the Inkosi SOKHULU YOUTH 4 60 000 000 uMkhwanazi. 2 40 000 000 The Sokhulu Youth Development Programme 0 RBM built the Port Dunford Thusong Centre as part of a submitted a proposal to RBM to appeal to employees 2012 2013 2014 2015 2016 20 000 000 commitment in our Social and Labour Plan (SLP). and contractors to donate books for a library being established in the area. 0 The Thusong Centre will enable surrounding 2012 2013 2014 2015 2016 communities to access social and commercial services, TOTAL NUMBER OF LOCAL VENDORS 2012 - 2016 The Programme has set about creating a library using including SASSA, Home Affairs, a SAPS Satellite an existing structure in Sokhulu so that the youth do 140 Community investment and educational spend Station, a public library, an early childhood development not have to travel to Richards Bay to use a library. 120 LED Spend centre, and other facilities to be determined by the municipality and the Traditional Council. 100 We placed collection points at various places on site, RBM has reached about R170 million in Local Economic with a heart-warming response from employees. 80 Development (LED) spend over the past five years. On the same day, the honourable minister and RBM’s 60 This has included investment in small-scale farming, Managing Director handed over four houses built in the 40 business development, construction and refurbishment area. of community roads, houses for destitute families, 20 education, and healthcare facilities. During the handover, a commitment was made to the Procurement practices 0 Minister by the Mkhwanazi Trust to donate refrigerators 2012 2013 2014 2015 2016 Over the same period, RBM invested a further R80 to all 11 beneficiaries. Our Preferential Procurement Strategy centres on million in community strengthening and education creating an enabling environment for increased projects, including cultural heritage projects, the Inkosi uMkhwanazi and the Trust delivered on their procurement from local suppliers. Through focussed B-BBEE SPEND (%) 2012 - 2016 development of sports and recreational activities, commitment, hosting a handover ceremony in August effort from our Business Development Centre, we enterprise development, and local schools. In total, 2016 at the Port Dunford Thusong Centre. It was have increased procurement from host community 80,0 approximately R250 million was invested in our host encouraging to see the Trust identifying and meeting businesses to 13.55 per cent of spend, resulting in 70,0 communities over this period. needs of members of their community. the creation of approximately 200 jobs. The number 60,0 of local vendors on our database has risen to 119 RBM funded the construction of 44 houses – 11 in each Three SMMEs involved in building the houses also with overall B-BBEE spend at 67.7 per cent. 50,0 host community – in an initiative to assist community brought tears to the eyes of the beneficiaries, with their 40,0 members in need. The houses were handed over during donation of furniture. As a clear demonstration of our commitment to 30,0 the course of the year. the development of host community enterprises, The SMMEs thanked RBM for the opportunity to RBM has set a target of 20 per cent of total annual 20,0 Skills development showcase their construction skills and indicated that contestable spend to be awarded to local and host 10,0 their way of demonstrating their appreciation was also community vendors. This has been the main driver 0 Training for unemployed youth in our host communities to give back to the community behind this significant achievement in 2016. 2012 2013 2014 2015 2016 aims to help to create a pool of employable people. We extend our reach and impact by working with For RBM this was a particularly memorable event We could not have achieved this without the existing government’s National Skills Fund. showing what can be achieved when stakeholders contractors’ contribution to community development, work together. by getting involved and entering into joint Bambisanani Programme ventures with RBM’s host community enterprises. The RBM-sponsored Bambisanani Learning Programme Joint ventures are a critical part of community supports Grade 10 to 12 learners in maths and science. empowerment, as they involve the transfer of Imbokodo Programme skills without compromising RBM standards and In addition, it offers further training to school principals Twenty young women from the communities operational requirements. and heads of department from local high schools. A continued on RBM’s two-year Imbokodo programme, second cohort graduated with an Advanced Certificate in which provides both theoretical and practical training. Education in 2016. On completion they receive an MQA-accredited Smelting Certificate. Apprenticeships Twenty five youth from host communities continued On-the-job training for apprentices on RBM’s two-year apprenticeship programmes Twelve youth joined the on-the-job component of a including electrical engineering, fitting and turning, Transport Education and Training Authority (TETA) 26 instrumentation, and diesel mechanics. sponsored electrical apprenticeship at RBM. 27
Youth engagement and development has been a key focus area in host communities. Through various engagements via newly selected youth committees in each host community, lack of driver’s licenses was identified as creating a significant barrier to employment. RBM provided the opportunity for 30 youth members within the Mbonambi community to obtain driver’s licences. A local service provider, Nkosi Driving, also pledged three opportunities for the Mbonambi youth. This brought the total number of beneficiaries to 33. RBM applauds the contribution from one of its host community companies and encourages more suppliers to lend a helping hand as we collectively uplift youth in the area. This initiative will be rolled out to the three remaining communities – Sokhulu, Dube, and Mkhwanazi – in the coming months.
Ten local small businesses from our host Sustainable Development Report | 2016 Sustainable Development Report | 2016 communities were sponsored by RBM to attend a two-day SMME Expo at the Durban ICC to showcase Mduduzi Nsele owns FMD Spillage Control, a their businesses. cleaning-services company with 148 workers. “I saw an opportunity to supply services, hence I started this RBM also held its own SMME Open Days. The first business. Fortunately RBM is good at helping local was held in June 2016 in partnership with the communities,” says Nsele. He says setting up his Sokhulu Traditional Council and Youth Committee. own business has enabled further positive impact The event was held at the Community Traditional on the local community through their donations of Council and will ultimately be rolled out to all host school uniforms to school children in need. The communities in partnership with relevant structures largest challenge Nsele says he encounters is union within communities. representatives trying to mislead workers into joining irrelevant trade unions. “Our industry is governed only The second SMME Day was held at the Mkhwanazi by the Cleaning Bargaining Council KZN,” Nsele says. Traditional Council, KwaDlangezwa, with an impressive turnout of 60 businesses. It was also very encouraging to have attendance by Izinduna, Ndunankulu, and the CEO of the Mkhwanazi Trust. The objective of the SMME Open Days is to refine Michael Thethwayo, owns Mike’s Civil, a five-time and refresh RBM’s localwise database. This is a SMME Contractor of the Year winner in RBM’s Annual database on which all enterprises from the four Safety Awards. The company maintains all RBM roads host communities are registered. Entrepreneurs and has a staff of 12 with offices at Mzingazi. “RBM is were encouraged to attend the SMME Open Day improving our lives. Their investment in our schools is and provide the documentation necessary for legendary. It’s a pity the younger generation does not registration. These documents include company realise how positively RBM has impacted our lives,” registration documents and B-BBEE certificates. RBM Thethwayo says. He mentions cash flow management provides those companies who do not have a B-BBEE as the key challenge in his business. “But my life and certificate with an equivalent DTI affidavit to complete that of my workers has definitely improved, and our and have certified. RBM also assisted entrepreneurs success is due to our working as a team,” he explains. who did not have email addresses by opening email accounts for them. 2016 saw several new companies being formed in our host communities, as well as established companies expanding to achieve even greater success. CASE STUDIES: LOCAL BUSINESSES MCK Services is a newly formed entity with three directors: Melusi Gwala, Christo Mienie, and Kumaran Poonan. The company supplies RBM with metallurgical equipment, engineering services, and labour and has already hired 35 employees. In an interview at their offices in Richards Bay, Mienie said he viewed the impact of the venture as a “win-win solution for RBM, MCK and the community, as it uplifts all parties involved.” Poonan mentioned lack of people from local communities who have relevant skills and who are Six unemployed community members from Sokhulu able to start working at short notice as some of the embarked on an entrepreneurial journey with the challenges. But the company sees this challenge as launch of a block-making enterprise. RBM assisted an opportunity as well: “Our vision is to establish a the start-up by donating two machines and some training workshop at Mabhodla to counter the skills building materials. A concrete slab was also built to shortage,” says Melusi. allow their business to operate. The enterprise is now supplying blocks to contractors involved in other RBM community projects. 30 31
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