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Amplats misses benchmark on sustainability

Fails on promises to deliver housing to workers and undershoots its BEE procurement target.

Anglo Platinum may have won awards for its sustainability reporting, but not with the Bench Marks Foundation, a faith-based non-profit organisation owned by churches in South Africa that monitors corporate social responsibility.

Gone are the days when, as former Federal Reserve chairman Alan Greenspan put it, management’s primary responsibility was to make profits for shareholders. Bench Marks and several other groups, including the SA Human Rights Commission, are showing increasing interest in the conduct of corporate SA across a range of issues, from human rights to environmental damage and the health of people living in proximity to mines.

“Dust and airborne diseases do not stop at the mine gate,” says Bench Marks CEO John Capel, who was speaking in Johannesburg at a presentation of findings into Amplats’ sustainability reporting. “Similarly, HIV, TB and other diseases do not stop at the mine gate.”

Today, companies – and mines in particular – are answerable to a far wider range of stakeholders than just shareholders. They are being held accountable for diseases, disability, environmental degradation and the human rights of those who live close by. The latest financial results from Amplats for the six months to June 2018 may have been impressive, with a 70% improvement in earnings before interest, taxes, depreciation, and amortisation (Ebitda), a 4% gain in production and a 3% reduction in costs – but its sustainability reporting still has a long way to go, according to Bench Marks.

One area where Amplats has been particularly successful is in reducing the number of mine fatalities. Though Amplats was the subject of this report, it is clearly intended for much wider consumption.

Take housing, for example. In 2008 Amplats announced plans to build 20 000 houses over the next five to 10 years. By 2016, only 700 had been built. And although 26 000 workers received paid-out allowances, the company failed to report how many of these lived in squatter camps.

Bench Marks found Amplats’s reporting inadequate on issues such as air and water quality. It has done good work in reducing the number of tailing storage sites and waste rock dumps, but failed to report on the impact of mining on biodiversity areas.

The study was broken into three time periods, the latest being 2011 to 2015. The previous period, from 2007 to 2010, was one where Amplats scored excellent marks for adhering to the Global Reporting Initiative (GRI) guidelines. Thereafter, reporting standards started to slip.

“Amplats appears to have identified the story it wants to tell sustainable development report (SDR) readers, with product responsibility key performance indicators (KPIs) progressively disappearing from the SDR, as well as significant decreases in KPIs in the areas of human rights (down to around 33% in 2015 from 95% in 2010), labour (down to 53% in 2013 from 73% in 2010) and environmental (down to 64% in 2015 from 73% in 2010),” says the study.

Amplats scored somewhat better on economic issues, but Bench Marks wonders how it managed to win top awards “without demonstrating overall net benefit to society and nature.” In 2011 it was ranked first in the materials category of the annual Newsweek Global Green Rankings and fourth for Excellence in Sustainability Reporting by Ernst & Young. It was also named top gender-empowered company in resources and overall winner in the Top Women Awards for that year.

The latest financial results may have been good, but the Bench Marks report highlights key areas of decline, especially labour. What is striking is the drop in the number of workers – down 50% to 44 000 since 2003. Contract workers are down 93%, and have been steadily declining since 2007.

Capel presented a graph showing the percentage share of revenue going to shareholders (down from around 33% to less than 3% between 2007 and 2015) against what went to workers (up from about 17% to 26% over the same period). Spending on community development, though rising, is tiny.

Meet failed promises or lose mining licence

Bench Marks recommends that the Department of Mineral Resources (DMR) set a new timetable for Amplats to make good on its failed promises and agree terms of fulfilment with unions, government, local communities and other stakeholders. It should be compelled to address the housing needs of workers. Failing this, the DMR should revoke its mining licence.

Advocate Tseliso Thipanyane, CEO of the SA Human Rights Organisation, says his organisation is taking a growing interest in the human rights behaviour of companies and their adherence to the constitutional rights of South Africans.

This is the brave new world in which mines find themselves. Commodity prices are down, and mining might be in its sunset years, but no mining company today can operate without taking into account the social and environmental impacts of its activities.

Amplats said it “notes the release of the report entitled ‘Coping with Unsustainability’ by the Bench Marks Foundation following their critical analysis of the company’s sustainable development reporting for period 2003 to 2015. We have not had adequate time to review the report in detail and we will assess its findings and respond within a month.”

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The following 2 paragraphs sum up the conundrum for business and shareholders in South Africa – shrinking employment and more of the pie going to stakeholders, rather than to providers of capital. I am not sure if the BM Foundation gets it. Employees are well compensated but not enough money is spent of community development? And I thought that was the role of local and national govt using taxes paid by the employees and company! Rather spend more money on community development – will this come via decreased salaries or must the providers of capital take a haircut?

“The latest financial results may have been good, but the Bench Marks report highlights key areas of decline, especially labour. What is striking is the drop in the number of workers – down 50% to 44 000 since 2003. Contract workers are down 93%, and have been steadily declining since 2007.

Capel presented a graph showing the percentage share of revenue going to shareholders (down from around 33% to less than 3% between 2007 and 2015) against what went to workers (up from about 17% to 26% over the same period). Spending on community development, though rising, is tiny.”

Bench Marks Foundation seems to be a bit of a tree hugger group – why would they start dictating to companies on illnesses or how much shareholder funds should be spent on mine staff housing projects and saying that 2.79% of dividend payouts is inadequate in terms of commitments. They have an interesting web page but it seems that they are more intent in knocking the mining industry – maybe they need to look internally at their own set up and weasel out all the bad eggs immediately

Machines, lots. Period

Eish Pamplona; if only. Machines mostly have to be imported in foreign currency (at best the ZAR is “volatile”; at worst plummeting), they need electricity (at best expensive, at worst non-existent), they need support – educated and experienced technicians, specialist components etc, all thin on the ground in SA. Finally you still need operators and these can hold your operations to ransom.

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