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Sustainable Development Report for the year ended 30 September 2012

03/People, Planet, Profit

(noun) group of individuals living and working together;
linked to each other by common needs, challenges and interests

Human rights and labour relations

Our context

We seek to uphold human rights though all our operations and we believe in the importance of internalising internationally recognise standards of human rights.

We use the following conventions to inform our policies: Voluntary Principles on Security and Human Rights; the framework for businesses formulated in the UNGC, The United Nations Universal Declaration of Human Rights and the proceedings of both the International Labour Organisation (ILO) and the ICMM. We also ensure that the policies and practices in place at our operations fully reflect the legislative requirements of South Africa, including the Bill of Rights contained in the South African Constitution, together with the Company’s Act in the United Kingdom, where we have our primary listing. We have incorporated a Standard within our Lonmin Sustainable Development Standards that specifically focuses on Business Ethics and Human Rights. Lonmin embarked on a three year roll out plan for these standards of which, at the end of the three year period, Lonmin aims to have integrated these Standards within all business units.

In particular we observe the UNGC Principles relating to Human Rights that businesses should:

  • support and respect the protection of internationally proclaimed human rights;
  • make sure they are not complicit in human rights abuses;
  • uphold the freedom of association and the effective recognition of the right to collective bargaining;
  • uphold the elimination of all forms of forced and compulsory labour;
  • uphold the effective abolition of child labour; and
  • uphold the elimination of discrimination in respect of employment and occupation.

Our Human Rights Policy was developed in 2009 and in line with these principles to assist the Company in its goal of upholding international human rights through all of its dealings and operations. The policy applies to all employees, contractors, suppliers and business partners. We record and report any credible allegations of human rights abuses, by public or private security, within our area of operations to the appropriate authorities. We undertake to monitor investigations to completion; and ensure actions are taken to prevent reoccurrences.

Key principles of this policy are:

  • equality, fair labour practices and the right to prosperity;
  • human dignity and the individual’s right to life, freedom and security;
  • taking a stand against slavery and child labour;
  • ensuring privacy, freedom of religion, belief and opinion and the right to language and culture;
  • freedom of expression, association, trade, occupation and profession; and
  • access to an environment that is not harmful to health or wellbeing.

Our CEO holds the responsibility for human rights matters across all our operations, and is supported in this role by our Executive Vice President: Human Capital and External Affairs, and by the Company Secretary.

Communicating our Human Rights Policy

All human rights related policies are available on the Company intranet and new or revised policies are circulated via emails and discussed in management meetings and safety breaks to ensure that employees are aware of their and our responsibilities in respect of human rights.

Training on human rights and business ethics is undertaken during induction and during our annual refresher course in which all employees participate. All employees working on site (underground or at the plants) have to do an annual refresher course. In this way, we ensure that there is widespread exposure to this information. During induction employees are also provided with information on how to appropriately handle grievances and report incidents. The training material is available in English, Setswana, Sesotho, isiXhosa and Afrikaans, and employees can also request to be briefed verbally.

As an avenue for anonymous or sensitive information, we provide an Ethics Hotline, a phone-in service available to anyone involved in our operations. The service is provided by an independent third party and is a secure channel that can be used to report any conduct of concern in the Company. These issues are investigated by our internal investigations department and they track the progress of each case and report monthly to the Head of Internal Audit.

During 2012 we conducted a Human Rights Awareness Campaign within our Process Division. The campaign used various communication media, including video clips, noticeboards and other electronic communication to create awareness around the 30 Human Rights of the UN declaration.

Managing working conditions

Lonmin is committed to ensuring that our working conditions are in line with our Human Rights Policy, and employees are not allowed to engage in activities that may conflict with this or cause prejudice to the Company. Both our Human Rights Policy and our Employment Policy prohibit forced or child labour and we have had no incidents of either during 2012 at any of our operations or perpetuated by any of our primary contractors or suppliers, nor is there any risk of this in the coming year. All of our contracts with suppliers contain human rights clauses. Our employees enter into their employment conditions voluntarily and all conditions are regulated by legislation, thus none of our operations have a risk for incidents of forced labour. Any overtime is restricted to the national level permitted by the Basic Conditions of Employment Act 75 of 1997.

We analyse all (100%) of our business units for risks related to corruption and respond to any related complaints. Lonmin has a zero-tolerance approach to corruption and complies with all legislations regarding this. Our revised vendor application system specifically asks if the applicant has ever been investigated for any reason by any other mining company.

Due to the nature of our business we have an impact on the communities around our operations. We have various mechanisms in place to assess the actual and potential impact on human rights. This year we have assessed the health and wellness of the communities surrounding our operations, which included the assessment of access to public services such as clinics.

 GLC health survey

CASE STUDY: GLC health survey

In 2006, we commissioned research on the health status of the GLC. The survey gave us an accurate understanding of the impact of Lonmin’s activities on the community, and formed the basis of our Community Health Programme. Five years later, we commissioned a review of the survey. Read case study

We also undertake education baseline assessment in support of the right that everyone has to education, see Partnering with our communities. Our risk management systems are explained under Managing risks and identifying material issues.

Security and human rights

Our security services comply with the relevant national legislation and the United Nations Basic Principles on the Use of Force and Firearms by Law Enforcement Officials. We endeavour to handle any security incidents with sensitivity, upholding human rights as the basis for any decision. Lonmin has a security code of conduct, which governs the security staff and contains the requirements to prevent human rights abuse. The majority (80%) of our security personnel have been trained on the code through our security induction programme. Training for all employees and contractors in these roles includes dedicated modules on human rights and the appropriate and legal behaviour when carrying out security-related responsibilities. This training programme is designed in accordance with the South African Private Security Industry Regulatory Authority.

In September of 2011, media reports alleged that Lonmin security personnel were involved in intimidation and harassment of PMR employees suspected of product theft. Lonmin strongly condemned any such action and confirms that these criminal acts were carried out without Lonmin’s knowledge. It should be noted that product theft is reported to and investigated by the SAPS. We provided the affected employees with counselling and helped them to lay criminal charges against the perpetrators.

The effect of these allegations has remained with us though, and to reaffirm our commitment to human rights we undertook a further programme of intensive human rights training for our security teams. We have had a security Code of Business Ethics ratified by EXCO and signed by our CEO, which addresses human rights issues, specifies behaviour that is not condoned and sets out guidelines for security practices. This document was drawn up using not only the Criminal Procedure Act Number 51 of 1977, but also international codes to ensure it encompasses a broad view of human rights. The Code applies to our entire workforce regardless of location or job. Any suspected transgressions can be reported to our investigations department through our independent and confidential ethics hotline, in line with our formal Whistle-blowing Policy. Responsibility for the monitoring and resolution of these investigations is then transferred to the Company’s internal audit teams.

Standard Eight of the Lonmin Sustainable Development Standards sets out mandatory requirements such as training and reporting for how to integrate ethics within the business. In addition, we are currently developing training material, which will be implemented over the next year, to sensitise all security employees and service providers to the approved Code of Business Conduct. We have also included this in service providers’ contracts, and any violation of the code will result in a breach of contract.

Mining companies cannot assume the roles of government or social organisations. They are not structured to advance social interests, nor enforce public order. We will consider how we respond to the challenges posed by Marikana while being mindful of our competencies and resource limitations and, in particular, the way in which we uphold our values within the context of our society.

Ensuring freedom of association and collective bargaining

Our Human Rights Policy and agreements are aligned to the Labour Relations Act No 66 of 1995. We ensure that we comply with the South African government’s set minimum wage for employees with basic skills across industries. Lonmin respects the rights of its employees to freedom of association and to be covered by collective bargaining agreements, if they so choose.

Trade unions negotiate terms and conditions of employment on behalf of their members with particular focus on wage increases. Union representatives are also involved in formal forums that meet monthly to discuss issues such as housing, transformation and skills development, while safety and health are discussed in formal tri-partite structures comprising, management, unions and government representatives. Collective bargaining agreements are often framed by South African labour legislation requirements, to which we adhere. The minimum notice period regarding operational changes is one such rule and is set by law at between three days and 12 weeks. We have formal agreements in place with a number of trade unions in South Africa, which permit them to organise (that is, to recruit and represent members) in our business. This enables us to engage with democratically-elected representatives whom we know to be acting on behalf of our workforce. The Company conducts collective bargaining with unions it knows to represent more than 50% of the relevant workforce.

Lonmin undertakes to negotiate in a responsible manner with all recognised unions and the extent of their recognition will be based on the level of membership that the union holds. Once a union has a majority membership (in excess of 50%), it is granted full recognition status. A union with over 33% membership will be granted partial recognition. A recognition agreement confirms that the employer accepts the trade union as a bargaining agent. Within the agreements the rules of engagement and the rights of the employer are stipulated.

As at 30 September 2012, 80.8% of employees are members of recognised trade unions (2011: 55.5%). We have seen an increase in AMCU membership this year, with it rising from 20.82% at the end of September 2012 to 45% at the end of October 2012.

Trade union membership - 30 September 2012

We believe that it is important for our employees to be able to choose the representation that best suits them, and for a culture of freedom of expression and association be fostered within the Company.

The Farlam Judicial Commission of Inquiry on the Marikana tragedy began in the first week of October and its outcomes are expected to have a bearing on Lonmin’s approach to collective bargaining.

Eliminating discrimination and resolving grievances

Lonmin prohibits discrimination on the basis of race, gender, ethnic or social origin, age, sexual orientation, disability, religion, language, marital status or pregnancy. We acknowledge South Africa’s troubled history of racial discrimination and we have transparent recruitment and development targets in line with the South African Mining Charter to foster a more equitable employment environment, both at Lonmin and throughout South Africa’s mining industry.

We have various programmes in place to encourage mutual tolerance and understanding, and to further equal opportunities. Specific policies where the most common types of workplace discrimination are directly addressed include our Human Rights Policy, Employment Equity Policy, HIV/AIDS Policy, Women in Mining Policy, Maternity Policy and Sexual Harassment Policy, each of which provides necessary and relevant information to our employees. Grievances or experiences of discrimination may be reported through our ethics hotline.

In 2012, two incidents of discrimination were reported and one case of sexual harassment. One incident of discrimination was reported via the ethics hotline and was successfully closed out, while the other was reported through our internal processes and could not be substantiated. The sexual harassment case was raised by a human capital officer on site and a final warning was issued against the offender. This year four human rights related cases were reported; these cases relate to intimidation. One of the cases has been withdrawn, two cases are with the SAPS and one case is still being investigated. The unprotected strike that sadly saw the loss of life will be investigated by the Farlam Commission. See Critical review: Making sense of Marikana

Investing in ethical value chains

At Lonmin we realise that our responsibility extends beyond internal policies and so we hold all our employees, customers, suppliers and contractors to the same standard of human rights and ethical conduct under which we perform our business operations. Contractors are expected to behave in the same way as our employees, in a manner that neither undermines our commitment to human rights nor jeopardises our reputation.

Our suppliers are screened at project pre-feasibility stage with regard to their human rights behaviours, and once we contract a supplier they are expected to meet Lonmin’s ethics requirements. We have systems in place to monitor this compliance and any breach of this standard is also considered a breach of contract. Our primary suppliers and contractors must also comply with South African law in respect of working conditions. All of our suppliers are subject to human rights assessments, with 53 individual assessments having been completed in 2012. There were no allegations or reports of human rights violations committed by any of our contractors or suppliers during the year however one contract was terminated due to unethical business practice.

Respecting the rights of communities residing in areas adjacent to our operations

Lonmin respects the traditional and cultural rights of the communities living around its operations and endeavours to add value to their long-term wellbeing. The tribal authorities with whom we engage regularly are Bapo Ba Mogale (at our Marikana operations) Mapela, Mphahlele, Ledwaba, Kekana Ndlovu (at our Limpopo operations) and the Silindini traditional authority, from the Eastern Cape, where many of our employees originate. Details on the methods and frequency of our engagement with communities around our operations and their representative authorities can be found in the Engaging with our stakeholders section of this report.

Heritage before exploration

CASE STUDY: Heritage before exploration

We know that our heritage sites are irreplaceable and we are committed to preserving our heritage for future generations. A Phase 1 Assessment at the Marathodi Chiefdom heritage site at Vlakfontein was completed in June 2011. Read case study