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Sustainable Development Report for the year ended 30 September 2012

03/People, Planet, Profit

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

Securing the safety of our employees

Our context

Our principal operational priority is the safety of our employees and contractors. While we recognise that mining and processing operations present risk to safety, we believe that we can operate without injury and, most importantly, without loss of life. As a Company, we measure our performance against our safety objectives: fatality prevention, injury prevention and safe production culture.

During the year under review, we achieved 13 million fall of ground free shifts at our Rowland operations – a significant achievement as fall of ground remains the highest cause of fatalities in the underground mining industry. Over the past three years our safety results have been impressive and to date, we have achieved the lowest industry fatality frequency rate in the South African Platinum Industry. We aspire to be the industry leader in respect of safety performance. Lonmin was recognised by the Association of Mine Managers South Africa (AMMSA) Safety Awards in December 2011 where we were awarded 14 of the 36 safety awards.

Our Safety and Sustainable Development Policy outlines our policy commitments, with Lonmin Sustainable Development Standards (LSDS) supported by Fatal Risk Control Protocols. These provide a risk-based management framework for Company-wide safety management, for our strategy of working towards continual improvement and alignment with best practice. The Standards will be implemented over a three calendar year period, with the aim of their being integrated into decision-making processes during all phases of the operations by December 2014. A steering committee was appointed during 2012 to support the roll out of the LSDS within the operations.

Our Group Safety Department plays an important role in setting of objectives, the development of strategy and development of tools for implementation, as well as monitoring, reporting, auditing and compliance. An important aspect of their work is the investigation of accidents and incidents followed by action plans to ensure that events do not recur.

Our Safety Strategy is devised in consultation with management, unions and employees – we give our operations and employees the opportunity to identify their current situation and think about what safety goals they need to achieve. The Safety Strategy incorporates feedback from employees at all levels.

While line management is accountable for safety, it cannot create a safe working environment or prevent injury in isolation. The involvement of unions and the regulators is necessary at every level of engagement, from the rock face to the level of the National Safety Summits. Mine Health and Safety Committees operate on mine in accordance with the objectives and requirements of the Mine Health and Safety Act, and play a fundamental role in our drive toward zero harm. In 2012, there were 17 full-time safety and health stewards at Lonmin’s operations, with a further 1,610 safety representatives, excluding contractors, in the workplace. These are elected officials and, through these structures, all employees have access to and are represented in workplace safety and health structures. Topics and issues addressed through these committees include, among others, emergency trauma care, mental awareness, hazardous chemical substances, material handling, repeat incidents and PPE requirements.

This section focuses on operational safety. We recognise, however, that safety extends well beyond the workplace.

Fatal accidents: In memoriam*

It is with deep regret that we report two fatalities at work during the year:

  • Mr Albino Moses Cuna (49) was fatally injured on 9 December 2011 in an accident at Eastern Platinum, 2 Shaft. He was struck by a radial door during cleaning operations. Mr Cuna was a Team Leader who had been employed by Lonmin since June 2010. He leaves behind his wife, Ester, his parents and children. We extend to them our sincere condolences for their loss.
  • Mr Thobisani David Didi (35) was fatally injured on 22 June 2012 at Rowland Shaft. The accident occurred during sweeping operations where a rigging arrangement failed and struck him. Mr Didi was a Rock Drill Operator who had been employed by Lonmin since November 2007. Mr Didi leaves behind his wife, Zama, his parents and children. We extend to them our sincere condolences for their loss.
  • *Our safety performance data excludes any injuries or fatal accidents that occurred during the unprotected (unlawful) strike at Marikana as that is treated separately within this report.

Fatality prevention

Following the unacceptable performance in 2011, when our operations suffered six fatal accidents, Lonmin reported twoRA fatal accidents in 2012. Refer to the fatalities graph below for a five-year comparison. While this falls short of our aim to operate without any loss of life, we recognise the efforts of management, employees, contractors and unions to effect this significant improvement and we commend our operational teams on this critical step forward. Specific actions were taken to prevent a similar fatal accident. These include the following: a winch mock-up was established at all operations, which alerts employees to the dangers involved with scraping operations, compliance audits and re-training on safety procedures was undertaken; and a training video on scrapping and rigging safety measures was produced. We have also implemented a box front clearing standard. A box front is the mechanism that regulates the flow of the ore. The standard is the governing system to inform the user how to clear a blocked or obstructed box front.

Following the Lonmin Safety Summit held in 2011, we compiled a safety improvement plan with a total of 63 projects, campaigns and initiatives, which were effectively executed in 2012. We monitor the effectiveness of these initiatives monthly.

One of the significant campaigns we embarked on was aimed at safety through leadership development. The entire executive team and many senior managers, including our CEO, along with union leaders, participated in a DuPont safety management training course with emphasis on achieving a culture of care, increasing safety awareness and a personal commitment to safety. This, we believe, will be one of our most valuable tools in achieving zero harm.

Fatalities [graph]
Lost time injury frequency rate [graph]

Injury prevention

LTIFR is the principal measure of safety performance, illustrating the number of occurrences of lost time injuries per million man hours worked. We aimed to improve our LTIFR by 5% by 30 September 2012, against the 2011 rate. We have achieved this target and our year-on-year LTIFR improved from 4.71 to 4.16RA thus 11.7%. Our year-on-year Lost Time Injuries (LTIs) improved by 11.2% from 419 in 2011 to 372 in 2012. Over the last five years Lonmin has improved the LTIFR by 33.7%. Refer to the LTIFR graph above for comparative data.

While our injury rates have declined, the actual number of LTIs and their causes remain a significant area of concern. Material handling remains the main contributor to LTIs, accounting for 25% of all LTIs during the year. In total, we lost 20,579 days as a result of occupational injuries in 2012.

We have continued to focus on improving our processes that identify and eliminate material handling injuries, emphasising pro-active hazard identification before any work is done, irrespective of how small the job is. We encourage our employees to work by the slogan “mind on hands, hands on job” to encourage focus and concentration, both fundamental elements in avoiding injury.

Leading by example has had a significant positive impact on safety and Visible Felt Leadership (VFL) has been an important way to drive this behaviour. VFL means that the commitment to care begins at the top of the Company and our leaders clearly demonstrate and communicate how safety initiatives should be implemented, by setting expectations and being accountable for the results. All employees in leadership roles, especially high-level leadership, take part in safety training and workshops throughout the year. VFL is structured and well-defined; performance is evaluated and measured and structured feedback is given. Our employees are recognised and rewarded for good safety performance and exceptional LTIFR performances are rewarded financially as part of Lonmin’s balanced scorecard approach.

Reducing the severity of injuries continued to be a focus area. We had 16 level three safety incidents compared with 36 level three incidents in 2011, a 56% improvement. An injury can be classified as a level three injury, based on the severity of the injury that in the opinion of the medical practitioner can result in some degree of permanent disability. We investigate all level three safety incidents thoroughly to determine their basic causes and to address their prevention.

Effort has been made to improve our post-injury care resulting in the speedier recovery of the injured person, as well as a reduction of the amount of time employees take off after being injured. Our severity rate has declined by 20% in 2012. Similarly, our Medical Treatment Cases declined by 44% during the year.

Safe production

Fostering a pro-active approach to safety means we cannot separate our safety performance from how we undertake business. Lonmin aims to produce safely, which means setting goals, encouraging a culture of proactive behaviour and developing sustainable work practices for growth.

Following the 2011 Safety Summit and the culture survey we identified the key focus areas affecting safety in our operations as being:

  • Leadership: Our focus areas for the development of leadership are to improve knowledge of safety, embed the principles of care and integrate safety into the business. Our emphasis will be on personal commitment to safety.
  • Simplifying systems: An important element of this is our effort to provide each level of employee with only the information they need to carry out their core responsibilities safely. The implementation of our systems used to manage the safety risks and opportunities was internally and externally audited in relation to ICMM Subject Matter 3. We have also again obtained assurance with reference to ICMM Subject Matter 3, relating to our management of safety risks.
  • Creating an enabling environment: We have implemented safety standards and fatal risk protocols. We are ensuring that documents are relevant and understandable to all employees and contractors at all levels of the Company.
  • Creating a safety conscious culture: We need to create a culture of safety, a set of shared beliefs about safety, within our Company. We have identified that the living conditions of many of our employees contributes to unsafe behaviour in the mining environment, including lack of sleep, poor diet, abuse of alcohol or drugs, and there is or a lack of respect for high risk that is inherent in the mining environment. A system of alcohol testing for all Smelter and BMR employees, as well as random tests at other sections of our operations is in place.

We are committed to sourcing and developing contractors from our local communities wherever possible, and contractor safety management is an integral part of reaching our goal of zero harm. All new vendors are pre-assessed and undergo safety training to ensure they comply with our safety standards. A highlight of the past year has been our collaboration with other industries and companies within the mining sector and of the sharing of best practice ideas and techniques. We aim to formalise this collaboration in 2013.

Fit for the job

CASE STUDY: Fit for the job

Apart from promoting equality in the workplace, the South African Mining Charter set a target that women should make up 10% of the total women in mining. Achieving these levels has brought with it unique challenges including the real and perceived issue of reduced physical capacity. Read case study

Safety stoppages

During the year under review, Lonmin was issued with 37 Section 54 notifications from the DMR, an increase of 37% from the 27 issued in 2011. Section 54 notifications are issued when an Inspector from the DMR has reason to believe that any incident, exercise, or situation at an operation endangers, or has the potential to endanger, the health and safety of any person at the mine.

The Company fully supports the government’s commitment to enforcing mine safety legislation and we are directly involved with the DMR and other government structures to improve safety standards. We perform internal safety stoppages if we believe that any incident or situation endangers any person at the mine. The operation is halted until investigation confirms the situation is resolved. All injuries and incidents are investigated and reviewed by senior staff, allowing us to understand where gaps in our safety strategy exist and implement new, more effective plans.

Increased interaction between the Chief Inspector of Mines and discussions with the Minister of Mineral Resources, have been fruitful. These engagements facilitated a two way information flow for the business to understand the increased efforts from the DMR, as well as for the DMR to understand the impact of the stoppages.

Emergency and disaster management

Lonmin’s Emergency and Disaster management service is a centrally based operation in Middelkraal. Our emergency services are regularly called upon to assist at neighbouring shafts and also with emergencies in the GLC. The disaster management centre is fully resourced for any kind of disaster and the team of specialists are highly skilled to provide immediate access to medical attention. The service is available to our employees, their families and the communities around our operations. This year the DMR developed a new code of practice for disaster management, with which Lonmin is already compliant, being the first company in the mining industry to achieve this.

The centre’s disaster management plan initiated in the immediate aftermath of the tragic events that took place on 16 August 2012. With the support of Netcare, the provincial emergency services and Anglo Platinum, Lonmin Medical Services were able to cope adequately with the multiple casualties that were suffered.

Working conditions

The environment in which an employee finds himself/herself is complex and can best be explained by referring to three areas:

  • The “rural home” generally refers to employees’ homes of origin. The rural home is often the location of extended families and multiple dependents.
  • Local households are the homes occupied by employees in the vicinity of their place of employment (informal settlements) and employees usually have dependents in them. Lack of sufficient rest at these households is common as is over-crowding. The local households usually struggle with basic services such as water, sanitation and waste removal. We have also identified that poor diet, lack of healthy recreation, alcohol abuse and risky sexual behaviours are common challenges employees face.
  • The underground environment requires physical labour in often confined spaces. It is artificially lit and ventilated. It is noisy and often respiratory illness is associated with this environment. Due to the nature of the underground environment it will continue to present hazards.

We are extending our focus on safety to better understand leading indicators such as the household conditions of our employees as well as endeavouring to understand absenteeism better. Reasons for absenteeism do not always include sickness or injury, but other factors such as family responsibility, providing support to a sick family member or the transfer of money to the rural home.

At the Process Division we have, this year, started to track household safety issues. These issues are discussed and monitored as we believe they can affect employees’ behaviour at the workplace.

Achievements and acknowledgements

Lonmin was awarded the John T Ryan Trophy, an award which recognises outstanding safety practices in the mining industry. The prestigious award was presented to Lonmin’s 1B4B mine at MineSAFE 2012, the premier industry safety conference incorporating the MineSAFE Awards. As the 2012 recipient, the shaft will now compete internationally with winners from the other participating countries. The awards are a joint venture between SAIMM, AMMSA, and the South African Colliery Managers Association (SACMA) with input from the DMR, the Chamber of Mines and employee unions. Other safety milestones for which we received recognition included:

  • 13 million fall-of-ground (FOG) fatality-free shifts at Rowland Shaft, which is a worldwide industry record (August 2012)
  • 7 million FOG fatality-free shifts at 4B Shaft (July 2012)
  • 5 million fatality-free shits at Karee Mine(August 2012)
  • 5 million FOG fatality-free shifts at K3 Shaft (July 2012)

Acknowledgements

  • Mine SAFE 2012, recognised Lonmin as being the most improved corporate in respect to safety.
  • Lonmin Mining has on two occasions achieved 6 million fatality -free shifts.
  • Lonmin Mining has achieved 12 million fall -of -ground fatality- free shifts.