Mojobeng Makibinyane, our environmental officer, explaining the lining process of the K3 dam under construction.

Overview

This Lonmin Plc (Lonmin, the Group or the Company) Sustainable Development Report presents information on the most material sustainability matters the Company faces and how the related opportunities are pursued and challenges addressed.

Reporting guidelines

This report has been compiled in accordance with the GRI’s1 G4 core compliance and its Mining and Metals Sector Supplement. It also considers the United Nations Global Compact (UNGC2) principles and the International Council on Mining and Metals’ (ICMM3) principles and reporting requirements.

Our Safety and Sustainability Policy is aligned to the ICMM principles.

1 The GRI (formerly the Global Reporting Initiative), is a global reporting guideline that provides a framework for sustainable development reporting (www.globalreporting.org). Lonmin’s GRI index is available.
2 The UNGC sets universal principles on labour, environment, anti-corruption and human rights.
3 The ICMM is an organisation of mining, minerals and metals companies and associations committed to driving social, economic and environmental progress in the industry.

Scope and boundary

Information disclosed in this report covers the financial year from 1 October 2015 to 30 September 2016, unless otherwise stipulated. Our previous Sustainable Development Report covered the 12 months to 30 September 2015.

This report discusses information relating to Lonmin Group subsidiaries: Western Platinum (Proprietary) Limited (WPL), Eastern Platinum (Proprietary) Limited (EPL), Messina Platinum Mines Limited (MPML), and Akanani Mining (Proprietary) Limited (Akanani), including the joint ventures and exploration activities over which the Company exercised management control during the financial year.

This report is structured according to material focus area chapters that present the applicable management approach and performance data relevant to that focus area. In the interests of conciseness, certain topics are covered in our online supplementary reports and comprehensive GRI index.

The disclosure of scope 1 greenhouse gas (GHG) emissions was expanded in 2016 and, for the first time, includes emissions from the Mooinooi landfill site and waste water treatment works. Apart from this, the boundary of data remains unchanged and, where possible, data is reportedon a comparative basis.

Significant changes to the Company

The reorganisation of the business announced in 2015 was concluded by the end of March 2016. There was a disruption-free reduction of 5,433 people, (details in Employee Relationships). The closure of inefficient areas and shafts will continue as planned throughout 2017, with Hossy shaft scheduled for closure in 2017. Our Newman shaft has now ceased production from Lonmin crews. Two Generation 1 shafts, East 1 and West 1, were initially intended to be put on care and maintenance. These contractor-managed shafts were, however, subsequently allowed to continue mining following a revised contractor development plan, which made these shafts cash generative.

In line with our strategy of divesting non-core assets and maximising cash utilisation to focus on our core platinum operations, Lonmin entered into an agreement with Acacia Mining Plc to dispose of the 49% stake in the West Kenya joint venture for a cash consideration of US$5 million.

Simon Scott stepped down as Chief Financial Officer on16 May 2016, after five and a half years in the role, and Barrie van der Merwe was appointed as Chief Financial Officer and Director with effect from 17 May 2016. Kennedy G Bungane was appointed as a Non-executive Director of the Company with effect from 1 March 2016. Mr Bungane is Chief Executive Officer of Phembani Group (Proprietary) Limited (Phembani), which merged with Shanduka, Lonmin’s black economic empowerment partner. Mr Bungane was nominated to the Board of Directors (the Board) pursuant to a contractual arrangement with Shanduka.

There were no further significant changes to the size, structure or ownership of the Company.

Units of measurement and comparative data

All monetary amounts reflected in this report are expressed in South African Rand (R) or in US Dollars (US$). The average cost of US$1 during the reporting period was R14.77 (2015: R12.0). A total production of 1,440,724 Platinum Group Metal ounces (PGMoz) (2015: 1,447,364) is used to calculate intensity or efficiency ratios in the report, unless indicated otherwise. The icon is used to indicate where data was severely affected by, and should be interpreted in the context of, the protracted 2014 strike.

Rectifications

In 2015, “General and hazardous waste incinerated” was incorrectly reported as 277 tonnes. The correct amount is 27.7 tonnes. “Hazardous waste to landfill – other” was incorrectly reported as 12 tonnes. The correct amount is 2,122 tonnes.

In the 2015 supply chain supplementary report, the discretionary procurement spend for the year was incorrectly reported as R10.52 billion. The correct amount is R8.6 billion.

Assurance

KPMG Services (Proprietary) Limited provided assurance on selected performance data in this report, in line with the International Standard on Assurance Engagements (ISAE 3000) assurance standard and the ICMM Sustainable Development Framework: Assurance Procedure as it relates to Subject Matters 1 – 4. The scope of the assurance engagement, the data assured and the statement of assurance are provided in Governance. An internal review of the safety and health material focus area for the period 1 October 2015 to 30 September 2016 was completed. The review covered the qualitative and quantitative information presented in the 2016 Sustainable Development Report, Material Focus Area: Safety and Health.

Assurance provided by KPMG: Reasonable (✓RA), Limited (✓LA).

Lonmin-specific terms and references

The terms below are used throughout the report when referring to operations and geographic areas. For ease of reference, these are:

  • Marikana: The mining and processing activities of WPL and EPL in the North West Province
  • The Precious Metal Refinery (PMR): The precious metal refinery, located in Brakpan, Gauteng Province, ownedby WPL
  • Limpopo operations: The operations of Messina Platinum Mines Limited (wholly owned by WPL), located in Limpopo Province

Suite of reports

This annual Sustainable Development Report should be read in conjunction with the Annual Report and Accounts 2016 and the online supplementary reports.

Annual Report and Accounts 2016 Sustainable Development Report 2016 Supplementary online reports
An overview of Lonmin’s operating landscape. Statutory financial statements for the Company are provided with the associated audit reports Detailed disclosure on Lonmin’s material sustainable development policies, practices and performance Additional sustainability information on topics such as supply chain, stakeholder engagement, and our GRI index
Annual Report and Accounts 2016 Sustainable Development Report 2016 Supplementary online reports

Navigation

Assurance provided by KPMG: Reasonable (✓RA), Limited (✓LA)

Targets set for 2017 or beyond

Lonmin’s four strategic pillars

Data impacted by the strike in 2014

KPIs as a measure in the incentive plans for remuneration of executives

Contacts

Lonmin values feedback from stakeholders regarding our Sustainable Development Report, our approach to reporting according to the various frameworks and how we address Lonmin’s material focus areas. For feedback or requests for more information on sustainable development, please contact:

Dr Mel Mentz
Head of SHE and Sustainability
+27 14 571 4561 or +27 83 653 1080
mel.mentz@lonmin.com