Integrated Annual Report 2014
Menu
Integrated Annual Report 2014
Menu
Integrated Annual Report 2014
Menu
Implats aims to achieve a balance between
The business identifies its strategic objectives, and material sustainability focus areas, through a structured internal risk management process, and with consideration to the views and interests of key stakeholders.
Implats' risk management process sets out to achieve an appropriate balance between minimising the risks associated with any business activity and maximising the potential reward. This process enables the board and senior managers to take decisions regarding the possible trade-off between risk and reward, and assists them to identify and pursue appropriate strategic growth opportunities informed by the Group's risk appetite and risk tolerance levels.
The structured risk management process comprises the following steps:Arising from this process is the identification of a set of objective-based risk assessments (ORAs) that cover approximately 80 of the most important aspects of the Implats business. Each identified risk, as well as its associated controls, has a clearly defined line management owner. This process is repeated and reviewed regularly, ensuring that the information remains relevant. All information is captured into the Group risk repository system that informs the Group risk profile. The Group risk profile is presented on a monthly basis to the Exco and quarterly to the board risk committee, which has been separated from the audit committee.
This process culminates in the identification of a prioritised set of Group strategic risks. Collectively, these risks, along with the outcomes of our internal and external stakeholder engagement activities, and our assessment of market fundamentals, are used to identify our material sustainability-related issues and business strategic objectives. These issues are prioritised in terms of their impact both on the organisation and on our key stakeholders. They inform the nature of our strategic objectives, as well as the performance issues for monitoring and reporting.
The Group risk profile includes key risks, the 10 most critical of which are set out below (see page 30 of the sustainable development report):
| Group strategic risk | Context | Our response measure |
| Non-delivery of production and productivity targets at Impala Rustenburg | Short-term challenges include: safe resumption of the Impala Rustenburg operation post-strike; ramping up to full production as per the start up plan, maintaining our ability to achieve completion of the mining cycle; speeding up the establishment of face length in new mining areas; ensuring increased productivity. | Ensuring the safe return to work for all employees by implementing the detailed start-up plan for the operations. Implement initiatives relating to: mining quality; training; visible felt leadership; mine planning protocols and work procedures. |
| Employee relations climate | On 23 January 2014, around 80 000 members of the Association of Mineworkers and Construction Union (AMCU) commenced strike action at the Rustenburg mines of Impala, Lonmin and Anglo American Platinum (Amplats). The strike lasted until the end of June 2014, resulting in estimated production losses for Impala of 312 000ozs Pt. | Striving to provide an enabling work environment that fosters open, honest and effective relations between management, employees and elected union representatives. Engaging with various government departments directly, working with the Chamber of Mines and labour representatives to find sustainable solutions to industrial relations challenges in the country. |
| Platinum group metal (PGM) price fluctuations | Despite the protracted strike, the platinum price did not move significantly over this period, which is an indication of significant above-ground metal stocks. | Understanding the future demand for our products, and the corresponding industry supply-side profile. Scanning the environment for technological advances that may affect the demand for Implats' products (substitution), and instituting appropriate responses where possible. |
| Volatility of the rand/US$ exchange rate | The volatility of the Rand:US$ exchange rate primarily impacts revenues for the basket of PGMs and base metals produced. Fluctuations in the exchange rate have a marked influence on cash flows. | Closely monitoring the rand/dollar exchange rate as a source of significant volatility for our business and where prudent try to mitigate its impact. |
| Shear induced ground instability at Zimplats (Mutambara shear) | The behaviour of the Mutambara Shear has been erratic and unpredictable. As a result, prediction of the operability and hence production levels in the short to medium term may not be accurate. | Close monitoring and review of the affected areas by industry experts and using the best available technology. Ensuring that the worst affected areas are quarantined. Establishment of a detailed action plan is in progress. |
| Pressure to provide metal at low prices, for local beneficiation in South Africa | The issue of further minerals beneficiation has been on the agenda of the South African Government since 1995, in the belief that beneficiation will help re-industrialise the economy and create hundreds of thousands more jobs in manufacturing. The DMR is pursuing the specific agenda of developmental pricing and forced local sales. | Maintaining regular high-level contact with the DMR as part of the platinum industry group. Engaging in national technological research for further opportunities. |
| Uncertainty regarding indigenisation policy | The Zimbabwean Government has advised that the Zimplats Indigenisation plan signed in January 2013 needs to be revised. | Maintaining regular contact with government officials. Ensuring full legal and regulatory compliance in a continuously changing environment. Investing in community and social development initiatives |
| Weak balance sheet and cash flows | The financial impact of the protracted strike has been far reaching. Implats is currently operating in a cash constrained mode. | Proactive and rigorous review of the short and long-term business planning process and parameters, together with ensuring appropriate funding is available or in place. |
| Excessive taxation at Zimplats |
There are multiple and sometimes conflicting interpretations of the unique special mining lease tax law that is applicable to Zimplats. | Maintaining regular contact with government officials. Conducting training and awareness campaigns to internal stakeholders, as well as tax compliance audits. |
| The security and supply of electricity in South Africa | In South Africa, the electricity supply industry is dominated by Eskom, which owns and operates the transmission grid. Eskom has a net installed generation capacity of 42 000MW. Given planned and unplanned outages it is able to bring a maximum of 36 000MW on line at present. | Maintaining regular contact with Eskom to ensure we are aware of any situation that may affect us. Ensuring we minimise our consumption of energy and water by promoting efficient processes, and adopting appropriate technologies |