• There are also risks related to changing regulation, such as the government audit on Mining Charter compliance and the outcome of the interpretation of BEE ownership.

• Management is focusing on housing, BEE and affirmative action in order to comply with the key objectives of mining legislation.

In recognition of employees’ freedom of association, Northam’s policy is to grant organisational rights to any union with representation of 15% or more of a relevant category of employees. Management maintains open channels of communication with its labour force, both directly with, for example, employees of influence and with representative union structures. For bargaining rights, a union is required to prove 33.3% representation of its relevant constituency. In addition, management consults with any legitimate worker representatives or committees to resolve any concerns which may arise.

At Zondereinde, interdicts through the Labour Court were used when necessary, such as during the one week unprotected strike in January 2015. Stakeholder liaison with the local SAPS is in place in the event of possible industrial action. Our negotiations with unions for F2016 began at the end of F2015. Post financial year end, a wage settlement was reached which was a good outcome for both employees and the company. At Booysendal, mining and plant contractors signed two-year agreements in July 2013 and no major labour difficulties are expected on the eastern limb.

We also engage proactively over socio-economic issues with employee communities, and have initiated our Accommodation Strategy 2020 to improve employee housing and related infrastructure. Please go to material issue 4 for the latest on this Strategy. Employee empowerment, including the expansion of a bigger and better Toro Trust, is also part of our approach.

Northam fully participates in any meetings or forums set up by the DMR, local municipalities and other mining companies in the areas where its mines are located. Soon after year-end there were disturbances in the communities around Booysendal mine. Northam fully participated in the ministerial efforts to calm the area.

The current leadership model is being reviewed to determine what aspects can be adjusted to accommodate the changing labour climate, with an emphasis on succession and communication.

• Meeting production targets is key to the sustainability of the business; the biggest risks to meeting targets are work stoppages and section 54s.

• Management ensures as far as practically possible compliance with standards. Human resources maintains good relations with union leadership to mitigate the risk of work stoppages. Management communicates directly with employees and not just through their unions. Northam participates in the Chamber of Mines’ efforts to maintain good relations with all union structures and employees. Our Accommodation Strategy 2020 (see material issue 4) and employee empowerment are also important aspects of our approach.

• There was a concern that Booysendal mine’s UG2 ore’s high chrome content would adversely affect Zondereinde’s processing capabilities.

• Booysendal plant has a chrome circuit which splits the chrome from other concentrates and it is sold separately per contract.

Underground mining is inherently hazardous and requires full compliance with health and safety regulations, compulsory safety training and the use of personal protective equipment. Non-compliance with safety standards may lead to costly mine stoppages. Our established health and safety department has implemented health and safety codes of practice and standard operating procedures are in place. The Chamber of Mines’ safety system is to be implemented. A Standard Process and Advisory Group has been established whereby policies and procedures are reviewed on an ad hoc basis. Management performs ad hoc underground visits to verify adherence to safety standards.

The group’s proposed growth strategy which involves acquiring and/or developing shallow mechanised mines or reserves and thus growing “down the cost curve” is also a mitigant against the safety risk as the mechanised mining method is far safer and employs far fewer workers underground.

The group has adopted a zero tolerance policy towards safety infringements. All infringements are investigated, and employees may face disciplinary hearings, which may lead to suspension or dismissal. In addition, the group undertakes continuous training campaigns for its employees. Mining safety standards are meticulously and constantly revised in order to facilitate compliance. Where possible mechanisation is favoured and implemented as a mining method given its improved safety record.

At Zondereinde, the use of hydropower itself largely eliminates the presence of dust in the workings.

HIV/Aids and TB have been aggressively targeted with a strong focus on prevention, through education initiatives and community involvement, as well as the implementation of a monitored employee wellness programme which includes the provision of anti-retroviral treatment (ART) for those affected.

The group has engaged with Eskom so that it is given advance warning of any possible outages in order to secure employees’ safety and protect its assets. It is not always possible to determine the cost of power disruptions, which are likely to persist in the medium term. The group has instituted a number of measures in order to reduce its maximum demand as well as to lower its total power consumption. These include dieselpowered machinery, an electricity management programme to assist Eskom and automated emergency generators to allow co-generation.

Booysendal mine, being a mechanised mine, is relatively less reliant on Eskom power. In addition, the mine has been designed in such a way that it can continue operating for several hours with reduced electricity supply.