Q&A: Harmony - JSE MAGAZINE

Q&A: Harmony

Melanie Naidoo-Vermaak, executive for sustainable development at Harmony, on the miner’s environmental priorities and its numerous social development initiatives

Q&A: Harmony

Q: What is Harmony’s approach to sustainability, as well as environmental, social and governance?
A: Harmony is approaching its 70-year landmark as a global gold mining and exploration company. Its ability to transform and adapt to changing environments and conditions has never rung more true than it does today, particularly given the expansion into Papua New Guinea (PNG), known as one of the world’s premier gold-copper regions.

Throughout the decades, Harmony has always undertaken its business with integrity. The concern for not just people, but environment and governance too has been entrenched in four tenets under our sustainability framework and policy agenda, namely business integrity, good labour practices and human relations; environmental and material stewardship; socio-economic upliftment of host communities; and public and employee health and safety.

Although these four priorities are underpinned by the principles extolled by both the International Council on Mining and Metals – a global organisation that promotes safe, fair and sustainable mining – and the UN’s Sustainable Development Goals, Harmony is a strong advocate of also using its own economic engine, which has been created by our mining interests and supported by partners and stakeholders to unlock shared value.

Essentially this means we’re building an economy that will survive and thrive for the betterment of society and the environment in which we operate. Creating shared value has been, and remains, an integral part of the organisation’s corporate culture. This is part of its branding and – even more importantly – builds the credibility of our reputation as a responsible corporate citizen and value partner within the communities that we operate in.

Q: What are the company’s main environmental considerations?
A: We have a number of short-, medium- and long-term goals that drive efficiencies. From an environmental perspective, Harmony looks at five key issues. The first, climate change, impacts on how we drive energy reductions and improve our energy mix. Over the past seven years we’ve been recognised as leaders in addressing climate change, having been awarded ‘A’ listings for performance and reporting on climate change and water by the CDP.

Water is our second driver, which again is about enhancing efficiencies of use and reducing our consumption. The latter is largely achieved by maximising re-use of mine-affected water and reducing our dependency on the nation’s potable supply. To give an idea of our goal of zero-discharge and reduced dependency on potable supplies, we recently installed a water treatment plant at Doornkop, near Soweto, that replaces Rand Water’s facilities at our operation, with a similar plant installed at Kusasalethu in Carletonville, offsetting some of Harmony’s dependency on Rand Water. An additional plant is being installed at Welkom.

Waste is being reduced using waste-management tools and by optimising how we use the materials we need. Our rehabilitation programme focuses on the demolition of defunct infrastructure and the rehabilitation of mine-impacted land. We also endeavour to create final land uses that support economic or ecological value-add, including biodiversity conservation and agricultural initiatives.

Over the years we have concentrated on reducing our footprint on the land we mine from. Up to 2018 we had rehabilitated some 45 shafts and old plant areas; contributed towards conservation of the sungazer lizard; developed a biomass plantation; and we will shortly be developing our own solar farm.

Q: What energy aspects are important?
A: Energy plays a large role within the mining environment, being as it is such a big component of our input costs. We’ve invested significantly in an ongoing energy efficiency programme that delivers improved carbon intensity performance year on year. We’ve recently concluded the procurement process of sourcing 30 MW of solar energy for Harmony’s Welkom operation, which will be constructed once the relevant licences to build have been granted.

Harmony’s Hidden Valley operation in PNG has 66% (FY18) of its energy supplied by hydropower, which supports our renewable energy programme as well as short- and medium-term intensity targets. Similarly, Harmony is aiming to substitute 30 MW of electricity with solar energy in Welkom. We are also commissioning a bioenergy pilot plant at Welkom that is intended to replace heavy fuel at one of our main plants.Harmony has worked closely with Eskom to manage its electricity usage. Energy consumption by our SA operations declined by 38 516 MWh for FY18, compared to FY17 – a result of energy efficiency projects implemented during the course of the year, which amounted to R85 million in 2018.

Q: What are some of the social development initiatives undertaken?
A: Most critical to our social investment is that Harmony provides employment for some 41 000 people (including contractors), last year investing approximately R9.4 billion in salaries and R418 million in training and development. We contribute to host countries’ economies through royalties and taxes, which tally some R430 million (R424 million in SA, R5 million in PNG).

Harmony’s socio-economic initiatives tend to focus on improving infrastructure, health, education and alleviation of poverty in our host communities. Over past years, Harmony partnered with the Department of Human Settlements to deliver community rental stock in Welkom and Virginia by re-purposing Harmony’s redundant hostels. These projects have been very successful.

Our Merriespruit 3 housing project was first runner-up for the Govan Mbeki Award in 2015. Our Masimong housing development was declared winner in both the Govan Mbeki National Awards for best housing development project in 2013, and the Govan Mbeki National Awards for the best community residential units project in 2014. These awards speak to our ongoing commitment to building a sustainable business.

While our socio-economic development programmes support a preferential procurement strategy of sourcing locally, our performance proves that we have gone beyond compliance with the Mining Charter scorecard. Like government and our peers, Harmony believes one can promote local economic development through the success of new and growing SMEs in both the formal and informal sectors.

Supply chain and SME development are at the forefront of our initiatives, with Harmony having launched, among other projects, the Leano programme – a very successful SME lenders initiative. Leano specialises in providing finance and hands-on business support to SMEs, enabling entrepreneurs to participate in Harmony, host municipalities’ supply chains and the communities in which they operate. Yet another successful initiative, Harmony’s supplier day is a standard event in local communities where we engage directly with entrepreneurs and introduce them to opportunities within Harmony.

Q: What aspects of governance dominate how effective your mining operations are?
A: In the main, our SA mining efforts are governed by approved mining rights, each bound by an agreed to and approved social contract through the government’s social and labour plan. Moreover our environmental authorisations hold us to account on responsible environmental stewardship and further bind us to account on responsible use and protection of several aspects, including but not limited to water, waste and land. We adhere to the King IV principles and remain compliant with the JSE listing requirements, which keep us honest in our disclosure practices.

Q: How are ESG issues incorporated or influenced within your supply chain?
A: As a Minerals Council South Africa member, we subscribe to responsible sourcing principles inclusive of labour standards and human rights; wellness; workplace safety; business integrity and corporate citizenship; environment; and economic development. We urge our suppliers to note these aspects and embrace a similar ethos.

The Minerals Council also presents a buy-and-maintain-quiet initiative – which we support through our contractual clauses on noise-level outputs with our suppliers and service providers. We are also one of the few companies that calculate our Scope 2 and 3 emissions for high-value spend. A green clause in all our supplier contracts urges those with whom we do business to comply with ISO 14001 standards.

Q: How has FTSE rated Harmony, and what does this mean for stakeholders and shareholders?
A: Harmony is a member of the FTSE4Good Index, which validates the company’s commitment to sustainable and responsible investing. The most recent analysis from FTSE shows that we scored the highest on the index for corporate governance, water and climate change, and says to us that our relative practices are therefore generally well-aligned with our shareholder interests.

We comply with King IV and therefore produce an integrated annual report, but we do not depend just on the report and our website to inform our shareholders of our ESG efforts. We engage through bilaterals – including the likes of GES International, MSCI and Oekom – to provide guidance in as well as ratings and tools for responsible investment. We also frequently engage with ESG compliance stakeholders, both local and global, to ensure we are informed of the latest best practices so we can continue to meet investor expectations.

Q: What projects impacting on communities were concluded in the past year?
A: We established a commercial agricultural project at Doornkop that produces vegetables for the Johannesburg market. The success has motivated two similar projects in the pipeline for Kusasalethu and Moab Khotsong in Orkney.

Another project we are proud of is the youth business village in Masilonyana, Welkom, which assists SMEs by providing them with accommodation from which to conduct their business activities. In a similar vein, the digital hub we established in Soweto enables access to computers and the internet as well as printing facilities for local community members. Some of our hubs are now also using the facility for developing computer skills for students from local schools.

By Kerry Dimmer
Image: Clinton Prins