Anglo American Platinum Limited |
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A conversation with Amplats’s CEO
Reshaping our competitiveness for sustainability
How would you sum up the past year in general?
This has been one of the most challenging years ever faced by (Anglo American Platinum Limited) Amplats and possibly the industry as a whole. The economic situation made it difficult for our business; I am proud of the ways in which the people in the organisation responded to the pressures.
We knew that this would be a particularly difficult year and therefore had to revert to a business that is based on solid fundamentals. We continued to put systems in place to improve safety performance. We also geared up production to be efficient and strengthened our cost-containment endeavours. However, most importantly, we had to make sure that we were building an organisation with a culture that will ensure that we deliver safe, profitable platinum and that we make it sustainable into the future.
How have the new organisational values launched last year affected Amplats?
The launch of the values was the beginning of a process to foster a new culture in Amplats. 2009 was a challenging year, one that has put our values to the test. We stuck to our values and used them as a moral compass to navigate the challenges. I’m pleased by our employees’ dedication and commitment to living our values and fostering a new culture within the Company.
Even though the Company’s safety performance has improved, people are still losing their lives at Amplats operations. Is there something that you should be doing differently?
We have put a great deal of effort into safety and it is disheartening to see people losing their lives at our operations. I, on behalf of my executive team, extend our deepest condolences to the families, friends and colleagues of the people who lost their lives at our operationss during the past year.
We continue to learn from all safety-related incidents and we will continue to strive to improve on safety, with the ultimate aim being that of zero harm.
This was a very successful year on our journey to zero harm in terms of achievements; we have, for the first time in Amplats’s history, achieved in excess of 100 days fatality free, and our LTIFR of 1.37 is at a record low. A number of our operations have achieved their best records in fatality-free shifts and injury-free shifts. All of these achievements lead me to believe that we are heading in the right direction. Although we will continue to refine our strategy, we are confident that our four strategic thrusts will deliver the desired results for safety.
How has the financial crisis influenced sustainable development within the organisation?
The recession in the global economy resulted in a significant reduction in the platinum price. This forced us to reduce costs and improve our efficiency. We decreased our production target to 2.4 million ounces and put some of our operations under care and maintenance.
In order to meet the reduced production forecasts of 2.45 million ounces efficiently we have had to rightsize the organisation and have therefore reduced our staff complement by 20%, or some 15,751 employees and contractors. This was achieved by focusing our resources at the operations, and through natural attrition, the elimination of vacancies, the replacement of contractors with permanent employees and voluntary severance packages.
Despite our cost-cutting actions, we did not compromise the safety and health of our workforce, the environmental performance of our operations, or the development work taking place in our host communities. We in fact increased our community development spend by R104 million to R245 million in 2009. This is a testament to our commitment to sustainable development.
2009 marked a significant milestone in terms of the Mining Charter. How has Amplats performed against the charter’s targets?
I’m pleased to say we have successfully met all of the Mining Charter obligations that we were expected to meet at the end of 2009. The biggest impact the charter has had for Amplats has undoubtedly been the changes to ownership structures at a number of our operations and projects. These changes and the transactions done have certainly resulted in the meaningful empowerment of historically disadvantaged South Africans.
Amplats continues to be accused of abusing local communities. What has been done to improve the relationship with communities in 2009?
Our efforts in community relations and development continue to demonstrate that we value and care about the communities around our operations. In partnership with provincial and local government we have a number of programmes offering portable skills training opportunities to members of the communities that have been negatively affected by the global economic downturn. This will allow them to self-develop, so that they can participate in the natural infrastructural development programme and in the long term maybe provide a service in their communities.
We are also working closely with the DMR Task Team that was established by the Minister of Mineral Resources in 2009 to address the issues that are preventing the remaining 64 families at the Motlhotlo village from resettling to their new homes
How have the rising concerns around security and pricing of energy affected your business?
Securing a cost-effective and stable supply of energy is increasingly challenging. Although we have managed to improve our overall energy intensity by 14% from last year, it is essential that we continue to pursue alternative means of reducing our energy consumption. For this reason, in 2009 we set more rigorous energy-efficiency targets at each of our operations.
In terms of the Eskom-proposed electricity price increase, we have made submissions through the Energy Intensive Users’ Group (EIUG). The group consists of 38 of the largest energy consumers, covering 40% of South Africa’s electricity use. EIUG is extremely concerned about the economic impact of the proposed 35% increase in the cost of electricity on business and employment, and is proposing models to improve efficiency and access alternative funding.
Climate change was a topic of discussion in 2009. How are greenhouse gas emissions impacting Amplats?
Our greenhouse gas emissions are directly proportional to our electricity consumption and this remains a challenge for Amplats. By reducing our energy consumption we also reduce our carbon footprint, as over 90% of our greenhouse gas emissions are indirect emissions from the electricity we use.
A key component of our climate change strategy focuses on energy efficiency while we evaluate adaptive options and access the longer-term risks climate change may have on our business.
Climate change may also present a number of opportunities for our products, as more and more research is being done into new, cleaner technologies, many of which may contain platinum. We continue to pursue emerging markets such as fuel cells and clean coal technology with our research partners.
It is said that water will become a scarce resource in years to come. How is water being managed at a strategic level?
Water is fundamental to our business; in 2009 we developed a long-term strategy for the use and discharge of water that caters for various medium- and long-term scenarios. We also embrace the concept of the true value of water that takes into account the other costs of using water, such as social and ecosystem implications. We are working closely with government in the development of the medium- to long-term water strategies to avoid competition for water resources in the catchments where we operate.
In terms of our water use in 2009, however, our use of potable water decreased by 11%, due primarily to an increase in the use of waste or second-class water.
What are some of the key focus areas for 2010?
Amplats expects the platinum market in 2010 to return to a position of deficit as a result of a moderate increase in supply but a significant recovery in demand. Given the market conditions we believe the appropriate level of production for 2010 is 2.5 million ounces of refined platinum and this is our target. We also aim to produce this volume at a unit cost of just over R11,000/oz, the same level as in the preceding two years. Our labour reductions are largely complete and we will spend the year working on improved productivity.
Operationally our top priority remains safety and we will increase efforts to take the next major step in safety improvement on our journey to zero harm.
Finally, the entire Amplats team has worked very hard to set the company up for success in the future. We are now in a much better position to deliver the performance required in the areas of safe, profitable platinum than ever before. Although our efforts are still ‘work in progress’, and we still have challenges ahead, Amplats is ready to deliver. I would like to thank each Amplats employee for your dedication and commitment during the past year, and in anticipation of your efforts in 2010. We have improved our relationship with all major stakeholders and I can assure you that we will continue to improve these in the future.
