Kumba Annual Report 2003

EMPLOYMENT

Currently, Kumba employs 9 674 permanent employees which excludes the employees of Ticor Limited, Australia. Various contractors and suppliers support the company’s operations, creating an additional 4 000 jobs. Kumba will report on net job creation per region in the 2004 annual report.

HUMAN RIGHTS

Kumba is a responsible employer that complies with all labour legislation in South Africa, eg the constitution, Labour Relations Act, Employment Equity Act, Skills Development Bill and Basic Conditions of Employment Act. Accordingly, Kumba ensures that:

Child labour is not tolerated
Forced and compulsory labour are not practised
Employees are educated about human rights in accordance with the noted legislation
Security personnel are educated in and respect human rights. This is reinforced through agreements with security companies
The guidelines of the International Labour Organisation are complied with.

HIV/AIDS

The Kumba HIV/AIDS policy was finalised on 18 March 2003 when the agreement with recognised unions was signed. The policy was developed with the involvement of shop stewards from all business units, union officials from their respective head offices and representatives from all business units.

Measurement

A knowledge, attitude and practice (KAP) survey was conducted at all business units during 2002. Actuaries and consultants also conducted a financial impact analysis in the second half of 2002.

One of the outcomes of the impact analysis was the savings that could be realised with a prevention and treatment programme.

Graph A indicates the amounts that could be saved by Kumba over an 18 year period (2003 to 2020). The cumulative savings will be
R373 651 000.

Graph B indicates Kumba’s estimated HIV prevalence without any intervention. This shows that by 2020 about 18,2% of our workforce will be HIV positive and 4,6% will be HIV sick if no interventions are made.

However, Kumba has developed a comprehensive HIV/AIDS strategy, regarded as one of the best in the country in terms of proactive approach. In an evaluation done by a global investment bank, UBS, this year on risk exposure of South African companies to HIV/AIDS, Kumba was rated second overall in terms of strategy.

Graph C indicates Kumba’s prevalence in terms of the mining industry.

Prevalence studies have been completed at Sishen, Northern Cape (11,0%) and Glen Douglas, Gauteng (14,6%). The prevalence rates as modelled by NMG-Levy are estimated at 11% for Kumba. This prevalence rate means that Kumba is underexposed relative to the mining industry as a whole.

HIV/AIDS management

Programmes are in place or planned at all business units and the corporate office, which include voluntary counselling and testing, peer education, wellness programmes and community-based programmes and treatment of sexually-transmitted diseases. Anti-retroviral pilot programmes are being implemented at two business units in October 2003. If successful, the programme will be extended to more operations.

EMPLOYMENT EQUITY

Kumba has embarked on a process for the development and promotion of historically disadvantaged South Africans (HDSAs), women and people with disabilities.

At the end of June 2003, 65% of the total workforce was black, coloured or Asian.

To realise its employment equity goals, detailed employment equity plans have been compiled for every business unit. Employment equity (Graph D) progress is being actively managed in the management categories where currently 27% of the Kumba board and 33% of general managers are employment equity candidates. Concerted efforts are being made to increase the number of equity candidates, with special emphasis on middle management levels.

Labour relations

Kumba accepts that sound labour relations is a major contributory factor to the success and efficiency of the group.

Kumba follows an approach of constructive engagement of all stakeholders in matters pertaining to the employment relationship. This approach focuses and supports the group’s strategic objectives by creating a working environment where the employment relationship will assist to bring about a more competitive company.

Effective participation structures exist at corporate and business unit level, where interaction with organised labour on matters regarding the employment relationship takes place regularly.

A total of 88,35% of employees in the bargaining unit at Kumba are unionised. The main trade union role players are the National Union of Mineworkers with 63,19%, Solidarity with 15,34% and the Building Allied and Construction Workers Union with 6,64% membership.

The group again experienced no labour unrest or strikes in the year covered by this report.

Various policies regarding the employment relationship (eg disciplinary and grievance procedures, disability and retrenchment policies) are constantly reviewed, with consultation or negotiation with the trade unions to create the optimal working environment.

WORK ENVIRONMENT

Since listing, Kumba has been rated by credible, independent publications and institutions as being among the top 40 companies in South Africa on elements such as salary and benefits, incentive schemes, and education, training and development.

HOUSING

Kumba’s approach is to focus on home ownership and enabling strategies to make this possible, driven by a joint housing forum at each business unit.

Kumba spent R17 million on housing for employees during the financial year under review, and will spend an additional R10 million in the 2004 financial year. The current status of housing Kumba’s personnel at business units is summarised as follows:

*Housing statistics*
	Number of
Description	employees	%
Home ownership
Kumba
houses bought	1 256	12,98
Rental
Kumba units	1 672	17,28
Hostels	2 779	28,73
Other*	3 967	41,01
Total	9 674	100,00

* People who own or rent non-Kumba housing.

The housing programme conforms to the requirements of the mining charter and will be fully implemented by 2008. Rental houses will be sold at market value to employees and, where feasible, hostels will be converted into single units.

RECRUITMENT

Kumba applies a policy of non-discriminatory recruitment. The general approach of business units is to employ residents from local communities, except where specific skills are not available. About 70% of employees at business units are employed from local communities.

HUMAN RESOURCES DEVELOPMENT

Kumba is committed to the development of its employees. It has maintained its position among industry employers who invest significantly in training and developing their people. During the past financial year, the group invested R62,2 million in training and developing employees.

This equates to 5,7% of total payroll, well ahead of the Mining Qualifications Authority’s average of 3,8% for mining companies with over
5 000 employees.

More than 63% of the company’s employees benefited from training during the year.

*Beneficiaries of training*
Category	% trained
Plant and machine
operator/professional	99
Craft and related trade workers	97
Technician and associated
professionals	92
Labourer and related workers	78

The average number of training interventions to which Kumba’s employees were exposed is more than one training intervention per employee. Again, this index was exceptionally high in the case of the plant and machine operator (an average 4,5 training interventions per employee), craft and related trade workers (average of 3,5 training interventions per employee), and the technician and associated professionals (average of 3,4 training interventions per employee).

Graduates-in-training, bursars programme and bridging school

Kumba is committed to ensuring a steady stream of suitably-qualified professionals in a skills-deficient market. The group continues to fund bursaries, mainly for engineering and geology studies. Kumba invested R23 million in the bursary and graduate-in-training programmes for the review period. This investment includes the bridging school where grade 12 learners are provided the opportunity to improve their entry qualifications for universities. Currently, there are 25 full-time learners and 127 bursary holders studying at South African universities. Of these, 60% are black, coloured or Asian. Sixty-five graduates are in training, with 41% being black, coloured or Asian.

Leanerships

Kumba has 412 apprentices (recently converted to learnerships through the Mining Qualifications Authority) in training, all on a bursary scheme. This represents 24% of all apprentices trained in the mining industry. The technical training centres at Ellisras and Sishen were accredited as training providers by the Mining Qualifications Authority during the year.

Leadership development and transformation

The attraction, retention and development of current and future leaders remain priorities. This is achieved through a number of initiatives, including a comprehensive succession planning process, and enhancing strategic leadership competencies.

School of finance

The Kumba School of Finance is an accredited training organisation with the South African Institute of Chartered Accountants and provides training outside of public practice (TOPP) to employees aspiring to attain the associate general accountant (AGA) or chartered accountant (CA) qualification.

Thirty-one employees are currently enrolled in the TOPP programme, with 77% from the designated groups.

In addition, two HDSA bursars are currently studying at South African universities towards qualifications as chartered accountants.

Mining Qualifications Authority (MQA) involvement

Kumba's human resources development professionals are contributing significantly to the national and sectoral transformation process through their membership and participation in bodies such as the National Skills Authority, the National Board for Further Education, Business South Africa's committee for education and training, and the MQA's sector skills planning committee. Kumba professionals are also playing a prominent role in unit standards generation and qualification design processes of the MQA.

SOCIAL INVESTMENT AND COMMUNITY DEVELOPMENT

Responsible corporate governance and the management of the company's impact on society and its relationships with stakeholders are playing an increasingly important role in the successful achievement of the company's vision and business goals. Kumba fully acknowledges that it has a crucial role to play in supporting the philosophy of sustainable development and building prosperous societies. The group has made an unequivocal commitment to the concept of sustainable development and subscribes to the socio-economic transformation of the mining industry as defined in the Mineral Act and attendant mining charter.

Kumba's area of focus are:

Education, training and skills development
Healthcare promotion, particularly HIV/AIDS programmes
Job creation
Small, medium and micro enterprise development
Conservation of environment, including awareness programmes
Infrastructure development

Corporate social investment (CSI) programmes, managed as an integral part of the group’s business, are tangible evidence of its commitment to social development and reflect directly on its values of social investment. Kumba spends no less than 1% of its consolidated pre-tax profit, based on a three-year rolling average, on CSI programmes. In the year under review, Kumba spent R18 million on its investment programmes which translates to 1,8% of pre-tax profits. Healthcare, education, training and skills development receive the larger portion of the budget allocation. Through CSI initiatives, Kumba continues to ensure that its host communities value corporate citizenship by partnering them with other relevant stakeholders and government in implementing sustainable community development programmes. Most of the business units meet the requirements of the mining charter relating to the delivery of socioeconomic development such as cooperating in the development of integrated development programmes, representative decision-making structures and programmes for labour-sending areas.

In partnership with the communities, Kumba has built schools, houses and clinics around areas of its operations; it takes care of the natural and social environment; and cooperates rigorously in the fight against the scourge of HIV/AIDS and other diseases. The Lephalale section 21 company established at Grootegeluk with the sole aim of providing total wellness at HIV/AIDS-infected residences at Lephalale demonstrates the commitment to working with communities to fight the adverse effects of AIDS.

Kumba’s school development programme is a focal point in the field of education, with special emphasis on science, mathematics, engineering and technology. The bursary scheme and bridging school programmes have provided opportunities for young people to improve entry requirements in universities and colleges to follow their challenging careers. The recent partnership with the Northern Cape Department of Education in the launch of the National Institute for Higher Education illustrates how Kumba values the contribution of institutions in education and training for science.

The high rate of unemployment among the host communities is great cause for concern. In addressing this problem, various technical training and skills development programmes have been implemented around all areas of operations. Through such programmes, more than 65 students have acquired artisan skills at Grootegeluk and 49% of them are employed at the mine. The Itereleng skills development centre at Thabazimbi in Limpopo was upgraded to provide much-needed skills in the community such as bricklaying, carpentry, craftwork, knitting and dressmaking. These skills provide support to the community’s sustainable livelihood. The Tshipi training centre in Sishen, Northern Cape, conducts programmes that reflect Kumba’s commitment to skills development, education, training and job creation.

In alleviating poverty among its host communities, Kumba has engaged in various private-public partnership programmes that aim to reduce high unemployment levels and enhance business skills so that the host communities become independent and contribute towards creating jobs for themselves. As such, programmes initiated include entrepreneur promotion, infrastructure development with special focus on labour-intensive projects. The Ticor SA operation in KwaZulu-Natal plays an important role in the support of women in mining through its involvement and support of the regional structure of the South African Women in Mining Association (SAWIMA).

Caring for the environment and natural resources is an additional responsibility. Working with local authorities and following the recognised principles of sustainable development, Kumba strives to limit its impact on the environment while promoting conservation of natural resources and biodiversity. Kumba does this to ensure that its footprints are covered with extensive rehabilitation and conservation programmes. Through the commitment to maintain the environment and its ecological integrity, it ensures that direct benefits such as skills development and the creation of job opportunities that enhance the environmental knowledge of communities are also established.

In supporting conservation and maintenance of South Africa’s biological diversity, Kumba has committed itself to an investment of R10 million over 10 years for the creation of Peace Parks. This investment intends to promote conservation objectives and to extend the involvement to large-scale projects that care for the environment while providing sustainable job opportunities for communities. The Peace Parks Foundation facilitates the establishment of transfrontier conservation areas, thereby supporting sustainable economic development, the conservation of biodiversity and regional peace and stability.

A Blesbokspruit Trust for Environment project has been launched at Zincor in partnership with the communities. This has resulted in positive spin-offs in the nature conservation and environmental management initiatives.

In partnership with the MQA and other mining houses, Kumba is participating in two projects, to the value of R10 million, in the poverty nodes of Majuba in Newcastle and Kgalagadi near Sishen, to train and build capacity in projects by former employees and their dependants.

Kumba is a member of the Business Trust, a joint programme between private sector and government to stimulate job creation through targeted programmes and capacity building. The trust sought to provide socio-economic consolidation of the political gains ushered in by the 1994 dispensation.

With these programmes and initiatives, Kumba establishes its commitment to the principles of the new Minerals Act, which requires that all mining companies develop a social and labour plan. All business units and mining operations are preparing their own social and labour policies which will ensure that Kumba’s operations meet the objectives and principles of the plan. Kumba has, however, subscribed to the principles during the closure of the Durnacol and Hlobane collieries.

BRIDGING SCHOOL

“Without financial support, your dreams could remain dreams.” Those were the words of Rasai Ntsoelengoe, a young learner from Gauteng who faced a bleak future in 1994. So did Venon Ngubo. Both young men successfully attended the Kumba Resources bridging school in 1995. Both were offered bursaries to study the degree of their choice. Both elected metallurgical engineering at Wits University and graduated in 2001, completing their experiential training at various Kumba operations. Both face considerably brighter futures today, thanks to their hard work and the stepping stone of the bridging school.

Faced with the challenge of finding sufficient learners with the potential to succeed at tertiary level, Kumba initiated its bridging school in 1995, focusing on historically disadvantaged learners from its operational areas. The school enables learners to improve in their results in mathematics and physical science to enrol for tertiary education in engineering and geology. Students also receive life skills, computer skills, language proficiency and technical drawing skills.

Since 1995, 219 learners have notched up 147 A and B symbols in mathematics with 101 A and B symbols in science. Of these students, 105 received bursaries from Kumba for tertiary study, while 90% of the balance received bursaries from other mining companies. To date, 35 bridging school learners have been employed as qualified engineers or geologists at Kumba, while some 60% of Kumba’s bursary holders have come through the bridging school.

DURNACOL

When the chief employer in a remote rural area reaches the end of operations, it can often be the end of the surrounding community as well. Not so at Kumba’s Durnacol colliery in northern KwaZulu-Natal. Knowing in the early 1990s that the mine had just another decade, Durnacol developed a R22 million social plan to mitigate the impact of closing in December 2000.

Some 1 800 people faced retrenchment on closure, a serious issue for the community. Redeployment to other Kumba operations and surrounding labour-intensive industries and using retrenched people in the environmental rehabilitation programme secured jobs for some, but not enough.

For 1 200 other retrenched employees, a R3 million training programme developed an array of skills, from driving licences to entrepreneurial ventures.

But Kumba had a greater aim than just its skills programme. The project initiated in 1995 with broad consultation ensured that Durnacol would be a fully-functional and self-sustainable township in its own right, built on the existing facilities and resources of the mining operation, donated by Kumba. In the process, over 400 people are now proud home owners, some assisted by the state RDP fund, with the proceeds of the sales being reinvested in community projects.

The proclamation of Durnacol as a town is expected before the end of calendar 2003, a fitting testimony to Kumba’s commitment to sustainability and the communities in which it operates.

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