WORKPLACE ISSUES
EMPLOYMENT
Currently, Kumba employs 8 963 permanent employees. This excludes the employees of Ticor Limited, Australia. Various contractors and suppliers support the company’s operations, creating an additional 4 000 jobs. During this reporting period, there was a net decrease rather than increase in net job creation per province/region. This could largely be attributed to the Kumba business improvement programme that is aimed at streamlining business operations primarily by reducing costs, increasing throughput and revenue, and improving business processes, while minimising potential job losses. With the proposed extensions to mining operations that will take place at the Grootegeluk and Sishen mines, further jobs could be created. Kumba is working towards reporting on net job creation per region as required by GRI.

EMPLOYMENT EQUITY
Kumba has an employment equity policy for the development and promotion of historically disadvantaged South Africans (HDSAs), women and people with disabilities.

At the end of December 2004, 66% of the total workforce was black, coloured or Asian.

To realise our employment equity goals, detailed employment equity plans are in place for every division. Employment equity progress is actively managed in the management categories, where currently 28% of the Kumba board and 31% of general managers are employment equity candidates. The focus remains on increasing the number of equity candidates, particularly at middle management levels.

The current status of HDSA representation in our management and professionally-qualified categories as well as representation by women (all levels) is illustrated in graphs 1 and 2. Graph 1 indicates that Kumba’s performance on HDSA targets has increased steadily each year and is currently at 28%, up from 20% in 2003.

Graph 2 indicates that Kumba’s performance on targets for women, increased from 10% in 2003 to over 12% in 2004, already 2% above the target.

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

The main objectives of the Kumba HIV/Aids strategy are to:

• Prevent more people from becoming infected with HIV/Aids
  
• Extend the lives of those infected for as long as possible to the benefit of the company and society at large
  
• Ensure the impact of HIV/Aids on the company is managed to enable Kumba to grow and contribute to South Africa’s developing economy.

Measurement
A knowledge, attitude and practice survey was conducted at all divisions 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 3 indicates the amounts that could be saved by Kumba over an 18-year period (2003 to 2020). The cumulative savings will be R373,6 million.

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, in 2003 on risk exposure of South African companies to HIV/Aids, Kumba was rated second overall in terms of strategy.

HIV/Aids management
Programmes are in place or planned at all divisions and the corporate office. They include voluntary counselling and testing, peer education, wellness programmes and community-based programmes and treatment of sexually-transmitted diseases.

An anti-retroviral pilot programme was implemented at two business units in October 2003 and also at the corporate centre in 2004. The programme proved successful and is being extended to more operations. Implementation of the programme saw a total of 132 HIV-positive employees enroll on the programme. This represents 80% of possible positive cases as determined by the prevalence testing at Zincor, 35% at Grootegeluk and 20% at corporate office. All HIV-positive employees who were detected by voluntary counselling and testing held throughout the period are enrolled on the programme.

Cost of the programme
Table 1 indicates Kumba’s progress with its voluntary counselling and testing programme. At least 70% of the total workforce and contractors participated in the programme. This high level of participation enabled the company to develop comprehensive employee assistance programmes that included the provision of anti-retrovirals.

Kumba spent R2,7 million on HIV/Aids during the review period. This was mainly spent on a medical care and disease management HIV programme consisting of appropriate supplements as well as immune boosters, preventative therapy and ART (including pathology and supplying the drugs) to three pilot sites, voluntary counselling and testing, awareness training for employees and managers and the identification and training of peer educators.

Community programme
In 2003, Kumba commissioned an independent study to establish the status of current HIV/Aids programmes and initiatives in the Thabazimbi community in Limpopo. The intention of the Re Tlo Lwana pilot was to strengthen and extend the group’s HIV/Aids approach to host communities. The words translate to “we will fight” in SeSotho.

• Conducting voluntary counselling and testing projects
  
• HIV/Aids awareness and education programmes
  
• Initiating comprehensive community home-based care programmes for families whose members are already infected
  
• Initiating income-generating projects for indigent communities around Kumba mines.

The success of the Re Tlo Lwana project is reflected in improved disclosure cases, increased availability of condoms, effective condom usage, improved capacity of community-based organisations, improved public-private partnership networks and increased awareness of HIV/Aids.

The project is now being rolled out nationally at Kumba operations in Northern Cape, Mpumalanga, Gauteng and KwaZulu-Natal. In each region, the focus will be on consulting with stakeholders and customising each project to meet stated community needs.

EMPLOYEE MANAGEMENT RELATIONS
Employees have the freedom of association to join a trade union of choice. The following trade unions have recognition, subject to the criteria of the respective recognition agreements, at the various operations to bargain on behalf of their members in the bargaining units: United Association of South Africa (UASA); National Union of Mineworkers (NUM); Solidarity; Building, Allied, Mining and Construction Workers Union (BAMCWU) and Mine Workers Union of Namibia (MUN). Employees have the right to elect shop stewards of their choice.

Collective agreements between the various employers within Kumba and the trade unions regulate the relationship. These include:

• Recognition agreements
  
• Full-time shop stewards’ agreement
  
• Full-time health and safety representative agreements
  
• Communication and participative structure agreements
  
• Agency shop agreement.

Conditions of employment are negotiated annually. Through collective bargaining, employees receive a number of benefits that exceed the minimum requirements of the Basic Conditions of Employment Act. These enhanced benefits include: leave (including a leave bonus), sick leave, maternity leave and family responsibility leave. Allowances are also paid for housing, standby, call outs and shift work.

Consultation
Regular meetings are held with employee representatives (trade unions) at operations and centrally to inform employees through their representatives on relevant issues such as business and financial results.

The trade unions are consulted on new or revised policies and procedures such as the disciplinary procedure, which includes appeal and non-retaliation procedures.

Agreements on changes in operations such as continuous operations have been negotiated with the respective trade unions at the relevant division.

HUMAN RIGHTS
Kumba, as a responsible employer, complies with all labour legislation in South Africa, eg the Constitution of the Republic of South Africa, Labour Relations Act, Basic Conditions of Employment Act, Employment Equity Act, Skills Development Act, Unemployment Insurance Act, Mine Health and Safety Act, and Compensation for Occupational Injuries and Diseases Act. Kumba also complies with the ILO guidelines.

Kumba ensures that child labour is not tolerated and that forced or compulsory labour is not practised.

Through induction programmes for employees, Kumba ensures that they are educated about human rights. Policies on discrimination, harassment and racism as well as structures, such as equity committees, exist to protect employees’ human rights in the workplace.

Agreements with security providers ensure that security personnel receive education in human rights.

Employee training on human rights takes place through the Jay Hall Leadership Training programme, diversity management and entrenching foundational and motivational values through the Kumba Way programme.

WORK ENVIRONMENT
Since listing, Kumba has repeatedly 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.

HUMAN RESOURCES DEVELOPMENT
Kumba is firmly committed to developing its employees, and is an industry leader in investing in training. During the review period, the group invested R73 million in training and developing employees. This equates to 5,7% of total payroll, well ahead of the Mining Qualifications Authority’s average of 4,0% for mining companies with over 5 000 employees.

• With the exception of service workers, more than 70% of employees in other job categories were beneficiaries of training during the period
  
• With the exception of service workers, beneficiaries of training in all job categories were exposed to more than two training interventions during the period. The number of training interventions is especially high in the categories of professionals, technicians and related professionals, craft and related trade workers and plant operators.

RECRUITMENT
Kumba applies a policy of non-discriminatory recruitment. Divisions generally employ residents from local communities, except where specific skills are not available. About 70% of employees at business units come from local communities.

During the review period, staff turnover in terms of voluntary resignations was 4,6%, which is low against industry norms and suggests Kumba has a strong ability to retain staff. This high retention rate is one of the reasons that Kumba was voted best mining company to work for in 2004.

HOUSING
Kumba’s housing strategy, focused on home ownership, is being rolled out at each division. The current status of housing in Kumba is summarised in Table 3.

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. Prior to this reporting period, R17 million was spent on housing to comply with the mining charter. During this reporting period, Kumba (at Sishen) issued a guarantee of R10 million towards a housing development project. A further R8 million was made available for the development of infrastructure. A further R4,5 million is budgeted for the development of services for 2005.

COMMUNITIES OF PRACTICE
Kumba has developed communities of practice for effective group-wide knowledge sharing. The focus is primarily on the core competencies required for Kumba’s growth and sustainability, and these communities ensure the establishment and sharing of best practices and learning. This approach has been taken from organisations recognised as the leaders in knowledge management. These communities have been able to lower the risk of losing key knowledge workers, and new people productively incorporated into the group faster than before. A team of dedicated knowledge management practitioners proactively facilitates and serves these communities of practice, to ensure maximum value from knowledge sharing.

Much interest has been generated through the success of the Kumba communities of practice and many organisations visit Kumba to learn about the knowledge-sharing processes and concepts being implemented. The aim of the knowledge management team is to value the intangible assets of Kumba to ensure that these are safeguarded into the future.

PROFESSIONALS-IN-TRAINING, BURSARS PROGRAMME AND BRIDGING SCHOOL
In a skills-deficient market, Kumba is committed to ensuring a steady supply of suitably qualified professionals. The group continues to fund bursaries, primarily for engineering and geology studies. In the review period, Kumba invested R23 million in the bursary and professionals-in-training programmes. This includes the bridging school where school leavers are given the opportunity to improve their entry qualifications for universities. Since the establishment of Kumba’s bridging school some ten years ago, 269 HDSA learners graduated from the school and obtained an average of 78% for mathematics and 72% for physical science on the higher grade.

Currently, there are 25 full-time learners studying at the Kumba bridging school and 129 bursary holders studying at South African universities. Of these bursary holders, 66% are HDSAs. Notably, the dropout rate for Kumba first-year students is under 6% compared with the South African average of 30%, reflecting the quality of our bridging school – which supplies over half of our bursars –and our ability to recognise talent and award bursaries accordingly.

Sixty-five graduates are in training, with 60% being black, coloured or Asian.

LEARNERSHIPS
In the annual training report submitted to the Mining Qualifications Authority (MQA), Kumba reported 365 apprentices in training (since converted to engineering learnerships through the MQA), all on a bursary scheme. Of these learners, 75% are black, coloured or Asian, and 7,3% are females. Notably, this represents 24% of all apprentices trained in the mining industry. The technical training centres at Lephalale (Ellisras) and Sishen are accredited as training providers by the MQA. The net cost to Kumba, after MQA grants have been discounted, is R9 million.

Kumba’s commitment to engineering learnerships exceeds its own requirements by building the pool of skills for the industry and training unemployed people in line with the growth and development summit targets.

LEADERSHIP DEVELOPMENT AND SUCCESSION PLANNING
Building and retaining a pool of current and future leaders remains a priority for Kumba. Initiatives to achieve this include a comprehensive succession planning process and enhancing strategic leadership competencies.

Kumba has developed a set of leadership competencies that are aligned with the company’s strategic imperatives. Business units contract with various service providers to develop these leadership competencies through management programmes, development centres, enrolment in tertiary institutions for further education and training and workshops in a range of leadership development areas.

Talent management is constantly monitored. The level of readiness for promotion and performance are two of the more important criteria used in determining the talent pool for succession planning and developmental purposes.

SCHOOL OF FINANCE
The Kumba School of Finance is an accredited training organisation with the South African Institute of Chartered Accountants. It provides training outside of public practice (TOPP) to employees aiming for associate general accountant (AGA) or chartered accountant (CA) qualifications.

Twelve employees are currently enrolled in the TOPP programme, with 83% from designated groups.

MQA INVOLVEMENT
Kumba’s human resources development professionals continue to contribute significantly to the national and sectoral transformation process through their membership and participation in bodies such as Business Unity, 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 the

MQA’s unit standards generation and qualification design processes.

HDSA PROCUREMENT
Kumba’s HDSA procurement spending increased to R616 million in the period compared to R128 million in 2002. Kumba participates in SME development programmes that enrolled over 200 suppliers in Limpopo, Northern Cape and Gauteng. This programme assists HDSA companies with the skills required to participate in the Kumba HDSA procurement programme.

Kumba was a founding member of the South African Mining Preferential Procurement Forum (SAMPPF) which led to a number of initiatives that help Kumba meet its mining charter requirements and encouraged some of the mines in the areas of Kumba’s operations to participate in the regional forums of the programme. Early results are most encouraging.

DATA LIMITATIONS
Kumba’s HDSA procurement data includes the value of purchases from suppliers that would qualify as black owned (>50% ownership), black empowered (25 – 50% ownership), black influenced (5 – 25% ownership), white female (where the qualifying percentage of ownership is retained by females) and disability ownership (where the qualifying percentage of ownership is retained by persons with disabilities).

The R616 million spending noted above includes procurement from black-owned and black-empowered companies. We are satisfied that our systems and controls monitor HDSA procurement that relates to all the HDSA suppliers detailed above. Kumba endeavours to align with Anglo procurement guiding principles and it is expected that this alignment will be fully completed within the 2005 financial year.

CORPORATE SOCIAL INVESTMENT
By aligning itself with national and provincial growth and development strategies, and guided by corporate governance protocols and principles spelt out in the King II report and GRI guidelines, Kumba has successfully positioned itself as a leader in corporate
social investment. We use a results-driven approach of developing, implementing and monitoring corporate social investment programmes in partnership with our host communities. Full details of our policies are available on www.kumbaresources.com.

KEY FOCUS AREAS AND NATIONAL FLAGSHIP PROJECTS
During the review period, Kumba spent R13 million on corporate social investment initiatives, and R31 million between 2002 and 2004.

NATIONAL FLAGSHIP PROJECTS
Kumba has initiated three corporate social investment and community relations projects classified as national flagship projects. These address issues of major concern in areas of education, HIV/Aids and environmental awareness.

Whole School Development Programme
This project assists 24 schools (equally split between Limpopo and Northern Cape) to benefit from a satellite-based education system designed to improve the standards of educators, technological literacy of learners and attractiveness of careers in technical fields such as engineering. The concept of Kumba’s whole school development project has been well received by the heads of the education departments in these provinces.

Kumba sponsors the Weskus School at Saldanha

Extension of HIV/Aids programmes to communities
To ensure the well-being of our host communities, we have undertaken several initiatives to contain the spread of life-threatening diseases like HIV and Aids by providing counselling and support to community members who are already infected and affected by HIV and Aids.

Working with employees, labour unions, local communities and traditional healers, health and social institutions, and state departments, Kumba’s community HIV/Aids campaign has started to yield positive benefits. Our specific interventions on HIV/Aids prevention include:

• HIV/Aids awareness and education
  
• Anonymous voluntary HIV testing
  
• Counselling and support in a caring environment
  
• Home-based care training for families whose members are already infected
  
• Income-generating projects for unemployed communities around Kumba mines.

The project tackles the HIV/Aids pandemic as a social programme and includes the educational and nutritional side of interventions. During the year, 24 people were trained as home-based caregivers, peer educators, counsellors or mentors.

Environmental sustainability and community awareness programme
This project raises awareness and creates jobs through environmental programmes. The temporary use of land for extracting non-renewable resources has implications that extend beyond the life of the mining operation. Closure and rehabilitation planning is a legal and social responsibility and Kumba readily acknowledges that our environmental responsibility and the sustainability of our host communities extends beyond these parameters. An integral component of this extended responsibility is the need to ensure that the mined land is returned to the local economy and can be maintained, cared for and used sustainably by its future custodians.

A partnership between Sishen and Kgalagadi municipality has seen the establishment of a community environment committee. A pilot environment awareness programme has been initiated. In line with the development plan of the local municipality, several potential projects have been identified. These are in the areas of recycling and beautification of waste disposal sites. The result will be improved awareness and creation of jobs.

Working with local authorities and following the recognised principles of sustainable development, we strive to limit our impact on the environment by ensuring that our footprints are covered with extensive rehabilitation and conservation programmes that are understood and appreciated by host communities who are, in most cases, the custodians of mined land.

OTHER INITIATIVES
Kumba participates in a variety of other corporate social investment initiatives, including:

• Business Trust – public/private sector partnership focused on creating jobs, improving education, and reducing crime.
  
• New Africa Mining Fund – Kumba has contributed R20 million to an initiative of the mining industry and government to facilitate access to capital for junior mining entrepreneurs, while giving investors the prospects of competitive returns.
  
• Minerals Education Trust – supporting academic staff and lecturers in the mining and metallurgy sector to ensure the supply of high-quality new engineering graduates.
  
• Institute for Higher Education – supporting higher education and training in mathematics and science in the Northern Cape.
  
• University of Stellenbosch Transformation Chair – sponsoring the position of a senior lecturer in transformation at the university’s business school to develop a leading academic source of knowledge in social and economic transformation in South Africa.
  
• University of Zululand Integrated Rural Development Chair – improving the economic lives of rural communities in Zululand, using an interdisciplinary approach and involving all stakeholders.
  
• Peace Parks Foundation – supporting transfrontier conservation areas for sustainable economic development based on the management and conservation of ecosystems, natural resources and biodiversity.

KUMBA FOUNDATION
To ensure effective management of funds allocated for community development, the Kumba Foundation, an independently-managed body, monitors progress in community development programmes through the project monitoring system and procedures.

The foundation also funds learners through Kumba’s bridging school.

MONITORING AND EVALUATING TO ENSURE SUSTAINABLE PROJECTS
For Kumba, sustainability is a process of development. It is dynamic, ongoing and guided by community involvement in decision making. While always focused on building capacity, we have predetermined entry and exit points, and the process is driven by a formal project management system. Our policy of aligning our initiatives to national priorities ensures that we build meaningful partnerships with all stakeholders.

Kumba is currently developing a common platform for measurement standards and audit methodology for all corporate social investment initiatives.

STAKEHOLDER ENGAGEMENT
Kumba recognises the need to create synergies with communities, businesses and government around our business units have formal, democratically constituted structures to facilitate open and honest engagement, consultation and mutually beneficial partnerships with stakeholders on issues of common social, economic and environmental concerns. Representatives of these structures range from unions, government, NGOs, civil organisation, mine management, municipalities, as well as traditional leaders.

This process further ensures that all development programmes are aligned with the District and Local Municipalities’ Integrated Development Plans (IDPs), as well as Provincial Growth and Development strategies.

POLITICAL CONTRIBUTIONS
In the review period, Kumba donated R1 million to South African political parties towards national general elections funding.

The Butterfield Bakery at Kathu near Sishen started off as a social development joint venture and is one of the franchise’s most successful outlets. From left, Kagisho Mogotsi, Calvirn Batshabane and Albert Marrume at work.