Integrated Annual Report 2015
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Management Processes 
Risk management

 
  X – Reference
  Heat
map
number		   Description of risk Residual severity Likeli- hood Residual risk   Mitigating strategy   KPI (Target) Strategy Strategic objective
  1   Depressed PGM basket prices The current weakness in the PGM basket price remains a concern and is unsustainable in the medium to long term 158
 75
 11 850
   Understanding the future demand for our products, and the corresponding industry supply-side profile. Scanning the environment for technological advances that may affect the demand for Implats’ products (substitution), and instituting appropriate responses where possible   Costs <R20 100/Pt oz
Capital <R4.2bn		 4
 4
  2   Non-delivery of production and productivity targets at Impala Rustenburg Short-term challenges include: ramping up to full production; maintaining our ability to achieve completion of the mining cycle; speeding up the establishment of face length in new mining areas; ensuring increased productivity 120

 90
 10 800
   Implementing initiatives relating to: mechanised off reef development, management of critical spares, detailed work procedures, team mobilisation, training, mine planning protocols, production planning, quality mining and visible felt leadership. Review of the short and long-term business planning process and parameters, together with ensuring that appropriate funding is available or in place   Platinum > 1.4m oz 1
 2
  3   Weak balance sheet and cash flows (liquidity The financial impact of the protracted strike has been far reaching. The cash reserves have been largely dissipated by the start-up and ramp-up process. Implats is currently operating in a cash constrained mode, as are our peers 132
 80
 10 560

   Proactive and rigorous review of the short and long-term business planning process and parameters, together with ensuring that appropriate funding is available or in place   Cost per Pt oz < R20 100 2
 3
  4   Excessive taxation and levies at Zimbabwean operations There is an exposure to high taxation as a result of the unique Zimplats taxation, particularly the special mining lease (SML). There are multiple and sometimes conflicting interpretations of this piece of taxation legislation, giving rise to taxation risks 167
 60
 10 020
   Ensuring compliance through external tax compliance audits and the use of specialist tax advisory services. Tax training and awareness, resolution of historic tax matters and the tax risk management framework     3
 5
  5   Revenue impact of Section 54s Section 54 stoppages have cost the Impala Rustenburg operations approximately R720m and Marula platinum R110m in direct production during FY2015. The indirect cost of these stoppages in terms of management time and start-up difficulties are of a similar magnitude 133
 80
 10 640 
   Interrogation of the impact of section 54s, along with participation in the initiative by the Chamber of Mines. Training of management, as well as to incentivise safe working conditions   Platinum > 1.4m oz 1
1
  6   A significant deterioration in safety performance Safety is the primary priority for the Implats leadership. The increase in the number of fatalities is unacceptable. It must be noted that there has been an improvement with regard to NLTIs and LTIs, but not with fatalities this year. Mine safety is receiving high priority at a national political level and any significant deterioration in performance carries significant risk. Since the end of the strike, we have had six fatalities at our Impala Rustenburg operations 123
 77
 9 471
   Strong strategic commitment to develop an appropriate safety culture, driven through initiatives relating to people, practices and the physical environment   Zero fatalities
LTIFR: 20% improvement on FY2015		 1
1
  7   The security of supply of electricity in South Africa In South Africa, the electricity supply industry is dominated by Eskom, which owns and operates the transmission grid. Eskom has a net installed generation capacity of 42 000 MW. Given planned and unplanned outages it is able to bring a maximum of 36 000 MW on line at present. 60% of the generating capacity is beyond the 30 years design life 107
 88
 9 416
   Detailed monitoring of our energy usage and maintaining regular contact with Eskom to ensure we are aware of any situation that may affect us. Ensuring appropriate emergency evacuation plans. Implementing initiatives to reduce energy consumption     1 and 3

3 and 5

  8   Capital constraints affecting project delivery The current cash constrained environment has necessitated the review and reconsideration of a number of our capital projects. Current capital constraints has the risk of affecting not only delivery of current projects, but also the project pipeline as a whole 98
 80
 7 840
   Continuous review of project prioritisation along with stringent application of professional project management principles and methodologies. Rigorous risk management is practiced at every level of capital projects   Capital<R4.2bn 5
 4
  9   Employee relations climate Following the profound impacts of last year’s five-month strike, we need to shape relationships with trade unions based on shared values and mutual interest, allowing unions/managers to share information more freely/openly and to resolve conflicts seeking mutually beneficial outcomes 115
 44
 5 060
   Striving to provide an enabling work environment that fosters open, honest and effective relations between management, employees and elected union representatives. Engaging with various government departments directly, working with the Chamber of Mines and labour representatives to find sustainable solutions to industrial relations challenges in the country     3
 5
  10   Maintaining a social licence to operate in South Africa Our current approach to mine communities is simply not delivering the required benefits. It is vital that, as we explore the future of mining, we seek a new social contract that will ensure mine communities and employees are given a fair say in how mining will affect their own future. We are working with the Chamber of Mines (COM) in an effort to develop a new social compact that explores the scope for and means of improving the coordination, scale and impact of social investments by mining companies 125
 33
 4 125
   Committing to developing a deep understanding of the situation by conducting a Social Impact Assessment, as well as participating in the multidisciplinary research on the mining sector. Ensuring that human rights are protected by committing to adopt the Voluntary Principles on Security and Human Rights   Build in excess of 300 employee houses in South Africa and Zimbabwe respectively. Continue with SLP commitments 3
 5

Key
 Minor/low  Major/moderate  Critical/high

 

 
Strategy
    
Operational – Strategic objectives
  
  1 Improve efficiencies through operational excellence and safe production   1 Relentlessly drive safety of people
  2 Cash conservation   2 Consistently deliver on production targets  
  3 Maintain social licence to operate   3 Continually improve operational efficiency  
  4 Investment through the cycle   4 Wisely preserve cash  
  5 Maintain optionality and position for future   5 Strive to be a good corporate citizen  
  See here.   See here.