Social capital and stakeholder responsiveness

MATERIAL
ISSUES


  • Our social licence to operate
  • Uncertainty of the socio-political environment

SOCIAL CAPITAL

Social capital is any value added to the activities and economic outputs of an organisation by human relationships, partnerships and cooperation.

Organisations rely on social relationships and interactions to achieve their objectives. Externally, social structures help create a climate of consent or a licence to operate, in which trade and the wider functions of society are possible. Organisations also rely on wider socio-political structures to create a stable society in which to operate, e.g. government and public services, effective legal systems, trade unions and other organisations.

To enhance social capital we:

  • contribute to open, transparent and fair governance;
  • source materials ethically and treat suppliers, customers and citizens fairly;
  • respect and comply with local, national and international law;
  • pay our taxes;
  • invest in the social infrastructure;
  • provide communication;
  • minimise any negative social impacts of our operations and maximise the positive impacts they can have; and
  • support the development of the communities in which the Venture operates
Socio-economic development

Both Merafe and the Venture are committed to working with local authorities, community representatives, inter-governmental and non-governmental organisations and other interested parties, to develop and support community investment projects.

Both the Venture and Merafe focus on sustainable projects, with their focus being on education, infrastructure and health issues in the communities in which the Venture operates.

Social capital and stakeholder responsiveness


KEY POINTS – 2017

The Venture spent
R27.1 million
on corporate social investment and enterprise development
(2016: R23.7 million)
 
64% of the Venture’s
expenditure on capital goods
was on BEE spend
(2016: 59%)
 
86% of the Venture’s
expenditure on services
was on BEE spend
(2016: 83%)
 
74% of the Venture’s
consumable expenditure was
on BEE spend
(2016: 65%)
Corporate social investment (CSI)

The Venture, which contributes to various CSI projects, spent R27.1 million on CSI projects and enterprise development in 2017. The amount budgeted for these projects is R134.6 million over a five-year cycle of which to date R50.8 million has now been spent. They include community health programmes, a crop and hydroponics project, community centres, crèches, youth programmes and school nutritional programmes. They also include infrastructure programmes including the construction of housing and school rebuilds. The Venture as part of its five year programme has also contributed to the establishment of catering enterprises, food banks and business support centres. During 2017 the Venture also supported a number of health and community projects and programmes. These included Ratanang Orphanage Centre, the Lydenburg Rusoord old age home and a number of school and community nutritional and health programmes.

In addition to Merafe contributing to CSI and enterprise development through the Venture (where it contributes in accordance with its participation interest of 20.5%), it independently and outside the Venture supports CSI initiatives.

Merafe's CSI projects in prior years involved the renovation and building of ablution blocks at Boitekong and Meriti secondary schools and the mentorship of six up and coming entrepreneurs. The Company was impressed with the excellent manner in which their projects were carried out by the Adopt-a-School team and the schools management teams. Boitekong and Meriti Secondary schools are located in the Bojanala district of the North West province. When Merafe visited the two schools after completion of the projects, the lack of suitable and sufficient infrastructure at the schools became apparent to the delegation. Merafe made the decision to conduct a further needs assessment on the two schools to better understand how to assist them.

Following the needs assessment at Boitekong and Meriti, the Company agreed to support the two schools in respect of two further projects at a cost of approximately R4.5 million which were completed in 2016. The Social and Ethics Committee of the Company conducted a site inspection and met with the principals and key stakeholders at the school in May 2017. As a result, the Company supported two further projects at the schools and committed funds of R3.5 million for the projects of which R1.5 million was spent during 2017. At Meriti school in 2017 the Company supported an infrastructure project (fencing, kitchen, shelter and walkway cover), renovation of the existing science laboratory as well as supporting an educator development and classroom support programme. At Boitekong in 2017 the Company supported renovations to the science labarotory as well as a labarotory management training programme. In 2017 for Mandela Day, the Company supported tree planting and a vegetable garden projects.

See attached for more information on some of the projects of the Venture.

Enterprise development

Small, medium and micro enterprises (SMMEs) play a key role in job creation in South Africa and our investment in their development is an important part of the contribution both Merafe and the Venture make to the socio-economic capacity of communities. It also increases our ability to procure from black-owned enterprises. The Venture has enterprise development commitments in terms of the Mining Charter Scorecard. The Venture spent R2.3 million on enterprise development in 2017.

Job creation and skills development

The Venture recognises that its commitment to employing local people whenever possible is to the advantage of both itself and the local communities. Direct employment at the Venture’s operations, indirect employment through contractors and its use of local suppliers provides an income for thousands of families.

Our commitment to employing local people includes providing training opportunities that enable community members to meet the Venture’s competency requirements.

See Human capital of this report for further information on the range of skills training the Venture provides and its investment in this training.
Procurement

In terms of the discretionary procurement targets set in the Mining Charter Scorecard the Venture performed well as can be seen in the table below:

  Total
procurement
spend
R
Non-
discretionary
spend
R
Discretionary
spend
R
BEE
spend
R
Impact
%
 
Capital 1 491 794 728.76 287 676.69 1 491 507 052.07 952 642 228.92 63.87   
Services 9 712 953 953.91 5 790 706 674.88 3 922 247 279.03 3 361 374 630.36 85.70   
Consumables 4 702 332 799.21 183 717.05 4 702 149 082.16 3 476 033 419.98 73.92   
Total 15 907 081 481.88 5 791 178 068.62 10 115 903 413.26 7 790 050 279.26     
Multinational capital spend 60 404 760.88           
Total procurement spend (including MNC) 15 967 486 242.76           

Public health and HIV and AIDS

The Venture favours a united approach to public health, whereby we collaborate with government, international organisations and NGOs to make the most impact at community level. The public-private partnerships formed by the Venture provide communities access to prevention, treatment and care for HIV and AIDS, as well as other communicable and associated diseases. The Venture supports the government’s HIV counselling and treatment (HCT) campaign by providing funding and testing sites. It has also funded health clinics and hospices in the communities in which it operates, including an HIV and AIDS clinic in Lydenburg in Mpumalanga province. There is also a health clinic at the Lion ferrochrome plant in Limpopo province.

Respecting the rights of communities

Neither Merafe nore the Venture tolerates any form of discrimination and our policies clearly state that we do not tolerate any form of discrimination and that all our employees and stakeholders are to be treated with dignity and in a manner that is culturally appropriate, irrespective of gender, background or race.

Human rights and ethics

Merafe subscribes to the fundamental principles of human rights as enshrined in our country’s Constitution and Bill of Rights. Our policies and practices have been aligned with both to ensure that all our employees and stakeholders are treated with dignity and in a manner that is culturally appropriate, irrespective of gender background or race. Further, Glencore is a signatory to and has accepted the Voluntary Principles of Security and Human Rights.

Ethics

The Merafe Code of Ethics governs the way we do business and the way our directors and employees engage with our stakeholders. The Code, which is binding on our directors, employees and contractors, provides guidelines for behaviour which is above reproach.

Stakeholder responsiveness

Merafe and the Venture address material issues we have identified that could impact negatively or positively on our key stakeholders. These stakeholders include national, provincial and local government in their roles as regulators and partners; the trade unions in their role as representatives of the Venture’s employees who are from local communities; and our investors and business partners who are affected by all aspects of our business. The impact of our most material issues in regard to human, natural and social and manufactured capital on our stakeholders, together with our responsiveness on these issues, is outlined in this report.

While Merafe has direct relationships with certain key stakeholders in connection with community matters, we also have indirect relationships through our partnership with Glencore in the Venture. As managers of the Venture’s day-to-day operations, Glencore takes responsibility for engaging with the Venture’s stakeholders. All the Venture’s operations and projects are expected to review the stakeholder engagement plans every year. The Venture’s operations held formal community stakeholder meetings during the year.

In 2015 the Venture focused on identifying issues material to communities and stakeholders that will assist with preparing its social and labour plans for the five-year period from 2015 to 2020.