We believe that good corporate governance is key to the integrity of our organisation, our ability to manage risk and perform at optimum levels. It is for this reason that Merafe is committed to the highest levels of ethical and accountable business conduct. Underpinning our disciplined approach to governance is our determination to ensure we maintain a balance between good governance and the spirit of entrepreneurship that has built our business.

Our directors endorse the Code of Corporate Practices and Conduct (the Code) set out in the King IV Report on Corporate Governance. In an ongoing effort to improve our governance standards, our board has reviewed the recommendations contained in the revised Code and is taking the necessary steps to ensure that they are applied throughout the company.

Merafe applies the principles of King IV. A table setting out our application of the King IV principles is available under compliance, policies, charters and assurance.

Governance and management systems

We recognise that good corporate governance is key to the integrity of our organisation and our ability to manage risk and perform at optimum levels. It is for this reason that Merafe is committed to the highest levels of ethical and accountable business conduct. We have included our sustainability reporting with our financial reporting since 2004 which, we believe, reflects our long-term commitment to best practice corporate governance.

• Our non-executive directors do not receive share options or incentives
• There is a clear separation of responsibilities between the Chairman and the CEO
• The Chairperson of our board is independent and without conflicts of interest

While the board acts as the custodian of corporate governance within our organisation, a clear allocation of responsibilities among our directors ensures a balance of power and authority. As recommended by the Code, no independent non-executive director has been with the company for longer than 10 years and there are no fixed-term contracts with directors.

The structure of the Merafe board is closely aligned with the recommendations of King IV.

The independence of these directors is assessed annually. The Chairperson of the board is an independent non-executive director. In terms of King IV the Chairperson is elected annually.

It is imperative that our board has the appropriate balance of skills and experience within its ranks to fulfil its mandate. The members of our board have a wide range of skills, including financial, technical and commercial expertise which they use to guide the decision-making of our board.

Our board charter commits the board to ensuring our company is a responsible corporate citizen. Good governance is about strong leadership. It is the role of the Merafe board to direct, govern and be in effective control of the company. The fact that our company has been acknowledged as a responsible corporate citizen is testament to the sound leadership of our board.

The board’s Charter and our company’s Code of Ethics define the roles, responsibilities and behaviours of the board in ensuring a successful, ethical and sustainable business. The board is required to make decisions on matters of a material and significant nature, including our company’s financial and operating results, major acquisitions and disposals, considerable capital expenditure and the strategic direction of our business.

Not only does the board direct the development of our company strategy but its members are responsible for assessing the short- and long-term impacts of our strategy on all our stakeholders.

We review our strategic plans annually. They are then presented to the board for approval. Accountability rests with our board for ensuring our financial and legislative compliance, as well as the timeous identification and management of risk and opportunity.

The definition of an independent non-executive director in King III (these are the criteria that Merafe uses to define an independent non-executive director):

An independent director is a non-executive director who:

• is not a representative of a major shareholder who can control or significantly influence management or the board
• does not have a material direct or indirect interest in the company/ group which:
• is greater than 5% of the group’s total number of shares in issue
• is less than 5% of the group’s total number of shares in issue, but is material to his/her personal wealth
• has not been employed by the group or appointed as designated auditor or partner in the group’s external audit firm, or senior legal adviser in the previous three financial years
• is not related (immediate family) to someone who has been employed by the group in an executive capacity in the previous three financial years
• is not a professional adviser to the group
• or relationship that could conflict, such as being a director of a material customer of or supplier to the company
• does not receive remuneration based on the company’s performance.

All newly-appointed directors receive both formal and informal training related to the company and their fiduciary responsibility as directors. Ongoing directorate training has focused on ensuring a proper understanding of the revisions to the Code of Practice in King IV and the Companies Act. Board members attended training sessions and visited the operations of the Venture. They also participated in strategic workshops which led to the approval by the board of the company strategy.

To ensure that our board keeps pace with the dynamic business environment within which it operates while maintaining a level of continuity within the directorate, the retirement of directors, who are appointed at the Annual General Meeting, is staggered on a rotation basis.

Appointing directors who bring the appropriate skills and expertise to the board – and who are non-executive and independent as suggested by King IV – requires careful consideration and selection. The procedures for appointing new directors to the board are formal and transparent and a thorough investigation of the candidates by the Remuneration and Nomination Committee assists the board to make informed appointments in the best interests of our company. The committee not only checks whether the potential board member has ever been disqualified as a director but also assures the board that the requisite skills are in place to enable decisions around business sustainability, governance, strategy and performance, risk and opportunity and standards of conduct.

We have developed a policy to guide directors and designated employees on dealing in the company’s securities. The JSE Listings Requirements specifically prohibit directors or senior employees from buying or selling a company’s shares during a closed period.

Merafe subscribes to the fundamental tenets of human rights as enshrined in our country’s Constitution and Bill of Rights. Our policies and practices are aligned to ensure that all employees and stakeholders are treated with dignity and in a manner that is culturally appropriate, irrespective of gender, background or race.

The Venture has the grievance processes in place to ensure that any breaches of human rights can be reported, investigated and, where necessary, the appropriate corrective action can be taken. In addition, employees can use the ethics line to report any activities which they believe are not in line with the company’s policies on human rights.

Ensuring the security of our people and our assets is essential. The use of security in challenging environments can bring about risks, which we recognise and deal with by making sure that our security personnel and third parties providing security services are equipped with human rights training. As a whole, we are committed to the United Nations (UN) Universal Declaration of Human Rights and use the UV Guiding Principles on Business and Human Rights as a guide for the development of our group human rights policy and supporting operational standards.

The Venture’s Sustainable Development Standards require its operations to maintain community relations strategies that uphold and promote human rights and respect cultural considerations and heritage. No breaches of human rights were reported by any operations during the past year, nor were there any incidents of the rights of indigenous people being violated.

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 and employees and contractors, provides guidelines for behaviour which is above reproach.

The Merafe board is committed to creating a culture where the highest levels of integrity are underpinned by transparent business transactions and robust assurance systems.

The Glencore Corporate Practice framework lays out a clear path for practising our values and achieving our ultimate objective. Our operational and corporate policies are underpinned by our fundamental values and Code of Conduct.

Merafe is committed to the principles of the Mining Charter for the South African mining industry and the Mining Scorecard, established to monitor performance against the Charter, and to meeting the targets set in the Mining Scorecard.

Merafe’s partner in the Venture, Glencore, plays an active role in a number of significant international and national industry organisations and stakeholder groups through membership, funding, provision of expertise and participation in committees and working groups.

Its commitments, through these involvements, are met in the Venture’s operations. They include: the United Nations (UN) Universal Declaration of Human Rights, UN Guiding Principles on Business and Human Rights, the International Council on Mining and Metals (ICMM), the North West Province Air Pollution Control Forum (NAPCOF) and the Ferro Alloys Producers Association (FAPA). NAPCOF and FAPA discuss air quality issues and partner with regulators in setting best practice air quality standards. Their task teams deal with specific air quality issues and also engage with regulators through providing feedback and advice.

The Venture is a member of the Ferro Alloys Producers Association (FAPA), the International Chrome Development Association (ICDA), the North West province Air Pollution Control Forum (NAPCOF) and the South African Mining Development Association (SAMDA).

The Venture’s Sustainable Development structures are aligned to the International Council of Mining and Metals’ (ICMM) Sustainable Development Framework.