UK strategic report and non-financial information statement, CA Section 414C, 414CB, human rights disclosures, Modern Slavery Act

Lonmin Plc – Annual report – 30 September 2018

Industry: mining

Performance (extract)
Human Rights
Lonmin aspires to an ethical culture in the Company through its corporate values and by leading in a way that demonstrates sound ethics from the top of the organisation. Lonmin’s Code of Ethics commits the Company to the highest standards of social and business practices, and requires that employees, contractors and stakeholders share this commitment, formalising Lonmin’s ethical approach to conducting, managing and regulating all its business dealings.

The Code of Ethics defines Lonmin’s stance on conflicts of interest, anti-competitive behaviour, lobbying and relationships with Government, bribery, insider trading, the receipt of gifts and donations, whistle-blowing and reporting corruption or unethical behaviour. All employees and service providers are required to commit to the principles contained in the Code of Ethics. Those found guilty of contravening the Code of Ethics will be penalised by dismissal, contract termination and/or legal action. An electronic declaration platform commissioned to support the Conflict of Interest and Anti-Bribery and Anti-Corruption policies to enable employees to make declarations of gifts made and received and other potential conflicts of interest.

Allegations of misconduct are logged and investigated, and disciplinary action is instituted where required. The main areas of concern investigated relate to fraud, bribery and corruption, and procedure violation. The Company refers to the policy on BEE fronting to address certain allegations in this regard. Furthermore, a cautionary statement is included in advertisements for job vacancies, which declares that Lonmin does not endorse or tolerate unethical or fraudulent behaviour, bribery, insider trading, corruption or job selling, and that such behaviour will be reported to the relevant authorities. Each case is investigated and internal controls reviewed; and corrective actions are developed and implemented should concerns been identified on failed internal controls.

90 cases of commercial fraud and unethical behaviour were investigated by the Lonmin Business Assurance Services and Group Security, comprising 16 cases carried forward from 2017, and 74 cases reported in 2018. All reported cases are investigated through a structured and formalised investigation process. Of these cases, 29 are still under review, 17 were undetected due to insufficient information or evidence, and 34 were concluded having either confirmed or refuted the allegation.

Respecting human rights
Respect for human rights is a fundamental part of Lonmin’s culture and governance framework and this is demonstrated by our commitment to operate in accordance with the United Nations Guiding Principles on Business and Human Rights and the ten UN Global Compact principles. This commitment is reflected in our Human Rights Policy, a copy of which is available on our website, and in many other company policies such as our Code of Ethics and our Safety and Sustainable Development Policy.

We make a positive contribution to the realisation of human rights of our employees and those in the communities surrounding our operations in a range of ways through our rigorous approach to safety in the workplace, the health and wellbeing of our employees and the communities, minimising the impact of our operations on the environment and ensuring security is carefully managed in accordance with the Voluntary Principles on Security and Human Rights. Further information on Lonmin’s activities in these areas is discussed in detail in other sections of this report.

The human rights pilot study completed last year which focused on women in mining identified a range of topics which concerned our female employees including, for example, gender equality, sexual harassment in the workplace and inadequate ablution facilities. As a result of the feedback from that study, a number of short, medium and long term actions were identified. In the year under review, an awareness campaign was launched using industrial theatre, leaflets and workshops to promote gender equality and raise awareness that there is zero tolerance within Lonmin for any kind of gender prejudice or harassment and reporting/escalation mechanisms were enhanced. Ablution facilities for women have been inspected and, where necessary, have been upgraded and new personal protective equipment specifically designed for women have been sourced and will be available at all shafts by the end of the 2018.

Human rights training is included in mandatory annual refresher training and the induction programme for all employees and contractors, including security personnel. The training aims to increase understanding of individuals’ rights, standards of behaviour they should expect and reciprocate and the mechanisms to report grievances or incidents, which includes a toll-free ethics hotline service. The service provides for operators with different languages and female operators.

Advancing ethics within any organisation takes time and whilst Lonmin has a strong foundation, there is more to do. Lonmin is developing a human rights due diligence checklist which is expected to be rolled out next year. This will assist management to identify any breaches and any necessary remedial actions and will further embed human rights in the business by increasing awareness of human rights related risks. Further ethics training for managers and executives is expected to be rolled out in 2019.

Human rights and security
The Company focuses on understanding security threats to operations with a primary objective to mitigate interruption to operations. The Company subscribes to and implements the Framework for Peace and Stability in the Mining Industry (February 2013), and the Deputy- President’s Framework Agreement for a Sustainable Mining Industry (July 2013). We continue to build on our relationships at all levels with stakeholders, surrounding communities and the South African Police Services.

The security risk management process aligns with the fundamentals of ISO 31000, the international risk management standard and the voluntary principles on security and human rights, which are human rights guidelines designed specifically for extractive sector companies.

Our focus remains on supporting the safety of our people and the protection of our property through training, education and vulnerability assessment processes. We also guarantee that employees have appropriate equipment with applicable logistics necessary for asset protection (for example crime prevention vehicles and thermographic cameras). Corporate operational procedures are in place, and
there is a specialised corporate operational procedure on crowd management. Security personnel receive training on the legal and operational aspects of crowd management. By year-end 100% of our personnel were trained. Security employees and contractors all have Private Security Industry Regulatory Authority (PSIRA) training as a minimum, of which human rights forms part. Security employees receive refresher training on these aspects as part of the ongoing training plan and at year-end 75% of security employees and 80% of contractors received refresher training.

Modern Slavery Act
Lonmin’s human rights commitment includes a prohibition on modern slavery in all its forms, including human trafficking and forced or compulsory labour. All new Lonmin employees are subject to vetting procedures, including age and identity verification, credit checks, criminal record checks and a medical fitness assessment. We have zero tolerance for child labour in the Company, and do not employ individuals or hire contractors aged less than 18 years old. The minimum legal working age in South Africa is 15.

We support the right to collective bargaining and freedom of association of all our employees and contractors, and are committed to building constructive relationships with recognised unions. Wages for our unionised employees are negotiated by collective agreements with the majority union, and in adherence to the South African Labour Relations Act (66 of 1995). We comply with South African legislation regarding working hours. Further details on the steps Lonmin takes to reduce the risk of modern slavery among its workforce are set out in the 2017 Modern Slavery and Human Trafficking Statement, available on our website at about-us/governance/modernslavery-act.

Protecting human rights through the supply chain
Lonmin seeks to ensure that its counterparties conduct their own operations in line with Lonmin’s standards on human rights and modern slavery. During 2017, Lonmin circulated a questionnaire to all existing vendors, requiring them to answer a set of questions relating specifically to modern slavery risks in their businesses and supply chains. The outcome of this survey was discussed with the top 600 suppliers during a supplier workshop held in September 2018 in an attempt to create awareness around modern slavery risks.

Lonmin’s approval process for new vendors requires potential vendors to answer questions in relation to human rights, including whether the vendor has its own Human Rights Policy and whether it provides human rights training to its staff. We expanded this process to include specific questions regarding the New Vendor’s Policy in respect of modern slavery and the due diligence processes in place in respect of their supply chains.

The standard terms and conditions applicable to contracts with all vendors required to adhere to a range of legislation relevant to human rights, including the South African Labour Relations Act (66 of 1995), the Basic Conditions of Employment Act (75 of 1997), the Compensation for Occupational Injuries and Diseases Act (130 of 1993), as well as Lonmin’s own Sustainable Development Standards and Code of Business Ethics.

Accommodation and Living Conditions
Lonmin’s Employee Accommodation and Living Conditions Strategy aims to address the housing requirements of employees, contractors and the broader community, and to integrate plans for schools, clinics, transport hubs and other municipal infrastructure. Collaborative partnerships with Government are central to the strategy.

Lonmin acknowledges that living conditions have a direct influence on its employees’ and their families’ general wellbeing and ability to focus and perform in their working environments.

Lonmin committed R500 million towards employee housing and living conditions for the period 2014 to 2018. Over and above this commitment, Lonmin incurs a cost of R475 million per annum in living-out allowances to category 4 to 9 employees and an operating cost for its current rental stock of R57 million per annum. A further R420 million has been committed towards the new Employee Accommodation and Living Conditions SLP commitments (2019 – 2023) despite the current financial challenges facing the industry.

See Lonmin’s Sustainable Development Report 2018 for further information on employee accommodation.