2016 PERFORMANCE

ENVIRONMENTAL PERFORMANCE

Compliance

The legal environment in which the Group operates is increasingly complex as a result of additional SHE-related legislative requirements in South Africa and the diversity of legislation in countries in the Group’s geographic footprint. AECI reviewed its risk management and compliance approach during 2016 to ensure that management processes remained appropriate. As a result of this review, a centralised programme of audits of SHE-related matters at all Group manufacturing sites commenced. These audits are carried out by a third-party multi-disciplinary team of experienced SHE specialists. Audit results are reported at a detailed level to the management teams of the businesses concerned and at summary level to AECI’s Executives.

The programme commenced in June 2016 and 25 facilities had been audited by year-end. Site management teams have developed corrective action plans to address those deficiencies identified. Good practices have also been highlighted during the audit process and collaboration forums are in place to share these more widely across the Group.

Certain manufacturing operations at AEL’s Modderfontein site are unable, at this time, to meet all the minimum emissions standards that came into effect on 1 April 2015, in terms of the National Environmental Management: Air Quality Act, No. 39 of 2004, as amended. Accordingly, AEL submitted an application to the regulatory authorities for the postponement of the compliance timeframes so as to allow the company sufficient time to make the necessary commitments of capital required to achieve full compliance. This postponement application is under consideration by the authorities.

On 14 December 2015 the Department of Environmental Affairs (“DEA”), accompanied by representatives from the City of Johannesburg, conducted a search and seizure operation at AEL Modderfontein. Management cooperated fully with the DEA and submitted a response to the DEA’s allegations, relating to AEL’s compliance with certain conditions of its current emissions licence. This matter is in the process of being finalised with the authorities.

Incidents

The prevention of incidents detrimental to the environment is an important aspect of AECI’s approach to managing its impact in a responsible manner. Such incidents do occur, though, and are classified and reported internally in line with AECI’s reporting standards and guidelines. Reporting to external stakeholders also takes place, as appropriate, through structures such as Modderfontein’s Community Awareness and Emergency Response Committee, Stakeholder Forums and Licence Advisory Forums.

No * major or serious environmental incidents occurred in 2016 (no * major or serious incidents in 2015). Of those moderate and minor environmental incidents that did occur, the most significant were:

36 tonnes of ammonium nitrate solution were spilt when a tank overflowed at AEL’s Modderfontein manufacturing facility. The spillage was contained on the site and clean-up was effected successfully;

sulphur for Chemical Initiatives collided with another vehicle near Stanger, in KwaZulu-Natal, resulting in a spillage on the highway. The spillage was cleaned up successfully and there was no material environmental impact;

third-party contractor’s vehicle delivering emulsion to AEL’s site at Inata, in Burkina Faso, overturned resulting in the spillage of 12 tonnes of emulsion. The spillage was cleaned up successfully and there was no material environmental impact;

29 tonnes of emulsion spilled en route to a mine in the DRC when a trailer disconnected from a third-party contractor’s truck after being subjected to heavy impact on a road hump. The spillage was cleaned up successfully and there was no material environmental impact;

a third-party contractor’s vehicle transporting ammonium nitrate rolled en route to AEL’s manufacturing site at Bajool, in Australia. This resulted in the spillage of 36 tonnes of material which was cleaned up successfully and there was no material environmental impact;

a third-party contractor’s vehicle transporting product for ChemSystems overturned near Rustenburg, North West, resulting in approximately 13 tonnes of product being spilled. The spillage was cleaned up successfully and there was no material environmental impact.

It is pleasing that the reduction trend in the number of environmental incidents recorded in the Group since 2012 was maintained (see graph below). This improvement has been underpinned by the benefits of ever-increasing environmental awareness by Managers and employees at all of AECI’s facilities.

ENVIRONMENTAL INCIDENTS PER YEAR

Resource efficiency

Water usage by the Group’s operations decreased by 8,5% to 3 139 755m3 * (2015: 3 432 734m3 *). The majority of this decrease was attributable to AEL’s Modderfontein operations where recycling programmes were accelerated and leak management improved. A reduction in on-line time at the No. 9 nitric acid plant also had an effect.

Hazardous waste generation and disposal reduced by 5,3% to 7 474 tonnes * (2015: 7 892 tonnes *). This was largely the result of operational changes at AEL’s Modderfontein site where metallic materials such as container lids are being recycled after burning, instead of being disposed of as hazardous waste.

Recycled waste arisings were 12,0% higher at 16 588 tonnes (2015: 14 815 tonnes). This was on the back of recycling initiatives implemented at Chemical Initiatives and AEL.


HEALTH AND SAFETY PERFORMANCE

The primary indicator used by AECI to measure its health and safety performance is the Total Recordable Incident Rate (“TRIR”). The rate for 2016 was 0,45 *, higher than 2015’s record low rate of 0,35 *. Tragically, though, in 2015 the safety performance was overshadowed by the deaths of two * employees in two separate incidents. There were no * fatalities in 2016. Although the long-term trend of reducing incident rates continued (see below), the aspiration remains zero harm to employees and contractors, and management remains focused on improvements.

AECI’s occupational illness rate for 2016 was 0,02 * (2015: 0,01 *), with two such illnesses recorded. One employee suffered an asthma attack after being exposed to a spill of fatty acid, and another became sensitised to isothiazolin (a biocide) after spilling some product onto his skin.

ALL WORKERS TRIR BY YEAR


AECI continues to benchmark its health and safety performance against that of other companies operating in the same sector, both in South Africa and internationally. The graph below was compiled by an independent consultant using the latest publicly available data from the various companies’ websites at the time of writing. It positions AECI’s health and safety performance in the context of its industry peers.

TRIR PERFORMANCE COMPARISONS

INVESTOR-RELATED INITIATIVEs

AECI is involved in three sustainability-related investor initiatives, namely the FTSE/JSE Responsible Investment Index Series (which replaced the JSE Socially Responsible Investment (“SRI”) Index in 2015), and the CDP Climate Change and Water Programs. The latter two are global programmes administered in South Africa by the National Business Initiative.

AECI was a constituent of the SRI Index for six consecutive years, and is a constituent of the FTSE/JSE Responsible Investment Index for the second consecutive year.

AECI participated in the CDP Climate Change Program for the seventh consecutive year and achieved a score in the “B” performance band, which is an improvement from the prior year’s “C” band score. AECI scored higher than the CDP Climate Change Program average.

AECI participated in the CDP Water Program for the second year and achieved a score in the “B” band.

AECI’s 2016 CDP submissions are available on the Company’s website as is its FTSE Russell Rating Profile.

 

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