CORPORATE CITIZENSHIP

SAFETY, HEALTH AND ENVIRONMENT (SHE)

Sustainability

The issue of global warming, with greenhouse gases being a major contributor, has been the subject of increasing attention in recent years. Most of this attention is focused on the burning of fossil fuels for energy, which generates carbon dioxide. Consequently, the potential for global warming is commonly expressed in terms of carbon dioxide equivalence. Emissions other than carbon dioxide, however, can also have a significant impact.

The Kyoto Protocol calls for reductions in greenhouse gas emissions to levels which existed in 1990 in those developed countries which are signatories to the Protocol. These reductions must be achieved by 2012. The signatory countries can buy the equivalent carbon credits arising from reductions in emissions in developing countries, thus offsetting their own emissions against the reductions required. Developing countries are currently excluded from the Protocol's requirements.

A case relevant to AECI is that of nitrous oxide at Modderfontein - one ton of nitrous oxide is equivalent in its global warming potential to the release of 310 tons of carbon dioxide. Nitrous oxide occurs as a waste product in the production of nitric acid, and AEL operates two nitric acid plants at Modderfontein.

The Clean Development Mechanism (CDM) was instituted to facilitate the reduction of greenhouse gas emissions in developing countries. The CDM operates under the guidance of the United Nations Framework Convention on Climate Change (UNFCCC). AEL is one of the few companies in South Africa that has embarked on a CDM programme.

AEL's nitrous oxide abatement project for its No. 9 nitric acid plant was registered as a CDM activity at the UNFCCC in November 2007. With the secondary catalyst installed in the No. 9 nitric acid plant, certified emissions reductions (CERs) were generated from the time of registration. At year-end, AEL had generated 15 123 CERs. The measured emission reduction for 2007 was 17 738 tons carbon dioxide equivalent. This needs to be verified by an independent, designated operating entity at the end of the current campaign, expected to continue until February 2008.

The No. 11 nitric acid plant nitrous oxide abatement project is due to be registered as a CDM activity at the UNFCCC in February 2008. At present, the plant already has secondary catalyst installed for the abatement of nitrous oxide. The generation of CERs will commence as soon as the project is registered.

The next step is to arrange for the necessary verification audits once the current production campaigns have been completed. It will then be possible to begin marketing the CERs to potential buyers for the expected carbon credits.