Implats recognises that, as a leading global producer of PGMs and as a significant employer, the economic dimension of sustainability, that is, the groups impacts on the economic conditions of its stakeholders and on economic systems, is an important one.
Information relating to the financial performance of the group, at both an operational level and as an investment, is detailed in the main body of the annual report. The groups value-added statement reflects the significant value generated by the company during the year, partially as a result of a rise in production but mostly on the back of increased metals prices. It also indicates the value disbursed by the company, to employees, to shareholders and providers of capital, to suppliers, to the state (in the form of taxes) and to communities by way of corporate social investment.
In FY2007, R2.9 billion was allocated towards capital expenditure both to sustain and to grow its operations (FY2006: R2.2 billion). Over the next five years (FY2008 to FY2012), the group will spend some R25 billion on growth projects, new shafts, infrastructure and technological developments, making it one of the most significant investors in the mining industry in southern Africa.
Implats is also cognisant of the fact that, through its employment practices and procurement activities, the company can effect change and, in so doing, benefit those who were previously disadvantaged and members of the communities in which it operates.
In terms of BEE ownership of the group, Implats has established its credentials in four ways:
|Net cost of products and services||14,569.7||2,511.3||(480.2)|
|Value added by operations||16,911.8||15,030.4||12.5|
|Income from investments and interest||1,030.9||310.7||231.8|
|Total value added||17,942.7||15,341.1||17.0|
|Applied as follows to:|
|Employees as salaries, wages and fringe benefits||4,093.8||3,163.3||29.4|
|The state as direct taxes||3,894.7||2,614.5||49.0|
|Providers of capital||3,264.6||5,568.5||41.4|
|Total value distributed||12,956.5||12,198.1||6.2|
|(Distributed from)/re-invested in the group||4,986.2||3,143.0||58.6|
In addition, in late 2004, Implats sold its entire 27.1% shareholding in both Western Platinum Limited and Eastern Platinum Limited to facilitate the creation of a major BEE platinum company, Incwala Resources.
Implats has developed a procurement policy to assist in identifying accredited HDSA/BEE suppliers, to encourage their development and to ensure that they enjoy preferential status. A steady increase in procurement with these suppliers has been actively facilitated.
In FY2007, discretionary procurement at the groups South African operations amounted to R5.44 billion, or 79% of total procurement. Discretionary procurement is defined as total procurement less procurement with public sector vendors (rates, taxes), utility service providers (electricity), academic institutions and pass-through payments (medical aid contributions, sponsorships and sponsorship vendors). In total, 38% of discretionary procurement was spent with vendors that had an HDSA/BEE ownership of more than 25% (FY2006: 27%) and 47% with vendors with HDSA/BEE ownership of greater than 5% (FY2006: 34%).
Local procurement, that is, within the province of operation, was 56% of discretionary procurement (FY2006: 47%). The number of HDSA/BEE vendors (vendors with HDSA/BEE ownership of more than 25%) with which Implats does business rose to 649 from 525 in FY2006.
For the group as a whole, the most significant increase in procurement was recorded in the area of capital goods, where the percentage of HDSA/BEE discretionary procurement (vendors with more than 25% HDSA/BEE ownership) rose from 8% in FY2006 to 13% in FY2007. The highest level of procurement overall was in the services area (14%) for vendors with more than 25% HDSA/BEE ownership.
Platinum is supplied in the form of bars to jewellery manufacturers and as a powder to automotive manufacturers.
A significant portion of the powder, 340,000oz in FY2007 (FY2006: 190,000oz) is supplied to a plant based in South Africa for use in auto catalysts which are then exported.
Currently, the group supplies about 20,000oz of platinum to the local jewellery industry. Implats remains in discussions with government, other suppliers, Mintek and other parties to develop an optimal beneficiation strategy for the country.
Implats’ ESOP was implemented in July 2006, when Impala and Marula made a contribution of R2.6 billion to the Morokotso Trust to finance the acquisition of 16.4 million (after the 8:1 share split) Implats shares (3% of the companys equity). All South African employees in Paterson Bands A to C will benefit from the appreciation in the value of these shares over a period of 10 years. Some 28,000 employees were eligible and of these, close to 27,000 are HDSAs. After five years, employees will have the option of selling 40% of the shares and any net proceeds (after capital contribution repayments to Implats and tax) will be paid to the qualifying eligible employees. The remaining 60% of the shares will be sold on the same basis after 10 years. The ESOP is significant in that it provides lower level employees with a tangible stake in the business. The estimated growth in value since its implementation is approximately R1 billion.