Working with our communities

Introduction

Harmony’s recognition of its role as part of the communities in which it operates and from which it draws its employees ensures the company’s commitment to the sustainable socio-economic development and wellbeing of these communities. As mining operations have a limited lifespan, the company’s strategic objective is to be relevant to mining and labour-sending communities by effectively contributing to community development that is sustainable long after mining operations have ceased.

Harmony’s corporate social responsibility (CSR) policy (PDF - 34KB) for the South African operations recognises the need for the socio-economic development of South Africa and of the broader communities in which it operates, as well as its labour-sending communities. This policy includes local economic development (LED) initiatives executed in terms of the Mining Charter, MPRDA regulations and the Codes of Good Practice for the Minerals and Mining Industry. Both CSR and LED programmes are implemented in terms of Harmony’s strategic intent on community development, the foundation of which is the need to be relevant to the communities contiguous to its operations as well as to the communities from which the company draws the majority of its employees – Lesotho, the Eastern Cape Province in South Africa, Mozambique and Swaziland.

The section of Harmony’s socio-economic development contribution in South Africa that goes beyond mining and labour-sending communities focuses on health promotion, particularly the management and prevention of HIV & AIDS, and includes clinical trials for the HIV vaccine; the development and promotion of mathematics and science, including promoting the Mathematics and Science Olympiads; and enterprise development.

Harmony’s socio-economic development programmes at PNG in FY10, initiated for the benefit of the communities in which Harmony operates, were aimed at addressing health, education, agriculture and infrastructure priorities.

In line with the company’s CSR policy, Harmony budgets 1% of its annual net profit after tax for CSR programmes. LED is budgeted as part of each operation’s strategic plan as per its mining right in terms of the Mining Charter and the Social and Labour Plans (SLPs).

Harmony’s affirmative procurement programmes are well advanced and great emphasis is placed on promoting business with HDSAs, women and local communities. Harmony’s approach and progress is dealt with in the Economic performance and Governance section of this report.

Information on the housing and living conditions of employees may be found in the Harmony as an employer section.

Harmony’s objective of developing and promoting sound and responsive internal and external relationships is dealt with throughout this report.

South Africa

Implementing CSR and LED

One of Harmony’s key priorities is the identification and implementation of sustainable local economic development initiatives, such as enterprise and community skills development, both in line with the company’s business philosophy, and in compliance with its social licence to mine commitments and good corporate citizenship.

In South Africa, SLPs have been developed for each of Harmony’s mining rights in line with the requirements of the Mining Charter. LED programmes are undertaken by the company as part of the requirements of the various SLPs for the benefit of Harmony’s mining and labour-sending communities.

While Harmony endeavours to meet these obligations, the company also remains committed to developing and applying CSR and LED strategies that form part of its role as a responsible corporate citizen.

Harmony undertakes CSR/LED in four key areas – education; socio-economic development; sports, arts and culture; and broad-based black economic empowerment (BBBEE) support – in its mining and labour-sending communities. CSR further encompasses broader community development and includes national socio-economic development programmes such as mathematics and science development.

Local economic development

Each of Harmony’s operations forms part of a defined mining right. Each mining right is attached to an SLP that has been developed in partnership with local communities, with local and district municipalities and with the DMR. The DMR approves each SLP as part of the process to grant a mining right. The LED section of each SLP reflects the key socio-economic development priorities of mining and labour-sending community municipalities, as well as of the SADC countries (Lesotho, Mozambique and Swaziland) from which Harmony sources its employees.

Therefore, in FY10, Harmony’s LED priorities reflected the SLPs as per the relevant municipalities’ Integrated Development Plans and the economic development priorities of the major labour-sending areas.The programmes supported the following:

• developing educational infrastructure;
• providing educational support through bursaries and internships;
• developing LED infrastructure;
• providing LED support through business development; and
• creating sustainable livelihoods through agriculture.

Harmony’s LED priorities are stakeholder-driven through a stakeholder engagement process with the appropriate municipalities, communities, the DMR, NGOs and the governments of the labour-sending countries of Lesotho, Mozambique and Swaziland.

During FY10 Harmony spent a total of R58.8 million (FY09: R10.7 million) on LED projects, some of which were:

• Harmony Community Bursary Programme to improve the level of education in mining communities, and to promote specific skills in engineering, technology, mining, geology, finance and metallurgy for sustainable local economic development. In FY10, two male HDSA students from Soweto, Johannesburg were awarded bursaries to a total of R189 000.
• An internship programme that provides industry-related practical skills for students requiring industry experience. A total of 15 HDSA (nine women and six men) interns were recruited in FY10 from the local mining communities of Govan Mbeki municipality; Johannesburg, Soweto; Ratlou municipality and Merafong municipality in the following disciplines: finance, geology, environment, human resources and engineering. Four women (three from Doornkop and one from Evander) who were former interns are now permanently employed at Harmony.
• Lesotho Education Infrastructure constructed the St Bernard Primary School in Khanyane Village, completing it in March 2010. Lesotho is Harmony’s largest source of labour. In addition, Harmony also renovated the office of the community chief and connected an electricity supply to the office. The company also assisted with finances to complete the Orange River Secondary School in the Mokhotlong Mountains as a lack of resources prevented the community itself from completing the projects.
• The Mozambique Agricultural Farm Training Centre and Abattoir Project, in partnership with the Joaquim Chissano Foundation, provides practical training for agricultural students at tertiary institutions as well as to farmers in the community. The first phase of the project involves refurbishing the Marracuene abattoir approximately 28km from Maputo, training in meat processing and selling of cattle, all for the local community’s income generation. The rehabilitation of the training centre and office block is almost complete. Phase two of the project will entail a feasibility study for the development of a vegetable farm. A total of R2.2 million was spent on this project in FY10 and it is estimated that approximately 500 students as well as the local community will benefit from this project.
• Qedusizi, an SMME development for the Evander operation is located in Leslie. Harmony supported a toilet paper manufacturing company which is owned by four HDSA women by purchasing equipment and facilitating a capacity building programme, which included assisting them through the South African Bureau of Standards (SABS) approval process. This SMME’s toilet paper is now SABS approved and Harmony is a registered vendor. The women have since employed three other people from the community. Harmony is in the process of finalising a procurement process so as to be able to order from this SMME.
• Harmony Sports Academy develops and promotes rugby and soccer in the Free State province, enabling players to participate at provincial and national team level. A total of 76 students were enrolled on this programme in FY10. The Harmony Jewellery School provides education and skills in jewellery design and manufacturing through a three-year diploma at the Central University of Technology. In FY10, 47 (FY09: 39) students were enrolled on this jewellery programme. In FY10, Harmony contributed R4.5 million (FY09: R5.4 million) to both the Harmony Sports Academy and the Harmony Jewellery School.

Corporate social responsibility

Harmony’s CSR priorities during FY10 were aimed at implementing programmes in mathematics, science, engineering and technology development. In addition, Harmony ensured that its CSR programme is relevant to the key social issues faced by its communities. These include HIV & AIDS education, research and vaccine development; addressing key South African socio-economic developmental issues such as enterprise development, done in partnerships with SIFE South Africa and SIFE Swaziland; and contributing to educational infrastructure and support programmes in the company’s labour-sending communities.

CSR programmes are identified through NGO stakeholder engagement and partnerships with the Chamber of Mines’ Community Development Forum, relevant NGOs with specific expertise aligned with Harmony’s CSR policy, communities/beneficiaries, government departments, relevant municipalities, education institutions such as schools and universities, and the governments of Lesotho, Mozambique and Swaziland.

Harmony chooses to be represented on the boards of the NGO that implement the company’s CSR programmes so that it may provide strategic direction and support. New programmes, valued at above R250 000 are approved by the CSR committee which reports on a quarterly basis to the Sustainable Development Committee and the Harmony board. Each NGO also submits a quarterly progress report of the Harmony CSR programme and formal agreements are signed to guide relationships and responsibilities. All CSR programmes are run by specialised NGOs that focus on specific areas related to Harmony’s CSR policy and strategic intent on community development and, in this way, Harmony ensures that appropriate and dedicated resources are allocated to projects.

During FY10 Harmony spent some R23.1 million (FY09: R16.9 million) on CSR projects. The following were Harmony’s key CSR projects during the year:

• South African Agency for Science & Technology Advancement (SAASTA) which promotes public awareness, appreciation of and engagement with science, engineering and technology (SET) in South Africa. The partnership between SAASTA and Harmony runs the annual South African Science Olympiad and promotes the development of SET in Harmony’s mining communities. A total of 18 schools in Harmony’s mining communities have been targeted to benefit from the SET developmental programmes. The objectives of the Science Olympiad include identifying and nurturing talent in SET, encouraging grade 10 to 12 learners to study science at school and to pursue careers in scientific fields, enhancing the creativity of learners with potential in SET, developing broad life skills for learners to cope in a demanding academic environment, and honouring excellence in science. The cost of the programme is R7.5 million over a three-year period beginning in FY10, during which Harmony contributed R5 million to SAASTA.
• Minerals Education Trust Fund (METF), a membership of 31 mining companies in South Africa whose objective is to promote and support tertiary education to meet the skills needs of the South African mining industry. Harmony contributed R1.2 million in FY10 (FY09: R1.3 million).
• South African Mathematics Foundation (SAMF), which oversees mathematics teacher training programmes and the South African Mathematics Olympiad across all schools in South Africa, as well as mathematics development targeting learners and teachers in Harmony’s mining communities. In FY10, 48 369 learners (FY09: 60 418) participated in the Olympiad and Harmony contributed R2.0 million (FY09: R2.5 million) to this project.
• Students in Free Enterprise (SIFE) South Africa, which empowers tertiary institution students to assist others in creating economic opportunities through enterprise development programmes, covers 27 institutions of higher learning with a team membership of 1 700. Harmony contributed over R2 million in its fifth year of involvement with SIFE South Africa (FY09: R2 million). In FY10, SIFE Swaziland had been a beneficiary of Harmony for three years.
• AuTEK Biomed, which is engaged in research into new medical applications for gold. Harmony contributed R5.2 million to AuTEK in FY10 (FY09: R2.5 million). The primary AuTEK Biomed focus area is HIV research (HIV-1 programme) into the design, discovery and development of novel gold-based compounds to inhibit HIV-1 replication. The second area is the cancer research programme which includes the chemical synthesis of potential drug candidates and their pharmacological evaluation. The third area is the malaria programme. These programmes are carried out in collaboration with various universities in South Africa.

PNG

In PNG, Harmony works in long-term partnerships with government and established NGOs to develop non-mine related income-generating activities for the communities in which it operates, as well as to mitigate mine impacts on the communities along the Watut River. This is with the objective of benefiting these communities in a sustainable manner.

In FY10, the primary focus was on health, education, agriculture and infrastructure.

Health

The provision of sanitation and clean water facilities was the main health focus and Memorandums of Understanding (MOUs) have been signed with two community development agencies active in the Morobe Province for the implementation of the programme. Feasibility studies have been completed for 15 facilities in the villages along the Watut River that have been affected by the increased levels of sediment from the Hidden Valley mine. The facilities typically include latrines, showers and clean water supplies as well as a health and sanitation training programme in each village.

One facility has been completed at Golden Pine, two facilities are near completion at Manki 1 and Manki 2 (all in the Upper Watut region), while the installation process has begun on three other amenities at Uruf, Tsilitsili and Mafranazo in the Lower Watut region. The total cost to date is PGK510 046 (US$192 999) and a further 15 to 20 installations are to be undertaken in FY11.

Other health programmes planned for FY11 involve the training of village-based and Aid Post health workers; support for the government’s mother and childcare, HIV & AIDS, TB and malaria programmes; and infrastructure support through the construction and maintenance of Aid Posts in co-operation with government and various NGOs.

Education

A school fee subsidy programme has been implemented for students from the Watut River community. A subsidy of approximately 50% is paid directly to the beneficiary student’s school for school fees and education improvement. A total of 586 students from the Watut River villages benefited from this programme during the year at a cost of PGK203 120 (US$76 860). An additional 78 students from the Wafi area were provided with educational support in FY10 at a cost of approximately PGK42 616 (US$16 126). Six teachers from the Zindaga (near the Wafi project) and Nauti (Hidden Valley landowner village) schools were supported in a six-week teacher training programme. A school at Zindaga was also upgraded at a cost of about PGK35 000 (US$13 244) during the year (PGK78 000 (US$29 515) over two years). Another programme, involving teacher training, the supply of teaching resources and the construction of school classrooms and teachers’ houses in the Wau and Bulolo districts, will be implemented in FY11 in consultation with provincial and district education authorities.

Harmony sponsored the training of alluvial miners from the Upper Watut region at the Small Scale Mining School at Wau to encourage safer and environmentally responsible mining methods by avoiding the use of mercury, and assisted miners to increase their income. The basic course covers a wide range of topics including mining history, mining and affiliated laws, geology, mining and processing, mercury, occupational health and safety, HIV & AIDS, environmental issues and small-scale mining as a business. During FY10, 32 men and 25 women were trained at a cost of PGK12 540 (US$4 745).

Agriculture

MOUs have been signed with Mainland Holdings, a large PNG conglomerate involved in coffee and vanilla processing and marketing; Bris Kanda, a New Zealand aid-funded NGO; the Morobe Fisheries Management Authority and the National Agricultural Research Institute (NARI) for partnership in agriculture.

Mainland Holdings began a coffee farmer training and extension programme in the Wau Upper Watut region in July 2010, targeting approximately 100 coffee farmers, both landowners and non-landowners, from the mine’s surrounding villages. Coffee bean pulpers were also provided to the farmers. The total cost of the initial six-month programme was PGK100 000 (US$37 840). The coffee production programme will be further developed over the next few years.

Bris Kanda has been promoting cocoa production in the Huon District and will begin a training and extension service for cocoa farmers in the Lower Watut region partly funded by Harmony. The total cost of the initial six-month programme is approximately PGK100 000 (US$37 840).

The Morobe Fisheries Management Authority has been conducting training and awareness programmes on fish farming in the Lower Watut region in conjunction with the Lutheran Development Service. A programme in which over 100 fish farmers will benefit from training in the Middle Watut region is due to begin. The programme will significantly boost protein availability in the area at a cost of approximately PGK30 000 (US$11 352). This amount will increase significantly as fish ponds and hatcheries are developed in the years to come..

A preliminary agreement has been reached with the government’s Small Business Development Corporation (SBDC) to provide business management training for the coffee, vanilla, cocoa and fish farmers, both mine landowners and non-landowners, who are part of PNG’s sustainable community development programme. In FY11, this programme will be integrated with the business development programmes currently being pursued by the Hidden Valley landowner company, NKW Holdings Limited.

Another agreement has also been made with NARI to provide technical input to the various agricultural income generating programmes being implemented within a budget of PGK50 000 (US$18 920).

Infrastructure

Hidden Valley’s infrastructure programme focuses on repairs and upgrades to roads, bridges, schools and health facilities. To date, roads and the bridge at Nauti (a landowner village) and Leklu have been upgraded, and a suspension bridge is planned for Sam Sam in the Middle Watut region. School classrooms, teachers’ houses and Aid Posts will remain the main focus of infrastructure in FY11. The expenditure on this project to date has been approximately PGK400 000 (US$151 358), excluding the PGK1.5 million (US$567 594) for Aid Posts, classrooms and community halls currently being built in the three landowner villages of Nauti, Kuembu and Winima. The budget for infrastructure development for FY11 is expected to exceed PGK1 million (US$378 396).