Safety

SAFETY STRATEGY – SOUTH AFRICA AND Papua New Guinea

We are committed to our goal of zero harm – to achieve this goal, continuous improvement in our safety performance is required. At Harmony we have a co-operative approach to safety to ensure that the necessary infrastructure and systems are in place; from safety systems and planning, to communication and training.

While management holds legal responsibility for safety, in reality it is up to both management and employees to take joint responsibility for their actions and to stop work when they believe that a workplace is unsafe, or prevent others from acting in an unsafe manner. Continual reinforcement of safe behaviour in the workplace is overseen by line managers and supervisors. Operations have introduced site specific safe behaviour initiatives as well as behaviour re-enforcement programmes.

Formal safety reviews are conducted monthly at the South African operations by the senior management team, and all major safety risks highlighted are assessed. The operation provides information on controls introduced and action plans to address the risks identified.

Safety performances at the Papua New Guinea operations are monitored by Harmony’s south east Asian team. Safety managers at the Papua New Guinea operations report through the appropriate channels, including email notifications and formal monthly reports, to Harmony’s executive committee, which in turn reports to the technical committee and the technical committee reports to the board. Safety is a standard item on the agenda at the weekly executive committee meetings, while reports on safety and health are submitted to the technical committee for reporting to the board on a quarterly basis. The strategy is guided by Harmony’s health and safety policy.

SAFETY PERFORMANCE

Regrettably there were 22 fatalities during the year at our South African operations (FY13: 9), while we recorded zero fatalities in Papua New Guinea (FY13: 0). Tragically, a fire incident at our Doornkop mine in February 2014 resulted in nine fatalities. We again extend our condolences to the families, friends and colleagues of employees who lost their lives in FY14, and reiterate our commitment to our goal of zero fatalities.

THE DOORNKOP ACCIDENT

On 4 February 2014, an underground fire broke out at the Doornkop mine in a stope adjacent to the 192 level haulage, trapping 17 Harmony employees underground. Rescue teams were immediately dispatched underground, but access to the affected area was hampered by smoke and a subsequent fall of ground.

Working around the clock, rescuers managed to reach eight employees located in an underground refuge bay, bringing them to the surface unharmed. These eight employees were kept under medical observation for the night as a precautionary measure. On 6 February, rescue workers located the bodies of another eight employees who had been unaccounted for; and on 7 February they recovered the body of the ninth mineworker, bringing the total number of deceased employees to nine.

Operations at Doornkop were stopped by the company on 4 February 2014 – and subsequently in terms of the Mine Health and Safety Act (MHSA), section 54 notices were issued by the Department of Mineral Resources.

We again wish to extend our gratitude to everyone for their support, in particular the then Minister of Mineral Resources, Susan Shabangu; David Msiza, the Chief Inspector of Mines; Mike Teke, President of the Chamber of Mines; Piet Mathosa, Deputy President of the National Union of Mineworkers; Patrice Motsepe, Chairman of Harmony; and Graham Briggs, chief executive officer of Harmony who met at Harmony’s Doornkop mine on 6 February 2014 to address family and media concerns.

The company also made contact with the families of all the departed men, providing counselling and other assistance (including financial assistance) to them during that difficult time.

A memorial service was held at Doornkop mine on Wednesday, 12 February 2014.

Following the Doornkop accident, Harmony embarked on dedicated safety shifts during which, general managers lead their senior teams underground, re-enforcing safety messages and procedures, particularly in respect of critical safety areas. Regular visible felt leadership visits are taking place on all operations whereby the focus is on safety coaching. The re-enforcing of safety messages, compliance to standards, working to procedures and the wearing of personal protection equipment (PPE) are some of the focus points.

An extensive investigation into the fire was conducted under the direction of the Department of Mineral Resources, in collaboration with Harmony management and the National Union of Mineworkers, and an external safety audit team was also voluntarily appointed by Harmony to assess and report on safety at all of the company’s South African operations.

The fatal injury frequency rate (FIFR) for South African operations increased to 0.28 per million hours worked (FY13: 0.11) mainly as a result of the Doornkop accident. The fatal injury frequency ratefor Papua New Guinea remained at 0.00 per million hours worked for the third consecutive year. The lost-time injury frequency rate for South African operations was 8.09 per million hours worked (FY13: 6.03), an increase of around 34%, again mainly as a result of the Doornkop accident. For the first time ever, the lost-time injury frequency rate in Papua New Guinea was 0. A total of 25 338 shifts were lost due to occupational injury in South Africa (FY13: 20 236), and 0 in Papua New Guinea (FY13: 12).

* All 2014 figures exclude Evander, post its sale, while figures for the past four years include this.

The second phase of our electronic safety management system (called PIVOT), has been rolled out at the first pilot site at Target 1. The roll out on the other operations will follow during the course of the new financial year.

Harmony employed an external company to conduct risk assessments, and to undertake baseline risk assessment revisions on seven mines and seven plants in South Africa during the course of the year. Our objective is to determine the major risks to which each operation is exposed, as well as to identify critical tasks in order to appropriately address the associated risks. The remaining two mines are scheduled to be assessed by the end of the 2014 calendar year.

The number of section 54/55 instructions increased to 204 (FY13: 78), mainly as a result of increased Department of Mineral Resources group audits. Except for the operations where fatalities occurred, no operation was completely stopped as a result of these audits. All other instructions were issued to rectify deviations from mine standards and affected specific sections of the relevant operation.

SOUTH AFRICA

The fall-of-ground injury frequency rate increased by 19% to 1.53 (FY13: 1.29). There were four fall-of-ground fatalities in FY14 (three gravity and one seismic related).

Several safety achievements were recorded during the year. The most significant achievements are as follows:

Papua New Guinea

The safety performance in Papua New Guinea was generally very pleasing. No serious injuries were recorded during the year, and the operation was fatality-free for the third consecutive year. However, there were several near-miss incidents during the year that are a major concern.

The mountainous terrain, high rainfall and quickly changing weather conditions in Papua New Guinea are major contributing risk factors to aviation (fixed and rotary wing), vehicle use and landslides or slope failures. During FY14, the audit standards (maintenance, operation and safety management) for aviation contractors were updated and implemented. Internal operating procedures were also reviewed and updated during the year. External aviation consultants were commissioned to assist with the review and update of aviation related procedures and standards. There were no injuries related to aviation operations during the year.

Vehicle use in Papua New Guinea remains a high risk activity both on site, which is within our control, and off-site, on public roads, and where contractors and employees come into contact with the public and their vehicles. In addition to natural environmental factors contributing to the risk of vehicle operations, driver skills and competency, the ability to adapt driver behaviour in accordance with changing conditions the enforcement of standards and procedures through supervision are contributing factors that exacerbate the exposure to risk in vehicle operations within our control.

There were several near-miss vehicle use incidents during the year and several resulted in minor injuries (dressing cases). Further work undertaken during the year to mitigate the risk of vehicle-related incidents included:

• Updating traffic management plans on each site
• Increased focus on driver fatigue management
• Reviewing road signage and conditions, and making improvements
• Improved escort control for delivery convoys
• Updating site operator licence requirements and retraining of all operators
• Increased number of communication and education sessions

Natural landslides are a relatively common occurrence in Papua New Guinea and together with potential man-made landslides (slope failures associated with open pit mining) pose a significant safety risk to our operations in Papua New Guinea. During the year a significant crack appeared in the eastern wall of the Hidden Valley Kaverio open pit. After internal and external geotechnical risk assessments and input from the Chief Inspector of Mines’ office, work plans to mitigate the risk were implemented to allow work to continue safely. The work plans included:

• Installation of additional prisms to measure movement
• Real-time measurement and alarms based on the survey prism readings
• Limiting and strict control of access to the area below the potential failure
• Ceasing work after heavy rainfall events and excessive movement over a short (check) period of time
• Cessation of nightshift work

All work sites in Papua New Guinea have specific geotechnical risk assessments and associated mitigation plans which are updated at least once a year.

SAFETY OBJECTIVES FOR 2015

Safety remains our key priority and, as always, our focus will continue to be on drastically reducing our fatal accident rate with our ultimate aim of zero. We know that safety must be approached holistically. We are aiming for a 20% year-on-year improvement in the total accident and injury frequency rate, as well as to implement an electronic safety management system at all our operations.

At a behavioural level, our targets include continuing the leadership behaviour improvement strategy and having a renewed focus on safety messaging. While safety is always driven by law and standards, we would like to see our safety systems be driven more by business systems, leading indicators and a continuous safety improvement model in order to affect a long-term shift in thinking and behaviour.