Stakeholder engagement

WHY THIS IS MATERIAL TO HARMONY

To be a profitable, responsible and sustainable business we must have mutually beneficial and sustainable relationships with our various stakeholders, and understand and meet their needs where possible.

OUR APPROACH TO STAKEHOLDER ENGAGEMENT

To Harmony, stakeholder engagement is not just about policies and guidelines. Effective stakeholder relations are about building lasting relationships, and making a meaningful contribution to the communities and countries in which we work.

The primary aim of communicating with stakeholders is, simply, to share and gather information and implement actions. This communication is guided by both our values and our strategic intent. The actions that follow stakeholder engagement should:

• Improve the lives of host communities/stakeholders through participation in appropriate programmes or projects
• Find solutions to the various challenges facing our society and host communities, including unemployment and lack of economic activity, by collaborating with stakeholders and forming meaningful partnerships
• Find a balance between the expectations of stakeholders and shareholders

Our communication with stakeholders is inclusive, so that this communication is:

• Meaningful, and addresses what is material to stakeholders
• Complete so that we understand the views, needs, perceptions and expectations linked to issues that stakeholders view as material
• Responsive so that we respond to material issues in a timeous, coherent and appropriate manner

Our communication approach, with both internal and external stakeholders, is integrated into the way we do business. Stakeholder relations are an integral part of our business, and shape our actions in addressing problems, determining strategy and allocating resources.

What we hope to achieve from this comes back to sustainability. If stakeholders can help us identify problems before they become impediments, then it is more likely that we can manage them and avert any crisis. If we can remain accountable to stakeholders we can maintain open and honest relationships to ensure information sharing, mutual learning and understanding. Effective stakeholder engagement helps us manage risks and enhances the company’s reputation, which is essential to the long-term sustainability of Harmony.

Every member of Harmony is involved in the function of stakeholder relations, as we are all involved in both internal and external relationship management. A government and other stakeholder relations team, reporting to the executive director, Mashego Mashego, guides the process of stakeholder engagement at Harmony. The social and ethics committee of the board oversees stakeholder relations and, in August 2013, approved our Stakeholder Engagement Policy, which had been signed by the chief executive officer. In addition to the work done by the social and ethics committee, the board monitors stakeholder relations.

OUR ENGAGEMENT IN 2014

Our engagement complies with relevant legislation and standards, including ISO 14001, OSHAS 18001 and ISO 9000. Using our stakeholder engagement policy and strategy we identify various stakeholders, both internal and external, across our business process. In conjunction with this, and in line with ISO 14001 implementation, a formal stakeholder analysis was conducted using experienced, external social consultants. From these two processes we derived the stakeholder map shown above.

We have detailed our communication with key stakeholders below, highlighting their expectations from communications with us, what benefits can be found in communicating effectively and information on our interaction with each stakeholder during the year. We strive for communication that is regular, consistent, relevant, transparent and open in all these engagements.

SHAREHOLDERS

Expectations:

Consistent returns and growth on investment directly and relative to peers, timely and transparent disclosure on objectives, performance and expectations.

Benefits of engagement:

Share price resilience, continued investment, creating an understanding of the company’s short and long term objectives, open, on-going conversation allows us to deal with any worries or queries before they become serious.

Discussions during the year:

Shareholders asked questions pertaining to clarity on grade improvements, production, safety, Harmony’s strategy, our ability to fund Golpu, and sustained cash flows.

EMPLOYEES AND CONTRACTORS

Expectations:

A safe, stimulating and rewarding work environment that offers opportunities for personal and career development.

Benefit of engagement:

Fewer strikes, high levels of productivity, low turnover.

Discussions during the year:

In our engagements with employees the following issues have been raised and discussed – wage negotiation demands, cultural alignment surveys and opportunities at other Harmony mines.

GOVERNMENT AND REGULATORS

Expectations:

Compliance to the letter and spirit of the law, cooperation and continual improvement.

Benefit of engagement:

Easier to maintain social license to operate.

Discussions during the year:

During engagement with the government and regulators this year they brought certain regulatory matters to our attention and encouraged our participation in joint initiatives, such as the Deputy President’s Framework Agreement for a Sustainable Mining Industry. We were also closely involved in influencing legislative changes such as the Mineral and Petroleum Resources Development Act, environmental management plans, National Environmental Management Act, etc.

INDUSTRY BODIES

Expectations:

Mutually beneficial relationships founded on integrity, constructive engagement and mutually beneficial outcomes.

Benefit of engagement:

Firm understanding of our industry and our place in it.

Discussions during the year:

During the year under review we worked closely with the Chamber of Mines regarding changes to the Mineral and Petroleum Resources Development Act, and partnered with them and other gold mining companies for a joint communication campaign during the wage negotiations.

SUPPLIERS OF GOODS AND SERVICES

Expectations:

Mutually beneficial relationships founded on equal opportunity and integrity.

Benefit of engagement:

Reliable supply chain, assuring the sale of our product. Sustaining solid working relations cements current partnerships and paves the way for future work.

Discussions during the year:

We have engaged with suppliers this year to ensure that their processes are in line with our human rights and environmental standards, our code of ethics and our empowerment requirements.

HOST COMMUNITIES, LABOUR-SENDING AREAS AND NEIGHBOURS

Expectations:

Mutually beneficial relationships founded on shared goals, constructive engagement and long-term commitment.

Benefit of engagement:

Stable community relations, increased opportunity to make a meaningful difference through appropriate corporate social investment projects.

Discussions during the year:

The most important issues raised by our communities and local government are those regarding their expectations, such as questions relating to our corporate social investment projects, social and labour plans, job creation, training and the like. In addition, issues/concerns raised regarding our mining activities were discussed and addressed. Major environmental changes or operational changes that will have an impact on the environment were also discussed with surrounding communities. We use all of this to inform our planning for the future.

MEDIA AND ANALYSTS

Expectations:

Mutually beneficial relationships founded on mutual respect, open conversation and constructive engagement.

Benefit of engagement:

Allows outsiders to understand Harmony’s story.

Discussions during the year:

Most questions related to results announcements, labour, wages, costs, grade, and environmental issues.

TRADE UNIONS

Expectations:

Mutually beneficial relationships founded on openness and integrity.

Benefit of engagement:

Constructive engagement to understand issues raised by both the employer and the unions and a willingness to resolve these issues.

Discussions during the year:

Our engagement with various unions during the year encompassed the topics of recognition of Association of Mineworkers and Construction Union, de-recognition of National Union of Mineworkers at Kusasalethu, and outstanding labour issues such as transport at some mines where employees were moved from mines that were closed to mines in build-up.

BANKS/FINANCIAL INSTITUTIONS

Expectations:

Debt investors expect to be rewarded with interest and that debt covenants are met.

Benefit of engagement:

Access to affordable funding, healthy relationships allowing on-going, open conversation that provides stability.

Discussions during the year:

The issues that dominate our discussions with banks/financial institutions tend to be sustained cash flows, possible corporate action, future strategy, management structures, as well as our future business plans, including the Golpu project.