PALABORA MINING COMPANY LIMITED

SUSTAINABLE DEVELOPMENT REPORT

2004Mine address

1 Copper Road Phalaborwa 1389

Postal address

65 Phalaborwa 1390 South Africa

Telephone (015) 780 2911

Telegrams “Palamine”

Facsimile (015) 781 0448

website: www.palabora.com

From the Chairman andManaging Director

2004 Summary

Introduction

Economic contribution Objective 1 -

Developing the

underground mine

Objective 2 - Growing

the vermiculite market

Social contributionObjective 3 -

Develop the potential of

employees and

communities

CommunitycontributionPalabora

Foundation

Safety and healthcontributionObjective 4 - Prevent

all injuries and

occupational illness

Objective 5- Minimise

the spread of HIV/Aids

EnvironmentalcontributionObjective 6 -

Minimising the

environmental impact

of Palabora’s operation

Objective 7 - Prepare

for the closure of the

open-pit.

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Contents

2004 continued to be a

difficult year in Palabora’s

history. The transition from an

open pit copper mine to an

underground copper mine

continues to pose many

challenges. However, through the

dedication and efforts of our

employees, suppliers and

contractors and the ongoing

support from the community in

which we operate, we have

made great strides during the

year. This, our fifth annual

sustainable development report,

summarising both the

achievements as well as the

disappointments we had in

overcoming the challenges we

have set ourselves. We would

like to highlight the following

from the report:

Our safety performance

continues to be world class for

an underground mine. During the

year we suffered 14 (17 in 2003)

lost time injuries, nine of which

occurred in the underground

mine. Given the difficult

circumstances, we would like to

thank the contribution of our

management team and every

employee to this achievement.

Our lost time injury frequency

rate (LTIFR) of 0.40 remained

similar to 2003 and we still

haven’t achieved our goal of zero

injuries and a number of

initiatives are in place to improve

our performance further.

During 2004, Palabora signed

an HIV/Aids workplace

agreement with our two largest

unions. This underpins our

continued commitment to

address this scourge in our

Over 300 learners have access to the internet"

The Company makes a significant contribution to economic

development and employment in the area

From the Chairman and Managing Director

society. On site, our group of

30 trained peer group educators

continues with their excellent

work including the promotion of

awareness through slogans,

posters, banners and events such

as the Khomanani programme on

World AIDS Day. The voluntary

counselling and testing

programme is part of our policy

and all employees have access to

a comprehensive medical support

programme via medical aid to

which the company contributes.

I am proud to announce that

we again retained our ISO 14001

environmental listing reflecting

the health of our Environmental

Management System. Both our

sulphur emissions and our water

consumption were the lowest yet.

Palabora was able to reduce the

raw water allocation from

45 Ml/day to 15 Ml/day during

2004 and the fresh water intake

by 17%. Palabora updated the

Closure Plan during the year to

reflect current national and

international trends in planning

for future closure of operations,

including social impacts at

closure. R5.4 million was

contributed to the Closure Fund

in 2004 bringing the market value

of the fund to R151.5 million.

Palabora submitted an application

to the Department of Water

Affairs and Forestry to licence all

water uses on the site according

to the requirements of the

National Water Act of 1998. This

included an Integrated Water

Management Plan for the site.

The Palabora Foundation has

worked closely in partnership

with the Limpopo Province

Department of Education to

upgrade educators’ qualifications

and improve teaching

methodologies, skills and

content knowledge. More recently

there has been a greater focus

on OBE and the revised National

Curriculum Statement.

The Foundation assists the

Department of Education with

school support visits, the

monitoring and assessment of

common exams and continuous

assessment. The Phalaborwa

education Grade 12 results for the

Namakgale and Lulekani circuit

have improved significantly since

1999 and were at an all time high

of 85.6% in 2004.

Palabora (together with two

other local industries) continue to

support the Business Linkage

Centre (BLC) programme, which

aims to provide working

opportunities for local black

entrepreneurs to supply goods

and services. There are

258 businesses registered on the

Palabora Foundation’s Business

Advice Centre database and the

procurement spend for Palabora

with approximately 55 BEE

companies was R162 million out

of a total spend of R478.6 million

(34%) during the period January

to October.

In June 2004 two fully

equipped community libraries

were officially handed over to the

Ba-Phalaborwa Municipality with

a cheque for R1,2 million for the

operating costs of the libraries for

a two-year period after handover.

To date, 23 learners that have

attended our Foundation

supported PROTEC/Master Maths

courses have been accepted into

the bridging year at the University

of Pretoria. One of the PROTEC

students won a gold medal at the

Eskom National Science

Exposition. The Grade 12 school

leaving results for our PROTEC

students were at an all time high

with a 100% pass rate and

95.4% university exemption.

World market demand for

vermiculite is expected to

increase in most of the

commercially produced grades,

and specifically for the finer

grades following development of

end user applications in USA and

Asia. A new marketing strategy is

being developed to grow the

vermiculite business over the next

five years in collaboration with

Luzenac, a sister company in the

Rio Tinto stable, and a market

leader in the talc industry.

During 2004 production from

the underground mine steadily

increased from a six week rolling

average of as low as 17,600

tonnes per day early in the year

to 27,600 tonnes per day at the

close of the year. The record daily

production figure was 35,322

tonnes hoisted on the 17th of

August whilst the best month was

December during which 844,524

tonnes of ore was hoisted.

We wish again to record our

thanks to those leaders

representing community

stakeholders who again certified

that the community part of this

report is a true and fair reflection

of Palabora's socio-economic

initiatives in the period under

review.

We welcome your feedback

and our contact details in this

regard are on the back cover.

1

• Lost time injuries decreased to from 17 in 2003 to 14 in 2004

• Copper ore production increased to 27,600 tonnes per day at the close of the year

• Palabora, NUM and UASA signed the HIV/Aids workplace agreement on 21/04/2004

• 2 519 contractors and 250 Palabora employees attended generic safety induction

• The Palabora Closure plan and closure cost estimate was updated

• Fresh water intake (including rainfall) reduced from 16,966 Ml in 2003 to 14,473 Ml in 2004

• Water recycled through the various processes increased from 19,599 Ml in 2003 to 21,366 Ml

in 2004

• The sulphur dioxide ground level concentrations in the community reduced from 13ppb in

2003 to 5ppb in 2004

• The daily guideline limit of 48ppb for sulphuric dioxide was only exceeded four times in 2004

compared to the 15 times in 2003

• R162 million was spent on 55 BEE companies. She Rasebotsa and thecommunity fight against Aids

"

2004 in summary

2

Introduction

Palabora Mining Company (Palabora) commenced operations in 1964 and is a member of the worldwide Rio

Tinto Group. Palabora is located near the town of Phalaborwa in the Limpopo Province of the Republic of South

Africa, and shares a border with the world-famous Kruger National Park game reserve. The Company mines

and produces copper and by-products from a block-cave underground mine. Since the first anodes were cast

in 1966, in excess of four million tonnes of copper have been extracted.

Originally the copper mine started as an open pit operation but the pit reached the end of its life in 2003

and an underground mine was developed to extract the copper pipe underneath the original open pit.

Vermiculite occurs in a separate ore body in the same geological complex and is mined as an open pit

adjacent to the original copper pit. Palabora is a market leader in the production and sale of vermiculite.

One of the features of Palabora is the variety of by-products that are recovered in the copper recovery

process. Apart from phosphate, which is supplied to the neighbouring phosphate producer Foskor, the ore

contains magnetite, gold, silver, platinum, palladium and nickel. The smelting process also yields significant

quantities of sulphur dioxide, which is converted into sulphuric acid. Palabora supplies five different sizes of

copper rod principally to the local market.

Palabora has always believed that responsible mining can produce financial prosperity and enhance

opportunities for human development in a climate of environmental sustainability and ethical corporate

governance. The concept of sustainable development embraces this belief and Palabora values this concept as

a core business principle in the way we work.

We continually seek to understand, measure and maximise the contributions that Palabora operations and

products make towards sustainable development. By doing this, we will continue to improve our performance

and reputation and ensure continued access to capital, markets, physical resources and people.

We have set ourselves eight key objectives as part of our ongoing sustainable development programme.

These objectives have been agreed with a wide range of stakeholders and our fifth annual sustainable

development report reflects our performance in seven areas, while one of the economic objectives are covered

in the Annual Report.

Economic Objectives

• Develop the underground copper mine • Expand the production, market and sustainable use of vermiculite

• Optimise Palabora’s economic contribution to stakeholders (This objective is covered in the accompanying

annual financial report)

Social Commitments

• Develop the potential of employees and communities • Prevent all injuries and occupational illness

• Minimise the spread of HIV/Aids

Environmental Objectives

• Minimising the environmental impacts of Palabora’s operation • Prepare for closure in order to leave

behind a safe and environmentally acceptable site and an economically self-sustaining community

3

Our economiccontribution

The underground mine is mining

an area of 119,000 square metres,

containing a massive copper

bearing orebody and payable

reserves of 201 million tonnes.

During 2004 the underground

mine, also called the Palabora

cave, progressed from a cave

which produced large pieces of

rock that did not easily break up,

to a cave where the rock is

breaking up in smaller pieces.

The cave broke through to

the bottom of the open pit which

triggered failure of the northwest

wall of the pit. This presented

new challenges in the form of

timeous infrastructure relocation

and dilution of the ore.

Production was marked by huge

improvements that were due to

process improvement initiatives

and fragmentation improvement.

This continuing improvement in

fragmentation presents significant

production opportunities

beyond the initial design capacity

of 30,000 tonnes per day,

although this also comes with

challenges downstream

specifically with increased fines.

Production during 2004

During 2004 production from the

underground steadily increased

from a six week rolling average

of as low as 17,600 tonnes per

day early in the year to

27,600 tonnes per day at the close

of the year. The record daily

production figure was

35,322 tonnes hoisted on the

17th of August whilst the best

month was December during

which 844,524 tonnes of ore were

hoisted. The record weekly

production was 208,000 tonnes

(Week 38) for a daily average of

29,693 tonnes for the week.

The cave is fastly maturing

with sector 1 now at a Height of

Draw (HOD) of 57 metres

whilst sector 2 closed the year

at 71 metres and sector 3 at

48 metres for an overall average

HOD of 59 metres. This resulted

in the cave closing the year at a

yield of 319 tonnes per hang-up

for December against the

background of a year that opened

at 248 tonnes per hang-up in

January representing a 29%

improvement in fragmentation.

Key Issues for mine

production

The following key issues have

been identified for the successful

ramp-up in production by the

underground mine:

• Reduction of secondary

breaking fleet damages due to

unstable hang-ups.

• Installation of steel sets in all

draw points.

• Quick and timeous rehabilitation

of draw point brows, roadways

and crosscut infrastructure-

recovery of crosscut 11.

• Successful implementation of

dispatch.

• Low production fleet availability

• Dealing with dilution after

the introduction of fines from

the northwest pit wall failure.

• Adequate water handling

facilities - managing potential

influx of water during storms.

• Varying column heights over

the footprint- due to open pit

outline.

Opportunities to continue the

improvement in 2005

Palabora has also identified

opportunities to further improve

the production from the under-

ground mine, which include:

• Dispatch as a key source of

performance information for

feedback and optimisation of

processes.

• Improving fragmentation – less

secondary blasting required.

• The effectiveness of water.

cannons in bringing down and

stabilising hang-ups.

• Reduction of damages through

better stabilisation by the

increased water cannon fleet.

• Improve Load Haul Dumpers

(LHD) effectives.

• Continue to improve operator

skill levels.

• Improved ore resource

management through the

Objective 1 • Developing the

underground mine

Production was marked by huge improvements

4

#Ensuring that there are safe work procedures for all hazardous tasks

Production process

Vermiculite ore is mined from an

opencast mine after it has been

drilled and blasted. The ore is

loaded and transported by truck

to the vermiculite processing

plant where the ore is dried and

the vermiculite separated from

the waste. Dried ore is fed into

the processing plant through a

network of conveyor belts and

progressively screened into

different sizes before the

vermiculite is separated from the

host rock by winnowing.

After separation, the vermiculite

product is cleaned to remove

excessive fines and grit.

The product is dispatched in bulk

or in bags. Product parcels are

railed from the mine site to the

ports of Richards Bay and Durban

from where it is exported to the

United States, Europe, Asia,

Australia and the United

Kingdom.

Product safety and fibre

management

Palabora maintains a strict fibre

management programme to

ensure that no fibrous minerals

are mined and delivered to the

processing plant. All geotechnical

and mining personnel are trained

to recognise fibrous minerals.

Should any of these be observed,

the mining process is stopped

in that area and the planning

section informed immediately.

The material in the particular

mining block is then classified as

waste and discarded according to

the Palabora waste management

policy. All final product shipments

are also sampled and inspected

according to internationally

recognised methods for fibrous

minerals before they leave the

mine. Palabora vermiculite

undergoes stringent internal

testing to ensure that it is free

from any harmful materials.

Independent third party sampling

and testing of Palabora

vermiculite is also conducted on

a regular basis.

Vermiculite business overview

for 2005

World market demand for

vermiculite is expected to

increase in most of the

commercially produced grades,

and specifically for the finer

grades following development of

end user applications in USA and

Asia. This will allow Palabora to

market and sell surplus

production and maintain a strong

foothold as the world’s

vermiculite market leader, in an

intensifying competitive market.

International demand for medium

and fine grades continues to

exceed supply. Traditionally

Palabora sales have remained flat

and in line with production.

A new marketing strategy is being

developed to grow the

vermiculite business over the next

five years in collaboration with

Luzenac, a sister company in the

Rio Tinto stable, and a market

leader in the talc industry.

Emphasis will be placed on

matching production to demand

in the most profitable way and

growing market segments.

• Palabora's vermiculite continues

to retain a preferred supplier

status with high quality ‘fibre

free’ vermiculite.

• Profitability will be increased

by shifting the business focus

from a production to a market

driven company.

Key issues facing the

vermiculite market

Palabora has identified the

following key issues and risks

facing the growth of its

vermiculite market and is in the

process of developing plans to

counter these risks:

• The ability of South African

railways services, Spoornet,

acquisition of PC_BC

scheduling package and

interfacing with dispatch.

Background

Vermiculite is the geological name

given to a group of hydrated

laminar minerals, which are

aluminum-iron magnesium

silicates and have the appearance

of mica in its natural state.

Vermiculite is used in a wide

variety of applications, for

example as a growth medium for

plants, as an absorbent to contain

hazardous spills, to replace

asbestos in fireboards and to

make asbestos free brake shoes.

Vermiculite is chemically inert and

because of its nature, provides a

safe alternative to a number of

more hazardous materials

commonly used in industry.

At current consumption,

Palabora’s PP&V pit has proven

vermiculite ore reserves for at

least another 18 years and an

additional 20 years for VOD,

VODT and Copper Vermiculite

pits combined. Palabora has

recently developed a

vermiculite-mining model

for the PP&V ore body,

which can be utilised for

comprehensive short and long

term planning.

Objective 2 • Growing the

vermiculite market

5

$Providing appropriate health and safety training and personal protection equipment

to meet Palabora's

requirements, particularly if

there is an increase in demand

for vermiculite over the next

two to three years.

• Continued public perception

of vermiculite as a potential

carrier of fibres.

• The impact of the strengthening

of the South African rand

against the USA dollar and its

influence on turnover.

• Consolidated production of all

international producers will

exceed demand in the markets.

• Increasing competition from

new producers (e.g. Canada,

China) is also expected to

place pressure on existing

Palabora customers.

• Escalating shipping and logistics

service provider costs are also

expected to continue thereby

reducing margins.

Opportunities to grow

the market and reduce

production cost

Palabora has identified a number

of growth and cost reduction

opportunities and is in the process

of developing plans to realise these:

• Development of a value

proposition for vermiculite will

be key in retaining customers.

• Through Research and

Development (R&D) and

facilitation of vermiculite

applications focusing on

Palabora products as the

preferred raw material, all

attempts will be levelled to lock

in customers with long-term

agreements.

• The USA logistics chain will be

streamlined to reduce costs and

facilitate on-time delivery to

North American customers.

Our socialcontribution

Training and Employee

development

The skills development initiatives

at Palabora were extended during

2004 by the training and

appointment of internal skills

assessors to assist in the training

and skills development of

employees. All job competencies

were reviewed and aligned with

registered unit standards wherever

possible in order to align training

with national skills development

systems and objectives.

The continued training of

underground employees remained

a priority and the relevant

operations employees embarked

on learnership training which

would provide new skills in the

workplace as well as credit them

with the SAQA registered

qualifications.

A total of 1 607 employees

received training during the year

of which 1 223 or 76% were from

designated groups. Training was

prioritised according to business

need, and so recorded in the

workplace skills plan.

Employee Relations

The employee relations’ climate

remained calm throughout the

year 2004, however the number

of labour disputes referred to

Commission for Conciliation,

Mediation and Arbitration (CCMA)

and the Labour Court of South

Africa remained a cause for

concern. Nonetheless, the good

news is that the number of

referrals is decreasing.

In 2004 we again saw a

marked improvement in the

relationship between Palabora

and the National Union of

Mineworkers (NUM) in particular.

This was demonstrated by the

speedy resolution of wage

negotiations and other issues of

interest.

The year 2004 was one of the

challenging years in terms of

employee relations. In line with

the requirements of a smaller

underground mine and the

continued drive to cut operating

costs, 2004 saw two major

restructuring exercises that

resulted in a significant reduction

of contractors’ costs and the

reduction of employee numbers

by approximately 136 roles.

The initial restructuring was

met with little resistance by both

the unions however, the NUM

referred an unfair dismissal

dispute to the Labour Court in

respect of the retrenchments of

September 2004.

The year 2004 also marked

the end of term of office of the

2003/4 of both the NUM and

United Association of South Africa

Objective 3 • Develop the

potential of employees and

communities6

Priority number Priority description

1 Underground mining and shafts process. Underground mining

equipment.

2 Metallurgical process and minerals extraction.

3 Technical and engineering, including mobile equipment.

4 Safety and developmental training, including life skills.

5 Basic business skills and business improvement

In service learning and mentorship programmes continued throughout the year, with

33 students and 130 permanent employees benefiting from the training.

Programme Permanent Students/

employees Bursars

Engineering learnerships 19

Technician training 4 3

Engineers 4

Tertiary education study grants 11

Underground mining skills programmes 94

Supervisor learnership 28

(UASA) branch executive

committees and therefore the

2005/6 executive committees had

to be elected.

Employment Equity

Employment Equity (EE) remains

one of the notable challenges in

corporate South Africa. Since the

Employment Equity Act was

promulgated Palabora has set

itself EE objectives and targets.

EE plans are drawn to ensure that

a pathway and programme-of-

action exist to ensure that

Palabora achieves the objectives

of the EE Act. An EE committee

has been established with the

responsibility for the development,

implementation and monitoring

of the Employment Equity Plan.

The committee appointed a

consultative forum, known as

the Employment Equity Forum

(the Forum), in January 2000.

The Forum includes employee

representatives from both

designated and non-designated

groups across all occupational

categories and levels of the

workforce.

In September 2004, the

compulsory 2004/5 EE plan and

the 2004 EE annual report were

accordingly submitted to the

Department of Labour. The plans

and reports are central in meeting

the requirements of Employment

Equity Act.

The Company has adopted

the recruiting principle, where

possible, of employing 80%

of all new employees from

Historically Disadvantaged

South Africans (HDSA) and

20% white males. Such targets

and strategies are incorporated in

the EE plans. Achieving the

EE targets remains a challenge to

Palabora and many other

businesses in South Africa.

The Company integrated all

systems that impact on

employment equity, for example

the bursary/grant scheme,

apprentice training programme,

technician/engineer in training

programme, recruitment and

selection system.

The following table shows the total number of employees (including employees with disabilities) in occupational categories:

Occupational levels Male Female Disable

African Coloured Indian White African Coloured Indian White Total Male Female

Top Management 1 – 1 5 – – – – 7 – –

Senior Management 4 – – 9 1 – 1 2 17 – –

Professionally qualified and experienced

specialists and mid-management 7 2 – 34 – – – 6 49 – –

Skilled technical and academically qualified

workers, junior management, supervisors,

foremen and superintendents 244 6 4 358 20 1 – 49 682 – –

Semi-skilled and discretionary

decision making 905 2 – 19 17 1 – 3 947 – –

Total permanent 1161 10 5 425 38 2 1 60 1702 – –

Non-permanent employees – –

Total 1161 10 5 425 38 2 1 60 1702 – –

7

Training underground employees remains a priority

Communitycontribution

Palabora Mining Company Limited

(Palabora) and the Palabora

Foundation (Foundation) have a

long-term commitment to develop

and maintain sound relations with

neighbouring communities based

on trust, mutual respect and

active partnerships.

To achieve this core business

objective, Palabora will:

• Ensure that all Palabora and

Foundation employees have a

common understanding of the

policy.

• Seek adherence to this policy

by the contractors and suppliers

providing a service to Palabora

and the Foundation.

• Utilise the local government

Integrated Development Plan as

a cultural and socio-economic

database of the communities

within which Palabora and the

Foundation operates.

• Establish an ongoing

consultation process that

promotes consensus in the

community towards a

Palabora Foundation

We, the undersigned, representing community stakeholders as specified below, certify that the following report is a true

and fair reflection of Palabora’s communities socio-economic initiatives in the period under review.

Name Organisation Signature

MM Mukhabele Ba-Phalaborwa Municipality Mayor

I Nyathi Ba-Phalaborwa Municipality Municipal Manager

NA Mudunungu Ba- Phalaborwa Municipality Director: Community Services

I Masekwameng National African Federated Chamber of Commerce

P Cornelius Phalaborwa Chamber of Business

RL Maake Limpopo Province Department of Education

G Mhlongo Greater Phalaborwa Principals’ Association

Kgoshi: A Malatji Makhushane Traditional Authority

Kgoshi: MC Shai Mashishimale Traditional Authority

Kgoshi: J Machimana Majeje Traditional Authority

Kgoshi: A Malatji Maseke Traditional Authority

Kgoshi: NC Mathevula Makhuva Traditional Authority

Kgoshi: F Malatji Selwane Traditional Authority

A shared vision towards community self empowerment

8

#Evaluating and initiating appropriate community programmes

Foundation purpose

“Development at the Palabora

Foundation means meeting the

needs of the present without

compromising the ability of future

generations to meet their own

needs.”

Purpose

To assist local communities to be

self-reliant.

We achieve this by: Working in

partnership with communities

within a 50km radius of

Phalaborwa in the fields of:

• Education

• Skills Development Training

• Business Development

• Tourism Promotion Initiatives

• Community Health (HIV/Aids)

• Small Scale Community

Projects

So that

The Foundation facilitates the

establishment of a pool of

skilled people in local

communities who can contribute

to the further development of

communities.

OverviewIn 2004 South Africa celebrated

ten years of democracy and

witnessed its longest economic

boom since the forties. There has

been continuous economic

growth for the past ten years,

from 2.5% in 1994 to 5.9% in

2004. Two thousand and four was

a milestone for the Foundation as

it was able to consolidate and

implement programmes in

partnership with government and

communities in accordance with

national government strategies.

Together we are proud to serve

an organisation that has the

strength of purpose to make a

measurable difference to the

quality of lives in surrounding

communities.

Palabora has been involved

in developing communities

surrounding the mine for the past

37 years. The Company has

always been a leader in South

Africa in ensuring that its

employees and families benefit

from excellent employment

conditions. The Palabora

Foundation was established in

1986 and it has been operating

in local communities for the

past 18 years. The Foundation is

the sustainable development

arm of Palabora and the

corporate social investment

programmes are directly

aligned with the core business

of the mine.

The Foundation produces a

Five Year Communities Plan and

Budget which is an integral part

of the plan and budget of

Palabora and it is reviewed

annually.

Unlike many other South

African Foundations and Trusts,

the Foundation is not a grant-

making organisation and in

partnership with government and

other stakeholders, it manages

and implements a number of

programmes in communities from

its two education resource centres

in Namakgale and Lulekani which

are adjacent to the town of

Phalaborwa.

The Foundation has 45 full-

time and 26 part-time staff of

which approximately half of the

staff are involved in community

relations programmes. This number

is dependent on the number of

Foundation programmes at a given

time and is under constant review.

The Ba-Phalaborwa community is

situated in the Limpopo Province

of South Africa.

Local communities are either:

• Very disadvantaged in the

rural areas;

• Industrialised, moving

towards mainstream society;

• Industrialised, part of

mainstream society.

9

common vision and actions

aimed at continuous

improvement.

• Evaluate the effectiveness

of current programmes and

initiate appropriate new

programmes.

• Develop the necessary skills of

Palabora and Foundation

employees to deal effectively

with communities relations.

• Integrate the communities

policy into the company’s long-

term objectives and corporate

plans and establish quantifiable

and appropriate reporting

arrangements.

• Strive towards best practice,

at all times, through

information exchange with

other group companies and

authoritative sources.

Palabora’s policy on human

rights is based on its support for

the United Nations Declaration

of Human Rights, and enshrined

in the South African Constitution.

The Company’s approach to

local communities is set out

in its Communities Policy

and follows the Rio Tinto

Policy as stated in the “Way We

Work”.

K Marshall

Managing Director

Palabora Mining Company

SM Din

Chairman: Board of Trustees

Palabora Foundation

Palabora Foundationlegal statusThe Palabora Foundation is an

independent Educational Trust

registered with the Master of the

High Court (registration no. IT

1035/87). The Foundation is a

non profit organisation in terms

of the Non Profit Organisation

Amendment Act of 2000

(registration no. NPO 003-920)

and is also a registered and

accredited Provider for the National

Skills Fund (NSF Provider ID: 708)

with the Department of Labour.

Corporate governanceand managementBoard of Trustees

The Board of Trustees is the

highest decision-making body and

while retaining the overall

accountability, has delegated to

the Foundation Director the

authority to manage the operations

of the Foundation assisted by his

management team. The Foundation

Board of Trustees meets quarterly

to review the work of the

Foundation. In 2004 the Board of

Trustees comprised of four

executive trustees and three non-

executive trustees. The Board is

assisted by committees where

necessary to discharge their duties.

Chairman

SM Din

Executive Trustees

MG Demmer

DS Sadler *

MD Humphries **

S Langa ***

K Marshall

SM Din

AE China

Non-Executive Trustees

MRK Segabutla

MB Masete

ZW Ntuli

* DS Sadler resigned on 25 February

2004 to relocate to Australia.

** MD Humphries resigned on 30 April

2004 to pursue other career opportunities.

*** S Langa resigned on 30 June 2004 due

to ill health.

Mr K Marshall

(Managing Director) was

appointed as a Trustee on

23 February 2004,

Mr SM Din

(Chief Financial Officer) on

7 April 2004.

Ms AE China

(Manager: Financial Reporting

and Treasury) on 16 August

2004. The new trustees were

appointed to represent Palabora

on the Board of Trustees

following the resignation of

three executive trustees.

Mr MD Humphries acted as

Chairman of the Board of

Trustees as from 15 October 2003

to 31 March 2004 whilst

Mr S Langa was recuperating

from ill health. Mr SM Din was

elected as Chairman on 28 April

2004.

Trustees’ Executive Committee

(ExCo)

The Director reports to the

Executive Committee on a bi-

monthly basis and membership is

comprised of Executive Trustees.

Foundation Management

MG Demmer – Director

PM Mokgaphame – Operations

Manager

HS Hanke – Finance and

Administration Manager

The Director of the Foundation

also served as a Director of the

Phalaborwa Entrepreneurial

Support Centre (ESC) which is a

Section 21 company until

November 2004. The ESC has

been incorporated into the

Limpopo Business Support Agency.

Foundation Trustees’ Audit

Committee

The Board of Trustees’ Audit

Committee was established in

January 2003 and is an important

element in the Trustees’ system

of governance and control.

To enable the Director to meet

his responsibilities, the Board

sets standards and implements

systems of internal control

aimed at maintaining high

standards of corporate

governance. These controls

include the proper delegation of

responsibility within a clearly

defined framework, effective

accounting procedures and

adequate segregation of duties.

The Trustees’ Audit Committee

has adopted a formal written

audit charter. The Trustees’ Audit

Committee meets quarterly prior

to reporting to the Board of

Trustees at quarterly Board

meetings. The members of the

Trustees’ Audit Committee were:

AE China * – (Manager:

Financial Reporting and

Treasury – Palabora Mining

Company)

V Zimba – (Manager: Internal

Audit – Palabora Mining

Company)

BM Masete – (Non-Executive

Trustee)

* Ms C Dube (Manager: Management

Reporting – Palabora Mining

Company) replaced Ms AE China as

Chairman of the Trustees’ Audit

Committee when Ms AE China was

appointed as a Trustee to the Board.

Secretariat

K Thompson

Auditors

PricewaterhouseCoopers Inc.

Governance and Controls

The Foundation management

team continuously reviews all

Governance and Control

procedures. A number of

improvements were made to

operating procedures to ensure

that high standards of governance

were maintained. The annual

$Our key aim is to facilitate the development of neighbouring communities and empower them

10

audit for 2003 was conducted

by PricewaterhouseCoopers Inc.

and the audit report reflected

that there were good standards

of governance and control and

compliance to accounting

procedures.

Allan Gray Investment Fund

The Foundation investment

portfolio with Allan Gray Limited

continued to perform well with a

market value at the end of

December 2004 amounted to

R151 million. Allan Gray Limited

also advised the Foundation in

2004 to invest R15 million in

offshore portfolios.

Finance and Administration

The budget for 2004 including

income and donations was

R11,3 million and final forecast of

expenditure is R13,6 million.

The variance was mainly due to

additional expenditure incurred

with the handover of both

community libraries to the

Ba-Phalaborwa Municipality and

the granting of a two year

operating subsidy for the libraries

to local government.

Safety

A safety consultant works on a

part-time basis at the Foundation

to ensure that the Foundation

projects comply with the

Occupational, Health and Safety

Act (OHASA). Every Foundation

centre has a safety representative,

fire warden and a staff member

trained in first aid. Foundation

management and the safety

consultant conduct regular

inspections at Foundation projects

to ensure that high safety

standards are maintained. In 2004

a safety record system was

installed to record the total man

hours worked without any

injuries.

Strategic Objectives of the

Foundation

• To assist Palabora to meet the

requirements of government

legislation and policy.

• To assist government to

implement education and skills

training programmes in the

area, to improve the education

and skills base within the

surrounding community.

• To provide business linkages

and advice to emerging

businesses from formerly

disadvantaged communities.

• To facilitate in partnership with

the Ba-Phalaborwa Municipality

and other stakeholders selected

implementation of Local

Economic Development

projects from the Integrated

Development Plan.

• To minimise the impact of

HIV/Aids in the community.

• To facilitate tourism promotion

initiatives.

Details of attendance by the Trustees at board meetings during 2004 are set out below

Member 28 April 2004 4 August 2004 1 September 2004 24 November 2004

S Langa3 I

DS Sadler1 R

MD Humphries2 R

MG Demmer P P P P

MRK Segabutla P A P P

BM Masete P P P P

ZW Ntuli D

SM Din5 P P P P

K Marshall4 P P P P

AE China6

P P

1 Resigned 25 February 2004 2 Resigned 30 April 2004 3 Resigned 30 June 2004

4 Appointed 23 February 2004 5 Appointed 7 April 2004 6 Appointed 16 August 2004

A = Apologies P = Present I = Ill Health R = Resigned D = Deceased

Palabora Foundation budgeted expenditurefor 2004

%

41 Education programmes

25 Administration

12 Capital

11 Skills training

3 Bursaries

2 Business linkage centre

2 Community libraries

2 HIV/Aids

1 CDC

1 Retrenchments

11

• To move towards creating a

sustainable Foundation.

The fundamental principles that

are adhered to when

implementing projects are:

• Partnership

• Community participation

• Cost effectiveness

• Sustainability

PartnershipsFor many organisations

partnerships are emerging as the

most efficient way of becoming

involved in social development

projects. By accessing expertise

and sharing resources and skills,

partnerships can provide mutual

benefit whilst also giving projects

the critical mass and momentum

they require for success. Over the

years the Foundation has become

a partner with provincial and

local government, other local

companies, Non-Government

Organisations (NGOs) and

communities in their efforts to

improve the education and skills

base, fight the high rate of

unemployment in the region and

reduce the impact of HIV/Aids.

Palabora, Foskor Limited and

Sasol Nitro jointly fund the

Programme for Technological

Careers (PROTEC) and also the

Khomanani HIV/Aids Centre in

partnership with JOHAP/OXFAM,

the National Development Agency

and the Department of Health

and Welfare.

ConsultationIn order to ensure that the

principles of mutual respect,

active partnership and long-term

commitment exist between the

company and neighbouring

communities, consultation

remains key in deciding which

projects and programmes should

be implemented. Communities

relations programmes,

implemented through the

Palabora Foundation, reach out to

communities within a 50km radius

of the mine. At the request of

government and other non-

government organisations some

training programmes at times

have reached out further to other

communities at regional and

provincial level.

Each traditional authority area

has a Community Development

Committee (CDC) which

represents these communities in

consultation with the Foundation

at an annual forum. A number of

meetings have also been

conducted with individual CDCs

at the request of the Foundation

or the respective community.

Financial management training

was provided to CDCs in the

third quarter of 2004 to assist

communities to develop business

plans for projects that would be

presented to the Foundation.

Depending on the nature of

programmes the Foundation also

consults with provincial and local

government, civic associations,

tribal authorities and other non-

government organisations at

various levels.

Three formal meetings were

held in 2004 with the Community

Development Committees, local

government officials and ward

councillors at a Phalaborwa

Community Development Forum

meeting hosted by the

Foundation. The Palabora

Foundation Director, the two

Operating Managers and senior

Foundation staff attend these

meetings to plan projects,

determine priorities and update

the community on the

implementation of current and

past projects. Most community

projects and programmes have a

Board of Management or steering

committee comprising Foundation

staff, community members and

provincial and local government

representation. The local and

regional media are also used

to communicate achievements to

local communities. At the October

2004 meeting a number of new

projects were presented to the

Foundation for consideration for

support during 2005.

EducationOne of the legacies of apartheid

was poor education amongst the

majority of the citizens of the

country. This impedes the

development of technical

skills which a mine like Palabora

relies on. The value of quality

education is a prime ingredient to

providing access to employment,

economic prosperity, improved

quality of life and personal

fulfilment and growth.

The Foundation is addressing the

situation in partnership with

the Limpopo Province Department

of Education. The primary focus

of these partnership programmes

is to improve educator develop-

ment as well as educational

performance from pre-school to

high school. Interventions are

aimed at creating a pool of high

capability school leavers who

have the potential to pursue

scientific, technical and

accountancy careers at tertiary

institutions.

The Limpopo Province is one

of three of the poorest provinces

in the country and the major

focus of the Foundation’s

education initiatives is to upgrade

mathematics, science and english

education in the rural and semi-

rural schools. Some of the schools

are under resourced with learning

materials and school equipment,

some may lack electricity and

have high pupil teacher ratios.

This kind of learning environment

makes it difficult to implement

the new revised National

Curriculum Statement and to use

the Outcomes-Based Education

(OBE) methodology of teaching.

12

monitoring and assessment of

common exams and continuous

assessment. The Phalaborwa

education Grade 12 results for the

Namakgale and Lulekani circuits

have improved significantly since

1999 and were at an all time high

of 85.6% in 2004.

Outcomes Based Education –

Foundation Phase Training

(Grade R to 3)

In 2004 the Foundation and the

District Curriculum Advisors

conducted 28 workshops in the

Foundation School Phase for

1 347 educators and there were

47 mini school-based workshops

for 386 educators. There were

121 visits conducted to schools

and during those visits, 94 formal

lesson observations were

conducted and 27 demonstration

lessons by Foundation staff.

Foundation Educator Development

staff also attended a twelve-day

Limpopo Province “Train the

Trainer” workshop on the revised

National Curriculum Statement.

Outcomes Based Education –

Intermediate Phase Training

(Grade 4 to 6)

One hundred and five educators

from 38 schools received school

support visits during the year and

18 465 learners benefited from

this support. There were 76 visits

% G

rade

12

Pas

sR

ate

1997

1998

1999

2000

2001

2002

2003

2004

100

80

60

40

20

0

Grade 12 results – Limpopo Province vs

Phalaborwa District

Note: The results for 2003/4 are for the

Namakgale and Lulekani circuits.

Limpopo

Phalaborwa

Learners encouraged to excel in mathematics

Computerised education at the Foundation’s Education Centres"

Educator Development

Programmes

The purpose of the Educator

Development Programmes is to

ensure that the schools are

sufficiently well resourced with

qualified human resources and

learner support materials to

provide a conducive learning

environment.

When the Foundation embarked

on its Educator Development

Programme in 1993, the majority

of educators teaching mathematics,

science and english were un- or

under qualified according to

national norms and standards. In

past years the Foundation assisted

approximately 65 educators to

obtain Further Diplomas in

Education (FDE) at the University

of Witwatersrand in Mathematics,

Science and English. Some of

these educators have gone on

and completed a BEd Degree and

a number are currently registered

for Master’s degrees.

The Foundation has worked

closely in partnership with the

Limpopo Province Department of

Education to upgrade educators’

qualifications and improve

teaching methodologies, skills and

content knowledge. This is

achieved by educators attending

courses in mathematics, physical

science and other selected

curriculum topics where educators

experience difficulties in teaching.

More recently there has been a

greater focus on OBE and the

revised National Curriculum

Statement. Courses have also

focused on classroom organisation

and management and the

development of learning and

teacher support materials.

Courses are conducted at the

Foundation’s two Education

Centres in Namakgale and

Lulekani.

The Foundation assists the

Department of Education with

school support visits, the

13

conducted to schools and during

those visits, 108 formal lesson

observations were conducted and

16 demonstration lessons were

carried out by Foundation staff.

Three hundred and fifty seven

educators attended workshops for

seven days during the year.

Outcomes Based Education –

Senior Phase (Grade 7 to 9)

Thirty two educators from

16 schools received classroom

support visits during the year and

4 987 learners benefited from

this support. One hundred and

ninety two educators attended

workshops for 17 days during

the year.

Further Education and

Training Phase (Grade 10 to 12)

In 2002 the government took a

decision to implement OBE in

Grades 10-12 during 2004 to 2006.

The provincial Department of

Education “Train the Trainer”

workshops did not take place as

scheduled and a decision was

eventually taken to implement the

OBE Infused Curriculum. Six one-

day workshops were conducted

for 75 educators in Grade 10-12

with a focus on “teaching the old

curriculum the OBE way”.

The Foundation has been and

is a partner in a number of

consortia of NGOs that currently

provides services to implement

government tenders for educator

development. PROTEC was the

lead agency for the Mvele

Project which was funded by

BHP Billiton and managed by the

Joint Education Services.

The Foundation is responsible for

the mathematics component of

the programme in 29 schools in

the Mpumalanga, north west,

KwaZulu-Natal and Limpopo

Provinces. Eight days of

workshops were conducted for

284 educators and each school

received two days of classroom

support visits. The donors for

the project supplied each school

with mathematics and science

equipment and learner support

materials.

School Governance and

Management

The purpose of the programme

is to improve levels of governance

and management in schools.

The School Governance

Training Initiative (SGI) in the

Phalaborwa district is a well

established partnership with the

provincial Department of

Education and started in 1999 as

a pilot project. New school

governing bodies are elected

every three years and

approximately 80 schools in the

district have undergone

specialised training on this

programme. Training throughout

this programme has focused on

those areas of management and

governance that are necessary for

effective school administration

and management to provide a

school environment that is

conducive to learning. Training in

2004 focused mainly on Basic

School Financial Management,

How to Conduct Fundraising

and the Implementation of

Resolution 1 of 2000 relating

to the appointment procedures

for teachers and principals.

During the year 13, two-day

workshops were conducted for

504 School Governing Body

members. The result of this

training is that 34 schools in the

Namakgale and Lulekani circuit

have now attained Section 21

status. These are schools that

are termed “self-reliant” and can

access funding from the

Department of Education. Further

monitoring of schools took place

after training and 52 schools were

visited. Two two-day workshops

were conducted for newly elected

Representative Council of learners

and training focused on their

roles and responsibilities.

The Foundation also provided

support visits to six School

Governing Body meetings and

eight parent meetings.

The purpose of these visits

was to provide advice to the

School Governing Body on

matters related to management,

fundraising and conflict

resolution.

Community and Schools’

Library Project

In the past historically

disadvantaged communities have

neither had access to community

libraries and library programmes

nor to competitions for learners

and educators at local schools.

In 1987/8 the Foundation built

and equipped two community

libraries at its education centres in

Namakgale and Lulekani, which

provide a valuable service to

primary, secondary and tertiary

learners. These well equipped,

air conditioned facilities provide

a venue where students from

14

#Mathematics and science – key to our technological future

Forestry, Environmental Affairs

and Tourism, Education and the

Kruger National Park. There are

currently 20 schools who have

established Eco-clubs at their

schools. Two workshops were

conducted in 2004 for

environmental educators to train

them on how to introduce art and

drama into environmental

competitions. Forty nine learners

from local schools participated in

the worldwide Rio Tinto Birding

Day and assisted Palabora

employees in identifying just over

170 bird species. One hundred

and two learners participated in

the Art and Drama competition

and the winning high school was

Vuxeni High School. This high

school was selected to present a

drama item at the launch of the

South African Environmental

Observation Network (SAEON)

node in Phalaborwa. The drama

was so impressive that the

National Research Foundation

(NRF) undertook to adopt the

school as a pilot school and

the National Research Foundation

will provide support for the

environmental drama group.

The arts and drama approach to

environmental education will be

replicated at other SAEON nodes.

Learner Support Programmes

The purpose of the Learner

Support Programmes is to provide

a pool of high capability learners

who can go on to further their

studies in scientific and technological

careers at tertiary institutions.

South Africa has a dire

shortage of school leavers with

the correct symbols on the higher

grade in Mathematics and Science

to proceed onto those careers

where the country is experiencing

skills shortages. Until 2004

there was a gradual decline in

numbers of higher grade passes

in mathematics and science

nationally. The Foundation’s

learner support programmes are

aimed at increasing the skills base

in mathematics and science in the

district. Sebalamakgolo High

School is one of the 102 schools

on the national government

Dinaledi Project.

PROTEC (Programme for

Technological Careers)

Historically most of the learners

in local high schools would not

have had the opportunity or

the correct academic symbols

to proceed to tertiary education

in scientific careers.

The Foundation’s programmes

in the last few years have

changed this scenario and many

Grade 12s now have the correct

symbols to access high quality

tertiary education. The PROTEC

programme completed its seventh

year of operation in 2004 and

aims to provide a source of high

capability students for Palabora

and other local companies and

industries. Learners who are

talented in mathematics, english

and physical science are selected

for the programme in Grade 10

and spend three years on the

programme. In 2004, 60 new

learners were admitted onto the

programme in Grade 10. There

were a total of 174 learners on

the PROTEC programme during

2004.

These learners attend extra

lessons in the afternoons and

during school vacations to

prepare them for scientific and

technological careers. Industrial

site visits are organised to local

industries and Grade 11 learners

attend an annual one-week

environmental leadership camp

in July. More than 50% of these

learners have gone on to study

engineering, sciences and

accountancy at tertiary institutions

and some have received bursaries

from Palabora. Others have

completed their studies and are

crowded and often non-electrified

homes can study and have access

to relevant books and other

printed media, and computer

based education.

During 2003 the Palabora

Foundation Trustees took a

decision to donate the assets of

the libraries to the Ba-Phalaborwa

Municipality. The Foundation

entered into negotiations with

the Ba-Phalaborwa Municipality

who agreed to take over the

management of the two

community libraries and provide

staff for the libraries. In June 2004

the Foundation provided funding

for computers and radio links for

the two community libraries to

link up to the main server in the

Phalaborwa Library. All the books

in the two community libraries

were bar coded and entered into

the main library cataloguing

system. On 30 June 2004 the

libraries were officially handed

over to the Ba-Phalaborwa

Municipality Manager with a

cheque for R1,2 million for the

operating costs of the libraries for

a two-year period after handover.

This will allow the Ba-Phalaborwa

Municipality, to budget for these

costs after July 2006.

Environmental Education and

Schools’ Eco-Clubs

The purpose of the programme is

to create and raise awareness on

environmental and sustainable

development issues through

environmental programmes.

An Environmental Awareness

Programme was initiated in

schools in conjunction with the

Departments of Water Affairs and

15

employed by local and other

companies. Every year in January

the Foundation takes a group of

PROTEC/Master Maths learners

to the University of Pretoria.

To date, 23 learners have been

accepted into the bridging year

(UPFY Foundation course) at the

University of Pretoria. One of

the PROTEC students won a gold

medal at the Eskom National

Science Exposition which is held

at the University of Pretoria in

October each year. The Grade 12

school leaving results for

2004 were at an all time high

with a 100% pass rate and

95.4% university exemption.

Master Maths (M2)

The Foundation’s Mathematics

programmes encourage learners

with potential to take

mathematics on the higher

grade. Approximately 385 high

school learners attend extra

mathematics lessons in the

afternoons, evenings and during

school holidays at three

interactive computerised Master

Maths Centres. These Master

Maths programmes are designed

to follow the South African core

mathematics curriculum and

OBE lessons are competency-

based allowing learners to study

at their own pace. Three qualified

tutors work in each of the centres

in the afternoons to assist learners

with problems and to help with

homework and tutorials.

The performance of many of the

learners has increased dramatically

over the years and many have

gone on to study technical

subjects at tertiary institutions.

During the past five years the

Grade 12 pass rate has been

well above the national average

and the overall average pass rate

in past years was between

87.5% to 100% and seven learners

obtained a distinction in

mathematics in 2004, of which

three A symbols were on

the higher grade and four on the

standard grade.

Mathematics Olympiad

The Foundation supports a

number of initiatives to instil in

the youth a love for mathematics,

science and technology.

In partnership with the provincial

Association of Mathematics

Educators of South Africa

(AMESA) a local, regional and

provincial Mathematics Olympiad

for three different levels is

organised in the six districts in

the province. Approximately

40 000 children participated in

the first round of the Olympiad.

There were 2 682 learners

from 41 primary schools and

37 secondary schools who

New computers and radio links between libraries

Numeracy and literacy are key to the development of our youth"

16

participated in the first round of

the Olympiad. In the provincial

finals, 20 children in the primary

category, six in the junior

secondary category and seven

in the senior category came from

Phalaborwa district schools.

The Head of the Palabora

Foundation educator development

unit was elected as the National

Deputy President of AMESA in

2004.

Science Exposition

The local and regional Science

Exposition is funded by the

Foundation and organised by a

Science Exposition Committee of

dedicated local science teachers.

The Chairman of the Phalaborwa

Science Exposition Committee

was asked by the National

Science Exposition organisers to

accompany and lead the South

African Science Exposition

delegation that participated in the

international Science Exposition

in Dresden, Germany in July

2004. One hundred and thirty five

learners from 26 schools entered

112 projects in the regional

Science Exposition. Eighteen of

these learners with 15 projects

were selected to attend the

Eskom National Science

Exposition which is held in

October at the University of

Pretoria each year. Two projects

received gold medals, seven

projects silver medals and six

projects bronze medals at the

national finals.

Rural Tele-Teach Schools

The partnership between the

Foundation, the University of

Pretoria and three rural Tele-

Teach schools (Maphokwane,

Matome-Malatji and Makikele

Secondary School) continued in

2004. Afternoon lessons were

broadcast via Digital Satellite

Television (DSTV) from the

University of Pretoria for Grade

10-12 students. The three

participating schools have access

to the Internet and were able to

communicate with the University

via the Internet and

telephonically. The Tele-Teach

programme will no longer be

broadcast in 2005 and the schools

will use their equipment to view

the Mindset Learning channel

which is also broadcast on DSTV.

Some of the schools have

requested additional computers

for their learners and the

Foundation is investigating the

possibility of installing the new

Hewlett Packard 4:4:1 personal

computer. Two of the three

schools obtained a 100% rate at

the end of 2004 and the

mathematics and science results

in these schools have improved.

Internet Centres

The Internet rooms at the two

education centres have been well

supported during 2004 and over

300 learners have access to the

internet. Educators are also using

the centres to access educational

information in the afternoons.

The learners are encouraged to

use the internet to visit

educational and university

websites to access information for

projects and assignments and

information on careers, life skills

and bursaries.

Skills Development Training

Many school leavers who exit the

system before Grade 12 do not

have the necessary qualifications

or skills to enter the mainstream

economy or to proceed to tertiary

education. The Foundation has

a number of skills training

programmes to alleviate the

problem. The aim of the

programmes is to train mainly

unemployed youth in building,

carpentry, sewing and food

preparation skills to enable them

to seek work in the formal sector

or start their own businesses to

earn a living. Training is normally

five to six months in duration and

includes a short course on small

business management. Trainees

pay a small fee towards the costs

of the course.

Course January July

to to

June November

Bricklaying 14 6

Carpentry 29 10

Sewing 63 37

Food

Preparation

and Cooking 44 36

Total 150 89

The Foundation is registered with

the Department of Labour as an

accredited service provider

(NSF Provider ID no.: 708).

The Foundation is in the process

of registering with the primary

Sector Education Training

Authority (SETA) – Education,

Training and Development

Practice (ETDP-SETA) to ensure

that all qualifications are

accredited. As a requirement for

accreditation the Quality

Management System manual

was completed in 2004.

Plans are in place to ensure that

16 Foundation staff members

complete training towards being

registered as registered facilitators

and nine of the staff members’

portfolios are currently being

moderated. The Food Preparation

and Cooking training centre was

upgraded in 2004 to meet the

Tourism Hospitality Education

Training Authority (THETA)

requirements.

• Bricklaying and Carpentry

courses – have received

provisional accreditation and

training manuals are being

developed.

• Food Preparation and Cooking

course – the training manual

has been completed and the

17

Developing skills to start their own business$

Foundation is awaiting

provisional accreditation.

• Sewing course – accreditation is

in the process.

A Workplace Skills Plan for

2004/2005 was submitted to

ETDP-SETA.

Business Linkage and Advice

Centres

The purpose of the Business

Linkage and Advice Centre is to

empower Small, Medium and

Micro Enterprises/Black Economic

Empowerment (SMME/BEE) sector

with relevant training, mentoring,

counselling opportunities to

provide capacity to them so that

they can compete to provide the

three sponsoring companies with

goods and services.

This programme was jointly

funded by Palabora, Foskor

Limited, Sasol Nitro and Ntsika.

In March 1995, the South African

government adopted its White

Paper on the National Strategy for

the Development and Promotion

of Small Business in South Africa.

In 1996, the National Small

Business Act (1996) was

promulgated giving Business

Advisory Centres (BACs) guiding

principles and the necessary

impetus to effectively implement

the Small, Micro and Medium

Enterprise (SMME) programmes.

The Palabora Foundation,

through accreditation by Ntsika

Enterprises Promotion Agency

(NEPA), saw the opportunity to

address the needs of the local

SMME/BEEs within the greater

Phalaborwa area.

This was achieved through:

• Assisting SMME/BEEs to

establish their own businesses

with counselling, business

advice and training.

• Assisting local SMME/BEEs with

tendering and market linkages.

• Providing capacity to existing

businesses to maintain market

share with possible expansion.

• Promoting new market

opportunities for local business.

• Creating linkages with local

SMME/BEEs to tender for

contracts at the three

participating companies.

• Working with and encouraging

networking of other organisation

active in the same industry.

In April 2004 the Chief Executive

Officers of the three companies

took a decision that the Business

Linkage Centre (BLC) had

preformed all of the functions

from its original mandate of 1999

and it was decided to close the

centre. The Foundation Director

arranged for BLC staff to be

transferred to other institutions in

the area that promote BEE

advancement. The Manager of the

BLC and his assistant took up

employment with the Ba-

Phalaborwa Entrepreneurial

Support Centre and the Business

Consultant returned to the

Foundation to continue with the

Business Advice Centre activities

in the community.

A total of 314 SMME/BEEs

attended 13 training courses

conducted by the BAC at the

Palabora Foundation. Courses

varied in duration from one to

five days:

• Business management (5)

• Tendering procedures and

Methods (1)

• Financial management (1)

• Business improvement (4)

• Boosting sales and profits (1)

• Entrepreneurial spirits into

business opportunities (1)

There are 258 businesses

registered on the Foundation’s

Business Advice Centre database

and the procurement spend

for Palabora with approximately

55 BEE companies was

R162 million out of a total spend

of R478,6 million (34%) during

the period January to October.

Ten new businesses were

started this year in the

Phalaborwa area and five existing

businesses were assisted to

expand. These 15 business

enterprises created a total of

65 job opportunities.

Khomanani Ba-PhalaborwaCommunity ServiceThe purpose of the programme is

to use an effective HIV/Aids

management system to minimise

the impact of HIV/Aids in the

community.

We achieve this by educating

communities to change social

behaviour and to monitor

incidences and trends in order to

measure the effectiveness and

impact of the programme.

South Africa has the

unenviable distinction of having

the highest number of people

living with HIV/Aids in the world

with as many as 6,5 million South

Africans estimated to be HIV

positive, peaking at 7,1 million

in 2010. The Limpopo Province’s

HIV/Aids infection rate is

estimated at 14%.

The Khomanani

Ba-Phalaborwa Community

Service programme was launched

in the area at the beginning of

2001 and is funded by Palabora

Mining Company, the Limpopo

Province Department of Health

and Welfare, Foskor Limited, Sasol

Nitro and JOHAP/OXFAM and the

National Development Agency.

This project commenced in 2001

with a baseline study to

determine the impact of the

pandemic in the area and the

study was funded by the Nelson

Mandela Children’s Fund.

The Khomanani Ba-

Phalaborwa Community Service

project is located in premises next

to the Foundation’s administration

centre in Namakgale which was

formerly the Palabora Mining

Company family clinic.

This project facilitated the

establishment of community

18

Khomanani Centre for

professional help of which

64 were referred to the Department

of Health and Welfare for

counselling, consultation and

treatment. A further 21 were

referred to the hospital for

medical treatment.

The Bana Pele project

continued with funding from the

Nelson Mandela Children’s Fund

(up until March 2004) with a

programme in three pilot

communities to assist orphans

and vulnerable children to

register with the Department of

Social Welfare for social grants

and food relief. Registration with

the Department of Home Affairs

was for birth certificates. Ninety

four children received birth

certificates, 152 child grants,

22 foster grants and 18 social

grants and 45 are on a

programme receiving food

parcels. The Khomanani Centre

also collates statistical information

on sexually transmitted infections,

voluntary counselling and testing

and the prevention of mother to

child transmission.

The statutory Ba-Phalaborwa

local HIV/Aids Council continues

to meet on a monthly basis and

deals mainly with policy and

district issues relating to

HIV/Aids. The Ba-Phalaborwa

HIV/Aids Awareness programme

has been recognised as one of

the most effective programmes in

the province.

The government seconded a

Chief Professional Nurse who

manages the Khomanani Centre

and she received an excellence

award by the Phalaborwa

Chamber of Business for being

the community builder of the

year in 2004.

Early Childhood Education

The Palabora Foundation

coordinates the operation of

seven Early Learning Centres in

communities around Phalaborwa

catering for approximately

700 pre-school children.

Each centre has a Steering

Committee that assists with the

daily management of the centres.

Children attending the centres

receive a meal and a balanced

pre-school education programme

in the mornings. The Bambanani

Early Learning Outreach project

reaches out to 63 pre-schools in

very disadvantaged socio-

economic communities. There are

223 teachers working at these

sites and 3 733 pre-school

children benefit from pre-school

education. There are currently

45 educators on the Outreach

Training programme who are

completing Level 1 (20 educators)

and Level 2 (25 educators) pre-

school training. The pre-schools

are visited on a regular basis and

provided with educational

support and advice. The Outreach

project also operates a large

centralised toy library and the

Outreach pre-schools make

good use of this facility.

The Foundation has arranged for

the Bambanani project to

provide outreach services to its

seven Early Learning Centres.

The Bambanani Early Learning

Outreach programme will become

independent from the Foundation

in 2005 when it registers as a

support structures at

14 wards with approximately

115 volunteers who work with

the Department of Health, other

NGOs and local government.

The HIV/Aids Support Group

continues to meet on a monthly

basis for capacity building

purposes and to plan and review

progress of their work. During the

year they conducted 190 home

visits and visited 14 schools, three

churches and five farms. There

are 41 community Peer Group

educators who play a valuable

role when visiting high risk areas

and had the opportunity

during the year to address

7 500 males and 8 800 females

on HIV/Aids related issues at

these sites.

The Khomanani Ba-

Phalaborwa Centre provides a

wide range of services to the

community and Foskor Limited

donates nutritional supplements

which are given to old and new

Support Group members.

The centre is also the centralised

distribution point for male and

female condoms to 40 different

sites in the area and additional

funding is received from OXFAM

to build capacity with the Support

Group.

The Home Based Care (HBC)

group has doubled in size since

2002 and has provided a valuable

service in the community.

The Department of Health and

Welfare donated home based care

kits to the various home based

care sites. The Home Based

caregivers visited 4 046 patients

during the year. During the year,

120 people were referred to the

19

Non Profit Organisation with the

Department of Social

Development. It will then be

responsible for managing its own

finances and meeting the

necessary legislative criteria

governing trust funds.

Small Scale Community

Projects

The Foundation in consultation

with communities in 2003

identified three community

projects that would require

support from the Foundation

in 2004:

• Majeje Multi Purpose

Community Centre –

electronic equipment was

purchased for the project and

the centre will be handed over

to the Majeje community when

the telephone and electricity

supply have been installed

in 2005.

• Maseke Community Garden

Project – a borehole was sunk

close to the Selati River and a

pump station was built to

supply water to the irrigation

tanks. Three irrigation tanks

have been installed and

irrigation piping has been

laid. The ground was

prepared in November and

crops planted with the

assistance of the Department of

Agriculture.

• Sealene Cooperative Sewing

Project – an empty building at

the Makhushane Traditional

Authority offices was renovated

and the community cooperative

sewing group was provided

with tables and chairs, sewing

machines and sewing materials.

This group of rural ladies have

formed themselves into a

cooperative and will produce

school uniforms for local

schools.

The Foundation always strives to

ensure that capacity is built with

local staff on these community

projects and the community

members on the above projects

have received relevant training on

basic Financial Management and

have been linked to the

provincial government

departments were necessary.

Tourism Promotion Initiatives

The Foundation has played a

pivotal role in providing

secretarial and administrative

support for the Greater

Phalaborwa Trade and Tourism

Council that was established in

January 2004. The Foundation

was one of a number of major

role players involved in the

coordination of activities for the

national government World

Tourism Day celebrations held in

Phalaborwa on 27 September

2004. The Trade and Tourism

Council is working on a number

of initiatives to promote tourism

to the region and the town, to

shift the community focus away

from a mining town to a town

that thrives on tourism.

Phalaborwa is the gateway to the

recently proclaimed Greater

Limpopo Trans Frontier Park and

local government and the Trade

and Tourism Council are

identifying and developing

projects and programmes to

ensure that the town and the

community will be able to cater

for larger volumes of tourists in

the future. The Foundation has

provided seed funding for the

development of a community-

based website, a partnership with

Open Africa for a Marula to

Mopani tourist route, an

interactive DVD and the training

of a number community-based

tour guides. The Foundation has

also been appointed by the

national Department of

Environmental Affairs and

Tourism as the implementing

agency for the development

of a multi-million rand cultural

village in Lulekani starting

in 2005.

Community skills training programmes

Safety is a priority at Palabora Foundation projects"

20

safeguard himself and his fellow

employees.

The Lost Time Injury

Frequency Rate (LTIFR) at the end

of 2004 was 0.40 compared to

0.38 in 2003. 14 Lost time injuries

occurred during 2004 compared

to 17 for 2003. Although Palabora

experienced three less injuries

than 2003 we now have less

people working for us and the

injury rate has consequently

remained approximately constant.

Nine of the lost time injuries

occurred in our underground

operations, two at our vermiculite

operations, one at the smelter and

two at our refinery.

The proactive safety

management system, includes a

combination of Palabora and Rio

Tinto requirements. Every single

lost time injury, medical treatment

and first aid case is investigated

according to the system and the

results reported, circulated mine

wide and debated at group,

departmental and sectional safety

meetings.

During 2004, 66 accident

investigations were conducted

comprising 14 lost time injuries,

14 Medical Treatment Cases

(MTC) and 38 First Aid

Cases (FAC).

Safety Training

Safety training continued through

the year, 2 519 contractors

and 250 Palabora employees

attended generic safety induction,

84 employees/contractors

attended health and safety

representative courses and

44 contractor supervisors

attended the “contractor

supervisor accreditation

programme”.

Safety Auditing

The safety audit concept is based

on a programme that Dupont, an

international leader in chemical

production, developed which

reduced their LTIFR in a number

of their international operations.

All leaders are required to

perform regular safety audits in

their area of responsibility.

During the safety audit process,

time is taken to observe how

employees perform certain tasks.

Safe acts are highlighted and

encouraged whilst unsafe acts are

pointed out and the employee’s

commitment is then gained

not to repeat the unsafe act.

This is an ongoing process of

coaching to ultimately eliminate

unsafe acts from the work

environment.

Recognition of Partnership

Arrangements

The Foundation has a number of

important partners, including

the Limpopo Provincial

Government, Non-Governmental

Organisations, Industrial and

Commercial Corporations and

private individuals. Sincere thanks

are due to all those that help the

Foundation succeed to make

communities more self-reliant.

MG Demmer

Director Palabora Foundation

Safety and healthcontribution

The safety and health of our

employees is one of Palabora

Mining Company’s core business

principles and is a prerequisite for

an efficient and profitable

operation. We firmly believe

that all injuries and occupational

illnesses, as well as safety

incidents, are preventable.

Our collective goal for all of them

is zero. Whatever the situation,

the safety of employees and

contractors continues to be of

high priority to the Company and

the goal of zero injuries is

pursued relentlessly. Palabora

ensures the safety and health

of its employees with a dynamic

approach to the management of

safety and health issues

complimented by strong safety

and health support systems.

Although management fully

acknowledges and accepts

responsibility for effective

safety and health programmes,

it also holds the belief that

every employee must work

in such a manner as to

Objective 4 • Prevent all

injuries and occupational

illness

Donations to The Palabora Foundation 1986– 2004

Ran

d m

illion

per

yea

r

15

13

11

9

7

5

3

1

Investment fund

Palabora

External donors

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

21

Golden Safety Rules

A review of industrial fatalities

highlighted a few critical

situations that have a high

probability of causing death if not

controlled. Palabora decided to

link ten of these situations with

a direct disciplinary outcome.

For example, an employee that

fails to follow a lock out

procedure when working on

electrical equipment puts his

(and his fellow employees)

life in danger. In such a case the

company will enforce disciplinary

action. Although initially perceived

as negative by employees, these

high-risk taking situations were

very quickly eliminated. Employees

placing themselves in danger are

now the rare exception and this

initiative directly contributed to

the company achieving more than

3 000 000 fatality free shifts by

the end of 2004.

Focus areas for 2005

Rio Tinto has identified four key

areas for further safety

improvement during 2005.

Extensive investigation and

programme developments took

place in 2004 and Palabora will

be rolling out these initiatives

during 2005. These are:

• Improving safety interaction

quality

Significant progress was made

to train leaders to focus on safe

and unsafe behaviours rather

than condition based auditing.

The outcomes of the Rio Tinto

initiative will be used to further

enhance the quality of the

safety interaction process at

Palabora.

• Pre-task risk assessment

processes

Palabora identified

opportunities to improve the

existing Hazard Identification

and Risk Assessment (HIRA)

process but delayed changes to

the system in anticipation of the

Rio Tinto best practice

recommendations.

Consequently, the Palabora

hazard identification and risk

assessment process will be

reviewed during 2005.

• Providing safety leadership

induction for new leaders

New leaders come into the

business with their own safety

culture and understanding of

safety systems. It is important

that these new leaders be

aligned with both the Palabora

and Rio Tinto safety philosophy.

This training will commence

during 2005 based on the best

practice recommendations for

the Rio Tinto review.

• Common incident

investigation process for

critical incidents

Rio Tinto has proposed a single

incident investigation for all

critical incidents, a decision was

made to use the Taproot

process and selected Palabora

management and safety

professionals will attend training

in the process during 2005.

The health of our employees

Occupational diseases are defined

as those diseases which are

primarily caused by exposure to

physical, chemical and

psychological agencies in the

workplace. Typical diseases

include diseases of the lung

(asbestosis, silicosis), diseases

of the skin (dermatitis), diseases

of the musculo-skeletal system

(back problems, white finger),

diseases of the ear (mainly

hearing loss), as well as less

tangible diseases such as work-

related stress conditions.

Palabora is fully aware of the

potential health risks in the

business and maintains a fully

staffed occupational health clinic

and hygiene section to support

the business to ensure that the

health of workers is not adversely

affected. Levels of temperature,

ventilation, noise, illumination,

dust, hazardous substances, gases

and radiation are monitored.

In high exposure areas,

programmes of measurement,

control and risk reduction are in

place.

Four levels of control are

recognised, namely eliminating

the risk, controlling the risk at

source, minimising the risk, and

as a last resort and in so far as

risk remains, providing personal

protective equipment (PPE).

All employees and contractors

undergo medical examinations

upon joining. This is followed by

regular risk-based tests during

employment and an exit medical

examination when leaving the

company.

During 2004 a total of

16 employee and three contractor

cases of occupational diseases

were identified. 13 of these were

reported to the Department of

Minerals and Energy (DME) and

22

The impact of HIV/Aids is being

felt in Palabora and Phalaborwa

as is the case in the rest of the

country. The effects, though

difficult to quantify due to the

confidentiality and stigma that still

surrounds the disease, include

absenteeism, reduced productivity,

loss of personnel and increased

direct and indirect costs. It is

realised that there are no quick

fixes for the pandemic.

The company does not

discriminate against HIV positive

employees. These employees are

supported by counselling,

emotional support and vitamin

supplements in addition to their

medical aid programme. During

2004 there was an average of

40 known positive employees still

fit and working. Employees that

are too sick to continue working,

are assisted by the medical and

pensions department to go on a

disability pension via the company

pension fund and the company’s

disability insurers.

Palabora believes that only

sustained education and

awareness will eventually pay off

to prevent the spreading of more

infections. To this end, the

Company has several ongoing

initiatives.

HIV/Aids steering committee

The committee consists of

members of Palabora

management, the Human

Resources Department, the

Medical Department, the Palabora

Foundation and the Community

HIV Programme. The committee

co-ordinates plans and reviews

progress on a regular basis.

The effort made throughout

2003 bore fruit when the

HIV/Aids workplace agreement

was signed on 21/04/2004 by the

Company, NUM and UASA.

The Company and the two major

unions are now co-operating in

the fight against the epidemic.

HIV/Aids education and

awareness

This is the main aim of the

company’s HIV activities.

The Company believes that every

employee should have access to

the right HIV information so as

to empower them to protect

themselves and to know how to

handle the disease in the

community. To achieve the

highest level of awareness, the

following is maintained:

HIV and Health educator

The Company has a full-time

position for an HIV and Health

Educator. This person is spending

all his time and energy to

increase awareness by giving talks

and lectures mine-wide at safety

meetings, contractor inductions

and other gatherings. He is a

skilled educator and has suitable

office facilities for confidential

counselling. It is important to

note that he does HIV plus

general health and wellness

education. This reduces any

stigma that could be attached to

his job that could otherwise have

Objective 5 • Minimise the

spread of HIV/Aids

HIV and health related statistics 2003 2004

HIV voluntary tests. 56 309

Number of condoms issued each. 34 600 19 300

People reached by HIV talks during generic induction 3 656 2 766

People reached by HIV talks at sectional SHEQ meetings 492 286

Audio-visual audiences 699 5 287

People reached by HIV presentations by Training Officers N/A 1 015

People reached by general health topics at sectional SHEQ meetings 1 045 998

People reached by health counselling sessions and other health problems N/A 118

#The health and safety of all employees continues to be one of Palabora’s core business principles

the Compensation Commissioner.

The difference is explained by the

fact that the Rio Tinto internal

reporting requirements with

regards to noise induced hearing

loss are slightly different (more

stringent) from those of the

Compensation of Occupational

Injuries and Diseases Act (COID).

The types of occupational disease

are mostly noise induced hearing

loss cases, two occupational stress

cases and one tuberculosis case.

The tuberculosis case was most

probably community related but

because of accepted reporting

conventions it is reported as an

occupational disease.

Key performance areas for

reducing the number of

occupational diseases continues to

be driven by Rio Tinto’s health

standards and compliance to codes

of practices by the DME. Noise

induced hearing loss continues to

be the most common occupational

disease at Palabora. During 2004,

the following improvements were

made:

• A metric was developed to

determine early onset of

hearing loss.

• The Code of Practice (COP) for

hearing loss prevention was

finalised and implemented.

• A formal investigation process

for all new Noise Induced

Hearing Loss (NIHL) cases was

implemented.

During 2005 the following

initiatives are planned:

• Evaluate new cost effective PPE

that allows a limited level of

communication by transmitting

sound in the voice range.

• Review and make

recommendations on the

application of the business

disciplinary system for non-

conformances to wearing

hearing PPE.

23

prevented employees to talk to

him. He also counsels persons

with conditions like hypertension,

diabetes, obesity, substance

dependence and stress.

Peer Group Educator

Programme

The Company has a group of

approximately 30 trained

Peer Group Educators (PGE).

This small but enthusiastic

team is doing excellent work.

They operate under the

leadership of the full time

Health and HIV educator.

Their main function is to

give five minute HIV talks and

one-on-one awareness discussions

at shop floor level. Monthly

meetings are held where progress,

problems and new initiatives are

discussed.

Summary of awareness

programmes

• All Company training sessions

also incorporate an HIV

awareness module. Short courses

giving guidelines on how to do

the presentations were given to

the training officers.

• HIV slogans have been

displayed on the safety board

at the mine entrance as well

as on salary advices.

• Additionally a dedicated

HIV/Aids awareness board is

displayed on the main route

into the mine premises.

The slogans on the board are

changed monthly and

employees are encouraged to

submit new slogans.

• The Company supported the

HIV Candle Lighting Day,

which was presented by the

community HIV initiative.

This is an annual event to think

about the suffering that the

disease causes. It was attended

by senior management

members from Palabora

including the Managing

Director.

• World Aids Day was celebrated

with the assistance of

Integrated Well-being Services

Africa. Talks were given at

different gatherings all over the

mine. The theme for the year

was Khomanani and much

emphasis was placed on caring

for our women and children.

The talks and displays were

very good and elicited a lot of

discussion. The PGE’s played

an active facilitating role and

answered many of the

questions in the group

discussions. In addition,

every employee received

snacks in the form of apples

and fresh raw carrots to

emphasise the importance of

healthy living and eating.

Management had a visible

involvement with introductory

talks at each gathering.

It is estimated that 600 people

were reached on this one day

alone.

• Voluntary counselling and

testing is continuously advocated

and available free of charge for

employees and contractors.

Summary of prevention

programmes

• Condom distribution: Condoms

are supplied at strategic

locations all over the mine and

co-ordinated by the HIV

educator and the PGE’s

• STI treatment: All employees

belong to a medical aid and

STI’s are now treated by

general practitioners of

employees.

• HIV treatment: The Company

facilitates access to ARV

treatment for all employees by

a 50:50 subsidised medical aid

for all employees. Both medical

aids have HIV programmes

where a patient can register to

obtain up-to-date care and

eventually, HIV drugs when

this becomes necessary.

There are a number of

employees on ARV treatment

through these programmes.

$Environmental awareness and development training for all employees

We are committed to reducing our impact on the environment

24

Environmentalcontribution

Introduction

Palabora, forming part of the Rio

Tinto group, is committed to

reducing its impact on the

environment in which it operates

by managing its activities in an

environmentally responsible

manner. Due to the large scale of

the mining and processing

operations and related residual

impacts on the environment, it is

not feasible to discuss all

environmental impacts in this

report. Consequently, significant

impacts identified in the certified

Environmental Management

System (ISO 14001) are presented

in terms of performance.

The environmental performance

for 2004 is given in tabular form

followed by a description in text,

on page 27.

Air QualitySulphur Dioxide (SO2)

During the Copper smelting

Objective 6 • Minimising the

environmental impacts of

Palabora’s operation

process, sulphur in the copper

concentrate is transformed from a

solid to a gas called Sulphur

Dioxide (SO2). Over the years

Palabora has managed to

decrease its SO2 emissions (refer

to graph on page 26) by means

of capturing off-gasses from the

smelting process and producing

sulphuric acid.

Palabora’s main aim was to

ensure that SO2 emissions in

urban and residential areas

remained below the Department

of Environmental Affairs and

Tourism (DEAT) annual guideline

limit of 19ppb. Palabora has a

contingency plan in place to

ensure that the above guideline

limit is adhered to; this entails

curtailing or even halting

production when conditions

necessitate it. The SO2 monitored

in the urban areas also gives a

good indication of SO2 emitted all

around the site as the prevailing

wind direction is towards the

town of Phalaborwa.

The total sulphur capture was

68% during 2004, which is less

than the 72% in 2003.

A total of 33,857 tonnes of

SO2 was emitted to the

atmosphere in comparison to

32,850 tonnes during 2003.

Copper concentrate is being

imported to supplement

production until the underground

produces the target of

30,000 tonnes per day as the

smelter has a 60,000 tonnes per

day capacity.

During the 2004 annual acid

plant shutdown a total of

182 production hours were lost

due to converters being turned

off in order to prevent air

pollution and minimise the

impact in town. The annual SO2

concentration in residential areas

averaged 6ppb compared to

13ppb of the previous year.

This was the best ever year in

terms of SO2 management.

The daily guideline limit of 48ppb

was exceeded only four times

during the year compared with

15 daily exceedences in 2003.

Palabora continually strives to

improve its impact on ambient air

quality by means of improved

engineering methods,

maintenance and administration

of its processes.

Greenhouse gasses

Ascribing to Rio Tinto policies,

Palabora is committed to

assessing and reducing its

greenhouse gas emissions in

order to reduce its impact on

global warming.

857,671 tonnes of CO2

equivalents was released during

2004 into the atmosphere

compared to 937,385 tonnes in

2003. The reduction in

greenhouse gasses is mostly due

to lower production whilst the

underground mining ramps up to

the target of 30 000 tonnes, of ore

per day.

546,887 tonnes of CO2 was

indirectly released due to the

purchase of electricity from

ESKOM. The remaining balance

was due to the use of fossil fuels

such as coal, diesel and heating

fuel used in the smelting process.

Palabora has developed a climate

change programme, which

includes a greenhouse gas model.

#Environmental audits are conducted to maintain the ISO 14001 certification

25

Dust

Throughout the mining process

dust is generated. Appropriate

programmes have been put

in to place to prevent dust

from becoming airborne.

Water bowsers are used to spray

water to suppress dust emanating

from gravel roads.

A dust suppressant is sprayed

on inactive tailings dam areas

prior the onset of the windy

season (August to October).

Completed lifts on tailings

embankments are capped with

vermiculite waste, which acts as a

growth medium for vegetation

established on these slopes.

Process plants are equipped

with dust control systems such as

electrostatic precipitators,

extraction fans, bag houses and

scrubbing towers to capture the

dust generated in the plants.

These systems are regularly

maintained and the effectiveness

thereof is tested.

Alien plant control

In line with the requirements of

the Conservation of Agricultural

Resources Act, Palabora eradicates

alien and invader vegetation

found on its property. In order to

do this effectively, the property is

divided into management sectors.

A schedule is followed ensuring

that previous eradication sessions

are followed up aiming towards

total eradication. New species

were identified during the year

and have been added to the

ongoing programme.

Palabora is a member of the

Phalaborwa Alien Plant

Committee. This forum was

established to collectively monitor

the success of the eradication of

invader species within the greater

Phalaborwa area and

representatives include industry,

the local municipality,

government authorities, the

Kruger National Park as well as

local businesses.

Waste management

During the process of mineral

beneficiation mineral and

non-mineral waste is generated.

Palabora aims at managing

the waste generated in

an environmentally responsible

manner in order to

prevent pollution and

reduce its impact on the

environment.

Waste has been classified in

terms of type and risk and an

entrenched waste-recycling

programme resulted in the

following waste streams being

recycled during 2004:

• Process waste such as tailings

and waste rock is quantified

and deposited in designated

areas in order to facilitate

possible future beneficiation.

• A total of 21,840 litres

recyclable oil was recovered

during 2004.

• Hazardous waste is drummed,

sealed and disposed of by a

registered contractor at a

nationally approved landfill site.

During 2004, 26 tonnes of

hazardous waste was disposed

of at the designated site.

This mainly consisted of oil

sludges.

• A total of 5,128 tonnes of clean

metal scrap was recovered for

recycling during 2004.

• Domestic waste is disposed of

at the Palabora registered

Decrease of SO2 emissions

So 2(p

pb)

35

30

25

20

15

10

5

0

Stn 2

PMC Ceiling

SA Limit

1986

1997

1998

1999

2000

2001

2002

2003

2004

26

landfill site. 620 tonnes were

dispose of during 2004.

This is significantly down on

the 4,412 tonnes of 2003.

The main difference is due to

the closure of the open pit.

• 78 tonnes of wood waste

was recycled during 2004.

• Sewage effluent is treated at

three registered effluent

treatment plants situated on

site.

Fauna and Flora

Wildlife management.

The location of Palabora sharing a

common boundary with the

Kruger National Park puts the

operation in a unique position in

that wildlife is naturally attracted

to the abundant water and

vegetation. This, requires

continuous and responsible

management.

Management decisions have

been assisted by, three years of

data collected using a global

positioning system, annual

botanical surveys and aerial game

counts.

The transition from a severe

drought in 2003 to above average

rainfall in 2004 saw a substantial

change in vegetation and wildlife

activity. This, combined with

earlier capture and relocation

projects and with a 30% drop in

numbers, resulted in the

suspension of game capture and

relocation projects.

The viability status of the site

however remains below the

desired level and further capture

and relocation projects will take

place.

In late 2003 a joint elephant-

monitoring project commenced

with the Timbavati Private Game

Reserve situated south of

Palabora.

An IUCN Red Data Species

database was initiated during

2003. Currently there are 18 listed

species, which utilise the

property.

The Annual Rio Tinto Bird

Watching event was held in the

fourth quarter with 206 bird

species being identified.

This included a three-day

Community Bird Watching event,

which was presented during

October to learners from schools

in the greater Phalaborwa area

with the intent of raising

environmental awareness within

the local community, especially

amongst the youth. During the

monthly surveys a total of 269

bird species were identified on

the site. This is the most sightings

in one year since the programme

started five years ago.

Palabora initiated a second

survey of a cultural heritage site

during 2004 where several more

archaeological finds were made

and an additional copper-smelting

site was located. The first cultural

heritage site guides course was

completed in 2004 with another

planned in 2005 involving the

local community.

Water management

Palabora has a closed water

circuit where all fresh water used

is reused in various processes

with the objective being zero

discharge from the mine site.

Palabora has managed to

reduce its raw water consumption

by 46% from 2003 by means of

totally separating the Foskor and

Palabora water circuits in July of

this year. This has afforded

Palabora the opportunity to better

understand the dynamics of our

closed water circuit and has

allowed us to recycle more water

from the return water tailings

dam.

Key Performance Target/Ceiling Target/Ceiling

Indicators 2004 Actual 2004 2005

Air Quality

SO2 annual ground level

concentrations at Station 2 15ppb 6ppb 15ppb

Sulphur Capture (overall) >77% 68% 77%

kg SO2 emitted to atmosphere

per tonne Cu anode produced 370 570 455

Total tons SO2 emitted to

atmosphere during year 33,691 33,857 33,691

Dust level at Station 2 (TSP) <300 �g/m3/day 15 exceedences <75 �g/m3/day

No target set 62 �g/m3/year <40 �g/m3/year

Water Management

Fresh water consumption 35Ml/day 21.7Ml/day (1) 15Ml/day

Fresh Water intake (Ml)(3) 17,822 14,473 11,075

Greenhouse Gas emissions

Electricity use tCO2/t Cu Cathode <8 8.04 <8

Fossil fuel use tCO2/t Cu Cathode <4 4.56 <4

Electricity consumption (MWh) <975,000 546,887 (2) <975,000

Total greenhouse emissions

(tonnes CO2-e) <1,000,000 857,671 <974,811

Total energy use (GJ) No Target 6,009,708 <6,262,643

Others

Environmental incidents Category III – 0 Category III – 4 Category III – 0

Public complaints Category IV – 0 Category IV – 0 Category IV – 0

<10 13 000

ISO 14001 certification Maintain Maintained Maintain

ISO 14001 ISO 14001 ISO 14001

certification Certification Certificatio

1. Consumption figures reduced considerably due to Palabora no longer supplying water to export productto Foskor, as from 1 July 2004.

2. 2003 Production was below plan due to difficulties experienced in underground mine development, thusless electricity was consumed.

3. The raw water consumption target for 2004 will now be referred to as “Fresh water intake” as per theRT definition, which includes potable water and rainfall.

#Establish programmes to conserve resources, minimise waste and to protect the environment

27

"Develop the necessary skills of Palabora communities $Numeracy for all

The average fresh water

consumption (excluding rainfall)

for 2004 was 21.67Ml/day

compared to 48.2 Ml/day for

2003. This water is supplied by

Lepelle Waterboard.

An application to licence all

water uses at Palabora was

submitted towards the end of the

year. This application included an

Integrated Water Management

Plan for Palabora. This plan

describes how water is sourced,

used, reticulated, recycled and

impacts on various water

resources. It also describes

various management options, the

monitoring programme and the

results of key monitoring points

on and around the site. Further

work is expected on this

application in 2005.

Prepare for closure in order to

leave behind a safe and

environmentally acceptable site

and an economically

self-sustaining community

Palabora reviewed and updated

the 1999 Closure Management

Plan during 2004, taking into

account the changes that have

taken place on site with mining

now underground and external

comment on the document.

The current closure date for the

copper operations is in 2023.

The review also identified a

number of investigations required

over the next five years for

inclusion in the planning of mine

closure.

One of the main aspects of

the Closure Management Plan was

to conduct a socio-economic

impact assessment in order to

ascertain what strategies and

action plan Palabora can put in

place, at an early stage, to

mitigate against the inevitable

closure of mining operations.

It was confirmed in the

assessment that the local mining

and industrial sector has an

inextricable link to the Greater

Ba-Phalaborwa’s economic wealth

creation. Palabora has in the past

embarked on extensive community

upliftment programmes through

the Palabora Foundation. Future

strategies are to be identified for

mitigating the inevitable closure

of mining operations.

Another aspect reviewed in

detail was the closure cost

estimate using the preferred

closure strategies for each mine

area, which included the

following:

• Description of each area as it is

currently and how this may

change with time.

• Identified environmental issues.

• Proposed end land use

objective.

• Identified management

alternatives and implications to

the overall risk for the area.

• Preferred alternative and

actions needed for closure and

post closure.

• Estimated cost, including any

assumptions.

The present closure obligation

was estimated at R230 million for

direct costs and R96 million for

indirect costs, including

retrenchment and retraining.

Palabora has an irrevocable trust

fund registered with the

Department of Finance. Annual

contributions are calculated using

the current value of the fund and

the remaining years of mine life.

The fund was valued at

R151 million after the contribution

for 2004 of R5,4 million was

approved by the Department of

Minerals and Energy.

Objective 7• Prepare for

closure of open-pit

28

Palabora works in partnership with neighbouring communities