With Immediate effect you are being directed to the new Wescoal Holdings Limited website – www.wescoal.com

Risk and opportunities

Risk management is a critical component of every employee’s respective role and job description, and formal structures exist to govern actual risk management processes. The most significant risks faced by the group are indicated in the risk matrix below. For further detail on our risk management process please see the Risk Committee Report here.

Mitigation/enhancement strategy
  • Act in a responsible manner with regard to social and environmental matters
  • Meet and exceed obligations of the group’s SLPs and the Mining Charter
  • Proactive involvement as a responsible corporate citizen in sustainable socio-economic development initiatives
  • Review legislative compliance for our entire legislative environment on a regular basis
  • Engage regularly with all stakeholders, in particular communities and local and national government
  • Revisions to the operations’ SLPs submitted
    • Bursary, internship and work experience targets exceeded
    • Sharing of relevant information with host communities to foster harmonious relations
    • Available business opportunities within the business value chain advertised within host communities in support of local enterprise development.
  • No fines or sanctions relating to breaches recorded
  • The financial constraints at LME have made it impossible to deliver on LED projects
  • Stakeholder engagement is founded on regular meetings with the community, regulators and local government
  • A draft new Mining Charter with more onerous compliance targets has been gazetted for comment. If passed in its current form, this charter poses a significant threat to both the viability of the mines and the social licence to operate
  • Engagement with all stakeholders has been both maintained and enhanced
Mitigation/enhancement strategy
  • Innovative recruitment initiatives and succession planning
  • Market-related remuneration
  • Short and long-term incentive schemes
  • Training and development programmes
  • Outsourced operating model, which reduces the requirement of in-house specialist skills
  • Appropriate policies and procedures governing all aspects of employment
  • Continuous engagement with staff contractors, unions and other worker representatives
  • Review of group’s performance management system to ensure alignment with the company strategy
  • Staff turnover for the year was 39.3% (FY15: 19.4%). The year-on-year increase is substantially due to the restructuring of the contractor model at Vaalkrantz Colliery, necessitated by geological conditions and depletion of reserves which forced the closure of certain production adits
  • Continued enhancement and roll out of both internal and external training opportunities for own staff, contractor staff and community members
  • Continued audit of in-house and contractor skills requirements to ensure optimal application of the outsourced operating model
  • Continued review of compliance against legislative changes and industry best practice
Mitigation/enhancement strategy
  • Off-take contracts for both domestic and export products and services include price adjustment mechanisms for cost increases based on various baskets of indices
  • Customer basket of indices aligned to combined supplier basket
  • Stringent procurement policies
  • Supplier increases limited to customer increases
  • Outsourced operating model reduces fixed cost
  • In the process of aligning major customer basket of indices with supplier indices to address risk of reduced profitability over time
  • Outsourced operating model results in improved performance and aligns payment with performance
  • Multi-year wage agreements in place by major contractors
Mitigation/enhancement strategy
  • Multi-product company
  • Further diversification of products including sale of previously discarded materials
  • Limited exposure to export markets and commodity prices
  • Long term off-take contract with set delivery targets and price escalations
  • Maintain and manage relationships with customers
  • Long-term off-take contracts for the majority of the group’s existing production and new products
  • Increased demand for the group’s slurry
  • Compliance with contractual off-take terms
  • Healthy relationships with customers
Mitigation/enhancement strategy
  • Visible zero tolerance approach to fraud, corruption and bribery through applicable policies, awareness campaigns, reporting mechanisms and disciplinary procedures
  • Implementation of integrated IT system
  • Introduction of additional preventive controls
  • Regular review of effectiveness of contracts
  • Charges of fraud laid against former Vaalkrantz employees with SAPS/NPA investigation ongoing. Continued zero tolerance applied
  • Insurance claim submitted with claim settled by insurer for full value of insurance cover
  • Civil claims to be instituted
  • Implemented SAP ERP across the group
Mitigation/enhancement strategy
  • Operational and financial performance improves accessibility to bank funding
  • Development capital requirement for the development of Moabsvelden – negotiations with financial institutions commenced
  • Increase cash reserves, for equity component of funding, targeted. Assisted by pending disposal of discontinued operations
  • Both equity and debt funding opportunities pursued to achieve the targeted debt-to-equity ratio and to reduce the group’s cost of capital
Mitigation/enhancement strategy
  • Group Compliance Committee in place
  • Employees trained on policies and SOPs in place at all operations
  • Safety and Health Committee
  • SHE Manager at each operation
  • Corporate appointees’ and external advisers’ assistance with compliance
  • Compliance with EMPs
  • Reporting and monitoring of key performance indicators
  • Legal compliance audits conducted
  • Good safety record
  • Training ongoing
  • Review of integrated safety management system and implementation of an integrated environmental management system
  • No monetary fines relating to breaches recorded
  • Approved EMPs in place
  • Mining Charter and social and labour plan annual reports consistently submitted to the DMR
  • Ongoing monitoring of the compliance status with respect to both the social and labour plan and Mining Charter scorecard
Mitigation/enhancement strategy
  • Procedures to be implemented in the event of industrial action are documented and reviewed frequently
  • Continuous engagement with unions and other worker representatives
  • Multiple contractors appointed to undertake specific activities at operations
  • Written SLAs in place between the company and contractors, requiring contractor employees to operate in terms of the company’s policies and procedures, EMPs and SLPs
  • During the year, various incidences of unprotected illegal industrial action were recorded at Vaalkrantz Colliery, all related to contractor personnel
  • Strengthened constructive relationships
  • Continuous monitoring of contractor compliance against SLAs
Mitigation/enhancement strategy
  • Sophisticated water balance modelling implemented at Vanggatfontein to monitor IWUL licence conditions
  • Constant government liaison and consultation to facilitate and award approval of IWUL
  • Remedial measures to be implemented at Vaalkrantz once water management strategy and plan submitted to DWS is accepted
  • Vanggatfontein awarded licence in 2015
  • Moabsvelden IWUL application at an advanced stage at DWS
  • Vaalkrantz IWUL is being processed by DWS and is part of the backlog applications currently being addressed
  • A water management strategy and plan submitted to DWS has not been accepted as yet