Highlights

In South Africa we spent R84 million in FY11; R70 million on local economic development projects and R14 million on corporate social responsibility projects

In PNG, A$1.1 million spent on community programmes

Material issues

Improving employees’ housing and living conditions

Affirmative procurement, especially promoting business with HDSAs, women and local communities

Identifying and implementing sustainable socio-economic development initiatives such as enterprise and community skills development in line with our business philosophy, and in compliance with our commitments

Developing and applying corporate social responsibility and local economic development strategies to fulfil our role as a responsible corporate citizen

Developing and promoting sound and responsive internal and external relationships through effective stakeholder engagement

The section on Harmony’s approach to sustainability details how we identified our material issues.

Harmony’s socio-economic development contribution in South Africa focuses on promoting health and wellness, particularly for those affected by HIV & AIDS; the development and promotion of mathematics and science; and enterprise development.

Harmony’s socio-economic development programmes at PNG in FY11 were aimed at addressing health, education, agriculture and infrastructure priorities.

In line with our policy, we budget 1% of annual net profit after tax for CSR programmes. LED is budgeted as part of each operation’s strategic plan as per its mining right in terms of the Mining Charter and its social and labour plans (SLPs).

Harmony’s affirmative procurement programmes focus on promoting business with HDSAs, women and local communities. This is dealt with in the Economic performance section.

Information on the housing and living conditions of employees appears in the Labour relations section.

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

South Africa

A key priority is identifying and implementing sustainable local economic development initiatives, such as enterprise and community skills development. This is in line with Harmony’s business philosophy and good corporate citizenship, and in compliance with its social licence to mine commitments.

In South Africa, social and labour plans (SLPs) are in place for each of Harmony’s mining rights in line with the requirements of the Mining Charter. LED programmes form part of the requirements of the various SLPs for the benefit of Harmony’s mining and labour-sending communities and are also aligned with the integrated developments plans of local municipalities where our mines operate.

While we strive to meet these obligations, we remain committed to developing and applying the CSR and LED strategies that form part of our role as a responsible corporate citizen.

We focus on four key areas – education; socio-economic development; sports, arts and culture; and support for broad-based black economic empowerment (BBBEE) – in our communities. However, our corporate social responsibility extends to broader community development and national programmes such as mathematics and science development.

Each of Harmony’s operations is part of a defined mining right. Each mining right in turn is attached to a social and labour plan developed in partnership with local communities, local and district municipalities and with the Department of Mineral Resources. The department approves each SLP as part of the process of granting a mining right.

The local economic development section of each SLP reflects the key socio-economic development priorities of mining and labour-sending community municipalities, as well as of the Southern African Development Community or SADC countries (Lesotho, Mozambique and Swaziland) where Harmony sources some of its employees.

• Developing local infrastructure
• Developing educational infrastructure
• Providing educational support through bursaries and internships
• Providing LED support through business development
• Creating sustainable livelihoods through agriculture.

Harmony’s LED priorities are stakeholder-driven through a partnering process with municipalities, communities, the DMR, NGOs and the governments of Lesotho and Mozambique.

• Hostel de-densification programme (R14.3 million) to convert single-sex hostels into family accommodation and reduce occupancy per room to Mining Charter targets. To date, 25% of the workforce has moved out of hostels and over 1 700 family units are being constructed with a targeted completion date of FY15. In addition, working with local and provincial government, Harmony has invested R23.3 million on low-cost housing to promote home ownership. See case study on here.
• Taxi rank in Kutloanong – in an equal joint venture with the local municipality, Harmony is spending over R3.5 million to construct a taxi rank that will make commuters’ lives much easier by providing shelter. Stalls for hawkers will offer convenience shopping on site. See case study here.
• The Harmony Jewellery School provides education and training in jewellery design and manufacturing. The school is fully funded by Harmony which contributed R2.5 million in the review period. The Central University of Technology offers a three-year diploma at the Harmony Jewellery School complex. This partnership has seen a number of students who complete skills training with the jewellery school enrol for other diploma courses offered by the institution. In FY11, 55 (FY10: 47) students were enrolled on this programme. Eight of these students have Harmony bursaries. During the year, the students exhibited their gold jewellery at the Design Indaba in Cape Town, attracting much attention. These pieces were made by students currently completing courses to become goldsmiths. In addition to developing a five-year plan, the focus is on securing MQA accreditation so that the school can become a service provider conducting learnerships and other programmes under the auspices of the MQA.
• In Masilonyana municipality, Harmony and two other mining companies in the area initiated a R3 million brick-making project, with 27 beneficiaries at present. Harmony has contributed R1 million to the project so far. With all the machinery and equipment required for production delivered to site, work began late in the review period; 12 beneficiaries are involved in production and the rest are being trained in technical skills including paving and masonry. Bricks currently being produced are being used to build infrastructure on site, like offices and ablution facilities.
• The internship programme caters for internal and external bursars and students who need practical work and industry experience to meet the requirements of their academic qualifications.
• In Lesotho, Harmony’s largest source of labour, outside South Africa, we are building Nyakosoba-Harmony high school in the rural part of Maseru district to serve nearby villages, and accommodate some 500 learners. The first phase of the project has been completed and plans are being discussed to start the second phase – building and equipping a science laboratory. The budget for the second phase is R1 million. The total project cost is R3.5 million and estimations are that it will be complete by the end of calendar 2011. In Leribe district, we have completed the second phase of a project to supply water to six villages and the local clinic, benefiting around 5 000 people. In June 2011, we initiated a similar project in Thabana Tsooana in Mafeteng to rehabilitate the water system supplying four villages.
• The Mozambique Agricultural Farm Training Centre and Abattoir Project, in partnership with the Joaquim Chissano Foundation, provides practical training for agricultural students at tertiary institutions as well as to farmers in the community. The first phase of the project involved refurbishing the Marracuene abattoir some 28km from Maputo. Training is conducted in meat processing, selling cattle and business acumen to enhance the local community’s ability to generate income. With the rehabilitation of the training centre and office block complete, phase two will entail a feasibility study on developing a vegetable farm. R2.7 million was spent on this project in FY11, benefiting some 500 students and the local community.
• Working with the City of Johannesburg, Harmony has developed the Soweto Disaster Management Centre – an emergency centre for victims of a range of events, from floods to abuse. By redeveloping a disused administration block at a total cost of R3.5 million, the new centre has over 20 rooms that can accommodate families and provides a base for the city’s emergency services teams.
• The Soweto and Welkom business centres are managed by Harmony to develop and enhance the business and management skills of owners of small, medium and micro enterprises. In the past year, these suppliers received orders totalling R6.9 million (see case study on here).
• In Khutsong community, an old beer hall is being transformed into a community centre focused on small income-generating businesses. Construction on this R2.7 million project began in November 2010, with phase 1 completed by May 2011. Phase 2, comprising a parking area and additional workshop areas, is under way. In addition to the 30 people employed in the early phases, the centre is expected to provide a platform for 25 SMMEs to sell their wares once completed. This facility will also accommodate doctors’ rooms, a pharmacy, satellite police station and a future post office.

Harmony’s CSR priorities in FY11 were again aimed at implementing programmes in mathematics, science, engineering and technology development.

In addition, Harmony ensures that CSR programmes address the key social issues faced by its communities. These include HIV & AIDS education, research and vaccine development; addressing key South African socio-economic developmental issues such as enterprise development, in partnership with SIFE South Africa and SIFE Swaziland; and contributing to educational infrastructure and support programmes in labour-sending communities.

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

All programmes are run by specialised NGOs focused on specific areas of our CSR policy and strategic intent on community development to ensure that Harmony allocates appropriate and dedicated resources to projects. Formal agreements are signed with each NGO to guide relationships and responsibilities, backed by quarterly progress reports. To provide strategic direction and support, Harmony is represented on the boards of these NGOs.

New programmes valued at over R250 000 are approved by the CSR committee which reports quarterly to the sustainable development committee and the Harmony board.

• South African Agency for Science and Technology Advancement (SAASTA) which promotes science, engineering and technology in South Africa. The partnership between SAASTA and Harmony runs the annual South African Science Olympiad and promotes the development of these key subjects in our mining communities, where 18 schools have been targeted to benefit from developmental programmes. The aims of the Science Olympiad include identifying and nurturing talent in science, engineering and technology, encouraging grade 10–12 learners to study science and pursue careers in scientific fields, enhancing the creativity of learners with potential in these subjects, developing broad lifeskills for learners to cope in a demanding academic environment, and honouring excellence in science. The cost of the programme is R7.5 million over a three-year period beginning in FY10, when Harmony contributed R5 million to SAASTA.
• The Minerals Education Trust Fund, a membership of 31 mining companies in South Africa, supports tertiary education to meet the skills needs of the South African mining industry. Harmony contributed R1.2 million in FY11 (FY10: R1.2 million).
• South African Mathematics Foundation oversees teacher training programmes and the Mathematics Olympiad across all schools in the country, as well as subject development targeting learners and teachers in Harmony’s mining communities. In FY11, Harmony contributed R2.0 million (FY10: R2.0 million) to this project.
• Students in Free Enterprise (SIFE) South Africa empowers tertiary students to assist others in creating economic opportunities through enterprise development programmes. SIFE currently covers 27 institutions of higher learning with 1 700 team members. Harmony contributed over R2 million in its sixth year of involvement with SIFE South Africa (FY10: R2 million) while SIFE Swaziland has been a beneficiary for four years.
• AuTEK Biomed conducts research into new medical applications for gold. Harmony contributed R5.2 million to AuTEK in FY11 (FY10: R5.2 million). The primary focus area is research into the design, discovery and development of novel gold-based compounds to inhibit HIV-1 replication. The second area is cancer research, which includes the chemical synthesis of potential drug candidates and their pharmacological evaluation. The third area is malaria. These programmes are carried out in collaboration with various universities in South Africa.

In PNG, Harmony has long-term partnerships with government and established NGOs to develop non-mine related income-generating activities for surrounding communities, and to mitigate mine impacts on communities along the Watut River. In line with the objective of generating sustainable benefits for these communities, in FY11 the focus was on health, education, agriculture and infrastructure.

Access to clean water is key to combating health issues in PNG. In the prior year, two community development agencies active in Morobe Province were engaged to implement this programme. In FY11, they completed 20 water and sanitation projects in Watut River, Hidden Valley and Wafi area communities at a cost of PGK2.2 million. Another 20 projects are planned to be completed in FY12 in the middle Watut region.

In addition to three aid posts completed as part of the Hidden Valley landowner village projects, another aid post was constructed at Wongkins in the lower Watut River region near the Wafi-Golpu project at a cost of PGK190 000 to provide increased access to health services in the Wampar LLG area.

Another area where the joint-venture partners have been providing leadership has been in training village birth attendants. In FY11, we partnered with the Morobe health authorities, World Vision and Zonta International to conduct two training courses for 56 village-based health volunteers who assist with local deliveries. More courses are planned for FY12 to assist in reducing local infant mortality. Other programmes in FY11 involved developing the skills of 25 villagers in basic first-aid training.

In FY11, the MMJV education assistance programme was developed in coordination with the Morobe provincial and Bulolo and Huon Gulf district educational authorities. Components of this programme include school-fee assistance for communities, education infrastructure, teaching aids and teacher training. More than PGK2 million has been spent on these projects.

Since 2010, 1 186 children have been supported at a cost of over PGK400 000 through the school-fee subsidy programme. In FY10, 578 students attending 58 institutions throughout Morobe Province were covered, while in FY11, 608 children were supported. The assistance provides 50% subsidy on grade 7 to 12 tuition fees, rising to 100% for high achievers.

Having proper facilities also makes a difference to a child’s learning process. Accordingly, in FY11, Hidden Valley agreed to fund new educational facilities for six high and primary schools in the region. These are Grace Memorial Secondary School – to receive a two-storey double classroom (contractor mobilising); Bulolo Technical School – one double classroom and teacher’s house (completed); Baiyune High School – two double-storey classrooms (under construction); Sambio Primary School – two teachers’ houses (under construction); Manianda Primary School – a double classroom (under construction); and Gabensis Primary School – a two-storey double classroom (contractor mobilising).

Three double classrooms were completed for the principal Hidden Valley landowner villages – Nauti, Winima and Kuembu.

Five elementary schools in the MMJV operational area (Winima, Nauti, Kuembu, Zindaga and Wongkins) have received teacher training materials worth PGK50 000.

The Hidden Valley explosives contractor has agreed to donate 30 computer sets as part of the educational assistance programme to mine-area schools in Bulolo and Wau.

In FY11, 78 small-scale miners were assisted with training at the Mineral Resources Authority’s small-scale mine training centre in Wau in safer and more efficient mining methods at a cost of PGK17 500.

The MMJV community relations development team assisted coffee farmers in Watut and Biangai areas near the Hidden Valley mine to increase their annual coffee production through training, extension services and material support to increase income levels in the community and reduce dependency on mining activities. Basic husbandry training was conducted for 95 Biangai coffee farmers at a cost of PGK28 699, including distribution of 17 coffee pulpers, 70 pruning saws and 70 secateurs. Pulping machine maintenance training was conducted for Biangai coffee farmers at a cost of PGK10 000. This included the supply of related tools. The company assisted in establishing village coffee nurseries by providing 100 000 high-yielding coffee seedlings and shade cloth at a cost of PGK5 000. Regular quarterly extension patrols were conducted by Mainland Holdings, Coffee Industry Corporation and MMJV officers to provide additional support to growers. An agreement with the PNG Coffee Industry Corporation will be finalised in FY12 to provide even greater support to coffee growers in the mine area.

The MMJV community relations development team assisted farmers in the cocoa-growing areas of Lower Watut through materials support, training and cocoa dryers. Specifically, the company assisted farmers to establish 26 cluster nurseries with over 100 000 high-yielding cocoa seedlings at a cost of PGK65 000. Continuous extension support was provided by engaging specialists and MMJV officers. Cocoa dryers for three villages of Lower Watut (Uruf, Mafanazo and Chiats) were purchased at a cost of PGK40 000 to increase production of quality cocoa. In FY12, MMJV is set to work with Australian NGO, Business for Millennium Development (B4MD), and other stakeholders to explore value-added opportunities for Morobe cocoa and increase the income to cocoa farmers in the lower Watut. Support to aquaculture initiatives was continued in FY11 in conjunction with the Morobe Fisheries Management Authority and a faith-based organisation to improve family nutrition. The community relations team assisted fish farmers in Lower and Middle Watut to construct fish ponds and supplied fish fingerlings. The team also conducted training and extension visits. Three model ponds and a breeder pond were constructed for Lower Watut communities in the villages of Mafanazo, Magerin and Malarina at a cost of PGK88 000. During the year, 27 ponds were constructed by Watut River farmers and stocked with fish fingerlings at a cost of PGK2 000. Training for over 150 fish farmers was conducted at a cost of PGK19 400. A further PGK12 000 was spent on extension support by the Morobe Fisheries Management Authority, the NGFO involved and Mumeng Fish Farmers Cooperative Society.

The company has been working with the government’s Small Business Development Corporation (SBDC) to provide business management training for coffee, cocoa and fish farmers, both mine landowners and non-landowners, who are part of PNG’s sustainable community development programme. In FY11, this training programme was conducted for 172 participants at a cost of PGK79 000.

Hidden Valley’s infrastructure programme focuses on repairing and upgrading roads, bridges, schools and health facilities. In the prior year, roads and the bridge at Nauti (landowner village) and Leklu were upgraded, and a suspension bridge is planned for Sam Sam in the Middle Watut region. In FY11, the infrastructure focus was on school classrooms, teachers’ houses and Aid Posts. The expenditure on this project to date exceeds PGK900 000 (US$151 358), excluding PGK1.5 million (US$567 594) for Aid Posts, classrooms and community halls that were completed in the review period in the landowner villages of Nauti, Kuembu and Winima. In FY11, a major partnership programme was initiated with the PNG Department of Works and National Roads Authority to maintain 19 critical sections of the Lae-Bulolo highway which serves not only the company but a population of over 200 000 people in Bulolo and Menyamya districts. Expenditure on this project was PGK5.75 million, much of which will be reimbursed by the PNG government.

The budget for infrastructure development for FY12 is expected to exceed PGK2 million.

In FY11, the company assisted the Morobe provincial government to establish the Morobe projects management unit (MPMU) as part of our ongoing commitment to build institutional capacity as we progress the Hidden Valley memorandum of agreement. The MPMU is the peak provincial body charged with establishing development priorities and implementing community and regional infrastructure projects using special support grants from the national government. Hidden Valley is a board member of the MPMU and will continue to provide technical assistance as part of its ongoing commitment.

Case study – convenience in a joint venture In Kutloanong, thousands of commuters faced a daily battle to find the right taxi home amid hundreds of mini-bus taxis scattered across the open ground. The area desperately needed a formal taxi rank, which the joint venture between Matjhabeng municipality and Harmony is providing. Following due process, tenders were advertised early in the year. Respondents were screened by the consulting engineer and short-listed candidates evaluated by a panel comprising Harmony and municipal representatives. The selected main contractor was a company majority-owned by a black woman who, in turn, appointed a local sub-contractor and employed unskilled labour from the community. To ensure cooperation, the contractor was introduced to various stakeholders, including taxi organisations, ward councillors and committee members and community development workers. Ahead of the start of earthworks and ground preparation in March 2011, a sod-turning ceremony brought together representatives from the departments of mineral resources, police, transport, and economic development, as well as the executive mayor of Matjhabeng and the national secretary of Santago, the national association of taxi operators.