KUMBA IRON ORE LIMITED Integrated Report 2021
KUMBA IRON ORE LIMITED
Kumba's history
General view of an 860 haul truck in the Sishen pit
Kumba is a supplier of high-quality iron ore (64.1% average Fe) to the global steel industry. We operate primarily in South Africa, with mining operations in the Northern Cape, a head office in Centurion, Gauteng, and a port operation in Saldanha Bay, Western Cape.
Our purpose is to "re-imagine mining to improve people's lives", using innovative thinking, enabling technologies and collaborative partnerships to shape an industry that is safer, more sustainable, and better harmonised with the needs of our host communities and society.
1931
Iscor's first mine established at Thabazimbi in the Limpopo province
1942
Open-pit operations commenced at Thabazimbi
1953
Sishen, our flagship operation, established in the Northern Cape province
1976
The South African government invested in the infrastructure to enable the export of iron ore from Sishen mine via the Sishen-Saldanha rail link and port facility
This opened up a new era of growth for the iron ore business
1989
Iscor is privatised
2001
Iscor unbundled into two separate companies, namely Kumba Resources and Iscor
2002
Sishen achieved
ISO 14001 Environmental Management and OHSAS 18001 Health and Safety system certifications
2006
Unbundling of Kumba Resources' iron ore assets and the re-listing of Kumba Resources as Exxaro Resources and a new Company Kumba Iron Ore, fully empowered with black economic empowerment (BEE) ownership of 26%
2008
Sishen Jig plant formally opened in November 2008
Construction started on Kolomela
2011
Kolomela, first ore produced five months ahead of schedule and within budget
Maturity of the first phase of Envision (broad-based employee scheme) with 6,209 employees each receiving R576,045 (pre-tax)
2012
Unprotected strike at Sishen in the fourth quarter of 2012
2013
Finalisation of the new supply agreement with ArcelorMittal SA
Ultra-high density media separation (UHDMS) pilot plant commissioned at Sishen in the fourth quarter of 2013
Approval of the Dingleton relocation project
2014
Kumba granted the mining right for the rail properties at Sishen 47% decline in iron ore prices during the year
2015
Further 42% decline in iron ore prices - revised strategy from volume (increasing waste and production tonnes) to a value-based (cash-generating) strategy
Dividends suspended and restructuring of head office and support services at the mines
Slope failure at Thabazimbi; Board approves closure of the mine
Kumba achieved A-listing on the Climate Disclosure Project (CDP) Climate Change and Water programmes
2016
Sishen 21.4% residual mining right awarded to SIOC
Agreement reached to transfer ownership of Thabazimbi to ArcelorMittal SA
Restructuring of Sishen and significant reconfiguration of the Sishen pit
Bottoming out of the iron ore price
Maturity of Envision II; paid R75,000 per employee (after tax) in dividends; no capital pay-out due to decline in Kumba share price
2017
Kumba best performing share on the Johannesburg Stock Exchange (JSE)
Reinstate dividends
Introduced three transformation horizons to enhance our competitive position
Kolomela achieved
ISO 14001 Environmental Management and OHSAS 18001 Health and Safety system certifications
2018
Approved the Tswelelopele strategy with three horizons
Transfer of Thabazimbi, including employees, assets and liabilities as well as the mining rights to ArcelorMittal SA, effective 1 November 2018
Kolomela mining right amended to include Heuningkranz prospecting right
2019
Zandrivierspoort - expiry of prospecting rights in Limpopo, the strategic focus remains in Northern Cape
2020
Covid-19 pandemic impacts not only Kumba but the entire world. Our WeCare response programme was implemented as a comprehensive set of risk-based prevention and control measures
Approved the Kapstevel South project
Kumba delivers strong financial performance in a buoyant commodity market, but production volumes impacted by Covid-19 restrictions
2021
Kumba remained fatality-free for more than five years, supported by our elimination of fatalities (EOF) framework
UHDMS project approved - optimal value will be achieved through life-of-mine extension and increasing product quality
Kumba awarded first place in the Sunday Times Top 100 Companies (generated shareholder returns that outperformed their listed peers)
Resettlement of Dingleton community (which began in 2014) successfully concluded
Navigating our 2021 reports
Our integrated reporting suite comprises the following reports:
All information for the year ended 31 December
2021
Integrated report (IR)
Kumba Iron Ore
Centurion Gate - Building 2B
124 Akkerboom Road
Centurion
0157
www.angloamericankumba.com
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A member of the Anglo American plc groupwww.angloamerican.com
A succinct review of our strategy and businessmodel, operating context, governance and operational performance, targeted primarily at current and prospective investors. When read with the following reports, and our other regular communication channels, we believe we meet the information needs of all our stakeholders.
Sustainability report (SR)
Reviews our approach to managing our most significant economic, social and environmental impacts, and to addressing those sustainability and environmental, social and governance ( ESG) issues of interest to a broad range of stakeholders.
Annual financial statements (AFS)*
Detailed analysis of our financial results, with audited financial statements, prepared in accordance with International Financial Reporting Standards (IFRS).
Ore Reserve (and Saleable Product) and Mineral Resource Report (ORMR)*
Reported in accordance with the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC Code - 2016 Edition) as required by section 12.13 of the Johannesburg Stock Exchange listing rules.
* Published on 22 February 2022.
Online
Each of these reports, with additional updated information, is available on our website: →www.angloamericankumba.com
Social channels
Anglo AmericanAngloAmericanangloamerican
Directors' responsibility
@angloamericanangloamericanplc
As members of the Kumba Board, supported by the Audit Committee, we acknowledge our responsibility for ensuring the integrity of this report. Executive management, assisted by a dedicated reporting team, was responsible for drafting this report. As members of the Board, we have applied our collective mind to the preparation and presentation of the information contained in Kumba's 2021 integrated report. We believe that the report is presented in accordance with the Value Reporting Foundation's Integrated Reporting Framework and that it provides a balanced and appropriate presentation of those matters that have or could have a material effect on Kumba's ability to create value over time. The report presents Kumba's strategic framework for creating value and provides a concise review of the Company's performance and governance over the past year in creating, preserving or eroding value; we believe this review will enable report users to make an informed assessment of Kumba's ability to create value in an integrated manner over the short, medium and long term.
We invite Kumba's stakeholders to review this report and to provide feedback on the Company's performance, strategy and disclosure on delivering stakeholder value.
16 March 2022
Contents
Introduction
1 Approach to reporting
2 About this report
Our business
6 Our purpose, vision and values
7 Our value impact
8 Summary of key performance data
10 The United Nations Sustainable Development Goals
14 Who we are
15 Where we operate
16 Business model
18 Value chain activities and impacts
20 Creating value: interdependencies with the capitals
Governance
30 Chairperson's review
34 Our leadership
38 Protecting value through good governance
40
Corporate governance
Our strategy and operating context
54 Strategy
58 Chief Executive's review
62 Operating context
72 Addressing stakeholder interests
76
Material risks and opportunities
Our performance
92 Delivering on the strategy
96 Chief Financial Officer's review
108 Operational performance
112 Remuneration report
142 Ore Reserves (and Saleable Product) and Mineral Resources
Appendices
152 | Responsibility statement on internal financial controls |
153 | Climate change disclosure |
154 | Salient features |
155 | Remuneration framework composition |
160 | Glossary of icons |
161 | Glossary of terms and acronyms |
IBC | Administration |
This integrated report, written primarily for current and prospective shareholders, seeks to demonstrate that Kumba has the right strategy to deliver value to all our stakeholders in a responsible and sustainable manner, as well as the capacity to deliver effectively on this strategy.
With our Tswelelopele programme guiding us across the three-time horizons, we aim to radically transform our business and improve our competitiveness over the short, medium and long term.
As outlined throughout this report, our strategy and management practices are informed by a sound appreciation of the critical relationships and resources that Kumba depends on to create value.
Terence Goodlace | Mpumi Zikalala | Bothwell Mazarura |
Chairperson and independent non- | Chief Executive and executive director | Chief Financial Officer and executive |
executive director | director | |
Sango Ntsaluba | Ntombi Langa-Royds | Michelle Jenkins |
Independent non-executive director | Independent non-executive director | Independent non-executive director |
Chairperson of the Audit Committee | Chairperson of the Human Resources and | |
Remuneration Committee | ||
Themba Mkhwanazi | Duncan Wanblad | Josephine Tsele |
Non-executive director | Non-executive director | Non-executive director |
Buyelwa Sonjica
Independent non-executive director Chairperson of the Social, Ethics and Transformation Committee
Mary Bomela
Independent non-executive director
About this report
Reporting scope and boundary
This report presents Kumba's strategic framework for creating value over the short, medium and long term; it provides a concise review of how the Company's performance and governance over the past year are delivering on this strategy, and includes a frank reflection on how we have created, preserved or eroded value over time.
The report provides information relating to Kumba's business model, operating context, material risks and opportunities, and governance and operational performance for the period 1 January 2021 to 31 December 2021. It covers the activities and impacts of the following operations over which we have direct control: our Sishen and Kolomela operations, our corporate office in Centurion, our operation at Saldanha port, and our marketing division. We also consider the risks, opportunities and outcomes of our business activities on the various stakeholders who are affected by what we do. These stakeholders and their interests are described on page 72 and an overview of the principal outcomes of our activities is provided on pages 20 to 27.
In addition, we have published AFS, a SR, and an ORMR report. The reporting process for all our reports has been guided by the principles and requirements contained in IFRS, the Value Reporting Foundation's Integrated Reporting Framework, the Global Reporting Initiative (GRI) Sustainability Reporting Standards, the King IVTM* Report on Corporate Governance for South Africa 2016 (King IV),
the JSE Listings Requirements, and the Companies Act No 71 of 2008 (Companies Act).
Our understanding of materiality
This report provides information that we believe is of relevance to current and prospective investors, and to any other stakeholder who wishes to make an informed assessment of Kumba's ability to generate value over the short, medium and long term. We have sought to ensure that all the information in this report relates to matters that have a material bearing on understanding value creation at Kumba. The specific risks and opportunities that impact value (often seen as a discrete set of "material issues") are listed on pages 62 to 71, but these alone are not sufficient as material information for report users.
Understanding our business (page 14 and 15), our business model (page 16) and our activities and impacts on the capitals across our value chain (page 18), forms the basis for appreciating how Kumba creates, preserves or erodes value, and for identifying those issues impacting value. Our ability to create value is determined by the quality of our response to our operating context (page 62), the most significant risks and opportunities facing our business (page 76), and the priority interests of key stakeholders (page 74).
Making an informed assessment of the quality of our strategic response requires an appreciation of our strategy (page 54),
our performance (page 8), our leadership team (page 34), and our governance (page 38) and remuneration practices (page 112).
Our materiality process
To identify the material matters for inclusion in our integrated report, each year we run an independently facilitated materiality discussion with around 15 members of our executive and senior management teams.
This annual materiality review includes a detailed consideration of the following issues:
Assessing the implications of (and for) our business strategy of this analysis.
Informed by this analysis, which identifies all matters that have a bearing on value creation, the team prioritised these matters based on their relative importance. The results of this materiality process inform our annual reports. A separate report of the outcomes of the materiality process is available on request.
* Copyright and trademarks are owned by the Institute of Directors South Africa NPC and all of its rights are reserved.
Restatement
In this report, production, sales volumes and C1 unit costs for 2021 and 2020 are reported as wet metric tonnes (wmt); previously disclosed 2020 figures have been restated, as Kumba previously reported on a dry basis. Product is shipped with approximately 1.6% moisture.
Assurance
We use a combined assurance model that includes assurance obtained from management and from our internal and external assurance providers. This year, PwC assured our 2021 AFS (see page 20 of AFS), while Nexia SAB&T assured key sustainability information in our 2021 SR (see page 124 of the SR). Both of those processes inform our 2021 IR, which contains both financial and non-financial indicators.
Kumba follows a structured internal and external review programme to verify representative Ore Reserves (and Saleable Product) as well as Mineral Resources estimation.
Our Audit Committee provides assurance to the Board on an annual basis on the execution of the combined assurance plan. The group's financial, operating, compliance and risk management controls are assessed by the group's internal audit function, overseen by the Audit Committee.
The Audit Committee report is on pages 17 to 19 of the AFS.
Our reporting boundaries
Kumba Iron Ore Limited*
Investors, shareholders and BEE partners Employees and unions Customers and suppliers South African government
Host communities
Media
Sishen Iron Ore Company ProprietaryKIO Investment Holdings Proprietary
Limited (SIOC)
Limited
* For a detailed list of entities refer to Annexure 1 of the AFS.
Integrated reporting boundary
Integrated | Sustainability | Ore Reserve (and Saleable Product) |
report | report | and Mineral Resource report |
Our strategy (page 54)Our operating context (page 62)
Financial reporting boundary
Material risks and opportunities
(page 76)
Annual financial statements
Addressing stakeholders'
interest (page 72)
Indirect subsidiaries and other investments
Land management technician, Dawid Malo at Tamaga Lodge, one of three biodiversity conservation areas on the western side of Sishen. These areas were originally livestock farms, and are being carefully restored to their natural state.
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Contributing to the United Nations' Sustainable Development (UNSDGs) Goals through our purpose
Kumba's purpose is to "re-imagine mining to improve people's lives", using innovative thinking, enabling technologies and collaborative partnerships to shape an industry that is safer, more sustainable, and better harmonised with the needs of our host communities and society.
We are delivering on this purpose through our active engagement in Anglo American's FutureSmart MiningTM programme and sustainable mining plan (SMP). Developed through extensive internal and external engagement, and informed by an analysis of opportunities and risks, the strategy includes ambitious long-term targets, aligned with the UNSDGs, that relate to three global sustainability pillars: being a trusted corporate leader, building thriving communities, and maintaining a safe and healthy environment.
→ A review of our performance in contributing to the UNSDGs is provided in our separate SR, and summarised in the table on page 10.
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Disclaimer
Kumba Iron Ore Ltd. published this content on 04 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 April 2022 07:54:07 UTC.
