lonmin 2008 web-based sustainable development report

Lonmin PlcWeb-based Sustainable Development ReportFor the year ending 30 September 2008

Focused onOperational Performance

01 Message from our Chief Executive Officer02 Lonmin Charter03 Safety and Sustainable Development Policy04 About this Report

04 Report content04 Report boundaries and report

completeness04 Reliability and accuracy

07 Assurance Statement09 Lonmin at a Glance11 Summary of our Performance against our

Targets14 The Business Case for Safety and Sustainable

Development15 Governance of Sustainable Development

15 Introduction15 The Board16 The Board Committees18 The Board Committees and sustainability18 The Lonmin Charter and Safety and

Sustainable Development Policy18 The Safety and Sustainable Development

Management Standards19 External organisations and public policy

positions20 Management Systems20 Auditing and assurance20 Stakeholder engagement and reporting

21 Stakeholder Engagement21 Our approach22 Feedback from our stakeholders

25 Risks or issues that are material to ourstakeholders

25 Risk Management25 Our approach25 Our risks

35 Creating Wealth35 Introduction35 Direct economic impacts37 Indirect economic impacts39 The Platinum Group Metals market40 Product responsibility

41 Upholding Ethical Business Practices41 Our approach42 Our performance

44 Respecting and Valuing Fundamental HumanRights44 Our approach45 Our performance

48 Eliminating Fatalities and Serious Injuries51 Health

51 Managing workplace health risks52 Health care delivery

53 Eliminating Noise Induced Hearing Loss55 Managing HIV/AIDS in the workplace and in the

Greater Lonmin Communities57 Our Employees

57 Introduction58 Empowering Historically Disadvantaged South

Africans61 Attracting and Retaining a Skilled Workforce64 Availability and Affordability of Housing for our

Employees64 Our approach65 Our performance

67 Environment67 Introduction68 Management systems

70 Accessing and Managing Energy Resources72 Accessing and Managing Water Resources74 Reducing our Impacts on Air Quality

74 Our approach74 Our performance77 Reducing our impact on climate change

78 Responsible Materials Stewardship and WasteManagement78 Our approach79 Our performance

81 Responsible Land Management andBiodiversity Conservation81 Our approach81 Our performance

84 Uniting with our Communities84 Introduction84 Our approach86 Our performance

93 Implementing the International Council onMining and Metals Principles

96 Data tables98 Reporting Against Global Reporting Initiative

Indicators106 Acronyms107 Definitions113 Feedback on 2008 Sustainable Development

Reports

Lonmin is the world’s third largest primaryproducer of Platinum Group Metals. Our producingassets are all based in South Africa, whichcurrently contributes nearly 80% of globalPlatinum production.

We welcome responses to this Web-based Sustainable

Development Report and the Summary Sustainable

Development Report, to ensure that our reporting

meets your expectations. Please either complete the

online feedback form on www.lonmin.com or in the

appendix of this report or send feedback or requests

for further information to:

Rob GurnerInvestor Relations ManagerLonmin Plc4 Grosvenor PlaceLondonSW1X 7YLTel: +44 (0) 20 7201 [email protected]

01

Reporting is a critical component of engagement with our stakeholdersand is fundamental to ensuring that we respond to relevant risks andopportunities as they relate to the sustainable development of ourbusiness. Our reporting for financial year 2008 comprises both aSummary Sustainable Development Report as well as a web-basedversion which provides a more comprehensive coverage of sustainabledevelopment in the Company.

This year’s report, as in previous years, focuses on the risks andissues that are material to the Company and our stakeholders. Wehave done this using the guidance of the Global Reporting Initiative’s 2006Sustainability Reporting Guidelines and the Mining and Metals SectorSupplement (GRI). We are committed to the values and principlesreflected in our reports and believe our success, as a business isdependent on them.

Last year’s restructuring of the traditional safety, health, environmentaland community (SHEC) reporting structure to one of safety and sustainabledevelopment has resulted in a number of positive impacts. Our SHECPolicy was revised to the Safety and Sustainable Development Policyoutlining our business commitments. The importance and priority ofsafety is well understood by our employees and contractors as reflectedin the “My Life at Lonmin” survey that was undertaken this year.Sustainable development, in general has experienced visible traction at alllevels allowing for a clear vision on our commitments to sustainabledevelopment. In 2008, we have seen significant achievements in the fieldsof safety and sustainable development as well as challenges faced by theCompany and those on an industry wide basis. I have highlighted someof our key performances, challenges and strategies moving forward.

I deeply regret to report the deaths of three of our employees atour operations in 2008. We are fully committed to eliminating fatalitiesand serious injuries at all our operations. We have improved on our losttime injury frequency rate (LTIFR) by 42% and aim to further improvethis rate in 2009 by 15%. Our HIV/AIDS prevention and educationprogrammes have had a noticeable impact, with a 38% reduction inHIV/AIDS related deaths since 2006 as a direct result of early diagnosisand intervention, education and effective treatment. In 2009, we have atarget to increase participation in our wellness programmes by 20%and to enhance our peer educator training.

In 2008, we faced, along with the rest of South Africa, severeelectricity shortages and restrictions were placed on our electricity usage.In response to the electricity supply shortages, we have identified andimplemented various short, medium and long-term management plans toimprove energy efficiency and secure necessary electricity for futuregrowth opportunities. We also regard water management as a high riskissue. We have implemented extensive water management programmesand in May of this year we signed the memorandum of agreement as aparticipant in the Olifants River Water Resource Development Projectbetween the Republic of South Africa, the Joint Water Forum and othermining industry peers to secure water for our future mining operations.Cost of power, water and other consumables continue to presentchallenges for the Company.

We have exceeded our target of 40% of management comprisingof Historically Disadvantaged South Africans (HDSA) by 2009 and interms of preferential procurement, our total procurement spend in 2008with HDSA suppliers was 56.5%, surpassing our target of 50% by2009. Additionally, the local supplier development programme as partof the partnership with the International Finance Corporation (IFC) hasbeen successful, with 109 contracts to date being awarded to twentyseven local suppliers, to the value of US$29.13 million. Communitydevelopment and engagement initiatives will be furthered in 2009 in linewith our vision of uniting with our communities to improve their qualityof life and to contribute to the transformation of South Africa’seconomic, social and environmental conditions.

Although we have made progress on our housing programme,particularly in terms of stream lining our approach to the requirements ofour employees as well as addressing the aspect of affordability, we had adisappointing year in this regard and we are not on track to deliver ourhousing requirements by 2011. We are engaging with the Department ofMinerals and Energy as well as other stakeholders on a revised housingstrategy to address the current shortfall of housing for our employees.

We are pleased to announce that as part of the 2008 NedbankGreen Mining Awards, our sustainable development efforts were widelyrecognised. We were winners of both the environmental and socio-economic categories, as well as runners up in both categories.

We are a Company with valuable assets, a good safety record andstrong performance on sustainable development. We have workedhard over the years to build long-term strategies, embed a culture ofsustainable development and value based behaviour to ensure thataspects relating to sustainable development are incorporated intodecision making processes across our operations.

As a member of the International Council on Mining and Metals(ICMM), we fully support its goal of establishing a global sustainabilitybenchmark for the mining industry. As part of this commitment, wesupport the Sustainable Development Framework and the public reportingof our progress against the framework and our risks. In 2008, KPMG hasprovided assurance on progress made against the requirements of theframework. We would appreciate your opinions on our performance aswell as on our reporting to ensure that we acknowledge all relevant issuesraised by our stakeholders and address them effectively.

I would like to take this opportunity to extend my sincereacknowledgement to all Lonmin employees and contractors for theircommitment and dedication to the Company. Finally, I would like to thankBrad Mills, our former Chief Executive Officer (CEO), who was pivotal inestablishing and developing our industry-leading sustainability credentials.

Ian FarmerChief Executive Officer

I am pleased to introduce to you our2008 Sustainable Development Reportwhich provides information on ourperformance on the broader economic,social and environmental impactsof our business for the financial yearending 30 September 2008.

Ian FarmerChief Executive Officer

Message from ourChief Executive Officer

02

2008 Web-based Sustainable Development Report / Lonmin Plc

Lonmin Charter

Our Mission

To grow and build ourportfolio of high quality assets.

To deliver the requirementsof the South African broad-based socioeconomic MiningCharter and we welcome theopportunity to transform ourbusiness.

To build a value-basedculture, which is foundedon safe work, continuousimprovement, commonstandards and procedures,community involvement andone that rewards employeesfor high performance.

We are successfulwhenOur employees live and worksafely and experience thepersonal satisfaction thatcomes with high performanceand recognition.

Our shareholders are realisinga superior total return on theirinvestment and support ourcorporate sustainability values.

The communities in which weoperate value our relationships.

We are meeting ourcommitments to all businesspartners and our suppliers,contractors, partners andcustomers support ourCharter.

Our Values

Zero HarmWe are committed to zeroharm to people and theenvironment.

Integrity, Honesty & TrustWe are committed ethicalpeople who do what we saywe will do.

TransparencyOpen, honest communicationand free sharing of information.

Respect For Each OtherEmbracing our diversityenriched by openness,sharing, trust, teamworkand involvement.

High PerformanceStretching our individual andteam capabilities to achieveinnovative and superioroutcomes.

Employee Self-WorthTo enhance the quality of lifefor our employees and theirfamilies and promote self-esteem.

We are Lonmin, a primary producer of Platinum Group Metals. We create value bythe discovery, acquisition, development and marketing of minerals and metals.

We respect the communities and nations that host our operations and conductbusiness in a sustainable, socially and environmentally responsible way.

Sir John CravenChairman

October 2008

Ian FarmerChief Executive

03


Safety and SustainableDevelopment Policy

Honouring our health and safetyvalues and sustaining anenvironment that promotes thesafety, health and wellbeing ofour employees and their families,contractors and the communitieswhere we operate.

Providing adequate andappropriate resources toimplement effective managementsystems and risk management,based on valid data and soundscience, during all phases of ouroperations to ensure thereduction of risks and theadoption of best practices.

Respecting and valuing thefundamental human rights,cultural heritage and indigenoustraditions of our employees,communities and otherstakeholders where we operate.

Integrating safety and sustainabledevelopment into the decisionmaking process during allphases of our operations.

Upholding ethical businesspractices, sound corporategovernance and transparency,while meeting or exceedingapplicable legislation, standardsand other requirements.

Implementing the principle ofequal opportunity and equitywhile maintaining an appropriatelyskilled and diverse workforce.

Empowering our hostcommunities and improving theirquality of life by contributing totheir long term social, economicand institutional developmentand promoting the beneficiationof our minerals.

Implementing effective materialstewardship to manage thelifecycle of our products in asocially and environmentallyresponsible manner.

Promoting the sustainable useof natural resources and thereduction, re-use and recyclingof waste.

Preventing pollution andenvironmental degradation inorder to reduce our impact onthe environment and thecommunities where we operate.

Responding to climate changeand driving the reduction ofgreenhouse gases by adoptingbest practice technology,alternative energy sources,improved control systems andmanagement practices.

Promoting integrated land usemanagement and biodiversityconservation by applying aprecautionary approach duringall phases of our operations,including mine closure.

Maintaining transparent andongoing consultative relationshipswith all stakeholders andincorporating this engagementinto the decision making process.

Fostering the commitment of allemployees and contractors tothis policy through training andawareness programmes.

Seeking continual improvementto achieve a high level ofperformance through aframework of setting andreviewing our policy, objectivesand targets.

Reporting publicly oursustainable developmentperformance in accordancewith the International Council onMining and Metals SustainableDevelopment Framework andutilising the guidance of the GlobalReporting Initiative SustainabilityReporting Guidelines.

To honour our Charter, to fulfil our Vision and to create sustainable valuefor our stakeholders, Lonmin is committed to improving the quality of lifeof current and future generations through the integration of economicprosperity, social development and environmental protection by:

We are Lonmin, a primary producer of Platinum GroupMetals. We create value by the discovery, acquisition,development and marketing of minerals and metals.

We respect the communities and nations that hostour operations and conduct business in a sustainable,socially and environmentally responsible way.

Ian FarmerChief Executive

October 2008

04


About this Report

This year we have made use of a number offormal reports to communicate our sustainabledevelopment performance:• The Summary Sustainable Development

Report, which provides a summary of oursustainable development performance,focusing on key strategic risks to theCompany, to the broader stakeholder group,including our employees, business partners,shareholders, government, suppliers,contractors, industry specialists and non-governmental organisations.

• This more extensive, Web-based SustainableDevelopment Report provides detailedinformation on our sustainable developmentstrategy and profile, management approach,performance and case studies for thoserequiring more in-depth information.

• Our 2008 Annual Report provides a synopsisof our performance on sustainable developmentand should be read as a complementary reportto the Sustainable Development Reports.

Report contentTimelinessOur annual Sustainable Development Reports area reflection of our operational activities and coversour performance for the financial year ending30 September 2008, and has been preparedfollowing the guidance of GRI.

Materiality and stakeholder inclusivenessThe content of this Web-based SustainableDevelopment Report has been largely defined by:• sustainable development risks facing the

Company;• taking into consideration interests and

expectations from a range of stakeholdersobtained from various engagement initiativesand reporting on risks that wouldsubstantively influence their perceptions anddecision;

• taking into account legislation and issues thatsociety at large consider relevant to ouroperations; and

• reporting best practice.

The Summary Sustainable DevelopmentReport in turn provides information pertaining toour risks as identified by the Company and by ourstakeholders. We have compiled the reportsconscious of the fact that our stakeholder groupsrange from employees, local communities,shareholders and contractors to non-governmentorganisations, unions, socially responsibleinvestment analysts and governments.

Sustainability contextWe have endeavoured to clearly outline ourapproach to sustainable development in a localand global context. All the sections are aligned tothe sustainable development strategy as well asthe risks that were identified. Where necessary,we have referenced our performance data toglobal and national sustainability initiatives andprinciples.

Balance and clarityThe reports reflect a balanced approach,highlighting positive and negative aspects. Wehave endeavoured to present data andinformation in a clear and unambiguous mannerto ensure that the information in our report isreadily understandable and accessible to ourstakeholders.

ComparabilityWe are committed to presenting information anddata in a consistent manner to enablecomparative analysis. Trend information ispresented for all key sustainability informationfrom 2004 and where changes in datameasurement or collection methodologies haveoccurred, we have stated the basis, calculationand assumptions in the text. Where data hasbeen restated, it is indicated as such and theimplications are clearly described. Definitions ofindicators are provided in this report. All monetaryamounts reflected in the report are expressed inUnited States (US) dollars, using a Rand/US$exchange rate of R7.45/US$. A value of1,366,307 Platinum Group Metals (PGMs)/ozconstitutes the basis of efficiency calculationsthat include total production and part-processedmaterial.

We are committed to reporting publicly our sustainable development

performance as we realise that our performance is of interest to a diverse

range of both national and international stakeholders, including our

employees and contractors.

05


Report boundaries and report completenessOur previous report reflected performance forthe twelve-month period 1 October 2006 to30 September 2007, and since then there hasbeen no significant change in our size, structure,ownership or products that would materiallyinfluence the scope or boundary of this report.We are confident that the report provides acomplete and balanced view of our performancefor the 12-month reporting period and does notomit material information that would influencestakeholder’s assessment of our operations.

The report boundary includes all Lonmin-owned entities and those joint ventures orpartnerships over which we have exercisedmanagement control during the twelve-monthperiod ending 30 September 2008 as per thetable on the next page. We do not report onindicators, other than key employee data for ourhead offices or satellite offices as the limited sizeand impacts of these offices render them notmaterial to our reporting processes. The LTIFR ismaterial to our exploration activities, which arewholly owned or managed by the Company. Wehave not been in a position to report on the LTIFRrelated to exploration in 2008 due to insufficientdata capturing systems in place.

Reliability and accuracyIndependent external assurance of our publiclyreported sustainable development performance isa key element of our sustainable developmentframework. External assurance supports theintegrity of our report content and has beenprovided by KPMG over selected parameters, theapplication of the reporting principles as outlinedby GRI, as well as assurance relating to ourprogress towards the alignment of our policiesand business practices with the ten principles ofthe ICMM. We have identified and confirmed theaccuracy of our original sources of informationand provided evidence to support ourassumptions and calculations to the satisfactionof our external assurer. The scope of theassurance includes the Web-based SustainableDevelopment Report and the SummarySustainable Development Report (see KPMGExternal Assurance Statement page 07).

Application levelsBased on our own assessment of the report content against the criteria provided in the GRI applicationlevels, we declare that in combination, the Web-based Sustainable Development Report and theSummary Sustainable Development Report fulfil the requirements of a B+ application level. The GRItable referencing information per GRI indicator is contained within the section “Reporting Against GlobalReporting Initiative Indicators.”

About this Report (continued)

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Scope of the report and assurance statementAssurance on

Entities Ownership Components Report scope selected data Data reported

Exploration Wholly owned and Gabon Employee datamanaged by Lonmin Kenya

Ireland !

Joint Ventures, with Lonmin Loskop "as managing partner Tanzania

Joint Ventures and not Canadamanaged by Lonmin " "

Operations Wholly owned and managed Lonmin 100%by Lonmin Platinum !

Marikana

PreciousMetal Refinery

(PMR) ! !

LonminPlatinum !Limpopo

Akanani* "

Joint Ventures, with Lonmin Pandora 100% dataas managing partner Joint reported as

Venture ! part of LonminPlatinum

! Marikana

Dwaalkop 100% as partJoint of Lonmin

Venture* ! PlatinumLimpopo

Head offices Johannesburg Employee data

London ! "

* Activities on site are limited and mine is not operational.

About this Report (continued)

07


KPMG Assurance Statement

Independent assurance provider’s report to Lonmin Plc (Lonmin) on the Lonmin Web-based SustainableDevelopment Report 2008 (the Report)IntroductionWe have completed our independent assurance engagement of the Report, for the year ended 30th September 2008with respect to the following aspects of the Report:(a) To express reasonable assurance on the following Sustainable Development (SD) Performance Indicators:

• Work Related Fatalities in 2008 (page 48); Green House Gas (GHG) Emissions from Direct and Indirect sources(page 71); and Total Energy Consumption (page 71).

(b) To express limited assurance on the following:• SD Performance Indicators: % of Operational Discretionary Spend on HDSA suppliers (page 37); % of

Operational Discretionary Spend on GLC suppliers (page 38); Employee Lost Time Injury Frequency Rate (LTIFR)(page 49); Number of Noise Induced Hearing Loss Cases Compensated (page 53); Number of PulmonaryTuberculosis Cases (page 56); Average Tonnes of Sulphur Dioxide (SO2) Emissions per Day (page 75); and DustFallout Results for Marikana and Limpopo operations (page 74-75); Total Fresh Water Intake (page 72); Tonnes ofHazardous Waste disposed of to Landfill and Incineration (page 97); and Tonnes of General Waste to Landfill(page 97);

• Management’s assertions with respect to the application of the 2006 Global Reporting Initiative (GRI) G3 Part 1Principles within the Report, (page 04-05); and

• The International Council for Mining and Minerals (ICMM) Subject Matter 1, as described in the ICMM SustainableDevelopment Framework: Assurance Procedure, May 2008, relating to management’s assertions with respect toLonmin’s progress towards alignment of policies and business practices with the ICMM’s Ten Principles ofSustainable Development (page 93).

The ‘About this Report’ section of the Report (pages 04-05) highlights key issues in relation to limitations in thenature, timing and extent of the reported SD performance information. It is important to understand the ‘selected 2008SD performance indicators’ and related statements in the Report, in the context of these limitations.

The internally developed Lonmin reporting definitions, the 2006 GRI G3 Sustainability Reporting Guidelines, and theICMM Sustainable Development Framework: Assurance Procedure, were used as criteria for the assurance over theselected sustainability performance information.

This report is made solely to Lonmin in accordance with the terms of our engagement. Our work has beenundertaken so that we might state to Lonmin those matters we have been engaged to state in this report and for noother purpose. We do not accept or assume responsibility to anyone other than Lonmin, for our work, for this report, orfor the conclusions we have reached.

Responsibilities of DirectorsLonmin’s directors are responsible for the preparation of the Report, and the information and assessments containedwithin it, for determining the company’s objectives in respect of sustainable development performance, including theidentification of stakeholders and material issues, and for establishing and maintaining appropriate performancemanagement and internal control systems from which the reported information is derived.

Responsibility of the independent assurance providerOur responsibility is to provide our conclusions based on our independent assurance engagement, performed inaccordance with the International Standard on Assurance Engagements (ISAE 3000) Assurance Engagements Otherthan Audits or Reviews of Historical Financial Information. This standard requires, inter-alia, that the assurance providercomplies with the appropriate requirements of the IFAC Code of Ethics for Professional Accountants such that theirindependence is not compromised and the assurance team members collectively possess the necessary professionalcompetencies. Our work was carried out by a multi-disciplinary team of safety, health, environmental and assurancespecialists with extensive experience in sustainability reporting in the mining sector.

08


KPMG Assurance Statement (continued)

Summary of the work performedOur work performed depends on our judgment, including the assessment of the risks of material misstatement of the2008 selected SD performance indicators and disclosures, and our assessment of the internal controls relevant to thecompany’s preparation and presentation of the sustainability information in the Report. Our procedures were designed togather sufficient appropriate evidence to determine that the 2008 selected SD performance information is not materiallymisstated.

Our work consisted of:• Testing of process and systems in place at corporate level and business unit level to generate, collate, aggregate and

report the SD performance indicators for the year;• Conducting site visits to the Marikana Operations, and Johannesburg Corporate Office;• Review of internal audit work related to the selected SD performance indicators conducted for the Marikana,

Limpopo and PMR operations;• Conducting interviews with management, at the sites and at corporate level;• Conducting interviews with management at group level and a review of policies, procedures, systems and controls to

obtain an understanding of the consistency of the reporting processes in respect to the requirements of the ICMM’s10 Principles of Sustainable Development and the application of the 2006 GRI G3 Part 1 Principles ; and

• Consideration of whether management’s assertions in the Summary Report and Report in respect of the applicationof the 2006 GRI G3 Part 1 Principles are consistent with our findings and evidence obtained from our site and grouplevel work performed.Where a limited assurance conclusion is expressed, our evidence gathering procedures are more limited than for a

reasonable assurance engagement, and therefore less assurance is obtained than in a reasonable assuranceengagement. We do not express any assurance in relation to the 2008 SD performance indicators in the Report notincluded above. We believe that our work performed as set out above provides an appropriate basis for our conclusions,expressed below.

ConclusionBased on our work performed, in our opinion:• The selected 2008 SD performance indicators set out in (a) above for the year ended 30 September 2008, are fairly

stated in all material respects;• We have no reason to believe that, for the year ended 30 September 2008:• the selected 2008 SD performance indicators set out in (b) above are not fairly stated in all material respects;• management’s assertions relating to the application of the GRI G3 Part 1 Principles are not fairly stated in all material

respects on the basis of the 2006 GRI G3 Guidelines; and• management’s assertions relating to the alignment of Lonmin’s business to the requirements of Subject Matter 1 are

not fairly stated in all material respects on the basis of the ICMM Sustainable Development Framework: AssuranceProcedure, May 2008.

KPMG Services (Pty) LimitedPer PD NaidooDirectorJohannesburg20 November 2008


Lonmin at a Glance

We have a scarce, valuable and lasting reserveand resource base. All of our operations arebased in the Bushveld complex in South Africa,which contains more than 80% of the world’sknown PGMs reserve base. We are one of onlythree major integrated mine-to-market PGMsbusinesses.

Final metal sales for the financial year 2008were 726,918 oz of platinum and 1,401,371 oz oftotal PGMs. These sales include 20,425 oz soldas concentrate or other part-processed products.

We are listed on the London Stock Exchange,with a secondary listing on the JohannesburgStock Exchange. Our South African headquartersare located in Johannesburg, with our UnitedKingdom headquarters based in London. Ourmain operating subsidiaries, in which we have an82% interest, are Western Platinum Limited andEastern Platinum Limited, which are located in theNorth West Province of South Africa.

We operate two key business units:

1. Mining DivisionOur mining operations comprise Marikanamining in the North-West Province of SouthAfrica and Baobab Shaft in the LimpopoProvince. We also manage the Pandora JointVenture to the east of our Marikanaoperations. Our Marikana mining operationscurrently contributes around 92% of ourannual production. At both our operations,we mine the Upper Group 2 and MerenskyPGMs-bearing reefs.

2. Process DivisionOur Processing Division, including eightconcentrators, a smelter and base metalrefinery (BMR) is located primarily in Marikana.The PMR is located in Brakpan in theGauteng Province.

Other operationsOur two major acquisitions during the last fewyears were Akanani and Limpopo, including theDwaalkop Joint Venture, all located in theNorthern Bushveld.

Exploration activitiesWe also have an extensive exploration portfoliowhich includes the following projects:• Kenya: Wholly owned and managed by

Lonmin.• Canada: Joint ventures with Vale Inco and

Wallbridge Mining Company in the SudburyBasin, both of which are managed by thesepartners.

• Tanzania: Joint venture with IMX Resources,and managed by Lonmin.

• Gabon: Wholly owned and managed byLonmin.

• Ireland: Wholly owned and managed byLonmin.

• South Africa: Loskop joint venture withBoynton and managed by Lonmin.

We are Lonmin, a primary producer of platinum group metals. We create

value by the discovery, acquisition, development and market minerals

and metals.

K3 Shaft at our Marikana operations

10


Percentage shareholding in our operations

Entity Companies Equity Partners

Marikana Mining Western Platinum Limited 82% held by Lonmin 18% Incwala

Process DivisionEastern Platinum Limited South Africa (UK) Limited Resources Pty Limited

Limpopo Messina Platinum Limited 100% held by 18% Incwala ResourcesWestern Platinum Limited Pty Limited in Western

Platinum Limited, thus 18%indirect shareholding in

Messina Platinum Limited.

Akanani Metals Technology Incorporated 74% held by Metals 26% Incwala Resources(wholly owned subsidiary Technology Incorporated Pty Limited

of Lonmin Plc)

Pandora Joint Venture Eastern Platinum Limited 42.5% held by Eastern 42.5% RustenburgPlatinum Limited Platinum Mines Limited

7.5% Bapo Ba MogaleMining Company

Pty Limited

7.5% MvelaphandaResources Limited

Dwaalkop Joint Venture Western Platinum Limited 50% held by Western 50% MvelaphandaPlatinum Limited Resources Limited

Akanani

Limpopo

Marikana

Pandora

Pretoria

Johannesburg

Processing Capability• Marikana – Smelter

and BMR• Johannesburg – PMR• Each processing facility

has capacity of 1.2 millionplatinum oz

Resources andReserves

AkananiResources 21.9

LimpopoResources 22.5Reserves 5.1

MarikanaResources 101.5Reserves 43.1

PandoraResources 7.7Reserves 0.06

All Resources &Reserves figures areon a Total Attributablebasis in million PGMsoz (3PGE + Au)

Lonmin at a Glance (continued)

11


Summary of our Performanceagainst our Targets

The table below summarises our performance against our targets and outlines our targets going forward.

Issue Achieved Targets for 2008 and beyond Performance

Management systems We will achieve an average score of 3.7 We did not conduct an audit onout of 5 on the SHEC Standards in 2008. the implementation of the SHEC

Standards during 2008 due to therevision of the Standards, thus this

performance was not assessed.

New We will achieve Occupational Health andtarget Safety Standard (OHSAS) 18001 management

system certification at all our operations by 2011.

We will maintain all current management All operations maintained ISO 14001systems certification for the certification. OHSAS 18001reporting year. certification at the Assay Laboratory

lapsed in 2008.

Our Limpopo operations and Shared In 2008, our Limpopo operations andServices will achieve International Shared Services receivedStandards Organisation (ISO) 14001 ISO 14001 certification.certification in 2008.

We will receive zero fines and The provincial Departmentprosecutions for the reporting year. of Agriculture, Conservation and

Environment issued a US$13,422.82administration fine for proceeding to

construct a tailings facility withoutreceiving authorisation in termsof the National Environmental

Management Second AmendmentAct 8 of 2004. This fine was duly paid.

Human capital We will comply with the principles In 2008, there has beenembodied in the United Nation no reported incidentDeclaration for Human Rights. of violation of the principles.

On We will increase the literacy rate In 2009, literacy assessmentstrack of our employees to 50% by 2009. will be undertaken to verify

performance in this regard.

We will ensure that 40% of senior and In 2008, 42.3% of our seniormiddle management comprise of and middle managementhistorically disadvantaged South African employees were HDSA.(HDSA) employees by 2009.

Not We will increase female participation In 2008, although we increasedon in mining (in mining and processing the number of female employees to

track operations) to 10% by 2012. 6.1% in 2008, only 1.8%are employed in core operations

(in mining).

Procurement We will increase our total discretionary In 2008, 56.5% of our totalspend with HDSA suppliers to 50% discretionary spend was attributedby 2009. to HDSA suppliers.

New We will increase our total discretionarytarget spend with HDSA suppliers to 63%

by 2010.

We are committed to continual improvement in our performance through

a framework of setting and reviewing our policies, objectives and targets.

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Summary of our Performanceagainst our Targets (continued)


Safety We will achieve zero fatalities at each In 2008, regrettably three fatalitiesof our operations each year. occurred at our operations.

Two fatalities resulted from fall ofground occurrences and the

third fatality resulted from an explosioninduced by drilling into a misfired

shothole in a steeply inclined workplace.

We will improve our LTIFR by 25%. As at the end of September 2008,we have improved our LTIFR

by 42%.

New We will improve our LTIFR by 15% bytarget 30 September 2009 (baseline year 2008).

Health We will have a minimum of 900 patients As at the end of 2008, we had 989on anti-retroviral treatment (ART) by 2008. patients on ART.

New We will increase participation of patientstarget in our wellness programme by 20%

by 2009.

New We will train one workplace peer educatortarget for every 75 employees by 2009.

We will reduce our number of new In 2008, we have reduced our newnoise-induced hearing loss (NIHL) cases diagnosed NIHL cases by 62.2%by 20% by 2008. from our 2007 baseline

year to 236 cases.

New We will reduce our number of newtarget noise-induced hearing loss (NIHL) cases

by 30% by 2009 (2008 baseline year).

On All operations to implement a baseline Our mining and processing operationstrack survey on occupational exposure hazards have baseline risk assessments,

and establish occupational hygiene occupational hygiene monitoringmonitoring and health surveillance and medical surveillance programsprogrammes by 2009. in place. Risk review of significant

occupational hygiene hazards willbe conducted in 2009.

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Andre Spohr, Mine Overseer at K3 Shaftproviding training to the work force on potentialsafety hazards. Our ongoing safety trainingprogrammes have been an important componentof our improved safety performance.

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Summary of our Performanceagainst our Targets (continued)


Environment On We will reduce our aggregate fresh In 2008, we have reduced ourtrack water intake by 15% per unit of aggregate fresh water

production (2007 baseline year) intake by 15.1% per unitby 2012. of production.

On We will reduce our aggregate energy In 2008, although we have improvedtrack consumption per unit of production our aggregate energy consumption by

by 10% by 2012, thereby reducing 4.6% per unit of production, we havegreenhouse gas emissions by 5% increased greenhouse gas emissions(2007 baseline year). by 6.7% per unit of production.

On We will reduce our quantities of waste In 2008, we standardised our wastetrack disposed of to landfill by 15% measurement systems to a metric

(2007 baseline year) by 2012. of weight to enable more accuratemeasurement of waste to landfill, thus

a direct comparison to the 2007volumes is not possible.

We will not exceed the 600mg/m2/day In 2008, five exceedances of thedust fallout rate for ambient dust 600mg/m2/day target were recordeddeposition in residential areas near at residential sites at our Marikanaour operations. operations. Due to the methodology

employed, cumulative fallout of allexternal and internal dust sources

are recorded.

Housing Not on We will construct 5,500 houses within As a result of both extensive internaltrack the greater Lonmin community and external consultation in 2008,

(GLC) by 2011. a decision was made that show houseswould be constructed initially, after which

the remainder of the houses will beconstructed in phases. We are engaging

with the Department of Minerals andEnergy as well as other stakeholders on

this revised housing strategy.

Not on We will convert all 114 hostel 29 hostel complexes have beentrack accommodation into family and converted to date. Our housing strategy

bachelor accommodation by 2011. is in the process of being reviewed indiscussion with the Department of Minerals

and Energy and other stakeholders.

We will construct 80 houses within In 2008, the programme to designMooinooi Township by December 2008. and construct these houses was put

on hold, due to a shift in focus torental accommodation.

Community New We will spend 41% of our financialtarget commitments on local economic

development projects as per theSocial and Labour Plan by 2009.

In order to measure our dust fallout and impacts on our community, we have extensivemonitoring systems in place across our operations and within our communities.

Anna Maseko, Boikenyo Matlala and Tintswalo Langa from Rekgonne BapoSpecial School within the Marikana GLC, work daily in their school gardens,as part of the eco-schools programme.

#

#


The Business Case for Safety andSustainable Development

Sustainable development and a culture of safe production is embedded

in our business strategy to capture, build and grow the business for long

term success.

Our employees are the foundation to our business.

For the mining industry, sustainable developmentdoes not only mean integrating socialdevelopment, prosperity and environmentalstewardship into a mine plan. It also considershow a region will fare once the mine closes.It is about creative solutions to social andenvironmental challenges, and engagingstakeholders. It is about going beyond complyingwith the law, to take account of society’s needs.

The social business caseOur employees are the foundation to our businessand by investing in our employees’ wellbeing; weare investing in the Company’s long-term future,through enhanced attraction, retention andemployee morale.

The business case for empowering our hostcommunities and improving their quality of life isclear – we cannot succeed as a business insocieties that fail. To this end, we continue toendeavour to contribute to our communities’long-term development and promote thebeneficiation of our minerals – in this way, we canretain our licence to operate, innovate and grow.

Stakeholder engagement improves company-community relations, and guides the Companywhen taking decisions that affect the community.

The environmental business caseProducing PGMs while limiting damage to healthand the environment, and using resources moreefficiently is at the core of the sustainabledevelopment business case for the Company. Weshare global anxiety around environmentaldegradation and resource scarcity, in particularwater and energy resources. We depend on theseresources in order to function. By adopting newor cleaner technologies, we make productionprocesses more efficient, reduce costs anddecrease environmental degradation. We alsounderstand that our operations can affect thequality of life in the communities where weoperate.

The effective adoption of sustainabledevelopment principles within the Companyshould increase profits. We stand to enhanceour brand, gain an edge in the market, increasecustomer loyalty and build opportunities forfuture growth.

Business Benefits of Sustainable Development

Potential to enhance profitability• Improved shareholder value.

Market advantage• Stronger brand and image;• Customer loyalty;• Attracting and retaining the right talent.

License to operate• Improved reputation with all stakeholders;• Reduced costs of compliance.

Quality management• Improved risk management;• Employee motivation and commitment;• Increased intellectual capital.

Eco-efficiency• Reduced costs;• Optimal investment strategies.

Resources• Access to capital;• Access to natural resources, including land.

14

15


Governance of Sustainable Development

IntroductionThe Company is fully committed to the higheststandards of corporate governance which, itbelieves helps create the business integrityneeded to deliver robust and sustainable businessresults. The governance of the Company isunderpinned by the values set out in the LonminCharter and supported by the Lonmin Code ofBusiness Ethics. In terms of governance ofsustainable development, the Lonmin Safety andSustainable Development Policy defines ourcommitments. Standards and guidelines form thefoundation of the management system forimplementation of these sustainable developmentcommitments. As a member of the ICMM, its tenprinciples are integral to our sustainabledevelopment governance.

The BoardThe Company is led and controlled by a unitaryBoard of Directors. The Board currently has tenmembers, comprising an independent non-executive Chairman, seven independent non-executive Directors, and two executive Directors.An independent Director is a person who isindependent in character and judgement and freefrom relationships or circumstances which couldaffect their judgement. All non-executive Directorsat the Company are regarded as independent bythe Board, as per the requirements of provisionA.3.2 of the Combined Code.

The Board meets regularly, normally on sixoccasions during the year and more frequently asrequired, including two meetings in South Africa.The Board provides the entrepreneurialleadership, direction and control of the Company;is the custodian of the Company’s strategic aims,vision and values; and assesses whether thenecessary financial and human resources are,and will continue to be, in place to enable theCompany to meet its objectives. It has a formalschedule of matters reserved for its decision,the most material of which fall into the keyareas listed below:• Strategy and management;• Financial reporting and control;• Social, environmental and ethical matters;• Contracts and financial commitments;• External communications;• Corporate governance;• Remuneration; and• Board composition and membership.

Whilst all Directors have equal responsibility inlaw for managing the Company’s affairs, it is therole of executive management to run the businesswithin the parameters laid down by the Board andto produce clear, accurate and timely reports toenable the Board to monitor and assessmanagement’s performance. The executivesmake full use of the expertise and experience thatthe non-executive Directors bring from theirbusiness careers. The Chairman routinely holdsdiscussions with non-executive Directors withoutthe executive Directors being present.

Chairman and Chief ExecutiveThe roles of Chairman and Chief Executive areclearly separated and set out in writing. TheChairman, who is an independent Director, isresponsible for leadership of the Board, ensuringits effectiveness and setting its agenda, and forensuring that there is effective communicationwith all shareholders. The Chairman alsofacilitates the effective contribution of all Directorsand ensures that there is a constructiverelationship between the executive and non-executive Directors. The role of the ChiefExecutive is to provide leadership to the executiveteam in running the business, to developproposals for the Board to consider in all areasreserved for its judgment and oversee the efficientand effective implementation of Board-approvedactions.

Board balanceThe Board believes that it has sufficient membersto contain a balance of experience and skills andto manage succession issues but without beingso large as to be unwieldy. The quality of theindividual Directors and the Board’s compositionis a key contributor to the Board’s effectiveness,with no one individual or group of individualsbeing able to dominate the decision-taking. TheBoard keeps the membership of its Committeesunder review, to ensure gradual refreshing of skillsand experience. It is satisfied that all Directorshave sufficient time to devote to their roles andthat it is not placing undue reliance on keyindividuals. The Company has previouslyimplemented a Board performance evaluationprocess which is designed to identify whether theBoard possesses the relevant skills, knowledgeand experience to fulfill its mandate, so enablingit to manage succession issues.

We are committed to upholding ethical business practices, sound

corporate governance and transparency, while meeting or exceeding

applicable legislation, standards and other requirements.

16


Governance of Sustainable Development (continued)

Engaging with shareholdersThe Directors have regular discussions withinstitutional shareholders following which detailedfeedback from these visits is shared with theBoard. In addition, the Chairman routinely offerskey shareholders the opportunity of meetings witheither himself, the Deputy Chairman or the SeniorIndependent Director to discuss governance,strategy or any other matters shareholders wishto raise. A number of such meetings were heldwith shareholders during the financial year andgeneral areas of discussion with institutionalshareholders included governance, strategy,performance and remuneration. The CombinedCode urges companies to use the Annual GeneralMeeting to communicate with privateshareholders and to encourage their participation.The Board has followed these principles for manyyears. The Board, as a matter of course, providesshareholders the opportunity to vote on everysubstantially different issue by proposing separateresolutions and uses electronic poll voting on allresolutions. This enables the votes of allshareholders to be taken into account, whetherthey are able to attend the meeting or not, as wellas providing a more discreet and democraticmethod of voting at the meeting. The results of allpoll votes are displayed on our website, togetherwith a range of investor relations materials,including up to date information on the Group’sactivities, copies of all presentation materialsgiven to institutional shareholders and furtherexplanation of the matters contained in the annualreporting documents.

Additionally, all shareholders have the rightunder the United Kingdom’s Companies Act 2006to requisition resolutions to be moved at theCompany’s Annual General Meeting provided therequisition is made by 100 or more shareholdersor such number of shareholders who holdtogether not less than 5% of the company’svoting share capital. In certain circumstances, theCompany is required to issue a circular relating tosuch a resolution to all shareholders.

There were no significant issues raisedrelating to economic, environmental and socialperformance at the Annual General Meeting in2008. Queries raised during the Annual GeneralMeeting included those relating to smeltershutdowns and operational reliability in terms ofequipment and machinery.

The Board CommitteesThe Board has established four Committees andprovides sufficient resources to enable them toundertake their duties. The Board Committeesmeet quarterly, as a minimum basis and reviewsthe Company’s performance. The table on thenext page summarises the committees, thecomposition of each committee and the mandate.Detailed information on the Board Committee’sterms of reference and governance policies canbe accessed in our 2008 Annual Report.

The Company is fully committed to the higheststandards of corporate governance which we believehelps create the business integrity needed.

17



Committees of the Board

Committee’s of the Board Composition Mandate

Audit and Risk 3 non-executive Directors The primary purpose of the Audit and Risk Committee, is1 non-executive Chairman as follows:

• To monitor the integrity of the Company’s financialstatements and announcements relating to its financialperformance and reviewing significant financial reportingjudgments;

• To keep under review the effectiveness of the Company’sinternal controls and risk management systems;

• To monitor the effectiveness of the internal audit functionand review its material findings; and

• To oversee the relationship with the external auditors,including agreeing their remuneration and terms ofengagement, monitoring their independence, objectivityand effectiveness and ensuring that policy surroundingtheir engagement to provide non-audit services isappropriately applied.

Nomination 3 non-executive Directors The primary purpose of the Nomination Committee, is1 non-executive Chairman as follows:

• To ensure a regular, rigorous and objective evaluation ofthe structure, size, composition, balance of skills,knowledge and experience of the Board is undertaken;

• In consultation with the Chairman, recommend anyproposed changes to the composition of the Board andto instigate and manage the recruitment process;

• To oversee the Company’s adherence to applicable legaland regulatory requirements in relation to the above; and

• To oversee compliance with the Combined Code andother applicable corporate governance regulation.

Safety and Sustainability1 1 non-executive Chairman The primary purpose of the Safety and Sustainability2 non-executive Directors Committee, is as follows:1 executive Director • To provide advice to the Board and, as necessary to the

Audit and Risk Committee, on safety and sustainabilitymatters;

• To assess our effectiveness in managing these risks;• To review significant safety and sustainable developmentincidents and performance indicators; and

• To report to the Board on developments, trends and/orforthcoming significant legislation on safety andsustainable development matters which may be relevantto the Company’s operations, assets or employees.

Remuneration 3 non-executive Directors The primary purpose of the Remuneration Committee,1 non-executive Chairman is as follows:

• To make recommendations to the Board on theCompany’s framework of executive remuneration;

• To determine individual remuneration packages withinthat framework for the executive Directors and certainsenior executives;

• To oversee the administration of the Company’s incentiveschemes;

• To review Directors’ expenses; and• To oversee the Company’s executive pensionarrangements, all of which it carries out on behalf of theBoard.

1 The Committee comprises a number of senior executives in addition to those indicated.

18


The Board Committees and sustainabilityIn 2008, the Safety and Sustainability Committeeof the Board met four times. Membershipcomprises two non-executive Directors and oneexecutive Director and is chaired by anindependent non-executive Director. A number ofsenior executives also regularly attend thesemeetings, including the Chief Operating Officer,Mahomed Seedat and Vice PresidentSustainability, Marinda van der Merwe.

The Remuneration Committee of the Boardbelieves that participation in a short-term incentivescheme enhances the focus of the executiveDirectors and key senior executives by providing ameaningful incentive to outperform and helpsensure that the management team isappropriately focused on business criticaloutcomes. The table below outlines performancerelated pay for executive Directors in 2008.

The Lonmin Charter and Safety and SustainableDevelopment PolicyThe Lonmin Charter and the Lonmin Code ofBusiness Ethics provide a framework for allbusiness practices. During the reporting period,the Safety and Sustainable Development Policy(previously SHEC Policy) was approved by theChief Executive Committee, the seniormanagement grouping in the Company, to alignour commitments with the principles of theorganisations we support.

The Safety and Sustainable DevelopmentManagement StandardsThe Safety and Sustainable DevelopmentManagement Standards (previously SHECStandards) clearly outline the minimum operatingrequirements for the Company. The requirementsdrive us to deliver on policy commitments in amethodical and consistent way. They are alignedwith the requirements of South African NationalStandards, ISO 14001 and ISO 9001 and OHSAS18001. Although accountability for safety andsustainable development remains that of linemanagement, the Safety and SustainabilityDepartments provide strategic direction, technicalsupport and provide assurance of compliance tostandards through a range of internal and externalauditing functions.

Significant issues discussed at the meetings of theSafety and Sustainability Committee in 2008• Incident Cause Analysis Method reports on fatalities

occurring within reporting period;• Safety performance and benchmarking of our

performance;• Performance of Lonmin – IFC Technical Assistance

Partnership Programme;• Social and labour plan performance;• Changes in community development structures;• Level three environmental incidents;• Environmental risk overview;• Sustainable development reporting in terms of GRI

and assurance;• ICMM assurance protocol;• Evaluation of the performance of the committee and

the chairman of the committee.


Performance related pay for executive DirectorsPercentage of bonus Actual paymentopportunity on offer for the year (percentage

for target performance of bonus opportunity)

Safety and Sustainable Development Matters (15%)Safety– Level 3 Injuries 2.5% 3.75%– LTIFR 2.5% 3.75%

Community 5.0% 0.00%Environment– Electricity – percentage reduction in electricity consumption 2.5% 0.00%– Water – percentage reduction in fresh water intake 2.5% 0.00%

Total 15.0% 7.50%

19



Management system implementation

Operations OHSAS 18001 ISO 14001 ISO 9001

Shared Business Services !Marikana Mining !Limpopo Mining !Concentrators !Smelter ! !BMR ! !PMR ! ! !Assay Laboratory !Training Academy ! !

development. Our previous CEO chaired theICMM, and Vice President Sustainability Marindavan der Merwe, chaired the Executive WorkingGroup. Through our participation in the ICMM, wealso endorse the Extractive IndustriesTransparency Initiative. The Extractive IndustriesTransparency Initiative is a coalition ofgovernments, companies, civil society groups,investors and international organisations whichaims to strengthen governance by improvingtransparency and accountability in the extractivesector. Through this voluntary initiative, wecommit to reporting publicly on an annual basis,payments made to government.

In 2008, we became signatories to the UnitedNation’s Global Compact, which is a voluntaryinitiative. The United Nation’s Global Compact is astrategic policy initiative for businesses that arecommitted to aligning their operations andstrategies with ten universally accepted principlesin the areas of human rights, labour, environmentand anti-corruption. We will report on ourperformance against the principles in 2009.

We are members of and participate in theInternational Platinum Group Metals Association,International Chamber of Commerce, SouthAfrican Chamber of Mines, Business Call forAction and a number of forums in a local contextapplicable to our individual operations. In 2008,we also participated in the Carbon DisclosureProject.

External organisations and public policy positionsWe are recognised for our approach to sustainabledevelopment by being included in the Dow JonesSustainability Indexes, FTSE4 Good Index andJohannesburg Stock Exchange ResponsibleInvestment Index.

We participate in a number of organisations orforums which we believe will further ourperformance in terms of our values, principles orcommitments or enable us to influence policy anddecision making both nationally andinternationally. On affiliation with an organisation,we are committed to aligning our businesspractices with the principles or requirements ofsuch an organisation, with the accountabilityresiding with our CEO. In order to participate andadd value to these organisations, we provide thenecessary training or skills development to ouremployees who either participate or who areresponsible for implementation of the criteria orrequirements of these organisations and forums.We report our progress in terms of theseaffiliations on an annual basis.

We have been members of the ICMM since2005 and continue to value our membership. TheICMM is a CEO-led organisation representingleading international mining and metalscompanies as well as association members. As avoluntary member of the ICMM, we support theirvision of a respected mining and metals industrythat is widely recognised as essential for modernliving and a key contributor to sustainable



Management SystemsThe purpose of our management system is toprovide tools to support the management of thebusiness in a systematic and controlled way, withthe aim of delivering consistent performance. Wealso use these tools to implement the Safety andSustainable Development Management Standardsin order to achieve the commitments of our Safetyand Sustainable Development Policy and so deliverrobust and sustainable business performance.

Among the key constituents of ourmanagement system are our group-wide riskmanagement (refer to Managing our Risks page 25)and incident reporting and investigation process. Alloperations are responsible for reporting, rating andinvestigating incidents. Incidents which are rated aslevel three incidents or above are investigated byapplying the Incident Cause Analysis Method, withthe objective that root causes are identified andappropriate corrective and preventative actions aretaken. The outcomes of all Level four and higherinvestigations are presented to the Chief ExecutiveCommittee and the Safety and SustainabilityCommittee of the Board. Six Sigma processimprovements constitute an important componentof our management systems, by providing us witha continuous improvement methodology.

Auditing and assuranceThe Audit and Risk Committee of the Boardapproves the annual Company-wide internal andexternal audit plan. Audit findings are updatedmonthly and progress on corrective managementplans is reviewed by the Chief Executive’sCommittee and the Audit and Risk Committee ofthe Board on a quarterly basis. External auditingof ISO 14001, ISO 9001 and OHSAS 18001

management systems, at operational level,ensures continuous improvement. EnvironmentalManagement Programme Reports form part ofthe annual external Environmental PerformanceAssessment audits, which is a legal requirementunder the South African Minerals and PetroleumResource Development Act 28 of 2002.

As part of the assurance engagement, weensure that our assurance providers areindependent from the Company, have the necessaryindividual and organisational competencies and thatthe engagement process is based on best practiceguidelines. External assurance is provided onselected data and disclosures in this report, andreviews alignment of our policies and businesspractices with the ICMM principles and ourreporting practices with the GRI reportingprinciples. In preparation for this report, we haveconducted an internal audit on our key sustainabilityindicators to monitor the effectiveness andinclusiveness of our systems.

Stakeholder engagement and reportingIdentifying and responding to the expectations ofour stakeholders and incorporating their feedbackinto our decision making processes is a strategiccommitment which is an important part of theway we do business. Our approach to stakeholderengagement varies with the nature of thestakeholder and the specific matters at hand,ranging from formal engagement schedules to adhoc informal engagement processes, and rangefrom site-specific projects to general aspectsaffecting the Company at large. The followingsection provides more specific information onengagement undertaken in 2008.

We have a strategiccommitment toincorporatefeedback from ourstakeholders intoour decisionmaking process.

20


Stakeholder Engagement

Our stakeholders include:• Employees;• Contractors;• Business partners;• Organised labour;• Shareholders;• Communities;• Suppliers;• Tribal structures;• Local, provincial and national government;• Non-governmental organisations;• International and national organisations;• Industry peers.

Feedback from our stakeholdersGeneral feedback from our stakeholder on our 2007Sustainable Development Report

The information below provides a summary offeedback received from our stakeholders on our 2007report. This feedback has been taken into consideration inthe preparation of this report.• An honest and transparent report of a good length;• Reporting should focus on key risks to the company

as well as the business case for sustainabledevelopment;

• All major issues were identified, reported on andaddressed by the Company in the report; however attimes there was insufficient detail;

• Reporting should include more detail in terms ofstakeholder engagement approach, processes, areasof improvement and which issues are material to eachstakeholder group;

• Reporting of risks and performance should addcontext, and benchmarking where possible;

• Timely publishing and adequate distribution of reportsis critical;

• Data published in the report was most useful whencompared with the narrative information, particularly forbenchmarking purposes;

• Report lacks structure and is considered more glossthan substance;

Feedback from our stakeholders on our engagementprocessesIn 2008, satisfaction amongst our respective stakeholdergroups varied; however in general:• Most feel community engagement has improved over

the past few years;• A more structured approach to engagement was

recognised;• Company leadership was considered to be more

visible and engaged.

We are committed to maintaining transparent and ongoing consultative

relationships with all stakeholders and to incorporating this engagement

into the decision-making process.

Martin Khatleli, Shift Supervisor and Johan Raaths, Mine Overseerof Saffy Shaft accompanying the President of South Africa,Kgalema Motlanthe on an underground visit.

We appreciate the importance of soundrelationships with our stakeholders in growing ouroperations, in delivering consistent operationalperformance and in working towards long-termsustainability. We understand the inherent riskassociated with poor engagement and unstablerelationships with our stakeholders and willcontinue to improve our engagement approachesby evaluating our practices.

Our approachOur stakeholders are all individuals, communitiesor groups that influence our operations or areaffected by our existence. We engage with thosewho are directly affected by our operations,through the nature of our business or throughproximity to our locations, and with thosestakeholders who demonstrate an interest in ourbusiness. We engage with our stakeholders inorder to:• improve relations;• understand their perspectives and

expectations; and• communicate our plans and vision.

We maintain continuity in our relations withstakeholders using our group-wide StakeholderManagement Software, and match our projectswith corresponding stakeholder engagements.

We measure our performance on engagementwith the communities where we operate primarilyby undertaking an Annual Community PerceptionSurvey. Please refer to the section on Uniting withour Communities for the summary of the resultsof the survey.

Additionally In 2008, our internal auditorsassessed the way our key stakeholders see ourengagement processes, as per the box to theright.

22


Stakeholder Engagement (continued)

Risks or issues that are material to ourstakeholdersIn 2008, we have engaged with a diverse range ofstakeholders with varying frequencies and withdifferent approaches. The table below identifiesthe stakeholders with whom we have engagedwith in 2008, how we engage with them, howoften, and some of the more important issuesidentified and addressed. The risks or issueswhich have been identified below are not

exhaustive and are focused on the moreprominent risk or issue raised within that categoryof stakeholders. These risks or issues have beenidentified through the direct engagementprocesses outlined below and through ourongoing stakeholder communication channelsinherent to the management of our operations.We respond to key issues for stakeholders in therelevant forums, outlined below, and through ourformal reporting channels.

Engagement with our stakeholders in 2008

Stakeholders Methods of engagement Frequency Summary of issues that are material

Employees Lonmin intranet; it contains a library Ongoing • Safety in the workplace;of information for all employees. • Market-related remuneration;

Platinum Conversation, an employee newsletter Monthly• Organisational change.

distributed in three languages providing generalinformation to employees on safety,performance and other operational aspects.

CEO’s newsletter, translated into four languages: Monthlyprovides general information to employees onsafety, performance and strategic matters.

Annual employee climate survey to gauge Annuallyemployee’s perceptions and experiences whilstworking for the Company.

Sample employee focus groups to determine Annuallyissues that are material to them as employees(specific engagement for the 2008 SustainableDevelopment Reports).

Further engagements include shop-floorbriefings, regular internal announcements,meetings and annual performance reviews. Ongoing

Organised Union engagement forums. Monthly • Employment equity;labour

Discipline specific meetings covering aspects As required• Safety in the work place;

of safety, health and remuneration.• Market related remuneration;

Sample perception survey to obtain feedback Annually• Availability and affordability of

on perceived Company performance andhousing;

aspects that are material to them as• Engagement with organised

stakeholders (specific engagement for thelabour.

2008 Sustainable Development Reports).

Shareholders Safety and Sustainable Development roadshow Annually • Safety in the workplace,to provide shareholders with information particularly in terms ofregarding our performance, and to get their improvement and benchmarking;feedback on our performance and the • Availability, use and securing ofCompany in general. water resources;

Financial and non-financial reporting. Quarterly and• Availability, use and securing of

annuallyenergy (especially electricity)

Annual general meeting. Annuallyresources;

Performance and strategy meetings. Quarterly on

• Community development in

average

terms of employment, education,housing and health;

• Attracting and retaining skilledpersonnel;

• Engagement with organisedlabour;

• Ethics and whistle-blowing.

23



Engagement with our stakeholders in 2008 (continued)


Business Our business partners include Incwala Quarterly • Safety in the workplace;partners Resources Pty Limited, Anglo Platinum, • Project execution;

Mvelaphanda and the Bapo Ba Mogale, with • Community development.whom we engage formally at board meetings.We also engage with the IndependentDevelopment Trust as a business partner.

Traditional We engage with the Traditional Authorities in Quarterly • Equity and shareholding;Authorities the regions where we operate. The Authorities meetings • Employment equity;

include the Bapo Ba Mogale, Mapela, (monthly in the • Preferential procurement.Mphahlele, Ledwaba, and Zebediela Ndebele. case of

ZebedielaNdebele)

Greater Lonmin Lentswe meetings held with the communities Bi-annually • Equity and shareholding;Communities where we operate as a platform to raise • Employment;(GLC) concerns and to discuss general matters • Employment; Local procurement

pertaining to the community and the Company. opportunities;

GLC area meetings with area representatives, Quarterly• Informal settlements and

during which community development andinsufficient housing;

engagement is discussed and project• HIV/AIDS and pulmonary

performance tracked.tuberculosis in the community;

GLC development forum: meetings with Quarterly• Community engagement on

community area representatives during whichcommunity projects.

community development projects arediscussed and performance tracked.

Site-specific projects through social and As requiredenvironmental impact assessments.

GLC Voice, a community newsletter providing Quarterlygeneral information to communities at largeon aspects relating to the Company andto the GLC.

Perception survey within the GLC to obtain Annuallyinsight into the communities’ perception andexperience of Lonmin as a Company and ourperformance in terms of engagement anddevelopment initiatives.

Sample perception survey to obtain feedback Annuallyon perceived Company performance andaspects that are material to them asstakeholders (specific engagement for the2008 Sustainable Development Reports).

Local, regional Direct ongoing engagement on environmental Ranges from • Safety in the workplace;and national and social issues with amongst others the monthly,Government local municipalities, the Department of quarterly, • Community development;

Minerals and Energy, the Department of Water annually to • Availability, use and securingAffairs and Forestry, the Department of Health, ongoing of water resources;the Department of Education and the • Employment equity;Department of Agriculture, Conservation, • Affordability and availability ofEnvironment and Tourism. housing for employees.

Legislative activities, including social and As requiredenvironmental impact assessments.


24



Engagement with our stakeholders in 2008 (continued)


Contractors We continuously engage with our contractors Ongoing • Optimising use of non-renewableand suppliers and suppliers on safety, aspects associated dependent resources;

with sustainability requirements and on type of • Land and biodiversitypreferential procurement. contractor management.

or supplier


Non- Sample perception survey to obtain feedback Annually • Community development,governmental on perceived Company performance and particularly through education;organisations aspects that are material to them as • Availability of housing for

stakeholders (specific engagement for the employees and increase in2008 Sustainable Development Reports). informal settlements;

Legislative activities, including social and As required• HIV/AIDS and pulmonary

environmental impact assessments.tuberculosis in the workplaceand community.

Industry We actively engage in various industry Dependent on • Availability and affordability ofassociations associations such as the South African the association, housing for employees

Chamber of Mines, Producers Forum, the ranges from • Safety in the workplace;ICMM, the International Platinum Association monthly to • Availability, use and securing ofand the International Platinum Guild. twice per annum water resources;

Sample perception survey to obtain feedback Annually• Availability, use and securing of

on perceived Company performance andenergy resources;

aspects that are material to them as• Community development –

stakeholders (specific engagement for thealleviation of poverty;

2008 Sustainable Development Reports).• Environmental legal compliance

of our operations.

Industry peers We engage with our industry peers on an Dependent on • HIV/AIDS and pulmonaryad hoc basis, primarily at industry related forum or tuberculosis in the workplaceforums or industry associations. engagement and community;

platform • Availability and affordability of

Sample perception survey to obtain feedback Annuallyhousing for employees;

on perceived Company Performance and• Safety in the workplace;

aspects that are material to them as• Local enterprise development;

stakeholders (specific engagement for the• Community infrastructure

2008 Sustainable Development Reports).development;


Risk Management

The timely identification, assessment andmanagement of risks is critical to the successof our business. The Lonmin Risk ManagementPolicy and Risk Management Standard providethe framework for integrated and dynamic riskmanagement in the Company, our subsidiariesand partnerships.

Our approachRisk management encompasses both a bottom-up and top-down approach with the objective tohave employees actively involved in themanagement of risks to the business and in thework place.

The top-down approach involves seniorexecutives of the business reviewing strategicrisks facing the business and our ability to meetour strategic objectives. The bottom-up approachinvolves management within each business unitreviewing risks that may prevent achievement ofthe business specific objectives. These reviewsare conducted annually and on an ad hoc basisas business changes or the risks change so asto support business decisions. Progress onmanagement plans is tracked on a monthly basisand internal audits undertaken on a frequentbasis. The Chief Executive Committee receivesa quarterly report on the business risks andprogress in mitigating or reducing these risks.In addition, a six-monthly report to the Audit andRisk Committee of the Board highlights theprogress made on risk management and thestatus of all high priority actions.

The precautionary approach is inherent in therisk management framework. It identifies all risksthat could affect the Company and itspartnerships, using a standard framework toassess risks and prioritise actions. It embeds riskmanagement as a line responsibility, whilemonitoring progress on actions to mitigate therisks on a monthly basis; and implementing astructure that facilitates continuous improvementand shares best practice. Each risk is identified,assessed in terms of pure risk or the gross

We are committed to providing adequate and appropriate resources to

implement effective risk management during all phases of our operations.

Roof bolting at K3 Shaft to minimise fatalities and seriousinjuries resulting from fall of ground occurrences.

financial exposure of the risk, the overalleffectiveness of the control environment, theshortcomings with the controls in place, theseverity and likelihood of the risk occurring, theresidual risk or risk score, the priority of each ofthe risks and action plans to mitigate the risk.Factors taken into consideration in theidentification of risks include our values andcommitments, critical business success factorsand legislation.

Our risksWhilst the Summary Sustainable DevelopmentReport provides details around our moresignificant risks, this report provides furtherinformation on risks and issues facing theCompany that we believe are material. Theyare not presented in any order of significancein the report. The table on the next page outlinesthese issues/risks, why the management of theserisks is important to us, and how we areminimising their impact on the Company.

25

26


Risk Management (continued)

Company risks in 2008

Issue/risk Why the management of this risk is important to us How we are managing this risk

Creating wealth Our Company’s vision is to create value • Associated risks are identified, managed andby the discovery, acquisition, development monitored through our Company riskand marketing of minerals and metals for management framework;communities, shareholders, business • We have produced 726,918 oz of platinumpartners, employees and suppliers. Creating and 1,401,371 oz of total PGMs for finalwealth both directly and indirectly is metal sales for financial year 2008;fundamental to the success and • Net cash flow for financial year 2008 wassustainability of the Company. Creating US$ 1,815 million;wealth is the basis of our existence. Our • Creating wealth for the communities wheremission is to grow and build our portfolio we operate. In 2008, US$3.26 million wasof high quality assets and to enable our spent on local infrastructure developmentshareholders to realise a superior total and US$596.19 million was the totalreturn on their investments and to improve discretionary spend with HDSA suppliers;the quality of life of current and future • Additionally, through the success of our localgenerations through the integration of supplier development programme, oneeconomic prosperity, social development hundred and nine contracts and orders toand environmental protection. date, worth US$29.13 million, have been

awarded to twenty seven local suppliers.

Upholding ethical Our Company’s values encompass integrity, • Our business and operating values arebusiness practices honesty and trust and our business clearly outlined in the Lonmin Charter;

practices are founded on these values. • Group management is underpinned by ourPoor performance has direct implications Safety and Sustainable Development Policyfor Company reputation, on shareholder and supported by targets, standards andvalue and reduced profitability. guidelines;

• Associated risks are identified, managed andmonitored through our Company riskmanagement framework;

• The Code of Business Ethics provides theframework within which all Companybusiness practices must be conducted,managed and regulated. Training on the coreprinciples of this code is provided to allemployees;

• In support of the Code of Ethics, we haveinstituted an Ethics Hotline, with is availablefor the use of any employees, contractors,customers or suppliers who wishes to reportactivities that they feel are not consistent withthe spirit of this Code;

• Systems of control have been introduced toensure that in attaining our objectives, webehave legally, ethically and appropriately;

• We are a founding member of the Institute ofBusiness Ethics as well as a member of theEthics Institute of South Africa.

27



Company risks in 2008 (continued)


Respecting and The principles of human rights are • We do not tolerate any behaviour that mayvaluing fundamental fundamental to the success of the compromise the principles of human rightshuman rights Company and integral to our Company and we endeavour to promote these

values. Poor performance has direct principles within our sphere of influence;implications Company reputation, on • Our human capital and sustainability policiesshareholder value and reduced profitability. are aligned with human rights principles,

particularly in terms of employment, workingconditions and grievance procedures;

• Human rights are integral to our Companyrisk management framework;

• We have targets and management plans inplace to reduce risks associated with humanrights;

• In 2008, we became a signatory to theUnited Nations Global Compact to enhanceour knowledge in the sphere of human rights;

• We are committed to upholding the freedomof association and the effective recognition ofthe right to collective bargaining.

Eliminating fatalities Zero harm to our employees and • Group management is underpinned by ourand serious injuries contractors is the core value of our Safety and Sustainable Development Policy

business. Our employees and contractors’ and supported by group targets, standardswellbeing is the foundation to the success and guidelines;of our business. Poor safety performance • Associated risks are identified, managed andhas direct cost implications, reputational monitored through our Company riskimpacts and may affect our license management framework;to operate. • We have a zero tolerance approach to any

risky behaviour;• We are improving our safety managementsystems;

• All injuries and near-miss incidents arethoroughly investigated;

• We have effective and highly trainedemergency and response teams;

• We have innovative training and awarenessinitiatives.

Empowering HDSA Poor regulatory compliance may • Group management is underpinned by ourcompromise our license to operate and human capital policies and supported bystakeholder relations; and could be group targets, standards and guidelines;expensive. But besides meeting legislative • Associated risks are identified, managed andrequirements, the strength of the Company monitored through our Company riskis enhanced by a diverse and skilled management framework;workforce. • In terms of HDSA ownership, Incwala

Resources Proprietary Limited has an 18%holding in the share capital of our Marikanaand Limpopo operations and a 26% stake inour Akanani project. Our other businesspartners include Mvelaphanda Resourcesand the Bapo Ba Mogale Mining Company;

• In terms of expanding and developing skillsof HDSA employees, we have numerousemployee training and developmentprogrammes in place, including Adult-basiceducation and training (ABET), skillsdevelopment and leadership programmes;

28





Empowering HDSA • We promote the employment of HDSAs(continued) within the Company at professional and

management level and to date, 42.3% of ourmanagement employees comprise HDSAemployees, 6.1% of our total workforce and0.6% are female and disabled employeesrespectively;

• We have increased the participation ofHDSAs in our procurement supply chain andin 2008, we have exceeded our target byspending 56.5% on HDSA procurement.Additionally we have an intensive programmein place to support, train, and develop localHDSA companies;

• We are improving socio-economicdevelopment in our host communities andmajor labour-sending areas. In 2008 wespent US$6.5 million on communitydevelopment projects.

Attracting and As a result of the ever-increasing demand • Group management is underpinned by ourretaining a skilled and competing interests for skilled recruits Safety and Sustainable Development Policyworkforce nationally and within the international and supported by group targets, standards

mining industry, our success is dependent and guidelines;on our ability to attract talented employees • Associated risks are identified, managed andto our operations, while retaining and monitored through our Company riskdeveloping our existing employees. management framework;Management of the risk has the potential • We have recruitment programmesto increase productivity, decrease customised for local and national leveloperational costs and further attract and recruitment. Market-related remuneration,retain talent. We are successful when our as well as employee benefits is keyemployees live and work safely and elements of our recruitment success;experience the personal satisfaction that • We have extensive employee developmentcomes with high performance programmes in place, encompassingand recognition. both personal and professional development

requirements, including talent management,performance assessment, careerdevelopment plans and numerous trainingprogrammes;

• We have partnered with academic institutionsto attract young professionals to the miningindustry and to the Company through ourbursary and intern programmes. In 2008 142and 94 persons participated in our bursaryand intern programmes respectively.

29





Availability and The regions in which we operate are • Associated risks are identified, managed andaffordability of housing characterised by an estimated 50% of the monitored through our Company riskfor our employees population living in informal dwellings. management framework;

The shortage of housing is a critical issue • Our approach to housing is centred aroundon both a national and regional scale and the delivery of affordable houses whicha concern that needs to be addressed. The impact positively on our employees’ qualitymagnitude of this challenge for the of lives in terms of reuniting employees withCompany is underlined by statistics their families, enhanced security andindicating that more than two thousand of experiencing sustainable community living;our own employees reside in these informal • We are committed to the construction ofsettlements. The well-being of our 5,500 houses within the GLC by 2011 andemployees is fundamental to our success. the conversion of all our 114 hostels intoTo this end, we are committed to establishing family and bachelor accommodation bysustainable houses that provide shelter, 2011. Phase one, the conversion of 29security, services and a sense of place for hostel complexes, was completed in 2008;all our employees and their families. • We realise that it is in the best interest of our

employees to own their own homes and it isour intention to promote the ownership ofthese houses by the occupants. We havebeen successful in 2008 in addressingconcerns around affordability of housing;

• The nature and design of the proposedhouses are informed by a housing needsassessment that was undertaken in 2008;

• In 2008, progress on the construction of5,500 houses predominantly entailed aligningdelivery with customer expectations; urbandesign plans for Marikana in terms of thehousing programme were completed, landhas been secured for 2,500 houses inMarikana and we have earmarked furtheravailable land for housing purposes;

Eliminating NIHL NIHL is the most significant occupational • Group management is underpinned by ourdisability faced by our employees and our Safety and Sustainable Development Policycontractors. It compromises their quality and supported by group targets, standardsof life, compromises our Zero Harm and guidelines;philosophy and incurs costs. • Associated risks are identified, managed and

monitored through our Company riskmanagement framework;

• We reduce the exposure of our employeesand contractors to noise levels that exceedthe noise exposure limits through engineeringinterventions to reduce noise levels in thework place and by utilising personalprotective equipment;

• We have a comprehensive hearingconservation programme in place supportedby a group risk management framework andthe guidelines of the South Africanmandatory code of practice for noise;

• All employees and contractors undergoannual medical surveillance in order to detectany NIHL that demands further preventivemeasures.

30





Managing HIV/AIDS HIV/AIDS is a serious and debilitating • We respond to the epidemic in a responsible,disease which has the potential to have non-discriminatory and supportive mannerwidespread social and economic within our framework for the managementconsequences for the Company and the of the disease;communities where we operate. The health • Group management is underpinned byand wellbeing of both our employees and HIV/AIDS Policy and supported by groupthe communities is essential to our success targets, standards and guidelines;as a Company. • Associated risks are identified, managed and

monitored through our Company riskmanagement framework;

• Our response to the disease moves beyondthe boundary of our operations into the GLC,as we value the wellbeing of the communitiesand acknowledge that they are thefoundations of our workforce;

• We continue to participate in thedevelopment of leading practices andindustry benchmarking in health care in adrive to improve our health systems;

• We have extensive education and awarenessprogrammes, including our VCT programme,in an effort to prevent the spread of thedisease, to eliminate the associated socialstigma and to provide employees withsensitive, accurate and up to date informationabout risk reduction in their personal lives;

• We have a wellness programme, includingthe provision of ART, designed to cater forthe physical and emotional needs of HIVpositive employees;

• Free ART is offered to an employee for life,regardless of whether or not they remainemployed by the Company.

Accessing and As a result of the growing demand and • Group management is underpinned by ourmanaging our energy competing interests for energy both Safety and Sustainable Development Policyresources internationally and within South Africa, the and supported by group targets, standards

success of our Company is dependent on and guidelines;our ability to secure access to sufficient • Associated risks are identified, managed andenergy resource and to manage these monitored through our Company riskresources effectively and in a responsible management framework;manner for our current operations and • We have identified and are implementinggrowth opportunities. The efficient utilisation various short, medium and long-termof energy and subsequent reduction in management plans to reduce our energygreenhouse gas emissions will reduce consumption and secure necessary electricityoperational costs and enhanced reputation for future growth opportunities in light of thewith our stakeholders. South African electricity supply shortage;

• We are designing all future projects formaximum energy efficiency;

• We are fast-tracking existing efficiencyprogrammes and initiating additionalinnovative planning and implementation ofenergy efficiency improvements;

• We have efficient, real time electrical energyand demand management monitoring andcontrol systems in place to effectively monitorour maximum demand and consumptionCompany;

31





Accessing and • We continue to participate in international,managing our energy national and local task teams to enhanceresources (continued) our performance on energy management

and reduce our impact on climate change;• Quantification of our operation’s carbonfootprint as well as seeking partnerships withthe IFC on energy audits of our operationsand assist us with further initiatives to reduceour energy footprints.

Reducing our impacts The management of our impacts on climate • Group management is underpinned by ouron climate change change are imperative. Poor performance Safety and Sustainable Development Policy

in this regard will compromise our value of and supported by group targets, standardsZero Harm and our commitments, and guidelines;potentially resulting in impacts on resource • Associated risks are identified, managed andavailability, reputational impacts and monitored through our Company riskultimately shareholder value. management framework;

• We have identified and are implementingvarious short-, medium- and long-termmanagement plans to reduce our greenhousegases by focusing on efficient processtechnologies and improved control systems;

• We continuously measure our performancearound energy efficiency and greenhouse gasemissions targets to assess the effectivenessof these programmes;

• Contributing to research on atmosphericaerosols in partnership with the ClimatologyResearch Group at the University of theWitwatersrand;

• Quantification of our operation’s carbonfootprint as well as seeking partnerships withthe IFC to undertake energy audits of ouroperations and assist us with furtherinitiatives to reduce our energy footprints;

• Incorporating environmentally sound designinto our housing programmes, with solarenergy options;

Accessing and Without access to adequate water • Group management is underpinned by ourmanaging our resources, our mining operations cannot Safety and Sustainable Development Policywater resources be sustained. All three pillars of our business and supported by group targets, standards

strategy are dependent on water resources. and guidelines;As a result of the growing demand and • Associated risks are identified, managedcompeting interests for water both and monitored through our Company riskinternationally and within South Africa, we management framework;need to have the ability to secure the • We have secured the availability of sufficientavailability of sufficient water for our water for the future of our current miningoperations without adversely affecting operations;access to safe drinking water by the • We are in the process of securing furthercommunities where we operate. Additionally water resources for our Akanani operationsthe efficient utilisation of fresh water and the in the Limpopo Province and arereduction of pollution to the water resources confident that sufficient supply will bewill reduce closure cost liabilities, reduce available for maximum demand duringcosts associated with purchasing of fresh the operational phase;water and decreased potential for litigation • We have reduced our freshwateror fines against the Company. consumption and increased water recycling;

• We have a zero discharge policy at alloperations;

32





Accessing and • We continue to implement measures tomanaging our prevent and minimise the contamination ofwater resources ground and surface water resources in the(continued) regions where we operate;

• We continue to participate in international,national and local task teams to enhance ourperformance on water management.

Responsible land We are committed to promoting integrated • Group management is underpinned by ourmanagement and land use management and biodiversity Safety and Sustainable Development Policybiodiversity conservation by applying a precautionary and supported by group targets, standardsconservation approach during all phases of our and guidelines;

operations, including mine closure. Our • We make every effort to minimise our miningcommitment goes beyond our site-specific footprints and remediate areas ofactivities into broader communities to degradation or pollution;include observing national laws where we • Company biodiversity and land managementoperate; and respecting indigenous cultures, is informed by the environmental strategyand dependency on natural resources in and supported by guidelines as alignedneighbouring communities. Effective land with legislative requirements and inmanagement will result in reduced closure particular the South African Nationalcost liabilities, enhanced biodiversity and Environmental Management Biodiversityreduced chances of litigation or fines Act 10 of 2004, best practice andagainst the Company. ICMM principles;

• Aspects relating to biodiversity andintegrated land use are integral to our riskmanagement process and environmentalimpact assessments undertaken forproposed activities;

• With the exception of exploration activities inTanzania and Gabon, our operations are notlocated in biodiversity sensitive areas. Wecontinue to work in close collaboration withgovernment, the World Conservation Societyand other non-governmental organisations toensure that the appropriate risk managementthrough biodiversity assessment andmanagement programmes;

• We are in the process of compilingcomprehensive biodiversity action plans forall of our operations;

• We re-vegetate all dormant tailings facilitiesto enhance biodiversity and to suppress dustgeneration;

• We strive to follow a closure-based riskassessment approach in planning for closure.This integrated approach provides forconsolidation of management plans andenhanced application of pollution preventionprinciples and reduced long-term financialrisk;

• We have approved closure plans in place atall our operations as well as accompanyingfinancial closure provision;

33





Minimising our As a business that has a potential impact • Group management is underpinned by ourimpacts on air quality on air quality, we acknowledge our Safety and Sustainable Development Policy

responsibility to continuously manage and and supported by group targets, standardsreduce the impact from our operations on and guidelines;the ambient environment and the • Associated risks are identified, managed andcommunities where we operate. Without monitored through our Company riskmitigating the effects of our impacts on the management framework;environment, our license to operate may • The National Environmental Management Airbe in jeopardy. Quality Act 39 of 2004 comes into full effect

in 2009; we are completing an air qualitymanagement strategy that meets the Act’srequirements;

• We have an extensive ambient and sourcemonitoring network in place; this includes dustfallout at all operations, continuous ambient airquality monitoring stations, sulphur dioxidepassive diffusive sampling at our Marikanaoperations and continuous on-line stackmonitors at both the smelter and the PMR;

• We continue efforts to reduce particulatematter emissions: these include theinstallation of a fogger system at ourMerensky crusher; continuance of re-vegetation programmes on our dormanttailings dams; and suppression systems onoperational tailings dams and suppression onunpaved roads;

• We continue to investigate potential measuresfor the successful capture and treatment ofthe sulphur dioxide emissions from oursmelter complex. Following the effects-basedapproach of the National EnvironmentalManagement Air Quality Act, dispersionmodelling is undertaken to determine ambientair quality impacts, and to inform expansionand development programmes;

• We contribute to scientific research throughour hazemeter project, undertaken in thecommunities where we operate;

Responsible material We are committed to the philosophy of • Our approach to material stewardship andstewardship and zero waste to landfill at all our operations waste management is founded on our valuewaste management through the reduction, re-use and recycling of zero harm to the environment, best

of waste and to the principles of responsible international environmental practice andproduct design in order to reduce our compliance with legislative and otherimpact on the environment. Effective requirements;management of this risk will result in • Group management of waste and materialsreduced closure cost liabilities, operational is underpinned by our Safety andcosts savings, enhanced stakeholder Sustainable Development Policy andrelations and reduced chances of litigation supported by group targets, standards andor fines against the Company. guidelines. A waste management guideline

based on best practice and legal complianceprovides direction to operating units forwaste sorting, storage, transportation,recycling and disposal of wastes;

• Associated risks are identified, managed andmonitored through our Company riskmanagement framework;

34





Responsible material • We continue to seek opportunities to makestewardship and use of non-hazardous alternatives and towaste management reduce quantities of hazardous materials.(continued) Where these substances cannot be

substituted, reduced or eliminated, operatingprocedures are in place that outlinesrequirements for the responsible purchasing,separation of wastes and storage, use anddisposal of materials;

• We are committed to eliminating wastedisposal by adopting the waste managementhierarchy: to prevent waste generation,minimise waste generation and enhancewaste re-use and waste recycling;

• All waste streams that cannot be eliminatedat source, re-used or recycled go topermitted waste disposal facilities that areoperated in accordance with permitconditions.

Uniting with We recognise the reality of finite ore • Group management of waste and materialsour communities reserves, the certainty of mine closure and is underpinned by our Safety and

the adverse social, economic and Sustainable Development Policy andenvironmental effects often associated with supported by group targets, standardsmine closure. We have a firm commitment and guidelines;to the sustainable transformation of the • Associated risks are identified, managedGLC, as this is a key factor in the success and monitored through our Company riskand growth of our Company. We endeavour management framework;to honour our charter commitment to • Our approach to community development is“respect the communities and nations that one focused on long-term outcomes andhost our operations and conduct business programmes that are collaborative andin a sustainable, socially and environmentally partnership driven;responsible way” and realise that we are • Creating wealth for the communities wheresuccessful when communities where we we operate. In 2008, US$3.26 million wasoperate value our relationships. spent on local infrastructure development;

• We work in partnership with government,communities and other stakeholders on anumber of initiatives and programmes thatstrengthen the social, human, economic andcultural capital of the GLC, one of thesepartnerships being with the IFC to collectivelyplan and deliver forty projects with anestimated value of US$7 million over the nextthree years;

• We monitor out social performance on anannual basis to determine the impact of ourcommunity development initiatives on thecommunities where we operate;

• We have a structured and formal Lentsweengagement process in place, coupled witharea meetings of representatives from allareas; and a development forum;

• The responsibility for communitydevelopment does not rest solely with theSustainability Department, but also withineach business unit.


Creating Wealth

IntroductionOur economic impacts are both of a direct andindirect nature. Our mission is to grow and buildour portfolio of high quality assets and to enableour shareholders to realise a superior total returnon their investments and to improving the qualityof life of current and future generations throughthe integration of economic prosperity, socialdevelopment and environmental protection.

Additionally, we support the ICMM’sResources and Economic position paper andacknowledge that mineral resources have thepotential to promote economic development andcontribute to poverty reduction.

Additional information on our financialperformance can be obtained from our 2008Annual Report, which is located onwww.lonmin.com.

Direct economic impactsThe 2008 Annual Report details all directeconomic risks, opportunities and key strategieson our economic performance.

Operational performanceFinal metal sales for financial year 2008 were726,918 oz of platinum and 1,401,371 oz of totalPGMs.

Financial Year 2008 represents a low point inproduction for the Company and we did notachieve our forecast production. We are howeverconfident in the production improvement plansbeing put in place by our new miningmanagement team which will improve ourperformance in 2009 and beyond.

Economic performanceWe recognise that as a leading global producer ofPGMs, a finite resource, the impact our businesshas on the economic conditions of ourstakeholders including employees andcommunities is extremely important. The valueadded statement for Lonmin Plc as at 30September 2008 depicts our direct economicimpact. In 2008, our revenue increased byUS$291m compared to 2007 financial year whichwas primarily driven by strong pricing environmentof our metals. More detailed information about thefinancial performance of the Company is includedin the Lonmin Annual Report.

We create value by the discovery, acquisition, development and

marketing of minerals and metals for communities, shareholders,

business partners, employees and suppliers.

Summary of our 2008 performance• Net cash distributed in 2008 amounted to US$ 1,815 million;• Final metal sales for financial year 2008 were 726,918 oz of platinum and

1,401,371 oz of total PGMs;• The long-term demand fundamentals for platinum and other Platinum

Group Metals have remained positive, although recently platinum andother PGMs prices have decreased significantly;

• The largest percentage shareholders of the Company include M&GInvestment Management and Xstrata Zinc BV, which own 17.88% and10.68% respectively as at 30 September 2008;

• In 2008, we became a signatory to the Extractive Industries TransparencyInitiative and have reported payments made to government;

• US$3.26 million was spent on local infrastructure development in 2008;• In 2008, we have achieved and exceeded our target of 50% total

discretionary spend with HDSA suppliers, with a 56.5% spend totallingour spend to US$596.19 million;

• The local supplier development programme has been successful, with onehundred and nine contracts and orders to date being awarded to twentyseven local suppliers, to the value of US$29.13 million in the disciplines ofconstruction, ore transport, training and catering. In 2008, 0.8% of totalprocurement spend on goods, materials and services or an amount ofUS$8.85 million was spent on GLC suppliers.

We are a leading global producerof PGMs

36


Creating Wealth (continued)

Value-added statement for Lonmin Plc as at 30 September 20082008 2007 % Variance

US$ million US$ million

Net cash generatedCustomers, consumers and investment incomeCash received for products 2,270 2,016 13Cash return on investment 13 16 (19)

Suppliers1Cash payments for materials and services purchased (445) (395) 13Cost of borrowings (23) (41) (44)

Net cash flows 1,815 1,596 14

Cash distributedHuman capital (salaries and benefits) 557 492 13Social capital 7.3 3.9 86– Donations 0.7 0 100– The Lonmin Development Trust – 3.2 (100)– Other community projects2 6.6 0.7 836Government taxes 245 267 (8)Directors remuneration 9 7 20Shareholders distribution 186 171 9Cash retained for sustainable growth 811 655 24

Net cash distributed 1,815 1,596 14

1 We have a 30 day payment policy on services and procurement in our standard terms of purchase.

2 Inclusive of salary and administrative costs.

Payments to governmentNeither the South African nor United Kingdomgovernments are present in the Company’sshareholding structure. The Extractive IndustriesTransparency Initiative is a coalition ofgovernments, companies, civil society groups,investors and international organisations that aimsto strengthen governance by improvingtransparency and accountability in the extractivesector. The Extractive Industries TransparencyInitiative has a robust yet flexible methodologythat ensures a global standard is maintainedthroughout the different implementing countries.We are one of 37 companies from the oil, gasand mining industry that supports and activelyparticipates in the Extractive IndustriesTransparency Initiative. By committing to supportthe Extractive Industries Transparency Initiative,we have submitted an International-LevelCompany Self Assessment form and commit toreporting publicly on an annual basis, anypayments made to government. Governmenttaxes in 2008 amounted to US$245 million.

Assistance from governmentIn 2008, the Company did not receive significantfinancial assistance from government. However, askills development grant in 2008, amounting toUS$2,563,986 was received from the MiningNational Qualifications on evidence of trainingprogramme execution.

Our employeesIn 2008, the Company employed a combinedtotal of 33,725, employees and contractors.Where possible, we employ persons from ourlocal communities. Employees, includingexecutive Directors, received salaries to the valueof US$566 million. We provide various definedcontribution funds for our employees, of whichthe Company’s contribution in 2008 varied from13.9% to 20.5% depending on the retirementfund chosen by the employee.



Our shareholdersThe figures below illustrate a breakdown of ourshareholders by type of fund and geographiclocation. The largest percentage shareholders ofthe Company include M&G InvestmentManagement and Xstrata Zinc BV which own17.88% and 10.68% respectively as at 30September 2008.

Indirect economic impactsWe also create wealth through indirect impactssuch as local market presence and communitydevelopment. These are defined as intangiblebenefits that emanate from the secondary effectsof capital investment, mine development andmine payrolls in the local community. We arecommitted to local employment, developing localsuppliers and investing in local infrastructure tostimulate and attract further economicdevelopment. Our Social and Labour plansprovide for opportunities for employee andcommunity development as aligned with the localgovernment development plans. Risks associatedwith non-compliance to these plans may includecomprised stakeholder relations, penalties andeven temporary closure.

Preferential procurementWe fully support the transformation of the SouthAfrican government to address previousinequalities and to create stability and prosperityfor all. We continue to work towards enhancingthe participation of HDSA companies in theprocurement chains of our operations, in terms ofgoods, services and consumables. As part of ourmining license conversion, we have set a target toincrease our total procurement spend1 with HDSAsuppliers to 50% by 2009. In 2008, we haveachieved and exceeded this target, with a 56.5%HDSA procurement spend totalling our spend toUS$596.19 million. Our procurement strategytargets HDSA companies and where this is notpossible, we encourage existing suppliers to formpartnerships with HDSA companies and tocapacitate these companies. Aligned with ourvision to create stable and economicallyindependent communities, we are also focusingon developing local supplier opportunities for localHDSA community members as outlined below.

The GLC supplier development programmeAlthough we have a target to increase our totaldiscretionary spend2 with HDSA3 suppliers to50% by 2009 and achieved and exceeded thistarget in 2008, it has not resulted significantly inthe empowerment of the local community to oursatisfaction, as HDSA suppliers from themetropolitan areas of Johannesburg and Pretoriahave primarily benefited from this policy. We havealso focused on developing the social andeconomic standing of local communities throughlocal supplier development, an initiative with theIFC over a period of three years. The strategicobjective of this programme is to tap theentrepreneurial skills of communities who residein the GLC and develop sixty locally ownedsupply companies, thirty of them sustainable,during the next three years and award them withcontracts from the Company at a value exceedingUS$60 million. We aim to contract the services ofor purchase goods from locally based suppliers.In addition to the geographical location of thesupplier as well as the HDSA status, factors thatinfluence our supplier selection include costs,financial credibility, environmental performanceand social performance. The intent of thisprogramme is to promote sustainability bycontributing significantly to the development ofthe communities through enhancing knowledge,skills and entrepreneur development of thecommunities and community self reliance.The basis for success is for these suppliersto extend their services, not only to othermining organisations in the regions, but alsoto non-mine related customers.

23%

28%

27%

3%

7%

10%

2%

Others

American Depository Receipt

Market Maker Holdings andCustorial Accounts

Insurance Companies

Pension Funds

Unit Trusts

Unknown

Shareholders by type in 2008

17.7%

7.8%

45.2%

5.5%

15.7%

8.1%

Unknown

Rest of World

Continental Europe

North America and Canada

Scotland

England and Wales

Shareholders by geography in 2008

1 The percentage spend excludes companies which areowned by white women.

2 Spend excludes capital expenditure.3 HDSA companies exclude companies owned by

white women.

37

38



Eighteen months have lapsed since thecommencement of the local supplier developmentprogramme. The programme has been successful,with one hundred and nine contracts and ordersto date being awarded to twenty seven localsuppliers, to the value of US$29.13 million in thedisciplines of construction, ore transport, trainingand catering. In 2008, 0.8%of total discretionaryspend on goods, materials and services or anamount of US$8.85 million was spend on GLCsuppliers. The supplier development programmesystematically follows a proven methodology asoutlined in the below process flow. In order toidentify opportunities within the GLC, we haveconducted a business landscape assessmentduring which available and potential businesseswere identified and assessed – to date we haveidentified 124 potential suppliers who areestablished and are participating in the supplierdevelopment programme and an additional 60enterprises who require development prior toparticipating in the programme. The supplierdevelopment programme has identified three waysof matching potential suppliers in the GLC withbusiness opportunities, namely:• 100% GLC owned companies. This is the

preferred approach although it is often notpossible due to a shortage of existingcompanies and skills.

• 100% GLC owned companies as subcontractor. This approach is to enable GLCcompanies, the opportunity to develop theirskills and gain practical experience.

• Joint ventures. The majority of establishedbusinesses will entertain joint ventures withGLC suppliers, affording them the opportunityto promote their own black economicempowerment and to be accepted as suppliersof services or products to the Company.

2

3

4

5

6

1 Identify Opportunity

Identify the Entrepreneuror Company

Construct the deal

Source Financing

Provide support

Monitoring

Bons ConstructionOne of the companies that has benefited from our GLCsupplier development programme is Bons Construction.To date, the husband and wife owned constructioncompany has successfully been awarded four contractsunder the local supplier development programme. BonsConstruction was trained on how to execute the smallerprojects profitably before getting involved in much largerprojects. Training was also provided on various aspects ofbookkeeping. The Lonmin-IFC Partnership also assistedthe company to obtain an overdraft facility from a majorlocal bank and provided training on how the facility couldbe best utilised to support the work of the company andits cashflow management. On the strength of the highquality of the projects that Bons Construction hasdelivered thus far, the company is now under considerationfor much larger projects with better financial returns.

Bons Moeng, the owner of Bons Construction, atthe Lonmin Local Supplier Development Office.

Supplier development programme



57%

4%

35%

4%

America

Africa

Asia

Europe

Geographical markets served in 2008

28%

49%

23%

Other

Jewelery

Autocatalysis

Geographical markets served in 2008

The programme requires, in order to besuccessful a range of partners, including traininginstitutions, financial institutions and communitygroups. We have also developed a structuredprocess for training, support and monitoring ofthese suppliers and are in the process ofestablishing an incubation centre to facilitatethese processes.

Infrastructure developmentWe also have indirect economic impacts on thecommunities where we operate through our socialdevelopment programmes, which encompasscapital investment in public infrastructuredevelopment, education and health programmes.The social development programmes are alignedwith the requirements of our Social and LabourPlans that are in turn aligned with the IntegratedDevelopment Plans of the municipal areas in whichwe operate. In 2008, US$3.26 million was spenton community infrastructure development projectsof which the significant projects are outlined.

Furthermore in 2008, a revised basic needsassessment was undertaken for our Marikanaoperations to further align our developmentinitiatives with the needs priorities of thecommunities. Please refer to the section onUniting with our Communities on page 84 forfurther information on these programmes.

39

Infrastructure development expenditurein 2008

Project Lonmin investment

North West water andsanitation project US$265,537Thusong MultipurposeCentre (Eastern Cape) US$361,269Water and sanitation(Eastern Cape) US$601,672School facilities upgrade US$750,873Language andscience laboratories US$51,490Mobile school health services US$103,928Agisanang farming project US$1,037,584Itireleng communityco-operative US$92,483

The Platinum Group Metals marketWe are the world’s third largest producer ofPGMs. South Africa is the largest producer ofPlatinum and Rhodium in the world andcontributes 77% and 85% of global supplyrespectively. We are committed to growing themarket for PGMs. PGMs are used in applicationsthat depend on their unique physical andchemical properties such as catalysis, inertness,conductivity and biocompatibility. PGMs are usedin catalytic converters to reduce noxiousemissions from vehicle exhausts, gasoline, diesel,bio-fuels and hybrid engines. Their superiorperformance in such applications protectsagainst substitution.

The long-term demand fundamentals forplatinum and other PGMs have remained positive,although platinum and other PGMs prices havedecreased significantly recently and havebeen volatile.

Although auto catalyst sector continuesto be the primarily demand driver for platinum,palladium and rhodium, primarily as a result ofrobust long-term automotive demand asemerging market vehicle production grows,tightening emissions legislation and continuedgrowth in clean air legislation globally, therecontinues to be a strong demand growth inPGMs in the jewellery industry, which representsaround 30% of global demand for platinum, aswell as increasing usage across a range of otherindustrial applications.

We serve the same markets as is broadlyserved by all platinum producers or refinersworldwide, including companies that manufactureauto catalysts, industrial and chemicalcompanies, as well as glass companies andjewellery manufacturers. The figures to the leftpresent a breakdown of the industries served andthe overall demand breakdown.



Product responsibilityWe endeavour to undertake our mining andprocessing activities in an environmentally andsocially acceptable manner, which in turn givesrise to a responsible product. We are committedto responsible product design and promoting theuse, reuse, recycling and disposal of ourproducts. Our Company values and policycommitments underline our approach tomarketing and selling of our products; we chooseour customers based on their business ethics andsustainable development values and approachand relate to our customers as partners.

Accountability for product responsibilityultimately resides with our CEO. Although aspectsrelating to product quality are managed by theSenior Manager Marketing, the responsibility forproduct management, and training andawareness thereof, lies within each operationalunit contributing to the lifecycle of our products.Although no external auditing in respect ofcustomer product complaints is conducted at thisstage, we have a comprehensive internal productconcern monitoring process that is strictlyadhered to by all stakeholders. In 2009, we aimto enhance our systems to accurately track andmonitor our performance relating to productresponsibility.

In terms of customer health and safety, thereare no material health or safety complicationsrelated to the final product produced andmarketed by the Company. Although the healthand safety impacts of our post productionproduct in its various stages of the life cycle hasnot been formally assessed, consistent efforts aremade to address all health and safety issues asthey relate to our products. In 2008 there were noincidents of non-compliance with voluntary codesconcerning the health and safety impacts ofproducts and services. Due to the business-to-business nature of our niche customer base, weassess compliance to voluntary codes with ourcustomers in the form of structured discussions.No incidents of non-compliance with regulationswere reported in 2008. There was however twoincidents of non-compliance with voluntary codes,involving slight discrepancies in the compositionof impurities contained in the product. Weresponded and managed the concernaccordingly.

Whilst there are no legislative requirementsfor our product, service information and labelling,information regarding the content, particularly withregards to substances that might produce andenvironment or social impact, of all our productsis provided upon delivery to our customers. We,as a Company, adhere to all labelling codes andpolicies as set out by the London Platinum andPalladium Market for metals listed on the theirGood Delivery List. The London Platinum andPalladium Market was established in May 1987.It is a trade association, the purpose of which isto promote professional trading in London of bothplatinum and palladium. No incidents in thisregard were reported in 2008.

40

The Platinum casting process at the PMR.

We conduct annual surveys in whichcustomers supply feedback and a rating inrespect of their product satisfaction. We surveyratings in five areas, namely delivery, productquality, responsiveness-queries and complaints,customer communications and labeling andpackaging. The ratings are from one to five, withone being poor performance and five beingexcellent performance. Although the actual ratingsfrom the annual surveys are confidential, we doperform consistently well as per the results ofthese surveys. In 2008, electronic tracking ofdelivery compliance that has a material impact oncustomer satisfaction has been introduced whichprovides a mean for tracking of progress againstcustomer satisfaction. One of our successes in2008 was an 84.9% improvement on our on-timedelivery rate. We respect the privacy of ourcustomers. To this end, we have confidentialityagreements in place with all our customers. Nosubstantial complaints regarding breaches ofcustomer privacy or losses of data were receivedin 2008. Additionally in 2008, no fines werereceived in respect of non-compliances in theprocess of provision and use of product.

Our sales are largely business-to-business andas a result no definitive codes are followed for thepurposes of marketing communications,promotions and sponsorships. We are, however, asupporter of the International Platinum Guild, a non-profit organisation that provides information, trainingand advice on the sale of jewellery. As a Companythat is a listed entity on both the Johannesburgstock exchange and London stock exchange, wehave strict requirements in respect of productmarketing communicated in both content and form.

We are founding members of the PGMconsortium registered to the European CommunityRegulation, Registration, Evaluation, Authorisationand Restriction of Chemical substances (REACH).In 2008, we registered all of our PGM products(metal and salts produced) in terms of REACHrequirements. Going forward, we will continue toremain actively involved in the process.


Upholding Ethical Business Practices

Our approachOur business ethics are grounded in theCompany’s stated values, which promoteintegrity, honesty and trust. Our Lonmin Charteroutlines the values to which we ascribe as aCompany and the Lonmin Code of BusinessEthics provides the framework within which allCompany business practices must be conducted,managed and regulated. This Code of BusinessEthics has been compiled in accordance with thecommon values shared by all involved in theCompany, the general principles of law andinternationally accepted ways of doing businessethically. The Code encompasses aspects offraud, corruption, theft, conflicts of interest,disclosure of gifts, intellectual property andpolitical support. In addition, systems of controlhave been introduced to ensure that in attainingour objectives, we behave legally, ethicallyand appropriately.

We were one of the founding members of theInstitute of Business Ethics, a United Kingdombased non-profit organisation encouraging highstandards of business behaviour throughresearch, advisory services, reporting andeducation. Additionally, we are also a member ofthe Ethics Institute of South Africa, anindependent, non-profit organisation thatpromotes ethical practices in South Africa.Additionally, we partake in a number of forums tocontribute to government decision-making and tocreate a platform to collaborate with industrypeers and government.

Anti-corruptionWe do not tolerate any behaviour that is corrupt.Risks relating to corruption are encompassedwithin our Company formal risk assessment andmanagement processes in place for all (100%) ofour operations. Risk assessments include risksfacing our operations as well as risks applicableto the business. These risks are monitored on anon-going basis and the progress on managementplans is monitored and reviewed on a monthlybasis. Responsibility for the elimination of corruptbehaviour for our operations resides with linemanagement. Each Company employee andcontractor receives training pertaining to businessethics, including that of anti-corruption, on anannual basis as part of the induction and annualrefresher training.

Ethical value chainsOur procurement policy is to procure third partygoods and services from partners who we believeto be ethical in their business practices and tohave good human rights, safety and sustainabledevelopment practices in place. Our conditionsof contract with our suppliers and contractorsinclude clauses reinforcing these practices. Wehave the necessary systems and checks in placeto enforce our policies, including securityclearances that are undertaken on potentialsuppliers and contractors prior to engagement.These checks include company registration, creditand tax information, black economicempowerment status and financial judgments.Full evaluations of suppliers and contractors arealso conducted on request.

We are committed to the highest standards of social and business

practices by upholding ethical business practices, sound corporate

governance and transparency.

Summary of our 2008 performance• Our Lonmin Charter outlines the values to which we ascribe as a

Company and the Lonmin Code of Business Ethics provides theframework within which all Company business practices must beconducted, managed and regulated;

• We have continued to identify, assess and manage risks relating tocorruption at all operations as part of our Company formal riskassessment;

• We continue to provide training to all employees and contractors on ourCode of Business Ethics;

• In support of the Code of Ethics, we continue to make available the EthicsHotline, to any employees, contractors, customers or suppliers whowishes to report activities that they feel are not consistent with the spirit ofthis Code;

• In 2008, we did not receive any legal action for anti-competitive behaviour,anti-trust or monopoly practices;

• In 2008, action was taken against the Company by the South Africangovernment in terms of the National Environmental Management SecondAmendment Act 8 of 2004 and the South African Mine Health and SafetyAct 29 of 1996;

• As part of the screening process on all potential vendors to assess theirsuitability, there have been a number of incidents when contracts withbusiness partners have not been renewed due to violations related tocorruption.

41

42


Upholding Ethical Business Practices (continued)

Anti-competitive behaviourUpholding the principle of fair and opencompetition forms an important component of ourapproach to business. While we will competevigorously and honestly to get the best outcomefor our shareholders, we will never do so byillegal, dishonest or unfair means or by usinginformation gained unfairly. We will work withcompetitors where we believe we have commoninterests and can achieve the best outcome forthe Company by working together, but will nevercollude with competitors, suppliers or customersin any form of deception or other improperactivity. We will respect the confidentiality of anyinformation gained from these dealings and neveruse it to the disadvantage of the other party.Meetings with competitors where sensitivematters could arise, or be alleged to have arisen,are policed by qualified attorneys, and we believethat we adhere to all relevant legislation and avoidanti-competitive behaviour at our operations.Responsibility for ethical business practicesresides with line management, although our CEOremains accountable. Each Company employeeand contractor receives training pertaining tobusiness ethic on an annual basis as part of theinduction and annual refresher training.

Compliance with legislationWe are committed to complying with all relevantlegislation of the countries where we operate inthe sphere of environmental management, safety,human capital, health, business ethics, humanrights and community development. We haveinternal monitoring and internal and externalauditing plans in place to determine complianceto the legislation, with supporting internal andexternal reporting methods. Responsibility forcompliance to these issues resides with linemanagement. We have training and awarenessprogrammes in place across all operations toreduce risks associated with legal non-compliance.

Our performanceEthics HotlineIn support of the Code of Ethics, we haveinstituted an Ethics Hotline, with is available toany employees, contractors, customers orsuppliers who wishes to report activities that theyfeel are not consistent with the spirit of this Code.The Ethics Hotline is a safe and secure channelwhereby any information can be reported withoutfear of recrimination. In addition the failure to“blow the whistle” in cases where employeesknow of misconduct arising under this Code isregarded as a serious offence.

The Ethics Hotline is operated by a third partyand all reports made are fully confidential and theoption to remain anonymous is available. Allreports made are referred to the members of theCompany’s Ethics Committee, chaired by theGroup Company Secretary and comprising alawyer and an accountant (both of whom areexternal to the Company and based in SouthAfrica), the Vice President Risk and the Head ofInternal Audit. The Ethics Committee then takesaction as deemed appropriate to investigate anyviolations of this Code reported through the EthicsHotline. In 2009, we will investigate the potentialof introducing an e-learning system to enhanceour training initiatives in terms of business ethicsand associated non-compliance risks.

In addition, a number of calls are made to oursecurity hotline or direct to the in-houseinvestigations team, and other ethical breachesbecome apparent in the course of internal auditsor other investigations.

Results of the whistle-blowing process(by percentage of calls)

De minimis – no action taken 26%Investigated – unsubstantiated 22%Investigated – no action taken 13%Investigated – action taken 17%Open cases 22%

The outcomes of completed investigations (May to July 2008)

Outcome Type of incident Number

No action taken 70

Disciplinary action taken Theft/property related 53Fraud and corruption related 9Victim related 7

Criminal action taken Theft/property related 14Fraud and corruption related 4Victim related 0

Criminal and disciplinary action taken Theft/property related 7Fraud and corruption related 3Victim related 4

Total cases 171


Upholding Ethical Business Practices (continued)

Anti-corruptionThere have been a number of incidents whencontracts with business partners were notrenewed due to violations related to corruption,and we routinely screen all potential vendors toassess their suitability. A number of these mattersare either still within the legal process, orconfidentiality obligations preclude furtherdisclosure.

Accepting or giving bribes in all forms isprohibited in business transactions undertakendirectly by the Company or through third parties,including subsidiaries and joint ventures. We donot directly or indirectly participate in party politicsnor make any financial contributions to any partyor individual. We have not received any financialassistance from government in 2008. We alsosupport the Extractive Industries TransparencyInitiative, promoting transparent reporting byextractive resource companies of their dealingswith, and payments to government.

Anti-competitive behaviourIn 2008, we did not receive any legal action foranti-competitive behaviour, anti-trust or monopolypractices.

Compliance with legislationIn 2008, we conducted numerous audits of thevarious risks within our business to determinecompliance to relevant legislation. The objectiveand results of these audits are provided within thecontext of each issue in this report. In 2008, thefollowing fines and actions were taken against theCompany by South African government:• The provincial Department of Agriculture,

Conservation and Environment issued aUS$13,422.82 administration fine forproceeding with the construction of a tailingsfacility without receiving authorisation in termsof the National Environmental ManagementSecond Amendment Act 8 of 2004. This finewas duly paid.

• In 2008, we were issued with a number ofSection 54 notifications in relation to theSouth African Mine Health and Safety Act 29of 1996. Marikana received 17 suchnotifications and Limpopo received threenotifications. These notifications are evidenceof a renewed stance by the government onsafety in the mining industry, which we fullysupport. However, the notifications result intemporary closure for inspection of theindividual shaft under review.

43

We have an Ethics Hotline in placefor the reporting of activities that arenot consistent with our businessethics.


Respecting and ValuingFundamental Human Rights

Summary of our 2008 performance• We continue to have a zero tolerance stance to any behaviour that may

compromise the principles of human rights and we endeavour to promotethese principles within our sphere of influence;

• We achieved our target in 2008 to comply with the principles embodied inthe United Nations Declaration for Human Rights;

• In 2008, we became a signatory to the United Nations Global Compact;• We are committed to upholding the freedom of association and the

effective recognition of the right to collective bargaining. In 2008, the tradeunions have had a strong presence in our areas of operation with 79.4%of our employees being members of trade unions;

• In 2008, we experienced five instances of illegal industrial action;• In 2008, three racial discrimination cases were reported as part of the

grievance reporting procedure at the Company, which were immediatelyinvestigated;

• In 2008, no incidents of non-compliance against indigenous people wereformally lodged against the Company.

Human rights forms an integral part of thecompany risk management approach. Any riskspertaining to the compromise of human rights areidentified, prioritised and managed accordingly.The Ethics Hotline supports our initiatives to abideto the commitments within our Human RightsPolicy. All of our employees and contractorsreceive training on the key principles of humanrights as part of the induction programme andthrough annual refresher courses. The material istranslated into Afrikaans, Xhosa and Tswana, andilliterate employees are briefed verbally in theirmother-tongue languages. In addition, we haveproduced ‘a manager’s guide to implementingsound human rights, business principles andethics’. We have the necessary mechanisms andgrievance and corrective action procedures inplace to enable the reporting and monitoring ofincidents.

Working conditionsOur Human Rights Policy as well as ouremployment policies explicitly prohibits theemployment of persons under the age of 18years. All employees are engaged freely in theirchosen employment at the Company and havethe right to freedom of movement. Overtime tothe national permitted level is voluntary.

Security services and human rightsWith regards to our security services, we complywith relevant national legislation and with theUnited Nations Basic Principles on the Use ofForce and Firearms by Law Enforcement Officials.All of our security employees as well ascontractors receive induction training, onCompany polices including those of human rights,prior to commencement of employment orcontractual agreements and thereafter on anannual basis.

Our approachWe have a zero tolerance stance to any behaviourthat may compromise the principles of humanrights and we endeavour to promote theseprinciples within our sphere of influence. Theseprinciples are fundamental to the success of theCompany and integral to our Company values.

The responsibility for all aspects of humanrights ultimately resides with our CEO, who issupported in terms of policies and standards byour Vice President Human Capital, Vice PresidentSustainability and Company Secretary. Adherenceto policy commitments and requirements residewith line management.

Our target in 2008 was to comply with theprinciples embodied in the United NationsDeclaration for Human Rights.

Our Company Values and Human RightsPolicy and Standard provide the framework forcompliance to legislation and the principles ofhuman rights. Our Policy, which was revised in2008, is aligned with the principles enshrined inthe Universal Declaration of Human Rights, theInternational Labour Organisation, the ICMM andthe United Nations Global Compact. Furthermore,we are in dialogue with respect to becoming asignatory to the Voluntary Principles on Securityand Human Rights. In 2008, a number ofdiscipline specific policies were also approvedrelating to gender and race equity.

We are committed to respecting and valuing the fundamental human

rights, cultural heritage and indigenous traditions of our employees,

communities and other stakeholders where we operate.

44

We respect the rights of the indigenous people surrounding ouroperations. Traditional dancing was the entertainment for the annual

stakeholder feedback session held in June 2008.

45


Respecting and ValuingFundamental Human Rights (continued)

Freedom of association and collective bargainingWe are committed to upholding the freedom ofassociation and the effective recognition of theright to collective bargaining. Our Human RightsPolicy and our Recognition Agreement, as alignedto the South African Labour Relations Act 66 of1995, sets out our support for the principles offreedom of association and collective bargaining.We are actively interested in the welfare andopinions of our employees and union membershipprovides employees with an establishedmechanism to voice their opinions andgrievances. We regularly engage with all ourrecognised trade unions, both on a corporatelevel and at a business unit level.

Discrimination and grievance practicesWe have the necessary grievance and correctiveaction procedures in place to enable the reportingof grievances and to implement effectivecorrective actions. The Ethics Hotline alsoprovides a means of reporting of activities thatpersons feel are not consistent with the ethicsand values of the Company and of the countrieswhere we operate.

Ethical value chains and investmentsOur procurement policy is to procure third partygoods and services from partners who we believeto be ethical in their business practices and tohave good human rights, safety and sustainabledevelopment practices in place. Our conditions ofcontract with our suppliers and contractorsinclude clauses reinforcing these practices. Wehave the necessary systems and checks in placeto enforce our policies, including securityclearances that are undertaken on potentialsuppliers and contractors prior to engagement.Full evaluations of suppliers and contractors arealso conducted on request. We have instituted acapital investment procedure that addressessocial impacts and human rights risks during pre-feasibility stage of each project. All major andminor capital investment project proposals arescrutinised to assess the risks and impactsassociated with the project.

Indigenous rightsWe respect the rights and interests of indigenouspeople and strive to fully understand the interestsand perspectives of indigenous people whenseeking to develop or operate mines and toengage with potentially affected indigenouspeople during all stages of new miningdevelopment activities

Our performanceOur target in 2008 was to comply with theprinciples embodied in the United NationsDeclaration for Human Rights. Although acomprehensive site audit was not conducted in2008, we are not aware of any aspects of thebusiness that do not comply with these principles.

Working conditionsNo incidents of child labour of forced orcompulsory labour were recorded at any of ouroperations in 2008, nor are our operations at riskof such occurrences.

Security services and human rightsIn 2008, a total of 159 security personnel wereemployed by the Company and further supportedby 419 security contractors. All of our securityemployees as well as contractors receiveinduction training, on Company polices includingthose of human rights, prior to commencement ofemployment or contractual agreements andthereafter on an annual basis. In 2009, weendeavor to further enhance the training of oursecurity personnel on the principles of humanrights through the development of a specifictraining module.

We are committed to the following principles as outlinedin our Human Rights Policy:• Freedom of association and the effective recognition of

the right to collective bargaining;• Eliminating all forms of forced and compulsory labour;• Effective abolition of child labour within our business;• Eliminating discrimination in respect of employment

and occupation;• Respecting the rights and interests of indigenous

people and to fully understand the interests andperspectives of indigenous people when seeking todevelop or operate mines;

• Engaging with potentially affected indigenous peopleduring all stages of new mining development activities;

• Promoting and protecting international human rightsand constructively play a role in the advancement ofthese goals.

46



Freedom of association and collective bargainingWe have not identified through our riskmanagement process, employee rights toexercise freedom of association or collectivebargaining as a risk at any of our operations eitheras a result of our type of operations or thecountries where we operate. Unions have astrong presence in our areas of operation with79.4% of our employees participants of tradeunions. A range of minimum notice periodsextending from three days to twelve weeks areprovided to employees and their electedrepresentatives prior to the implementation ofsignificant operational changes that couldsubstantially affect them, this dependent on thenature of change. These notice periods and/orprovisions for consultation and negotiation arespecified in collective agreements.

Unions in 2008

Union/Association 2008 2007 2006

National Unionof Mine Workers 70.7% 69.7% 64.0%

Solidarity 2.3% 2.1% 1.7%

United Associationof South AfricaTrade Union 3.7% 3.7% 4.0%

Other unions 2.8% 4.2% 3.4%

Total unionisedworkers 79.4% 79.7% 73.5%

Non-unionisedworkers 20.6% 20.3% 26.5%

In 2008, we experienced a number of illegal and legal industrial action as detailed below in the table.

Industrial action in 2008Number ofemployees

Unit Date and duration of action involved Cause of action

Marikana Mining Division (K3 Shaft) 02 October 2007 (8 hrs) 68 Concerns around safety bonuses.

Limpopo 04 November 2007 (8 hrs) 1,125 National safety strike.

Limpopo 17 November 2007 (16 hrs) 1,125 Refusal to work eleven shift fortnight.

Marikana 04 November 2007(16 hrs) 1,600 National safety strike.

Limpopo 15 December 2007 (16 hrs) 1,482 Refusal to work eleven shift fortnight.

Limpopo 12 January 2008 (16 hrs) 1,521 Refusal to work eleven shift fortnight.

Limpopo 19 January 2008(16 hrs) 1,510 Refusal to work eleven shift fortnight.

Limpopo 23 January 2008 (8 hrs) 666 Transferring of provident fund.

Limpopo 02 February 2008 (16 hrs) 1,526 Refusal to work eleven shift fortnight.

Limpopo 14 February –20 February 2008 (59 hrs) 1,568 One page agreement which was

signed by Union and Managementon the 20th of December 2007.

Limpopo 12 May 2008 (8 hrs) 512 Derogatory comment by MineManager, resulting in demandedsuspension of the mine manager byworkers.

Process Division 17 – 18 Jun 2008 (16 hrs) 415 Misconduct charges against NationalUnion of Mine Worker’srepresentative.

Marikana Mining Division (K3 Shaft) 17 July 2008 (4 hrs) 187 The shaft cage was not on time dueto geological concerns.

Marikana 06 August 2008 1,200 National strike.

Limpopo 06 August 2008 (8 hrs) 672 National strike.

Marikana Mining Division 11 August 2008 (14 hrs) 309 The shaft cage was not on time due(Rowland Shaft) to geological concerns.

Limpopo 23 August 2008 (8 hrs) 734 National strike.

Marikana Training Department 09 September 2008 (8 hrs) 110 Concerns around remuneration.



Key health and safety aspects are integral toour formal agreement with our largest trade union,the National Union of Mine Workers. Thisagreement promotes the basis for acceptance ofresponsibilities by both trade unions and by theCompany and defines the roles andresponsibilities of Health and SafetyRepresentatives and Committees. Safety andhealth topics that are covered within our formalagreements with trade unions include Health andSafety Representatives and Committees, trainingand dispute resolution procedures.

Additionally we have formal Health and SafetyCommittees in place at each operation as per therequirements of the Mine Health and Safety Act29 of 1996 that represents more than 75% of ourtotal workforce. These committees operate at anoperational level and provide a formal platform forthe discussion on aspects relating to health andsafety including but not limited to safe workbehaviour, risks associated with NIHL, standardsand code of practices.

Discrimination and grievance practicesIn 2008, three racial discrimination cases werereported as part of the grievance reportingprocedure at the Company, which wereimmediately investigated. The cases were closedsubsequent to the agreement that no furtheraction was required to be taken.

Ethical value chains and investmentsOur conditions of contract with our suppliers andcontractors include clauses reinforcing thesepractices. We have the necessary systems andchecks in place to enforce our policies, includingsecurity clearances that are undertaken onpotential suppliers and contractors prior toengagement. Full evaluations of suppliers andcontractors are also conducted on request. Wehave instituted a capital investment procedurethat addresses social impacts and human rightsrisks during pre-feasibility stage of each project.All major and minor capital investment projectproposals are scrutinised to assess the risks andimpacts associated with the project.

Indigenous rightsIn 2008, no incidents of non-compliance againstindigenous people were formally lodged againstthe Company. For further information on ourengagement programmes, please refer to Unitingwith our Communities on page 84.

All employees are engaged freely in theirchosen employment and have the right ofmovement.

47


Eliminating Fatalities and Serious Injuries

Zero harm to our employees and contractors isthe core value of our business and we arecommitted to the wellbeing of our employees andcontractors, and maintaining a culture of safebehaviour. Fatalities and serious injuries at ouroperations resulting from fall of ground, materialhandling, and fall from height incidents remainsour key safety risks.

Work related fatalities in 2008It is with regret that we report the death of threeof our employees during 2008 as a result of fatalinjuries sustained during fall of ground and fallfrom height incidents. We extend our sincerecondolences to the families and friends of ourcolleagues.

Summary of our 2008 performance• We regret to report the deaths of three of our employees during 2008 as a

result of fatal injuries sustained during fall of ground and fall from heightincidents;

• The original SHEC standards were reviewed and approved as the Safetyand Sustainable Development Management Standards;

• We improved our LTIFR by 42% in 2008 as compared to our performancein 2007, thus exceeding our target of 30%;

• Our severity rate was 195 and days lost were 15,569;• We were issued with a number of notifications in relation to the South

African Mine Health and Safety Act 29 of 1996. Marikana received 17such notifications and Limpopo received three notifications;

• The “Laduma Score a Goal for Safety Campaign” was rolled out to theProcess Division and reinforced within the Mining Division.

We are committed to honouring our safety values and sustaining an

environment that promotes the safety of our employees and contractors.

Work related fatalities in 2008

Name of deceased Date Location Incident Key learning aspects

Tshokolo Pscalias 10 October 2007 K3 Shaft An explosion was induced • Supervision to beNkisi (33) by drilling into a misfired enhanced in areas which

shothole in a steeply are difficult to reach suchinclined workplace as box holes;

• Identification and treatmentof misfires require

Lungislile Daysman 17 April 2008 Newman Fall of ground incident additional precautionary

Dila (26) measures to ensure all

Eduardo Richardo 28 May 2008 E3 Shafts Fall of ground incidentexplosives are recovered

Munguambe (39) (Pandorafrom holes;

Joint• The importance of training

Venture)reassessments to ensure onthe job competency.

48

The use of personal protectiveequipment is central to our safetyawareness and trainingprogrammes.


Eliminating Fatalities and Serious Injuries (continued)

Our approachOur CEO is ultimately accountable for the safetyof our employees and contractors on site. TheSafety Departments provide the Company policy,minimum safety standards and training material aswell as auditing the implementation of theserequirements. Line management remainsaccountable for ensuring effective implementationof these requirements through supporting systemsand procedures. In 2008, we concluded thereview of our safety management systemcomprising our revised Safety and SustainableDevelopment Policy, Safety and SustainableDevelopment Management Standards and FatalRisk Protocols. These documents provide a risk-based management framework for company-widesafety management, continual improvement andalignment with international best practice. As aresult of the review process of the Safety andSustainable Development ManagementStandards, we did not undertake the annual auditon implementation across the operations. We areworking towards OHSAS 18001 certification forall our operations by 2011.

We continue to rigorously investigate incidentsthrough the Incident Cause Analysis Method andnow include near-miss incidents. Findings fromthese incidents are critical to our efforts ineliminating fatalities and are communicatedacross our operations. We report our safetyincidents to the South African Department ofMinerals and Energy, as required by the MineHealth and Safety Act 29 of 1996, which isaligned with the International LabourOrganisation’s Code of Practice on Recordingand Notification of Occupational Accidents andDiseases.

Visible leadership is crucial to our success insafety and is a powerful aid in creating aninterdependent safety culture. To this end wepractice safe behaviour observations as a leadindicator to our safety performance. Six Sigmaprojects, daily safety breaks in the work placecoupled with safety training programmescontinues to form an integral component of ourprogrammes to improve our safety performance.

Training and awareness campaigns form animportant component of our safety managementsystems. In 2008, the “Laduma Score a Goal forSafety Campaign” – a soccer match learning mapthat seeks to reinforce safe behaviours andadherence to safety procedures to achieveserious injury free workplace by 2010 – was rolledout to the Process Division and reinforced withinthe Mining Division. This campaign has proven tobe both popular, in the light of the imminent 2010World Cup in South Africa. Aspects of thecampaign were dramatised through industrialtheatre road shows across our Marikanaoperations.

We have highly trained surface andunderground rescue teams, fire fighters andemergency medical services available on a twentyfour hour basis to support our operations, whileour exploration activities are assisted byinternational emergency service providers. Oursafety campaigns and emergency responseextends beyond the boundaries of our operations,including extensive regional road safety initiatives,the impact of life style on the workingenvironment and community assistance.

Our performanceThe impact of our safety programmes andinitiatives on our performance is reflected by theLTIFR and severity rate, as key safetyperformance indicators.

LTIFR performance across business units

Business unit 2007 LTIFR 2008 LTIFR

Marikana Mining Division 12.54 7.04Marikana Process Division 6.28 2.98Limpopo Platinum 7.84 7.98Shared Business Services 3.28 1.99

Total 10.80 6.27

49

Bernard Tlou, Netcare 911 Basic LifeSupport Practitioner, of the Lonmin

Netcare team.


Eliminating Fatalities and Serious Injuries (continued)

During the past year our LTIFR has shown asteady and consistent improvement. We haveexceeded our target for 2008 to improve ourLTIFR by 25%. In 2008, the LTIFR has reduced by42%, compared to our 2007 performance. Itshould be noted however that 3% of thisimprovement corresponds to an adjustment ofman-hours in the Mining Division, to include man-hours from office personnel and some contractorswhich were not previously included incalculations. In 2008, the severity rate was 195,using a revised method of recording, where thedays away from work as well as any days onrestricted work are carried over until the casereaches permanent disability. The severity ratesprior to 2008, were incorrectly calculated resultingin a substantial increase in severity rates fromprevious years. In 2008, days lost were 15,569.

In 2008, we were issued with a number ofnotifications in relation to the South African MineHealth and Safety Act 29 of 1996. Marikanareceived 17 such notifications and Limpoporeceived three notifications. These notifications areevidence of a renewed stance by the governmenton safety in the mining industry, which we fullysupport. However, the notifications result intemporary closure for inspection of the individualshaft under review.

We take pride in accepting our commitmentto zero harm by living a safe day, every day, andensuring that all unsafe acts are eliminated. Theentrenchment of the value of zero harm within theworkforce was reflected by the results of the2008 “My life at Lonmin” employee survey thatshowed that the single most important value thatemployees experienced within the Company wasthat of zero harm. Through the implementation ofour safety management systems, we continuallystrive to eliminate fatalities, reduce injuries andnear miss incidents, encourage positive behaviourand enhance our training and awarenessprogrammes.

004 05 06 07

FatalitiesLTIFR

08

25

10

5

20

15

0

9

4

2

7

6

3

1

5

8

Incide

ntspe

rmillion

hoursworke

d

Num

bero

ffatalities

LTIFR and Fatalities at our operations in 2008

13%

10%10%

6%

19%

22%

2%4%4%5%

5%Confined space

Drilling

Gases and explosions

Scraping and rigging

Equipment safeguarding

Slip and fall

Fall of ground

Underground trackboundmobile equipment

Hazardous material

Working at heights

Other

2008 incident analysis

50

We continually strive to eliminatefatalities, reduce injuries and

near miss incidents.

51


Health

IntroductionThe health and wellbeing of both our employeesand the communities where we operate isessential to our success as a Company. In linewith our zero harm value and with the realisationthat employees are the foundation of ourbusiness, addressing health concerns for all ofour employees is paramount.

Whilst our CEO is ultimately accountable forthe health and wellbeing of our employees, healthcare delivery and occupational health and hygienepolicies, standards, monitoring and the auditingthereof is the responsibility of the Healthdepartment. Responsibility for the implementationof these occupational health and hygienerequirements resides with line management.

On an international and national scale, wepartake in a number of forums to contribute togovernment decision-making and to create aplatform to collaborate with industry peers andgovernment in issues pertaining to occupationalhygiene and health. We are a member of theSouth African Chamber of Mine HealthCommittee as well as members of the ICMMworking groups.

Our key risks in terms of employee andcontractor health remain NIHL, HIV/AIDS andpulmonary tuberculosis. We have targets in placefor these risks and monitor our performance on amonthly basis. Our performance is underpinnedby extensive training programmes in place toreduce exposure to these risks and to provideaffected employees with knowledge to manageand reduce the impacts that the disease mayhave in their lives. Further information in terms ofrisk, impacts, opportunities and managementapproach is provided below in terms of NIHL,HIV/AIDS and pulmonary tuberculosis.

Managing workplace health risksOur mining and processing operations havebaseline risk assessments, occupational hygienemonitoring and medical surveillance programmesin place which are aligned with relevant legislation,including those of the code of practices, as wellas best practice. Further review of occupationalhygiene risks will take place in 2009. Although wecontinue to assess and monitor exposure tooccupational diseases such as pneumoconiosis,occupational asthma, silicosis, occupationaldermatitis and platinosis, incidents of the diseasewithin our workforce are low. To date, oursignificant risks in terms of employee healthremain NIHL, HIV/AIDS and tuberculosis.

Rate of diseases in 2008

Occupational disease 2008

Rate of NIHL cases diagnosed 871/100,000Rate of NIHL cases compensated 859/100,000Rate of pulmonary tuberculosis 2,050/100,000Rate of pneumoconiosis 0/100,000Rate of occupational asthma 8/100,000Rate of silicosis 0/100,000Rate of occupational dermatitis 4/100,000Rate of platinosis 26/100,000

Employees exposed to hazardous workenvironments, or required to perform arduoustasks, are screened each year to allow earlydetection of occupational diseases, preventpotential deterioration and ensure they have thephysical ability to work safely in specificenvironments. To assess an individual’s fitness forunderground mine work, all new recruits, as wellas current employees whose fitness levels requirereassessment, are evaluated at our new functionalcapability facility.

We are committed to honouring our health and safety values and sustaining an

environment that promotes the safety, health and wellbeing of our employees

and their families, contractors and the communities where we operate.

Summary of our 2008 performance• In 2008, 18,692 of our workforce participated in our VCT programmes,

including the participation of 94% of management employees;• We have continued our partnership with global mining companies to

finance the research and development of a new HIV therapeutic vaccine,VIR 201, which in 2008, was approved by the South African MedicalCouncil for clinical testing to proceed;

• Our HIV/AIDS prevention and treatment programmes are proving to besuccessful. Studies undertaken indicate that the treatment programmehas led to a 38% reduction in the number of in-service deaths since 2006;

• As at the end of 2008, we had 989 patients on ART, exceeding our targetof a minimum of 900 patients on ART;

• We have made a commitment to ensure that free ART is offered to theemployee for life, regardless of whether or not they remain employed bythe Company;

• Two mobile clinics were donated to the Department of Health, which havebeen operational since August 2008. 16 schools to date have been visitedby the mobile school health services;

• In 2008, we have reduced our new diagnosed NIHL cases by 62.2% fromour 2007 baseline year to 236 cases.


Health (continued)

Health care deliveryOccupational and primary health care andmedical services are available to all employees.Our healthcare delivery structure is supported byan onsite hospital, three clinics in Marikana, anonsite clinic in Limpopo and a highly skilledtwenty-four hour emergency team. All employeesare covered by a company subsidised medicalaid scheme and have the option for family coveras well.

We offer various assistance programmes forthe management of serious diseases foremployees, their families and communitymembers. Preventive measures for, or risk-controlof, serious diseases are provided to communitymembers through our partnerships with theDepartment of Health and other role players. In2008, two mobile clinics were donated to theDepartment of Health, which have beenoperational since August 2008. To date, 16 havebeen visited by the mobile school health services.

Assistance programmes

Prevention/Programme recipients Education/Training Counselling Risk control Treatment

Employees ! ! ! !

Employees’ families residing within GLC ! ! ! !

Community members ! ! ! "

Rehabilitation and Functional Assessment CenterAn employee’s physical fitness to perform his or heroccupation is fundamental to our value of zero harm in amining industry where heavy manual labour is required.It is critical to establish a novice employee’s capability ofperforming physical labour requirements the miningenvironment. To this end, on the 13th June 2008, wecommissioned in conjunction with Anglogold Ashanti, theRehabilitation and Functional Assessment Center at AndrewSaffy Memorial Hospital. The Center provides both functionaland physical quantitative assessments of individualscapabilities. Functional work capacity assessment refersto a systematic assessment of an individual’s ability to fitor match the functional requirements inherent to his/herjob whilst physical work capacity assessment refers to asystematic assessment of an individual’s ability to performsustained physical work. The results of the assessmentare used by the occupational medical practitioners, inconjunction with a suite of other tests, such as lung function,weight, vision, hearing and heat tolerance testing, todetermine the capabilities of an individual. The Center is notthere to exclude people, but to determine whether anindividual is capable of performing his or her work safely.

Lerato Mashilo participating in the assessmentsof the Rehabilitation and FunctionalAssessment Centre.

Ntsiki Motshwane, the Physiotherapist at theAndrew Saffy Memorial Hospital providingheat treatment to Mgilawe Ziwinele’s knee.


Eliminating Noise Induced Hearing Loss

Noise Induced Hearing Loss (NIHL) is the mostsignificant occupational disability in the platinummining industry, and one of the most significantoccupational health risks faced by our employeesand contractors. In 2008, 94.6% of ouroccupational diseases were attributed to NIHL.NIHL has far reaching effects on the qualityof lives of our employees and has financialimplications for the Company. To this end,we will continue to honour our value of zeroharm, endeavour to sustain an environment thatpromotes the wellbeing of our employeesand contractors and strive towards continualimprovement of our health management systems.

Our approachWhilst we acknowledge that by the very nature ofmining operations, our employees are exposed tohigh levels of noise, we are committed toeliminating the exposure of our employees andcontractors to noise levels exceeding the noiseexposure limit of 85 decibels (dB)(A). The focus isto reduce noise levels in the work place throughengineering interventions and to effectively utilisepersonal protective equipment. In 2007, theSouth African Department of Minerals and Energyissued a directive to eliminate the impact of NIHLas follows:1. Zero new cases of NIHL by December 2008.2. Reduce the total noise emitted by all

equipment installed in any workplace to asound pressure level of 110dB(A) at anylocation in the workplace by December 2013.

We have a comprehensive hearingconservation programme in place supported by agroup-wide risk management framework and theguidelines of the South African mandatory Codeof Practice for noise. Although accountability foreliminating employee’s exposure to unacceptablenoise levels resides with line management, theOccupational Hygiene Department and theEngineering Department work in conjunction withline managers to identify and implement theseprogrammes. Our hearing conservationprogramme focuses on workplace noiseassessment, personal exposure monitoring,education and training, medical surveillance,reporting and review of these programmes.

Participation in various forums, includingthe South African Chamber of Mines and theSouth African Mine Ventilation Society, providesopportunities to assist with further research intoNIHL, develop best practice and share knowledgewith industry peers.

Our performanceWe have achieved our target of reducing ourNIHL cases by 20% by September 2008. In 2008we reduced our number of new diagnosed caseswith NIHL from 624 in 2007 to 236 in 2008,this representing a 62.2% reduction in casesdiagnosed with NIHL. We submitted 236 casesof NIHL for compensation by Rand Mutual, ofwhich 229 qualified, indicating a 50.6% decreasefrom 2007.

We aim to have baseline occupational hygienerisk assessments in place at all our operations in2009. To date, our mining and processingoperations have baseline occupational hygienerisk assessments, exposure monitoringprogrammes for significant hazards as well asmedical surveillance programmes in place. Riskreview of significant occupational hygiene hazardswill be conducted in 2009.

We are committed to honouring our health and safety values and

sustaining an environment that promotes the health and wellbeing of our

employees and contractors.

Number of NIHL cases compensated

004 05 06 07 08

600

500

300

200

100

400

Financial year

Num

ber

53


Eliminating Noise Induced Hearing Loss (continued)

Reducing noise through re-engineering andequipment substitutionIn 2008, we have focused on reducing the sourceof NIHL by noise attenuation of equipment whichhas sound pressure levels exceeding that of110dB(A) through re-engineering and sourcing ofalternative equipment. We have assessed highrisk equipment for the potential of noise reductionthrough re-engineering and substitution and havetaken into consideration factors associated withefficiency, practicality, costs and reliability.Although these initiatives are ongoing and in linewith our target for 2013, our focus in 2008 was toconduct extensive research into noise attenuationin mechanical loaders, rock drills and samplecutters.

The use of personal protective equipmentWe have extensive area noise and personal noiseexposure monitoring programmes in place acrossour operations. Hearing protection devices aremandatory in work places that are exposed tonoise levels exceeding 85dB(A) and which aredemarcated as such. We offer our employees andcontractors custom fit hearing protection devices,as identified through a Six Sigma project, whichhave proven to be successful in terms ofimproved hearing protection and added comfortto the user. Our approach to training andawareness is geared towards changing thebehaviour of each employee and instilling aculture of self responsibility.

Screening and diagnosesEmployees and contractors who are exposed torisks associated with elevated noise levels arescreened annually to allow early detection ofhearing loss and to prevent potential deteriorationof hearing loss thresholds. We have managementsystems in place to enable us to understand therelationships between each employee’s exposurelevels, health records and employment data;these assist with diagnosis and treatment.

Angel Naidoo, an Occupational Hygiene Technologist, explaining how our newcustom made earplugs are worn in order to prevent NIHL.

Annetjie Brits, an Audiometrist at Andrew Saffy Memorial Hospital,screening an employee to detect hearing loss.


Managing HIV/AIDS in the workplaceand in the Greater Lonmin Communities

HIV/AIDS is a serious and debilitating disease thathas widespread social and economicconsequences within South Africa, within ourCompany and in the communities where weoperate. Given national statistics we estimate thatabout 23% of our workforce is HIV positive, adistinct risk to our business. We strive to promotethe health and wellbeing of our employees,contractors, their families and of the communitieswhere we operate, through our values of zeroharm and respect. We are committed tohonouring our health and safety values andsustaining an environment that promotes thehealth and wellbeing of our employees andcontractors.

Our approachWe continue to respond to the HIV/AIDSepidemic in a responsible, non-discriminatory andsupportive manner and strive to minimise thesocial and economic implications within ourbusiness and within the GLC. Our strategicapproach to managing HIV/AIDS is two-fold,firstly, the prevention and secondly the treatmentof the disease.

Our approach is founded on the principles ofconfidentiality. Our HIV/AIDS policy provides anequitable and consistent approach to themanagement of HIV/AIDS, through awareness andprevention, management of the disease amongstthose who are infected and support for them. Ourawareness and prevention campaigns extend intothe communities that host our operations.

Through our membership of the ICMM and inconjunction with other companies we participatein the development of leading practices andindustry benchmarking in health care in a drive toimprove our health systems. In partnership withthe IFC, we have initiatives on work place peereducation training, community heath educationand home based care. We will continue ourpartnership with global mining companies tofinance the research and development of a newHIV therapeutic vaccine, VIR 201, which in 2008,was approved by the South African MedicalCouncil for clinical testing to proceed.

Our performanceIn 2008, 95 or 60% of our in service deaths werethe result of AIDS, and 62 of our employees werediagnosed with disabilities that were attributed tothe disease.

Testing, prevention and educational programmesExtensive testing, education and awarenessprogrammes are in place across the company inan effort to prevent the spread of the disease, toeliminate the associated social stigma and toprovide employees with sensitive, accurate andup to date information on risk reduction in theirpersonal lives. These programmes take the formof Voluntary Counseling and Testing (VCT), mineinduction programmes and ongoing awarenesscampaigns by peer educators. In 2008, 18,692 ofour workforce inclusive of 94% of managementemployees participated in our VCT programmes.

We are committed to promoting the health and wellbeing of our

employees, contractors, their families and of the communities where we

operate, through our values of zero harm and respect.

004 09 1005 06 07

Actual number of deathsNumber of deaths projected

08

350

200

150

100

50

300

250

Num

ber

Financial year

HIV/AIDS projected vs actual deaths

005 06 07 08

1,200

1,000

600

400

200

800

Num

ber

Financial year

Patients on ART

004 05 06 07 08

600

500

300

200

100

400

Num

ber

Financial year

Pulmonary tuberculosis cases


Managing HIV/AIDS in the workplaceand in the Greater Lonmin Communities (continued)

To date, we have 163 active peer educators forthe workforce, who have held 538 educationsessions and numerous one on one meetingsreaching over 15,000 people and have distributedover 400,000 condoms.

In addition to our robust workplace program,in 2008 we launched an intensive communityprevention and care programme at our Marikana,Brakpan, and Limpopo operations. To date wehave 52 active peer educators, who have heldover 750 education sessions and numerous oneon one meetings, reaching over 40,000community members. Over 275,000 condomshave been distributed in the community. In 2008,we have also introduced a home-based careprogramme in our communities where volunteersvisit and care for terminally ill patients andorphans. To date we have trained 62 active homebased carers in an intensive training programmeof 69 days. Currently over 600 patients and400 orphans are being cared for on a regularbasis, with over 14,000 visits made in the pastsix months.

Treatment and support programmesAs a direct consequence of enhancedparticipation in our VCT programme, enrolment inour wellness programmes has increased. Ourwellness programme is designed to cater for thephysical and emotional needs of HIV positiveemployees. Once their CD4 T-lymphocyte countis below the acceptable limit, employees may jointhe ART programme, which is made available bythe Company through the employee’s medical aidwithout additional cost. We have made acommitment to ensure that free ART is offered tothe employee for life, regardless of whether or notthey remain employed by the Company.

Historically, the participation of employees inemployer sponsored treatment programmes inthe mining industry has been low. In an actuarialimpact study undertaken in 2007, the resultsindicated that the Company has a higher thanaverage participation in the wellness and ARTprogrammes respectively.

In 2008, an additional 550 employees joinedour wellness programme, totaling the participationto 1,150 employees. To date, we have 989patients on ART, which is an 18% increase from2007. Of concern to us, is the 16% of patientswho defaulted from ART in 2008. Although thetreatment is voluntary, we continuously strive toreduce defaulting through education andawareness.

Our HIV/AIDS prevention and treatmentprogrammes have proven to be successful.Studies undertaken indicate that the treatmentprogramme has led to a 38% reduction in thenumber of in-service deaths since 2006. In termsof direct costs incurred by the Company as anemployer, the treatment programme has shown amarginal cost benefit, with the reduction inHIV/AIDS related costs being offset by the costsof the treatment programme. Although HIV/AIDSdoes represent a risk that will have to bemanaged on a continuing basis, we believe thatthe epidemic does not pose a significant threat tothe long-term sustainability of our operations.

Pulmonary tuberculosisPulmonary tuberculosis is the leadingopportunistic illness that results in the death ofpeople living with HIV/AIDS. No tuberculosisprogramme will be successful without an effectiveHIV/AIDS management programme in place, asthe majority of our tuberculosis patients are HIVpositive. We have an effective tuberculosis controlprogramme in place, in addition to targetedmedical surveillance programmes, comprisingearly identification and appropriate treatment withquality drugs and lifestyle management throughdirectly observed treatment, a World HealthOrganisation intervention to improve adherence totuberculosis treatment. We continue to be vigilantwith the identification and treatment of extremelydrug resistant tuberculosis through ourtuberculosis control programme. In 2008, 533 ofour employees were diagnosed with pulmonarytuberculosis, which is an increase from 2007,whilst two of our employees contracted extremelydrug resistant tuberculosis.

Flashman Kwadi Mokgophe, aProfessional Nurse, providing apatient with all the necessaryinformation on ART.


Our Employees

Summary of our 2008 performance• In 2008, we have exceeded our target of 50% discretionary spend on

HDSA suppliers, totally a 56.5% discretionary spend on HDSAprocurement. Additionally we have an intensive programme in place tosupport, train, and develop local HDSA companies;

• 42.3% of our management employees comprised of HDSA employees,which exceeded our 2008 targets of 40%;

• 6% of our workforce are HDSA women and 0.6% of our employees areclassified as disabled;

• We employ a total of 33,725 employees and contractors;• US$42.82 million was spent on training interventions;• Our programme manager was selected as a finalist in the Global Award

for the best Six Sigma programme in manufacturing;• Phase one of the hostel conversions, totalling 29 complexes,

was completed;• A housing needs assessment was undertaken, which has resulted in

aligning delivery with customer expectations;• We have secured land for 2,500 houses in Marikana and we have

earmarked further available land for housing purposes.

IntroductionWe employ a total of 33.725 employees andcontractors. Our employees are the foundation toour business and by investing in our employees’wellbeing; we are investing in the Company’slong-term future, through enhanced attraction,retention and employee morale.

Our CEO is ultimately accountable for thewellbeing of our employees and achieving equalopportunity and equity while maintaining anappropriately skilled and diverse workforce andhe is supported by the Vice President HumanCapital. Whilst the Human Capital Departmentprovides policy standards, requirements andaudits the implementation thereof, linemanagement remains responsible forimplementation of these commitments andrequirements.

In terms of the success of the Company andemployee wellbeing and satisfaction, the key risksfacing the Company include the empowerment ofHDSA employees, the attraction and retention ofa skilled workforce and the provision of affordablehousing to our employees. Each of these riskshave objectives and targets in place in order tomitigate the impacts of these risks to theCompany, the performance of which is monitoredand audited on a frequent basis. There arenumerous training programmes in place tosupport the execution of our employee retention,attraction and development initiatives.

Further information on these risks in terms ofpolicy, commitments, performance, training andmonitoring are provided within this report.8

8 All aspects relating to labour/management and tradeunion relations are covered in the section on Respectingand Valuing Fundamental Human Rights.

We are successful when our employees live and work safely and

experience the personal satisfaction that comes with high performance

and recognition.

We are successful when our employees live and work safely and experiencepersonal satisfaction.

57

58


Empowering HistoricallyDisadvantaged South Africans

Historically the South African mining industry hasexcluded many groups from participating inmainstream economic activities including blackSouth Africans, mining communities, disabledpersons and women. The South Africangovernment has promulgated legislation toredress the persisting uneven distribution ofwealth and opportunity. We support thegovernment’s initiatives and are committed toimplementing the principle of equal opportunityand equity by maintaining an appropriately skilledand diverse workforce. We uphold fundamentalhuman rights and respect cultural diversity of ouremployees and communities.

Our approachIn line with the Constitution of South Africa, thelegislative requirements and our Charter, we arecommitted to providing the necessary resourcesto deliver the requirements of the South AfricanBroad-based Socio-economic Mining Charter. Wewelcome the opportunity to transform ourbusiness into a model for fairness and equality inthe new South Africa. We intend to empowerHDSAs by means of these measures:• Ownership in our existing or future mining,

prospecting, exploration and beneficiationoperations;

• Expanding and developing skills;• Promoting the employment of HDSAs within

the Company at professional andmanagement level;

• Involving HDSAs in our procurement supplychains;

• Improving socio-economic development inhost communities and major labour-sendingareas (refer to the section on Uniting with ourCommunities on page 82).

Our performanceOwnership and joint venturesThe Mining Charter of South Africa requires thatat least 15% of the equity of mining companies(or equivalent units of production) must be ownedby HDSAs by May 2009, and at least 26% byMay 2014. Incwala Resources (Proprietary)Limited is a South African registered companyspecifically incorporated for the purposes ofenabling broad-based equity participation byHDSAs in Lonmin Platinum. Incwala ResourcesPty Limited has an 18% holding in the share

capital of our Marikana and Limpopo operationsand a 26% stake in our Akanani project. Ourother business partners include MvelaphandaResources, which owns 7.5% of the PandoraJoint Venture and 50% of the Dwaalkop JointVenture; and the Bapo Ba Mogale MiningCompany which own 7.5% of the PandoraJoint Venture.

Preferential procurementWe continue to work towards enhancing theparticipation of HDSA1 companies in theprocurement chains of our operations, in terms ofgoods, services and consumables. As part of ourmining license conversion, we had planned toincrease our total discretionary spend with HDSAsuppliers to 50% by 2009. In 2008, we havealready achieved this target, spending 56.5% onHDSA procurement.

Above and beyond our general HDSA targets,we are also committed to procuring from locallyowned HDSA companies. We have an intensiveprogramme in place to support, train, anddevelop local HDSA companies in partnershipwith the IFC. In the past eighteen months, wehave awarded US$30 million in contracts tosuppliers living in the immediate vicinity of ourmining operations.

Employment equityWe are committed to helping all employeesdevelop their talents and enjoy rewarding careers,regardless of gender, ethnicity, race, age ordisability. Eighty percent of our workforce areSouth African citizens, whilst approximately 20%are citizens of other African countries. Ouremployment equity targets are aligned with therequirements of the Minerals and PetroleumResources Development Act 28 of 2002, SouthAfrican Employment Equity Act 55 of 1998 andthe South African Mining Charter as follows:• 40% HDSA participation in management by

2008 and 44% by 2009;• 10% of women in mining (at our core mining

and processing operations and applicable tocertain employment categories) by 2012 and10% of women at the mine (Company wide )by 2010; and

• 2% of persons with disabilities employed bythe Company by 2008.

We are committed to implementing the principle of equal opportunity and

equity while maintaining an appropriately skilled and diverse workforce.

Xenophobic violence in South AfricaIn 2008, South Africa experienced an outbreak of violent attacks on foreignnationals. As a Company which employs a diverse workforce and whosevalues are to respect each and every individual, regardless of theirbackground or country of birth, we strongly condemned these sentiments andacts of violence. In response to these national occurrences, all employees werestrongly encouraged by management and trade unions to take a standagainst ethnic hatred and violence. We immediately mobilised our securityteam to be on alert, increased our communication with the South AfricanPolice Services and monitored the situation locally. During this period,although there were no incidents of violence reported amongst any of ouremployees, some of the communities where we operate were affected.

59


Empowering HistoricallyDisadvantaged South Africans (continued)

We have an established Employment EquityForum in place, which consists of representativesof all major trade unions and management. Theforum convenes on a regular basis and reviewsperformance against these targets.

In an attempt to improve our understanding ofemployment equity in the Company, weconducted an audit in partnership with the IFC ofour employment equity status, as required by theSouth African Employment Equity Act 55 of 1998.Through the audit, we determined moreaccurately the status of performance against ourtargets, identified issues that represented barriersand identified management programmes toexpedite our performance in this regard. It wasevident by this audit, that the major challengefaced in our journey towards employment equityis the shortage of skills, within not only the miningindustry, but the country at large.

HDSA employeesWe have policies and procedures in place tosupport HDSA employment in a non-discriminatory manner. In 2008, 42.3% of ourmanagement employees comprised of HDSAemployees, which exceeded our 2008 target of40%. In 2009 and thereafter, to increase theparticipation of HDSA persons in management,we aim to further enhance our governancestructures, with specific reference to the roles,responsibilities and communication thereof tovarious stakeholders involved; strengthen ourtalent management in developing designatedemployees; introduce detailed employment equitysecondary labour and succession planning bygender, race and category; consolidating andanalysing designated exit interviews; reviewingretention strategies and making an association ofachievement of employment equity targets to keyperformance areas of line management andappropriate support personnel. In 2008, threeracial discrimination cases were reported as partof the grievance reporting procedures at theCompany, which were immediately investigated.The cases were closed subsequent to agreementthat no further action was required.

Employment of womenHistorically, mining has not been a career easilyaccessible to women. This is reflected nationally;only 5% of all employees in the mining industryare female. We are committed to increasing thenumber of women employed at our operations,retaining current female employees and tocreating a culture that empowers woman in theworkforce. We have the relevant policies,procedures and programmes in place to supportthe participation of women in our Company. Thetable on the next page outlines the aggregatetargets from our Social and Labour Plans and ourperformance in this regard.

0%0403 05 06 07

Target% HDSA in management

Financial year08

45%

5%

10%

30%

15%

20%

25%

35%

40%

%

HDSA in management

Hendrik Qwabe, Production Foreman, and Jerry Malgas,Control Room Coordinator at the BMR.

60


Empowering HistoricallyDisadvantaged South Africans (continued)

Although we have not reached our target forthe employment of women at the Company, wemade progress in our attraction and retentionprogrammes focused on the employment ofwomen. Through the employment equity audit,we identified and have now accelerated a numberof women in mining initiatives, in partnership withthe IFC. During the past year significant progresswas made with regards to managementprogrammes in place, with an additional eightpolicies approved and communicated, elevenchange houses upgraded and a number ofunderground sanitation facilities upgraded toaccommodate our female employees. We arecurrently engaged in initiatives that look atalternative job placement for women, diversitytraining, and broad based communications.

Disabled personsPeople with disabilities have historically not beena clearly recognised group, despite the fact thatwe do employ a number of people withdisabilities. In 2008, we launched a project toadequately classify employees with disabilitiesand through that process identified that 0.6% ofour workforce are people with disabilities. Wehave not achieved our target of 2% for 2008. Weare currently developing further systems andsupport mechanism to ensure that our workforcesupports people with disabilities.

Performance on our targets relating to the employment of women

2006 2007 2008 2009 2010 2011 2012

% women at the mine 4.1 4.9 6.1

Target % 3.6 5.2 7.1 8.8 10.2 10.8 11.3

% women in mining 1.4 1.4 1.8

Target % 1 2 3.5 5 6.8 8.8 10

Female representation at Lonmin2007 2008

% %

Board of Directors 9 9Chief Executive Committee 20 20Management 20 20

Total Lonmin Employees 4.9 6.1

Women in mining, trainees at Saffy Shaftgoing underground.

61


Attracting and Retaining a Skilled Workforce

As a result of the ever-increasing demand andcompeting interests for skilled recruits nationallyand within the international mining industry, oursuccess is dependent on our ability to attracttalented employees to our operations, whileretaining and developing our existing employees.We are successful when our employees live andwork safely and experience the personalsatisfaction that comes with high performanceand recognition.

Our approachThere is a growing shortage of critical skills in themining industry. To combat this, our HumanCapital Strategy, designed for skills developmentand retention, includes a three-fold approach,namely attracting employees who value theCompany’s Charter and have the appropriatecompetencies for current and future needs,retaining current employees who are performingwell or have the potential to perform well anddeveloping the skills of our existing employees.

Attracting employeesWe employ whenever possible, people from ourlocal communities, HDSA employees and personswith disabilities. Our recruitment programmes arecustomised for local and national levelrecruitment. For skilled labour, recruitment iscoupled with pre-employment psychometric andcompetency assessments to ensure that thecorrect person is aligned with the job profile.Market-related remuneration, as well as employeebenefits, are key elements of our recruitmentsuccess. In the absence of a minimum wagewithin the mining sector, we work from theapplicable national minimum wage for employeeswith basic skills. Additionally, the remuneration ofscarce skills is assessed regularly in the marketplace, and salaries adjusted, to ensure we attractthe required skills. Benefits provided to full-timeemployees include, but are not limited to,healthcare, life insurance, disability insurance,retirement provisions, share incentiveprogrammes, maternity and family responsibilityleave. We have no defined benefit/final salarypension programmes but we operate definedcontribution pension schemes for our employees.We have committed to providing our HIV-positiveemployees with ART for life.

Retaining employeesTo retain employees with talent, those who deliverhigh performance and HDSA in managementpositions, we have financial and non-financialretention programmes.

Developing our employeesIn addition to legislated requirements, thedevelopment of our employees is critical to theestablishment of a competent workforce andfuture leadership for the Company. Employeedevelopment is facilitated by both the HumanCapital and the Organisational DevelopmentDepartments. Organisational Developmentcomprises of the Lonmin Training Academy andthe Centre of Leadership and BusinessDevelopment and facilitates training and skillsdevelopment, whilst the Human CapitalDepartment provides the framework for talentmanagement as a component of employeedevelopment. We have extensive employeedevelopment programmes in place,encompassing both personal and professionaldevelopment requirements of which the keyinterventions are summarised below.

Talent managementWe have an entrenched talent managementprogramme in place for management andprofessional employees to identify and developemployees who are high performing or employeeswith development potential. HDSA employees arespecifically earmarked for participation in thisprogramme. The talent management programmecomprises talent review, performancemanagement, career development, successionplanning and mentoring.

Bursary and intern programme

Number of Number of Number ofYear interns bursars sponsorships

Target (2012) 216 209 None2008 41 45 632007 39 36 522006 4 33 262005 10 19 202004 0 9 0

Total 94 142 161

An appropriately skilled and diverse workforce is the foundation to

the success of our business and we are committed to maintaining

this balance.

62


Attracting and Retaining a Skilled Workforce (continued)

Training programmesWe have extensive training programmes includingbut not limited to the following:• ABET remains a national priority in South

Africa and an integral element of ouremployee development. We offer eachemployee through the Lonmin TrainingAcademy, an opportunity to becomefunctionally literate and numerate with avariety of full-time and part-time ABETcourses, varying from level one to four. Wealso provide access to the trainingprogramme to communities where weoperate.

• The Lonmin Training Academy also providesemployees with the opportunity to further theirdevelopment with technical skills trainingthrough a wide range of courses specific tomining, processing and shared businessservices. Safety training is also integral to ourtechnical skills training programmes.

• We continue to drive six sigma as a tool todefine and implement business improvementsthroughout the Company.

• We have a variety of training and developmentinterventions in place to increase theperformance of managers and performancewithin work teams, these includingmanagement and supervisory training andmission-directed work team training.

• We have a study assistance programme inplace to support our employees with furtherstudying at institutions independent to theCompany. The study assistance policyprovides the framework for financial fundingas well as the provision of sabbatical timefrom work.

Our performanceAttracting employeesWe employ a total of 33,725 employees andcontractors. In 2008, we recruited 3,815employees, of which 72 were HDSA inmanagement positions and 694 were female.New talent is essential to the success of ourbusiness and we provide attractive careeropportunities within the mining industry forgraduates. We have partnered with academicinstitutions to attract young professionals to themining industry and to the Company through ourbursary and intern programmes with 142 and 94participants in 2008 respectively.

Kenosi Mabaso,Senior TechnicalTrainer demonstratesto service crewthe principles ofconventional mining.

Rock drill operators at K3 Shaft at our Marikana operations.

Group labour turnover (permanent employees)

2008 2007 2006

New recruits 3,815 2,831 1,424

Resignations (506) (471) (363)

Deaths(not work related) (223) (237) (231)

Dismissals (780) (956) (887)

Retirements (126) (147) (80)

Retrenchments (2) (15) (133)

Net gain/loss 1729 1005 (270)


Attracting and Retaining a Skilled Workforce (continued)

Retaining our employeesIn 2008, the company net labour gain was 1,729,an increase from 2006 and 2007.

In 2008, 56 of our 780 dismissals resulted inclaims being submitted to the Commission ofConciliation, Mediation and Arbitration, and ofthese claims, 28 were resolved in the Company’sfavour, and 23 are still in the process of beingfinalised. Of the 506 resignations recorded in2008, 24.3% were among skilled employees andupper-management. In 2008, we have intensifiedour exit interviewing process in an attempt tounderstand reasons for employee resignation.Severance pay for retrenched personnel isprovided and takes into account years of serviceat the Company. We do not offer job placementservices for those employees who are retrenched.In addition to resignations, a high rate ofabsenteeism affects productivity and we workcontinuously to reduce this rate. In 2008, ourabsenteeism rate was 17.7%.

Employee developmentAll management and professionally qualifiedemployees are subject to an annual performancereview process that guides performancemanagement and identifies employeedevelopment areas. In 2008, this accounted for1453 or 5.6% of our employees of which 42.1%were HDSA employees. Career developmentplans are reviewed annually and encompasscareer pathways and individual developmentplans outlining training requirements foremployees to progress in their chosen careers.To date, 471 employees have completed thisprocess. In 2008, an additional 361 menteeswere enrolled in the mentorship programme.

In 2008, US$42.82 million was spent ontraining interventions Company wide. We haveset a target to have 50% of our employees’functionally literate and numerate by 2009. In2009, we will undertake an audit to verify thelevels of literacy and numeracy within theCompany. In 2008, 2,866 full time employees,193 community members and 795 part timeemployees attended ABET courses at a total costof US$8,952.89, which includes costs relating toreplacement labour.

Six Sigma has been part of the way we dobusiness for over four years now and since thebeginning of the programme has helped us realisebenefits of over US$160 million across theoperations both in improved throughput andreduced costs. We have trained 70 Black Beltsand 17 Master Black Belts to date and we havealso extended our Green Belt training programmeto over 450 people. Our programme has nowbecome a benchmark for Six Sigma in SouthAfrica and to a certain extent worldwide in themining industry. The programme has won theGlobal Award for the best Six Sigma programmein manufacturing for two years running. Ourprogramme manager was selected as a finalist inthe same awards for 2008.

To enhance performance at executivemanagement level in 2008, we initiated theLonmin Leadership Development Programme, asix-week programme extending over elevenmonths, equipping management employees withleadership skills, promoting high performanceteams and creating alignment around the LonminOperating Model. In 2008, 118 employeescommenced participation in this course, with afurther 82 employees due to participate in thecourse in 2009. We also commenced with a FrontLine Supervisory Development Programme, aimedat equipping supervisory employees withnecessary supervisory and management skills,with 90 supervisors successfully completing thiscourse. In 2008, US$1.11 million was spent onbusiness leadership development interventions.

Historically, we have had transition trainingprogrammes in place, focusing on portable skills,which have not proven to be successful. To thisend, we have reviewed our training strategy, withimplementation planned to commence in 2009.The training will be made available to employeeswho are of retirement age as well as employeesclassified as medically disabled.

Sylvia Njomboni, Loco Driver at K3 Shaft, cleaning the track.

63


Availability and Affordabilityof Housing for our Employees

We are successful when our employees live andwork safely. The regions in which we operate arecharacterised by an estimated 50% of thepopulation living in informal dwellings. Theshortage of housing is a critical issue on both anational and regional scale and a concern thatneeds to be addressed. The magnitude of thischallenge for the Company is underlined bystatistics indicating that more than two thousandof our own employees reside in these informalsettlements. To this end, we are committed toestablishing sustainable houses that provideshelter, security, services and a sense of place forall our employees and their families.

Our approachOur approach to housing is centred around thedelivery of affordable houses which impactpositively on our employees’ quality of lives interms of reuniting employees with their families,enhanced security and experiencing sustainablecommunity living. This approach is aligned withthe Company Sustainable Development strategyas these houses will in future form a core part ofour communities. We currently have 1200 housesand 114 hostel complexes, available for ourcategory 2-8 employees. We also provide a livingout allowance to those employees who prefer notto stay in the hostels. In recognition of the socialimbalances that the legacy of single sex hostelspose, we have committed to address this shortfallthrough the following targets:• The construction of 5,500 houses within the

GLC by 2011;• The conversion of all our 114 hostels into

family and bachelor accommodation by 2011;• The construction of 80 houses within the

Mooinooi Township by 2008.

The nature and design of the proposedhouses have been largely informed by a housingneeds assessment that was undertaken in 2008(for further information, please refer to the textbox). Taking into consideration the outcome of theassessment, we are committed to the following interms of our housing programmes:• Houses are to be affordable to our employees

and home ownership is pivotal to the successof our housing programme;

• Houses are to be secure, have access toservices and infrastructure and provide asense of place for all our employees and theirfamilies;

We are committed to establishing sustainable houses that provide shelter,

security, services and a sense of place for all our employees and their

families.

Housing Needs AssessmentObjectiveThe objectives of the needs assessment were to analyse and understanddemographic profiles of employees on the waiting list, their financial profile,expectations and preferences with regards to housing.

MethodologyA combined quantitative and qualitative research approach was followedsampling 1,208 employees on the Company housing waiting list, with aquestionnaire-driven survey and focus group discussions as quantitative andqualitative research methods respectively.

Key outcomes of the survey• The strongest driver in employees’ efforts to acquire housing is the need

to live with their immediate family;• It is the intention of the majority of employees to buy a house as opposed

to renting a house;• Choice and being afforded a choice is valued;• Availability of plans, models and show houses is hugely important;• Employees expressed an urgent need to receive education on home

ownership with 64% of the respondents rating their knowledge as “knownothing” or “knowing just a little bit”;

• The most important factor impacting an employees’ decision makingregarding houses is location. The location of the new houses should beclose to work and in a safe environment. 85% of respondents indicatedthat they would prefer a house in Marikana;

• Affordability is the number two driver in decision making. Based on theanalysis of employees’ income, cash flow and credit profiles, an averageemployee will be able to afford between US$67.11 to US93.96 per monthfor housing;

• Building material was the third most important factor in decision-making.Employees are quality conscious and 92.3% would not consider buying ahouse built of any other material than brick;

• Employees place a high premium on space – which does not necessarilyrelate to the number of rooms, but rather to floor space and stand size;

• Employees prefer stand-alone houses with 98.4% of employees opposedto owning a unit in a block of flats.

Thandelakhe Situ, a Winch Driver at Eastern Platinum, Noaka Situ andbaby, Someleze Situ enjoying their upgraded family unit.


Availability and Affordabilityof Housing for our Employees (continued)

• Within practical boundaries, we endeavour toprovide choice to our employees and to makeavailable show houses, maps and models toenable them to visualise the end product priorto commitment;

• Houses are to be designed in sustainablemanner in terms of energy and waterefficiency;

• Taking into consideration location, as a criticalfactor when sourcing accessible land for ourhousing programme;

• Our employees are to be equipped with theknowledge and skills required to managepersonal finances and to own a home;

• Unrealistic expectations and perceptions areto be managed through effective two-waycommunication channels with our employees.

Our performanceMarikana hostel conversionsWe acknowledge that hostels are not anacceptable form of accommodation for ouremployees, and thus we have made acommitment that by 2011, no employee of theCompany will reside in hostels. No new hostelswill be constructed and in terms of existinghostels, we are committed to converting allour 114 single sex hostel complexes within thistime frame into 1,500 family and bacheloraccommodation for category 3-8 employees.In addition to this conversion, we realise that it isin the best interest of our employees to own theirown homes and it is our intention to promote theownership of these houses by the occupants. Tothis end, a portion of the accommodation will beconverted from rented accommodation intosectional title ownership. In the conversion ofhostels, sustainable development principles havebeen taken into account, with all houses beingequipped with solar geysers, low flush toiletsand low energy lighting. Landscaping will beundertaken with the planting of indigenous treesto enhance the aesthetics of the area. 5% ofthe accommodation is to be designed toaccommodate our disabled employees.

The first phase of the programme to converthostel complexes into family and bacheloraccommodation commenced in 2007, with aUS$46.04 million tender being awarded to aconsortium of GLC contractors. Thesecontractors were either wholly women ownedor a significant percentage of the companiesbeing women owned. In 2008, phase one of theconversions was completed successfully with29 hostels converted into 412 bachelors or familyaccommodation. In 2008, the tendering processfor phase two of the hostel conversions wasundertaken, with one of the three original GLCcompanies being awarded a significantcomponent of the tender and the other twocompanies forming joint ventures with larger

companies to execute the work awarded to themin terms of the tender. We expect phase two ofthe conversions to be completed in 2010, withthe remaining conversions scheduled for 2011and 2012.

Marikana housingWe have committed to the construction of 5,500houses within the GLC by 2011. The housingprogramme has posed some significantchallenges that included the following:• Proclamation of land has taken longer than

anticipated;• The provision of electricity to new housing

developments was delayed due to theelectricity crises in South Africa during the firsthalf of 2008;

• Rising interest rates in South Africa posed athreat to future and often first time homeowners;

• The engagement process undertaken withtrade unions to ensure alignment onaffordability and acceptability of the housingdesigns.

65

Makatlelio Lenkoe is one of the family members that reside at one ofour newly renovated family units.


Availability and Affordabilityof Housing for our Employees (continued)

In 2008, progress has been made on theprogramme particularly in the context of aligningdelivery with customer expectations, with keyareas of performance being:• Urban design plans for Marikana in terms of

the housing programme are complete and arepending approval by the Rustenburg LocalMunicipality as part of their IntegratedDevelopment Plans;

• A comprehensive housing needs assessmentwas undertaken which resulted in a greaterunderstanding of our employee’sexpectations, perceptions and needs;

• Affordability of the houses to our employees isnow a reality, as we have endeavoured tosubsidise the costs of the serviced stands,estimated at 30% of the total costs;

• We have secured land for 2,500 houses inMarikana and we have earmarked furtheravailable land for housing purposes;

• The proclamation process for an additional1,700 stands has commenced and is due forcompletion in 2009;

• The preliminary designs for the houses havebeen completed. The designs have taken intoconsideration the preference of ouremployees as highlighted in the housingneeds assessments. These including stand-alone houses made of brick and theaffordability of choice in terms of size. Thedesign and costs of the houses are inclusiveof solar geysers, low flush toilets, water tanksand smokeless combustion stoves;

• More extensive communication channels havebeen established, through the formation of themonthly Housing Forum with key role playersincluding organised labour as well as theinternal Housing Steering Committee;

Going forward into 2009, three show housesof varying designs will be constructed to enableour future home-owners to visualise the housesprior a financial commitment and to afford themwith the opportunity to provide feedback on thedesign prior to construction. We will also continueour focus on securing land for future housingdevelopments as well as securing access toelectricity and water resources. A further keyfocus area is our initiative to educate ouremployees on aspects associated with homeownership including financial management.

Mooinooi housingIn an attempt to reduce the shortages of housingwithin Mooinooi and as a component within ourattraction and retention programmes, wecommitted to constructing 80 houses withinMooinooi Township by 2008 for managementlevel employees. In 2008, the programme todesign and construct these houses was put onhold, due to a shift in focus to rentalaccommodation and facilitation of developmentby property developers in Mooinooi as opposedto direct construction of houses by the Company.

66

Masechabo Julea Kepe and DumseThokulanga visiting their friends KeletsoGamaisa, Merensihkoe Gamaisa, TakisoGamaisa, Mzoliswa Ketwa and Vincent

Tsabolita at the Eastern Platinum hostel.

67


Environment

Summary of our 2008 performance• All operations received or maintained ISO 14001 certification in 2008;• The rehabilitation of Vlakfontein Mine was the winner of the environmental

category of the 2008 African Nedbank Green Mining Awards, followed byour initiatives on revegetation of our tailings facilities as runner up;

• In 2008, a US$13422.82 fine was received as a result of proceedingconstruction of the K4 tailings facility and associated activities withoutauthorisation in terms of the National Environment Management SecondAmendment Act 8 of 2004;

• Six level three environmental incidents were reported;• Along with the rest of South Africa, we experienced in 2008 drastic

reductions in the availability of electricity supply due to capacityconstraints faced by the national electricity utility;

• In 2008, we have reduced our aggregate fresh water intake by 15.1% perunit of production;

• In 2008, although we have improved our aggregate energy consumptionby 4.6% per unit of production, we have increased greenhouse gasemissions by 6.7% per unit of production;

• Although not finalised, we have made significant progress in 2008 on ourcarbon footprint;

• In 2008, as part of our initiatives to secure water for our operations, wesigned the memorandum of agreement as a participant in the OlifantsRiver Water Resource Development Project between the Republic ofSouth Africa, the Joint Water Forum and other mining companies;

• In 2008, five exceedances of the 600 mg/m2/day target were recorded atresidential sites at our Marikana operations. Due to the methodologyemployed, cumulative fallout of all external and internal dust sources arerecorded;

• Our average sulphur dioxide emissions were calculated at 9.1 tonnes/day,which is slightly lower than the 2007 average daily emissions;

• We have continued with our re-vegetation programmes on our dormanttailings facilities, with our initiatives this year focusing on improving thedensity of the vegetation and enhancing vegetation growth in areas ofpoor coverage;

• We initiated an integrated mine closure strategy to provide a strategicframework within which environmental management and closure planningfor all South African operations can be managed.

We are committed to the value of Zero Harm to the environment, to

minimise our mining footprint and to continually improve our performance

within all environmental disciplines.

IntroductionBy nature of our mining and processing activities,we have an impact on the environment where weoperate. Producing PGMs whilst limitingdegradation of the environment and usingresources more efficiently is at the core of thesustainable development business case for theCompany. We share global anxiety aroundenvironmental degradation and resource scarcity,in particular water and energy resources as weare dependant on these resources in order tofunction. By adopting new or cleanertechnologies, we make production processesmore efficient, reduce costs and improve qualityenvironmental degradation.

Our approach to environmental managementis founded on our value of zero harm to theenvironment, best international environmentalpractice and compliance with legislative and otherrequirements. Management of our environmentalaspects and risks is underpinned by our Safetyand Sustainable Development Policy, which wasapproved in 2008, and supported by grouptargets, standards and guidelines.

Accountability for environmental managementresides with the CEO. The CEO is supported bythe Environmental Department, which providesthe Company policy, minimum standards andguidelines and audits the implementation of theserequirements whilst line management remainsaccountable for ensuring effective implementationof these requirements through managementsystems.

On an international and national scale, wepartake in a number of forums to contribute togovernment decision-making and to create aplatform for collaboration with industry peers andgovernment on issues pertaining to environmentalmanagement. We are a member of the SouthAfrican Chamber of Mine Environmental PolicyCommittee as well as member of the ICMMworking groups.

68


Environment (continued)

Corporate and operational environmental risksare identified as part of the Company riskmanagement programme on both a formal andan ad hoc basis. Our material issues in terms ofenvironmental aspects include the following:• Obtaining or maintaining ISO 14001

certification at all operations.• Compliance with legislation, regulations and

permits.• Access to, security of and improving efficiency

in the use of energy resources.• Access to, security of and improving efficiency

in the use of water resources.• Minimising impacts of our operations on air

quality.• Understanding the risks and opportunities

presented by climate change.• Eliminating waste disposal to landfill.• Responsible materials stewardship.• Supporting biodiversity and minimising

impacts on land resources.• Planning for mine closure.

Key environmental risks and opportunitiesrelating to each discipline within environmentalmanagement along with key strategies, targetsand procedures for implementation andsuccesses and challenges are discussed withinthe respective sections on the environmentaldisciplines.

Management systemsIn 2008, Shared Business Services and ourLimpopo operations were ISO 14001 certificatedby PricewaterhouseCoopers. All other operationsmaintained ISO 14001 certification.

Training and awarenessEnvironmental training programmes andawareness campaigns form an importantcomponent of our environmental managementsystem. In addition to general environmentalinduction training received by all employees andcontractors on an annual basis, each operationconducts site-specific training on environmentalaspects according to training matrices andschedules. In 2008, we focused on providing allkey management personnel with training onselected legislative requirements for activitiestypically undertaken as part of mining andprocessing operations.

Monitoring programmesWe have monitoring programmes in place tomonitor our impacts on the environment,including those relating to water, air quality, wasteand biodiversity management; our performance interms of our policy commitments, objectives,targets and legal and other requirements.Monitoring of compliance of contractors andsuppliers to our commitments and requirementsform an integral component of our programmes.These programmes comprise of operatingprocedures, the analysis of monitoring results, theidentification of corrective and preventativeactions and the subsequent reporting thereof.

Communication and reportingWe engage with stakeholders on both an informaland formal basis. In 2008, we have formallyengaged with our stakeholders primarily throughworkshops facilitated by third party consultants asrequired by environmental impact authorisationprocesses as well through an annual governmentopen day where we provide governmentdepartments with feedback on our performance.We report on our performance to governmentdepartments as required by our EnvironmentalManagement Programme Report and otherlicense conditions. In 2008, we have alsocommenced with the development of anelectronic environmental performance reportingapplication which will facilitate and improve theeffectiveness of monthly data capturing againstCompany targets.

Legal compliance and auditingWe continue to strive for full compliance to SouthAfrican environmental legislation, ourEnvironmental Management Programme Reportsand authorisations received on activities. We havea set target year on year to receive no fines orprosecutions relating to environmentalmanagement. In 2008, we did not achieve thistarget as a US$13422.82 fine was received as aresult of proceeding construction of the K4tailings facility and associated activities withoutauthorisation in terms of the National EnvironmentManagement Second Amendment Act 8 of 2004.Additionally, aspects of non-compliance whererelevant are outlined in the sections on the variousissues.

We have both internal and external auditprogrammes in place. We conduct third partyperformance assessment audits as required bylegislation every second year that are alternatedwith general third party legal compliance audits atall our operations. In 2008, a third party legalcompliance audit was undertaken to determinecompliance of our operations to relevant SouthAfrican environmental legislation.

69


Environment (continued)

Incident reporting and managementThe transparent reporting of incidents and the effective mitigation of the impacts of these incidents through correctiveand preventative is a fundamental aspect of our approach to environmental management and we have ensured that it ismandatory at all our operations. We continue to rigorously investigate incidents through the Incident Cause AnalysisMethod and report on incidents to the relevant government departments. In 2008, six level three incidents were reportedas outlined by the table below.

Level three environmental incidents in 2008

Date Location Type of incident Description of incident Impact of incident

5 October 2007 Process Division, Waste Spillage of approximately 50 Limited impact onSmelter management tonnes of calcium sulphite, soil resources, as

a low hazardous waste into waste was immediatelythe receiving environment cleaned up and removed

during the loading of a tanker. to a permitted landfill site.The waste spilt onto the loading

area and flowed ontothe adjacent soil.

3 January 2008 Process Division, Water The discharge of poor Soil and possible groundSmelter management quality process water into water contamination. The

the environment from the discharge did not enterRowland corner sump as the surface watera result of excess water resources directly.

from the smelter.

16 March 2008 Process Division, Water The discharge of poor quality Soil and possible groundBMR management process water into the water contamination. The

environment from the pollution discharge did not entercontrol dam as a result the surface water

of a burst pipe. resources directly.

30 June 2008 Marikana Mining, Water Unplanned discharge of Possible soil, surface waterB3 Shaft management poor quality water of and ground water

unmeasured quantities into contamination. Elevatedthe environment. The discharge concentrations of nitrateswas as a result of accumulated were of concern in the

underground water being pumped discharged water.to surface to prevent underground

flooding from taking place.

14 July 2008 Marikana Mining, Water Unplanned discharge of Soil and possible groundRowland Shaft management sewerage effluent from water contamination. The

the waste water treatment discharge did not enterplant at Rowland Shaft the surface waterinto the environment. resources directly.

3 September Marikana Mining, Hazardous Spillage of approximately Soil resources of an2008 Salvage Yards material handling 9,000 litres of oil containing estimated 850m2 were

polychlorinated biphenyls at contaminated, with thea concentration of two parts possibility of groundwaterper million from a transformer contamination.

onto the soil at the salvage yard.Spillage was as a result of

criminal interference ofthe transformer.


Accessing and Managing Energy Resources

Energy is indispensable to mining and industrialwealth generation. As a result of the growingdemand and competing interests for energy bothinternationally and within South Africa, our successis dependent on our ability to secure access tosufficient energy resources and to manage them ina responsible and sustainable manner for ourcurrent operations and growth opportunities.PGMs are globally strategic metals for a number ofcrucial applications worldwide. Given theimportance of South Africa’s role in the PGMmarket, the security of power supply remains astrategic issue for the industry. Energymanagement is also our primary focus to manageour impact on climate change.

Our approachEighty seven percent of our energy profile isattributed to the use of electricity from the nationalgrid, of which 90% is supported by non-sustainablefossil-fuel-based carbon. The nature of this fuelcoupled with recent electricity shortages faced bySouth African mining industries, caused energymanagement and efficiencies to be a criticalbusiness imperative. The electricity crisis faced byour Company in 2008 has accelerated our journeyto move towards alternative, more reliable andsustainable energy sources. Our approach toenergy management is centered on securing theavailability of sufficient energy for our current andfuture mining operations, reducing our energyconsumption by improving energy use efficienciesand ultimately minimising our carbon footprint.These initiatives will inevitably contribute to reducinggreenhouse gas emissions from direct and indirectsources. Short term, our focus with regards toenergy management involves integrating energyefficiency considerations into our business andplanning strategies, improving energy efficiency atexisting operations and investigating alternative, lowemission energy sources. This is being undertakenthrough the adoption of best practices, efficientenergy technologies and mechanisms that focus onalternative with the least cost and greatest long-term potential.

Our performanceIn response to the challenges facing the SouthAfrican mining operations with regards electricitysupply and demand, we have engaged theservices of the IFC to undertake an energy auditof our operations. The audit entailed identifyingopportunities for improving efficiencies and

* The energy (TJ) and energy efficiency (GJ/Platinum GroupMetals oz) figures indicated in the 2007 report for thefinancial year 2007 are incorrect as these figures onlyreflect energy use associated with electricity consumption.The figures provided here are the re-instated figures toreflect total energy use and energy efficiency for 2007.

We are committed to promoting the sustainable use of natural resources,

responding to climate change and driving the reduction of greenhouse

gases by adopting best practice technology, alternative energy sources,

improved control systems and management practices.

86.56%

6.57%0.86%

6.01%

Electricity

Fuel

Gas

Coal

004 05 06 07*

Energy (GJ/PGM oz)Energy (TJ)

08

8,000

1,000

2,000

6,000

3,000

4,000

5,000

0.00

6.00

7,000

1.00

2.00

3.00

5.00

TJ

GJ/PGM

oz

Financial year

Energy consumption

1,30004 05 06 07

Greenhouse gas(CO2 equivalent/PGM oz)

Greenhouse gas(CO2 equivalent/kilotonnes)

08

1,800

1,500

1,450

1,400

1,350

1,700

1,550

1,600

1,650

0.00

1.200

0.200

0.800

0.600

1,750

0.400

1.400

1.000

Kilotonn

esof

CO2

equivalent

CO2eq

uivalent/PGM

oz

Financial year

Greenhouse gas emissions

Energy profile

70


Accessing and Managing Energy Resources (continued)

What happened?On 24th January 2008, the state electricity provider Eskomdeclared force majeure on electricity supplies. South Africaunexpectedly experienced a drastic reduction in theavailability of electricity supply due to capacity constraintsfaced by the national electricity utility. Electricity restrictionswere implemented nationally, and mining industries werefaced with an immediate 10% decrease in supply.

What were our immediate responses?On request from Eskom, we reduced our operations toremain within the 10% target. In order to ensure the safetyof our employees, critical safety systems remainedoperational. As a result of consultations with Eskom,electricity restrictions were relaxed from 90% to 95% basedon energy consumption and load profile reductions.Efficient, real time monitoring and control systems wereimmediately established to ensure that our maximumdemand and consumption remained within the base profile.

What was the effect of the electricity supply shortage in2008 and what does this mean for the Company goingforward?In terms of longer term implications on the Company, thefollowing applies:• Reduction of both energy consumption and maximum

demand based on 2007’s profiles is necessitated;• Improvement in efficiencies in operations is urgently

required;• Electricity applications for all new projects are on hold

for six months;• Consideration will be given to our own energy

generation capacity for all new projects over the nextfive to seven years.

As from February 2008 our actual energy consumptionversus 95% target was within the limits, except for the monthof August when we were slightly exceeded this target.

The South African Power Crisis

Michael Phakati, the Control Room Co-ordinator at the BMR, monitoring the use of electricity.

4.62% on our 2007 consumption to 4.80GJ/PGMoz. 86.6% or 881,211.19 GJ is direct energywhilst 13.4% is indirect energy. There were noincidents of energy being exported outside thereporting boundary. Furthermore, although weslightly decreased our greenhouse gas emissionsto 1,659 carbon dioxide (CO2) equivalent, ourgreenhouse gas emissions increased by 6.7%from 1.13 CO2 equivalent/PGM oz to 1.21 CO2

equivalent/PGM oz, predominantly as a result oflower production. Our indirect and directgreenhouse gas emissions amounted to1,583,253.00 tonnes CO2 equivalent and75,850.96 tonnes CO2 equivalent respectivelyin 2008.

Efficient, real-time electrical energy anddemand management monitoring and controlsystems have been upgraded to effectivelymonitor our maximum demand and consumptionacross the Company.

benchmarking our energy utilisation performanceagainst that of similar industries. Although thecarbon footprint for our operations is not yetfinalised, we have made significant progressduring 2008. The carbon footprint includes abaseline organisational assessment, a businessoperations footprint and a product footprint.

We plan to improve our energy efficiency by10% and greenhouse gas efficiency by 5% by2012. In 2008, Company wide use of electricity,amounted to 1,575,917.39MWh, which accountsfor a 2.7% however decrease on 2007consumption. The Company wide electricityconsumption efficiency has however decreasedprimarily due to enhanced infrastructure use andlimited production output at K4, Hossy and Saffyshafts in preparation for production build up. In2008, our total energy use amounted to 6,555 TJwhich is a 11.8% decrease from our consumptionin 2007 and our energy efficiency improved by

Short term measures undertakenOur short term measures were undertaken in response to loadshedding and power supply restrictions; they were:• Enabling critical safety systems to remain operational.• Investigations commenced in reducing or eliminating

dependency of the concentrators on electricity supply from thenational grid.

• Management plans on energy efficiency were fast-tracked,including inter alia:• investigating and reducing air leaks;• extending the use of solar water heaters and disconnection

of geysers where possible;• saving compressed air and upgrading compressor controls

and automation;• reducing shaft water pumping; and• improving motor electrical efficiency by re-assessing

rewinding of motors, and ensuring that the correct capacityof motor is utilised.

• Short term initiatives and management plans on demandmanagement were commissioned to improve the power factorfrom 0.94 to 0.98 by shifting on-peak energy use to off-peakperiods. Examples included staggering concentratormaintenance, crusher plants and drilling schedules.

72


Accessing and Managing Water Resources

Our mining operations are located in water-scarceregions of South Africa. Access to adequatewater resources remains essential for our miningoperations. We strive for continual improvement inour environmental performance and we promotethe sustainable use of natural resources.

Our approachOur management of water resources is anintegrated three-fold approach to secure theavailability of sufficient water for our current andfuture mining operations; to reduce our freshwaterconsumption by improving water use efficienciesand water recycling; and to prevent thecontamination of ground and surface waterresources in the regions where we operate.

Group-wide water management isunderpinned by our Safety and SustainableDevelopment Policy and supported by standardsand guidelines based on legislated requirementsand best practice. On a regional and nationalscale, we partake in a number of forums todevelop national guidelines, best practice and tocreate a platform to collaborate with industrypeers in water management initiatives.

As a result of the growing demand andcompeting interests for water both internationallyand within South Africa, we need to securesufficient water for our operations withoutadversely affecting communities access toportable water. We support the United NationsMillennium Development Goal to reduce by 50%the number of people without access to safedrinking water by 2015. Our effort to reduce freshwater consumption and minimise contaminationof ground and surface water increases theavailability of water resources to bothcommunities and mining operations.

Our performanceSecuring water for our operationsWe have secured access to sufficient waterresources for our current and planned mining andprocessing needs at our Marikana operations. Wecontinuously seek opportunities to further reducefresh water consumption through securing accessto waste water or water of poorer quality. We arein the process of securing further water resourcesfor our Akanani operations in the LimpopoProvince and are confident that sufficient supplywill be available for maximum demand during theoperational phase. In 2008, we signed thememorandum of agreement as a participant inthe Olifants River Water Resource DevelopmentProject between the Republic of South Africa, theJoint Water Forum and other mining companies.

Reducing fresh water consumptionFresh water usage at our operations in Marikanaand at our PMR is sourced from the regionalwater utility, while our Limpopo operations accessfreshwater from a regional wellfield, and groundwater usage is limited to exploration activities. Nowater from surface resources is utilised in ouroperations. We have set objectives to reduce ouraggregate fresh water consumption by 15% perunit of production by September 2012 as atbaseline consumption in 2007. In line with thistarget, we continue to implement watermanagement programmes, maximise water re-use and recycling to ensure sustainable resourceutilisation. Particular progress in 2008 was madein the following areas:• Enforcing the zero surface discharge policy to

maximise water recycling through closedsystem reticulation.

• Redesigning the water reticulation system atK3 Shaft, as a pilot site, to maximise water re-use and reticulation to eliminate unnecessaryflow of water from surface to undergroundworkings.

• Capturing ground water contaminationresulting from our tailings dam at the Limpopooperations for re-use and to prevent furthermovement of the ground water contaminationplume.

• Researching the availability, sustainability andpracticality of utilising contaminated groundwater from our tailings facilities at ourMarikana operations to reduce our reliance onfresh water consumption and to minimiseground water contamination.

• Enhancing our industrial water meteringsystem to further improve the quantification ofwater recycling.

In 2008, our total fresh water intake from theregional water utility and from the wellfield inLimpopo was 9,256,244 m3 which decreasedby 21.5% from total intake in 2007. The totalfresh water efficiency improved by 15.1% from7.98 m3/PGM oz to 6.77 m3/PGM.

We are committed to promoting the sustainable use of natural resources and

to preventing pollution and environmental degradation in order to reduce

our impact on the environment and the communities where we operate.

73


Accessing and Managing Water Resources (continued)

Preventing the contamination of ground andsurface water resourcesWe strive to prevent pollution and environmentaldegradation to surface and ground waterresources, mitigate and remediate wherecontamination has historically taken place and tocontinue monitoring the impacts of our operationson water resources and the effects of ourremediation efforts. Our water licenses providethe regulatory framework for the managementof our water resource qualities. We have proactivemanagement programmes in place to preventpollution and continue with the followinginitiatives:• Implementing storm water measures over a

five-year period at our Marikana operations tocomply with the South African National WaterAct 36 of 1998.

• Implementing the Lonmin lining specificationguideline for all newly constructed dirty waterstorage facilities to minimise seepage to thereceiving environment.

• Implementing a policy of zero surfacedischarge. In 2008, four unplanned andunpermitted discharges to surface waterresources occurred, which were reported torelevant authorities as per legislatedrequirements. No fines were incurred due tothese discharges.

• Constructing a new waste water treatmentplant, due for completion in 2009, to replaceexisting treatment plants that are notperforming optimally.

In order to monitor our impact on thereceiving water resources, we have extensivesurface and ground water monitoringprogrammes in place at all operations. To this endwe monitor in excess of 260 ground watermonitoring boreholes and 135 surface watermonitoring points in total. The results of themonitoring programmes and annual groundwatermodeling are interpreted to effectively monitorimpacts of our operations on the receivingenvironment. We continue to make progress interms of the remediation of ground and soil watercontamination at our PMR, as reported on in both2006 and 2007.

004 05 06 07

Total freshwater intake(m3/PGM oz)

Total freshwater intake(m3)

08

14,000,000

8,000,000

6,000,000

4,000,000

2,000,000

12,000,000

10,000,000

0.00

9.00

4.00

2.00

7.00

6.00

3.00

1.00

5.00

8.00

m3

m3 /PGM

oz

Financial year

Total fresh water intake

The new waste water treatment plant at ourMarikana operations, to replace existing

plants which are not performing optimally, isdue for completion in 2009.


Reducing our Impacts on Air Quality

Monitoring systemsWe have an extensive ambient and sourcemonitoring network in place. This includes dustfallout at all operations, continuous ambient airquality monitoring stations, sulphur dioxidepassive diffusive sampling at our Marikanaoperations and continuous on-line stack monitorsat both the smelter and the PMR. The monitoringresults are used to identify areas of concern andto mitigate adverse impacts.

Our performanceMonitoring systemsAn effective quality assurance and qualitycontrol system is essential to ensure high-qualityresults and to eliminate invalid monitoring data.In 2008, we implemented a data managementand validation system for our continuous ambientair quality monitoring stations at both ourMarikana and Limpopo operations. In additionto this, we developed an accompanying dataassurance manual.

Total particulate matterOur sources of particulate matter at ouroperations include unpaved roads (vehicleentrainment), materials handling, crushing andscreening, drilling and blasting (at our opencastoperations), wind entrainment (tailings) and stackemissions. During 2008, we continued to reducethese sources, efforts which included theinstallation of a fogger system at our Merenskycrusher; continuing re-vegetation programmeson our dormant tailings dams; and suppressionsystems on operational tailings dams, unpavedroads and other areas of high impact. Wecontinue to operate and maintain air pollutioncontrol equipment at the Process Division.

Akanani operationsAs an area that is likely to have an elevated totalparticulate matter concentration, given thesources of particulates in the region andmeteorological conditions, we commenced witha baseline monitoring programme for Akananifor dust fallout. The baseline data will inform ourfuture specialist studies.

Our operations affect the ambient air qualityenvironment, and we acknowledge ourresponsibility to continuously manage and reducethe impact. We are committed to continualenvironmental improvement and permanent zeroharm to the environment.

Our approachWe strive to eliminate all risks and impactsassociated with our emissions as a result of ourmining and processing activities. Our air qualitymanagement system, which includes minimisingdust fallout, gaseous and particulate emissions,noise and odours, is based on the LonminCharter and the Safety and SustainableDevelopment Policy.

Management systemIn the light of our policy, and the requirements ofthe National Environmental Management AirQuality Act 39 of 2004 that comes into full forcein 2009, we are finalising our air qualitymanagement strategy. This identifies short,medium and long-term plans to align ouroperations and systems to meet the requirementsof the Act

Our PMR is located within the seconddeclared priority area in South Africa in terms ofsection 18(1) of the National EnvironmentalManagement Air Quality Act 39 of 2004. Thisnecessitates an air quality management plan forthe area, with ambient air quality objectivesdefined and emission reduction strategies andinterventions developed by the regulatingauthority. We will participate in the development ofa cumulative management approach to reachingset ambient air quality targets by the authorities.

During 2008, we continued with ourmembership on the Northwest Air PollutionControl Forum.

We are committed to preventing pollution and environmental degradation

to reduce our impact on the environment and the communities where

we operate.

74

75


Reducing our Impacts on Air Quality (continued)

Dust fallout monitoringOur network for the non-directional monitoringsites comprises of fifty-seven and twelve pointsfor Marikana and Limpopo respectively.Monitoring is undertaken in line with the AmericanSociety for Testing and Materials 1739methodology, which is the reference methodoutlined in SANS 1929:2005.

Results for monitoring sites at both Marikanaand Limpopo are illustrated by the figures below.Data not conforming to the methodology andprocess were excluded from the annual results.Exceedances of the alert threshold is restricted tosites within our operations and are not locatednear settlements. Intentional measurement ofconditions where no current mitigation measuresare applied, site-specific meteorologicalconditions and/or the status of operationalsuppression measures resulted in the highmeasured level of fallout.

For the monitoring points classified asresidential for Marikana, the targets wereexceeded. Due to the nature of the methodology,it is not possible to link the fallout to a particularsource, but to rather investigate the cumulativeimpact of nearby sources and meteorologicalconditions observed during the relevant period.Upon investigation, it was apparent that targetswere exceeded in unusually dry and windyconditions. Averages at these residentialmonitoring points are however well below thetarget.

At monitoring sites classified as residential atour Limpopo operations, we did not exceed theresidential target of 600mg/m2/day.

A third party study was undertaken during2008 on the dust monitoring network to evaluate,amongst other objectives, the classification of themonitoring site (residential or industrial) and thepotential sources of dust (both Lonmin and non-Lonmin) that would contribute to the levelsrecorded at the particular point. The auditoutcomes are being used in the air qualitymanagement system.

Sulphur dioxideTotal sulphur dioxide emissions for the Smelter atour Marikana operations are regulated at a targetof 8.3 tonnes per day. In 2008, our averagesulphur dioxide emissions (incorporating bothpoint and non-point sources) were calculated at9.1 tonnes/day, which is slightly lower than the2007 average daily emissions. While our sulphurfixation plant has been improved, managementof our fugitive emissions remains challenging. Weare investigating measures for the capture andtreatment of these emissions. Following theeffects-based approach of the NationalEnvironmental Management Air Quality Act 39of 2004, dispersion modeling was undertakenfor a range of scenarios to determine ambientair quality impacts; and to inform expansionand development programmes.

1% 0%

97%

2%

Exceedance of alert guidline threshold

Within alert guideline threshold

Within industrial guideline threshold

Within residential guideline threshold

Dust fallout results for all non-directional monitoring points locatedin dwellings and/or residential areas in proximity to our operations(Limpopo and Marikana)

6% 2%

83%

9%





Dust fallout results for our non-directional monitoring points at ourMarikana operations

8% 1%

85%

6%





Dust fallout results for our non-directional monitoring points at ourLimpopo operations



Scientific context:Aerosols and greenhouse gases interfere with the earth’senergy budget. These changes are expressed in terms ofradiative forcing. Aerosols are comprised of small solidparticles and liquid droplets which are airborne, of eithernatural or anthropogenic origin, and mostly produce acooling effect within the earth’s climate system.

Aerosols in the atmosphere, and their contribution toclimate change, are currently the object of manyinternational research programmes around the world, asthey remain the dominant uncertainty in radiative forcing.The scale of the human contribution of aerosols to theenvironment is not known.

Aerosols below the 10µm aerodynamic diameterfrequently exceed the South African air pollution guidelinesover the industrialised Highveld region (parts of whichhave been declared as a priority area in terms of SouthAfrican legislation). It has also been noted that the trend ofparticulate matter over the Northwest province isincreasing. Sources of aerosols contributing to the loadingfor the province include industry, mining, domestic fuelburning, biomass burning; and wind upliftment of dust.Transboundary circulation of aerosols further contributesto the cumulative concentration. As South Africa movestowards revising the guidelines and implementing morestringent air pollution standards for concentrations ofPM10 and PM2.5, it will be more important to understandthe reasons for annual variations of aerosols over theNorthwest province. The hazemeter project will give thefirst comprehensive look at aerosol loading in anintegrated manner over the defined area.

Hazemeter projectThe hazemeter project is being undertaken in associationwith the Climatology Research Group at the University ofthe Witwatersrand. The project uses handheldhazemeters, which measure the aerosol loading in thetroposphere at a point in space. These measurementsprovide invaluable information about the optical andradiative properties of the aerosols at that point. A total ofnine instruments were distributed over the GLC toundertake measurements in the area. This first campaignlasted four weeks during July and August 2008, recordingdata representative of winter conditions. An additionalthree campaigns are planned to understand interseasonalvariations. Eight sites were managed by schools, withpupils undertaking the recordings during daylight hours.

The purpose of the project is two-fold. An attempt willbe made to assess the distribution and nature ofatmospheric aerosols over the North West Province duringfour interseasonal campaigns (this will address keyscientific objectives); and the survey will involve pupils atmiddle and high schools within the GLC in scientificinvestigation. Learners will see the practical applications ofwhat is in the curriculum. It is also intended to stimulateinterest and enthusiasm amongst learners for careers inthe fields of physical science and engineering.

Schools participating in the campaign:• Bob Edward Middle School• Gotsube Middle School• Johane Mokobbatsi School• Machadam Combined School• Marikana High School• Rakgatia High School• St Theresa High School• Tlhapi Moruwe Middle School

Our contributionto research

The Hazemeter

Learners from Marikana High School use a hazemeter, tomeasure the aerosol load in the troposphere .

Policy formulation for climate change poses a greatchallenge as it often presents decision-making underconditions of uncertainty. The most challenging question is“how do we balance short-term objectives with long-termrisks?” Our response framework for dealing with the risksand opportunities around climate change is pragmatic.Our commitments are clear, we will continue to improveenergy efficiency in all our operations and we will use thebest technologies to reduce greenhouse gas emissions.

Our approach towards climate change is aligned withthat of the ICMM, and as a member company, werecognise the significance of climate change on a global,national and operational scale. As a major precious groupmetals producer, our products play a critical role inemission reduction technologies. Over the past few yearsthe market has responded positively as emission loweringlegislation impacted on the demand for platinum andpalladium. Although our products contribute positively toclimate change on a global scale, we realize that ourmining and production processes contribute togreenhouse gas emissions at a local level. Energy isindispensable to mining and industrial wealth generation.Our processes are energy intensive and we aim tointegrate energy efficiency considerations into operationalbusinesses and planning strategies. Whilst our group widefocus is on suitable longterm response strategies, we donot detract from the necessity for short term actions.

Our current research and development focuses onefficient process technologies, improved control systemsand alternative energy sources – these include researchon atmospheric aerosols in partnership with theClimatology Research Group at the University of the

Witwatersrand, measuring our operation’s carbon footprintas well as seeking partnerships with the IFC to undertakeenergy audits of our operations and assist us withreducing our energy footprints.. We continuously measureour performance around energy efficiency and greenhousegas emissions targets to assess the effectiveness of theseprogrammes. We also support economically soundemissions trading programmes within a global competitiveemissions trading regime.

One of the challenges of effecting policy into practiceis the importance of understanding our stakeholderconcerns and the value of training employees, contractorsand suppliers on the risks we are facing as a companybeing exposed to the impacts of climate change as wellas how we are rated by shareholders and investors in ourresponses to climate change. Balancing company riskwith the interests of investors and stakeholders, wecontinue to monitor our greenhouse gas emissions andwork to report accurately on these emissions according tointernational standards and the GRI Framework. Ourbaseline data and annual inventories are certified annuallyby independent third parties.

We are proactive in our management of secondaryimpacts from our operations. Water security, biodiversitydispersion, waste reduction and human health are alsoprominent within our operations, with management plansin place to counteract the effect of climate change.

We aim to integrate energy considerations into ourmanagement and social development programmes,optimise renewable energy use, use advanced energytechnologies to improve energy efficiencies. All contributeto a culture of climate responsibility at our operations.

Reducing our impacton climate change



We are proactive in ourmanagement of secondary impactsdue to the change in our climate.

Our processes are energy intensiveand we aim to integrate energyefficiency considerations into ourplanning strategies.


Responsible Materials Stewardshipand Waste Management

Our approach to material stewardship and wastemanagement is founded on our value of zeroharm to the environment, best internationalenvironmental practice and compliance withlegislative and other requirements.

Our approachGroup management of waste and materials isunderpinned by our Safety and SustainableDevelopment Policy and supported by grouptargets, standards and guidelines. Our wastemanagement guideline provides direction to theoperating units for waste sorting, storage,transportation, recycling and disposal of wastesaccording to best practice and national legislation.On a regional and national scale, we partake in anumber of forums to contribute to governmentdecision-making and to collaborate with industrypeers and government in waste managementinitiatives.

Material stewardshipMinimising the use of hazardous material inmining and processing operations is the basis ofour materials and waste management. Wecontinue to seek opportunities to make use ofnon-hazardous alternatives and to reducequantities of hazardous materials utilized. Wherethese substances cannot be substituted, reducedor eliminated, there are operating procedures thatoutline responsible purchasing, separation ofwastes and storage, and the use and disposal ofwaste.

Eliminating wasteWe are committed to eliminating disposal byadopting the waste management hierarchy shownbelow. We continually seek opportunities toprevent waste generation, minimise thegeneration of waste and enhance waste re-useand waste recycling. All waste streams thatcannot be eliminated at source, re-used orrecycled are sent to permitted waste disposalfacilities. General waste is disposed of either atoff-site or on-site permitted/registered landfillfacilities, while hazardous wastes are removed byauthorised waste contractors to permitted off-sitehazardous landfill facilities. Mineral waste, mostlywaste rock and tailings, is disposed of on-site inwaste rock dumps and tailings facilitiesrespectively.

Managing waste disposal facilitiesEffective and responsible management of wastedisposal facilities is imperative as it is mostly herethat possible pollution occurs. We operate anumber of waste disposal facilities at ouroperations, including landfill facilities, a wasteincinerator, waste rock dumps and tailingsfacilities, of which we have the necessary permitsand authorisations in place. We operate ourwaste facilities in accordance with permitconditions and relevant environmental legislation.We also use off-site facilities that are not ownedor operated by the Company, to recycle anddispose of waste streams, and thus have avested interest in the responsible management ofthese facilities. Third party verification auditsscrutinise off-site facilities where hazardous wasteis treated, recycled and disposed of, to confirmand ensure that we maintain our duty of careresponsibility.

Tailings, a by-product of the concentratingprocess, are disposed of at tailings facilitiessituated at our operations. We have five dormantand six operational tailings facilities at ouroperations. These facilities are managedaccording to legislated code of practices and siteinspections and formal audits are undertaken onthe facilities to ensure compliance with the codeof practices. Once a tailings facility is classified asdormant, various dust suppression and re-vegetation programmes are undertaken.

We have thirteen waste rock dumps, twelve atour Marikana and one at our Limpopo operations.These exclude temporary opencast rock dumps.Waste rock dumps are managed in accordancewith legislated code of practices. Internal andthird party auditing forms an integral componentof the management of the wasterock dumps.

We are committed to the philosophy of zero waste to landfill at all our

operations through the reduction, re-use and recycling of waste and

responsible product design in order to reduce our impact on the environment.

most favoured option

least favouredoption

prevention

minimisation

reuse

recycle energy recovery

treatment

disposal

Waste management hierarchy


Responsible Materials Stewardshipand Waste Management (continued)

Our performanceMaterials stewardshipIn 2008, we began to compile guidelines forhandling hazardous materials to meet safety,health and environmental standards. The guidelineis based on legal compliance and best practiceand will provide operational units with minimumrequirements for responsible materialsstewardship.

Eliminating wasteWe have set a target to reduce the quantity ofwaste we send to landfill, by 15%, by 2012. Thistarget covers combined quantities of hazardousand general waste as defined by the SouthAfrican Environment Conservation Act 73 of 1989.By outsourcing waste facility operations to anumber of specialised contractors, we have seena marked improvement on operational conditionsand management. In 2008, we standardised ourwaste measurement systems and now measureall waste disposal in metric tonnes. This has beenpossible following the erection of a weigh bridgeat our Mooinooi Landfill Site and the enforcementof an operational procedure to weigh allhazardous waste prior to removal off-site, as wellas at the off-site waste facilities.

However, this standardisation and change inmeasuring parameters has resulted ininconsistencies between waste figures obtainedprior to 2008 and figures for 2008. In 2008,8,279.60 and 42,857.29 tonnes of general wasteand hazardous waste were disposed ofrespectively. Of the 42,857.29 tonnes ofhazardous waste, 52.05 tonnes was medicalwaste that was incinerated. Calcium sulphitecontributed 39% to the weight of hazardouswaste to landfill. This significant increase over2007 is a result of aborting a pilot project thatcommenced in 2007 to dispose of calciumsulphite, a waste stream from our sulphur fixationplant at our Process Division. Research continuesinto alternative disposal or minimisation optionsfor this waste material.

General waste recycled in 2008

General waste Tonnes

Scrap steel Recycling (kg) 7158.79Paper Recycled 5.17Rubber 433.17Plastics Recycling 167.48Electric cable 72.17

In 2008, we recycled 7,836.28 tonnes ofgeneral waste. In addition, 149.27 tonnes ofhazardous waste, mostly oils and batteries, wasrecycled.

In 2008, we commissioned the compostingplant at the Karee Sewage Plant to convertsewage sludge and wood chippings into compostfor use on the tailings facilities to fertilisevegetation. In 2009, an additional compostingplant will be commissioned as part of the newWonderkop Sewage Plant.

004 05 06 07 08

16,000,00

12,000,00

400,000

800,000

Financial year

kilotonn

es

004 05 06 07 08

1,600,00

1,200,00

40,000

80,000

Financial year

kilotonn

es

Awareness campaignsOn the last day of National Clean Up Week, 19 September2008, we held a Clean Up Campaign at Marikana Townshipwith the assistance of the Marikana Primary School, theRustenburg Local Municipality and community members andorganisations. Approximately 800 people took part in thiscampaign, which highlighted the impact of poor wastemanagement within the community, provided insight onalternative ways of using and recycling certain waste typesas well as allowed for cleaning of community areas such asthe community hall, school and entrance roads intoMarikana. This short-term initiative is part of a longer termintegrated waste management project where wastemanagement practices and services will be investigated.

79

Waste to rock dumps Waste to tailings facilities

80


Responsible Materials Stewardshipand Waste Management (continued)

In 2008, 12,649,559 kilotonnes of tailings and1,128.26 kilotonnes of waste rock were disposedof at tailings facilities and waste rock dumpsrespectively. The decrease in quantities of wasterock and tailings disposed of relate directly to adecrease in production in 2008. Tailings are re-mined at selected tailings facilities and waste rockis used where possible as a material for roadconstruction and fill. In 2008, we beganinvestigating the use of tailings in brick makingas a community development enterprise.

In 2008, we have not transported, importedor exported any waste categorised as hazardousin the Basel Convention. We also do not makeuse of external sources of waste material in themining and processing of PGMs. In 2008,US$5.13 million was spent on company wastedisposal, excluding the financial benefits fromrecycling.

Benefits derived from consolidated waste management at our MarikanaoperationsWe have four established and licensed landfill sites at our Marikana operationsthat provide for waste disposal. In 2006, a decision was taken to restrict thedisposal of waste to the Mooinooi landfill, which also provides means ofdisposal for surrounding communities, and to discontinue the use of theremaining three landfill sites owned and operated by the Company for aminimum period of five years. This decision was based on the potential forimproved management and control of one landfill site, enhanced recyclingopportunities, improved record keeping and financial benefits. After decidingto restrict disposal to the Mooinooi Landfill site, we took these measures:• The implementation of the use of the single landfill for the entire Marikana

operations required that an accurate recording system be instituted. Aweighbridge was installed in 2007 to accurately record information onwaste disposal;

• Prior to 2007, the landfill site was internally operated and managed by theCompany. The operation of the site was outsourced in 2007, which hasresulted in a marked improvement in the level of operation andcompliance to registration conditions for the landfill site;

• A formal waste reclamation and recovery programme was established onsite. Six people from the community work at the landfill in a controlledenvironment separating out waste which can be reclaimed for recycling.This work has created a steady income for these six salvagers and sinceAugust 2006, the revenue earned from the sale of recyclables amounts toUS$26,845.64. We ensure that the salvagers receive fair pricing in termsof the recyclables they sell to external companies;

• Coinciding with the consolidation of the landfill operation, in 2007, thesalvage yards were consolidated to one operational yard at WesternPlatinum Mine, initiating the closure of both the salvage yards at KareeMine and the Eastern Platinum Mine. This consolidation has resulted inimproved management, safeguarding of recyclables and record keeping.This has resulted in improved direct financial benefits from the sale ofwaste in the form of scrap metal, cable, plastic, rubber as well asrefurbishment of metal items. Over the last 30 months US$4.39 millionrevenue has been realised. This revenue offsets one tenth of the cost ofgeneral and hazardous waste collection and disposal from our Marikanaoperations and surrounding communities.

Over the last three years, extensive resources have been allocated to thesuccessful management of waste disposal and salvaging activities which haveproven to have positive impacts on the environment and on the financialbottom line.

Waste disposal at our Mooinooi landfill site

At the Karee waste water treatment plant, weconvert sewage sludge and wood chippings intocompost for use on the tailings facilities toenhance vegetation growth.

81


Responsible Land Managementand Biodiversity Conservation

We are committed to conserving the diversity oflandscapes, ecosystems, habitats and speciesand to address factors that may threatenbiodiversity and the natural environment. Wemake every effort to minimise our miningfootprints and remediate areas of degradation orpollution. Our commitment goes beyond our site-specific activities into the broader communities toinclude observing national laws where we operateand the indigenous cultures and dependency onnatural resources of neighbouring communities.

Our approachBiodiversity and land managementThe loss of biodiversity as a result of competingland use and habitat loss is of global concern. Werecognise this business risk and endorse the ICMMprinciples to contribute to biodiversity conservationand to commit to integrated land use planning andmanagement by implementing the precautionaryapproach to minimise direct, indirect or cumulativeadverse effects on biodiversity from our operations.Company biodiversity and land management isinformed by the environmental strategy andsupported by guidelines as aligned with legislativerequirements and in particular the South AfricanNational Environmental Management BiodiversityAct 10 of 2004, best practice and ICMMprinciples.

Aspects relating to biodiversity and integratedland use are integral to our risk managementprocess and environmental impact assessmentsundertaken for proposed activities. Sound ecological

principals provide the foundation for our biodiversityaction plans. The action plans are supported bysoftware modeling the key parameters includingalien invasive species; the potential buffering qualityof existing wetlands and associated vegetation; andthe potential for faunal habitats.

In line with our commitment to biodiversityissues, we have joined the South African Miningand Biodiversity Forum, the intent of which is toprovide a platform for sharing of best practice inorder to improve the practices of the miningindustry in terms of biodiversity management.

Mine closureWe strive to follow a closure based riskassessment approach in planning for closure. Thisintegrated approach provides for consolidation ofmanagement plans and enhanced application ofpollution prevention principles and reduced long-term financial risk.

Our performanceBiodiversityWith the exception of exploration activities inwestern Tanzania and Gabon, our operations arenot located in biodiversity sensitive areas. Furtherinformation on these two sites is provided below.We continue to work in close collaboration withgovernment, the World Conservation Society andother non-governmental organisations to ensurethat the appropriate risk management throughbiodiversity assessment and managementprogrammes.

We are committed to promoting integrated land use management and

biodiversity conservation by applying a precautionary approach during all

phases of our operations, including mine closure.

Operations near to biodiversity sensitive areas

Location Type of operation Position in relation to protected area Size of operation Biodiversity value

Gabon Exploration Within the Monts de Cristal 9,241 km2 The park is a level 2National Park. protected area according to

the classification of theInternational Union for

Conservation of Nature.The ecosystem is of a

terrestrial nature

Tanzania Exploration Adjacent to the Mahale 11,400 km2 No official protection status,Mountains National Park. although a number of red

data species occur

82


Responsible Land Managementand Biodiversity Conservation (continued)

We are in the process of compilingcomprehensive biodiversity action plans for all ofour operations. All our operations requirebiodiversity action plans, criteria being thepresence of sensitive habitats or species,presence of invader or exotic species andrequirement for land management. These planswill identify resources that are significant in termsbiodiversity and assist in prioritising managementactions and will be integrated with various otherprojects such as the formulation of watermanagement plan, rehabilitation guidelines andmine closure to ensure that the end land use isplanned for appropriately and is sustainable. Theprimary objectives of these action plans are toprotect vulnerable or threatened species and to

eradicate exotic and invader species. Concurrentto the development of the biodiversity actionsplans, we are establishing a monitoring frameworkand schedule that will aid us in determining thesuccess of the action plans once implemented.

In 2008, we completed the biodiversityinventory for our Marikana operations whichresulted in the identification of several species aslisted on the International Union for Conservationof Nature red data status list, as well as theidentification of priority areas for biodiversity at ourMarikana operations as outlined below. In 2009,we will commence with the first occurrence ofbiodiversity benchmarking and monitoring of ourMarikana operations.

Land use in 2008

Land use Hectares

Total land managed 23,630.85Total land covered by tailing facilities 975.21Total land covered by waste rock 79.76Net land disturbed by opencast 654.97Total land disturbed andnot rehabilitated 282.94Total areas rehabilitated 295.16

Land managementThe total area of land managed by the Companyincludes land owned and land leased. Areas ofexploration are excluded from these areas. Thearea of land restored equates to the area ofopencast mining operations that have beenrehabilitated. Opencast mining in 2008 wasrestricted to our Marikana operations along thesouthern perimeter of the mining license area. Wehave the necessary expertise in house to auditand assess remediation and restoration practices,and where required we make use of the expertiseand services of external professionals in the fieldof rehabilitation and restoration. We have not

formed partnerships with third parties to protector restore habitat areas distinct from where theCompany has overseen and implementedrestoration or protection measures.

In 2008, we have developed five landmanagement guidelines in line with internationaland national best practice to rehabilitate disturbedland in an ecologically acceptable and sustainableway, namely the rehabilitation of opencastoperations, waste rock dumps, tailings facilities,landfill site and slag piles.

We have continued with our re-vegetationprogrammes on our dormant tailings facilities,with our initiatives this year focusing on improvingthe density of the vegetation and enhancingvegetation growth in areas of poor coverage. Withthe completion of the re-vegetation initiatives on anumber of facilities, we have witnessed the returnof a natural and sustainable eco-system to theareas with rodents, raptors and other unique birdspecies returning to the dam surface.

Almost two years have lapsed since therehabilitation at Vlakfontein Mine was undertaken.An audit of the rehabilitation has indicated thatthe remediation undertaken was successful,aesthetically pleasing with little evidence ofprevious environmental degradation.

Species found at our operations as per International Union for Conservation of Nature red data status

IUCN Red Probability ofScientific Name Common Name Data Status occurrence

InvertebratesMetisella meninx Marsh Sylph Vulnerable High

ReptilesPython natalensis Southern African Python Vulnerable High

MammalsAtelerix frontalis South African Hedgehog Near threatened HighMiniopterus schreibersii Schreiber’s Long-fingered Bat Near threatened HighTatera leucogaster Bushveld Gerbil Data deficient High

BirdsFalco naumanni Lesser Kestrel Vulnerable HighSagittarius serpentarius Secretary Bird Near threatened High


Responsible Land Managementand Biodiversity Conservation (continued)

Mine closureA key consideration for the any mining companyis the notion that, at some point, all miningoperations will cease. We have approved closureplans in place at all our operations as well asaccompanying financial closure provision. Theseplans take into account legislative requirements,mine planning, operational control andinternational best practice. Financial closureprovisions are reviewed annually by third partiesand amended accordingly to ensure sufficientfinancial resources are available at any given timeto implement rehabilitation measures as requiredby closure plans. In 2008, our financial provisionfor closure amounted to US$40,391,168 and US$1,479,272 for the Marikana and Limpopooperations respectively. All new projectsundertaken consider closure measures and theassociated closure costs are integral to theenvironmental impact assessments undertakenfor the activities.

As reported on in 2007, we have progressedin terms of compiling integrated mine closureplans for our operations which include all aspectsrelating to our employees and communitiesencompassing those of community development,skills development, education, training toencourage entrepreneurship and sustainability ofcommunities in the post-mining scenario.

Additionally in 2008, we initiated an integratedmine closure strategy to provide a strategicframework within which environmental managementand closure planning for all South Africanoperations can be managed. The framework willbe a risk-based management system that willserve as a framework to guide all environmentalmanagement programmes on the mines toensure that they meet the criteria of sustainabilityand that they are aimed at supporting theprinciples of Zero Harm and sustainable mineclosure. The primary benefits of this risk-basedapproach followed with regard to environmentalmanagement and closure planning are as follows:• Establishment of a closure-based risk

assessment as the foundation forenvironmental management plans at ouroperations, giving rise to enhancedapplication of pollution prevention principlesand reduced long-term financial risk.

• Establishment of an implementation plan andstructure to ensure that risk management isimplemented across all operations, therebygiving effect to the achievement of our visionand values as contained in the Charter.

• Consolidation of management plans intointegrated closure-risk based documents withrisk-based financial provisions.

• Establishment of Environmental StakeholderForums to ensure that communities are fullyempowered to provide their rightful input intothe sustainable use and management of thenatural resources.

In 2008, we completed thebiodiversity inventory for ourMarikana operations.

We have approved closure plans in placeat all our operations as well as

accompanying financial closure provision.

84


Uniting with our Communities

Summary of our 2008 performance• US$6.55 million was spent in 2008 on community development projects;• The local development supplier programme was the winner of the socio-

economic category of the 2008 African Nedbank Green Mining Awards.The local schools development programmes was runner up;

• We consolidated the socio-economic baseline assessment for theMarikana GLC;

• In 2008, we conducted the annual community perception survey, of whichthe average combined ratings for Marikana and Limpopo amounted to48.3%, which was well below the target for 2008 of 60%;

• We have instituted the Rekopane Development Forum and area meetingswhere key stakeholders coordinate community development projects;

• We continued our community training programmes in 2008, during whichamongst others, 193 community members attended the ABET and 592community members attended the Lonmin transformation trainingprogramme;

• We have a number of land claims lodged against the Company in termsof the Restitution of Land Rights Act 22 of 1994.

Our Charter states that we are successfulwhen our communities value our relationships.Our Safety and Sustainable Development Policyspells out our commitments to communityengagement and community development.

We are committed to empowering our hostcommunities and improving their quality of life bycontributing to their long term social, economicand institutional development and promoting thebeneficiation of our minerals as well asmaintaining transparent and ongoing consultativerelationships with all stakeholders.

As a member of the ICMM, we support theirPosition Paper Statement on Mining andIndigenous People. Our CEO is directlyaccountable for these commitments relating tocommunity development and community relationsand is supported by the Vice PresidentSustainability and the Vice President ExternalRelations. We plan to spend 41% of our financialcommitments on local economic developmentprojects as directed by the Social and LabourPlan, by 2009.

Our community initiatives in terms ofdevelopment and engagement are focused on theGLC, a term describing the communities within afifteen-kilometer radius of our operations.Additionally our community development initiativesare also focused on our labour sending areas ofthe Eastern Cape.

Our approachCommunity impact assessmentBefore starting mining, social impactassessments, which are part of the authorisationprocess, determine socio-economic conditionsand the potential impacts, both negative andpositive, which operations may have on thecommunity. In addition, as part of the mininglicenses granted in terms of the Minerals andPetroleum Resources Development Act 28 of2002, possible socio-economic developmentprojects within the communities are identified inthe Social and Labour plans. These are vital tothe mining license approval process. Theseprojects are aligned with and support theintegrated development plans of localgovernment. The impacts of projects aremonitored throughout the life of mine, as partof the specific project execution and operation,baseline assessments and communityperception surveys.

IntroductionThe reality of our business is finite ore reserves,the certainty of mine closure and the possibleadverse social, economic and environmentaleffects associated with mine closure. Platinummining has attracted large populations to miningoperations in anticipation of employmentopportunities. In line with national statistics, theGLC has a 40% unemployment rate, HIV infectionrates of 23% and dwellings are characterised bythe lack of basic services, such as water andelectricity.

The business case for empowering the GLC,our host communities and improving their qualityof life is straightforward. We cannot succeed insocieties that fail. To this end, we continue toendeavour to contribute to our communities’long-term development and promote thebeneficiation of our minerals – in this way, we canretain our licence to operate, innovate and grow.Additionally, stakeholder engagement improvescompany-community relations, and guides theCompany when taking decisions that affect thecommunity. Risks associated with poorcommunity relations and ineffective communitydevelopment may have far-reaching implicationsfor the success of the Company.

We are committed to empowering our host communities and improving

their quality of life by contributing to their long-term social, economic and

institutional development and promoting the beneficiation of our minerals.

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Uniting with our Communities (continued)

Prior to mine closure, further social impactassessments consider the impact of withdrawingoperations on the community. As part of thisimpact assessment, management plans areidentified and executed to minimise impacts oncommunities.

Community engagementThe key objectives for community engagementare:• understanding community concerns and

guiding expectations;• planning and managing community

development projects; and• encouraging community self-reliance,

governance and skills development.

Over the past couple of years we have learntthrough our annual perception surveys that ourapproach to community engagement often lackedinclusiveness and structure. In response we haverealigned our engagement effort that is conductedunder the umbrella of the Lentswe (meaning“Voice”) process. It includes local governmentinstitutions, tribal authorities, industry peersoperating in the vicinity, community members andgroupings, as well as specialist partners. We arecommitted to involving communities in decisionsthat affect them.

Incidents relating to communities arechannelled through our Community Departmentand External Relations Department to therespective departments where they are addressedin direct consultation with applicable communitymembers. We also have a formal complaintsregister that is easily accessible with the option toremain anonymous. The Rekopane DevelopmentForum also provides a platform for communitycomplaints to be raised and subsequentlyaddressed by the Company.

Community resettlementOur community policies comply with the WorldBank Operational Directives on Resettlement,Indigenous Peoples and Cultural Property, whichprovides guidelines to minimise and mitigateadverse social and economic impacts ofoperations on indigenous peoples. It promotesparticipation of displaced people in resettlementplanning and implementation. The key objectiveis to assist displaced persons in their efforts toimprove or restore their incomes and standardsof living after displacement. The directive alsoprescribes compensation and otherresettlement measures.

Community land claimsWe have a number of land claims lodgedagainst the Company in terms of the Restitutionof Land Rights Act 22 of 1994, mostly by thecommunities within the region where we operate.Discussions are being held in this regard with theLand Claims Commission of South Africa in orderto resolve these claims. Mechanisms for resolvingdisputes or grievances in this regard are managedthrough the legislative framework of the LandClaims Commission and Land Claims Court on aregional basis

Community developmentSince 2006, we have focused our communitydevelopment programmes on the commitmentsoutlined in the Social and Labour Plans forMarikana. Our key focus areas are infrastructuredevelopment, educational support, health supportand local business development, includingcommercial agriculture. These projects have beenselected and developed in close collaborationwith local authorities and government to ensurethat we complement local development plans. Inaddition, we have supplemented our projectselection by consolidating a baseline socio-economic assessment for our Marikanaoperations in 2008.

We have a number of training programmes inplace that affords the community with theopportunity to enhance their skills andknowledge. These training programmesencompass diversity training, ABET and projectspecific training, including school governancetraining and knowledge shared as part of the eco-schools curriculum.

The school nutrition programme is an initiative between Lonmin and theDepartment of Education. Gift Chisale from Seroophata Primary School.

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Our performanceCommunity engagementThrough the Lentswe process, our communitiescreated a common vision for 2040 for aprosperous and self-reliant community that isindependent from the support of the miningoperations. During 2008 we have instituted theRekopane Development Forum, where localgovernment, ward councillors, tribal councillors,organised labour, mining houses and other keystakeholders coordinate community developmentprojects. We have added another layer to ourengagement process to ensure that projects areexecuted as planned and we have structuredaccording to four broad areas as agreed with therelevant political and traditional leaders. Thisengagement takes the form of area meetings andprovides the opportunity for community membersto become part of projects in their area.

In 2008, there was one formal complaintlodged with the Company by communitymembers subsequent to a protest march thatwas undertaken by community members, whowere mostly unemployed. A memorandum wassubmitted to the Company, with the demand foraccelerated recruitment of local labour.

Community resettlement and small-scale miningThere was no resettlement of communities acrossour operations during financial year 2008; nor anyartisanal or small-scale mining. We are notinvolved in any programmes to address artisanaland small-scale mining regionally or nationally.

Community developmentOur training programmes in 2008 saw 193community members attending the ABET and592 community members attending the Lonmintransformation training programme. Manycommunity members received training orinformation relating to specific projects, includingthe school governing body initiative, eco-schools,farming projects and first aid training.

We are committed to local economicdevelopment in the Marikana and Eastern Capecommunities. We have community developmentprojects in place. These development projects arepro bono engagements as per the requirementsof the Social and Labour Plans. By the end of2008, we will have spent 24% of the total budget,with a target to spend 41% by end of 2009.Baseline socio-economic and quality of lifeindicators for the communities surrounding ourMarikana operations were consolidated in a reportin 2008. These indicators will enable us to trackour impact on sustainable development. The tableon the next page outlines the key projects, theextent of the development, achievements to dateand spend in 2008. For further information onlocal supplier development, please refer to thesection “Creating Wealth on page 34”.

Annual Community Perception SurveyIn 2004, an independent baseline study was conducted to determine where thecompany stood in relation to communities around its Marikana operations. Inorder to continuously improve the Company’s community engagement andbehaviour as a model corporate citizen, an annual target for social performancehas been incorporated into management’s overall performance scorecard. Theresulting standardised Community Perception Survey annually tracks ourrelationship with communities through a number of empirically verified socialperformance indicators. In 2007, the survey was extended to includecommunities neighbouring Lonmin’s Limpopo Division.

In 2008, average combined ratings for Marikana and Limpopo amounted to48.3%, which was well below the target for 2008 of 60%. Our disappointingperformance can be attributed to poor communication with communitymembers. Our performance in Limpopo is rated significantly lower than itsperformance in Marikana on each of the indicators for communication andbehaviour. Communities, however in Marikana perceived a year-on-yearimprovement of 2.2% in our performance as citizen of the GLC.

Baseline Socio-economic assessment of Marikana GLCBaseline data on quality of life and socio-economic indicatorstherefore enable measurement and tracking of a company’simpact on sustainable development.

Impact measurement substantiates the meaningful andsustainable contribution to development in neighbouringcommunities. It is the most responsible way of accounting forinvestments made, and decisions taken. The baselineassessment is the first assessment of specified indicators suchas educational and employment levels, access to basicservices, general health, and even community perceptionsabout a company, or mining in general. The “base”, asdetermined by the baseline assessment, guides further actionand enables measurement of changes/shifts in the relevantindicators over time. We realised the importance of baselinedata on our neighbouring communities as far back as 2005,when the first of a number of baseline studies werecommissioned. The Community Wellness Survey, as well asthe Health Status of a Communities Baseline Study conductedin 2005 covered most of the demographic, socio-economicand health indicators needed for a baseline assessment.Recently, other studies were also commissioned, focusing onschools and community based business. However, the resultsof the various baseline studies were contained in differentreports and different formats, resulting in a fragmented view ofthe baseline indicators guiding our development decisions inthe GLC. For this reason, we deemed it necessary torepackage existing baseline data into a consolidated baselinereport for Marikana in 2008. Going forward, this approach willresult in easier decision making as well as tracking the impactof sustainable development.

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Key community development projects in 2008

Spend in 2008Project Objectives Indicator for success US$ Impacts of the projects in 2008

Empowering our host communities and improving their quality of life by contributing to their long term social,economic and institutional development and promoting the beneficiation of our minerals.

Empowering communities to solve their own problems through self governance, skills development andmulticulturalism, building a sense of social cohesion

Madibeng capacity To facilitate a capacity Timely and successful US$6,502 • Needs assessmentbuilding programme building programme implementation of completed on

for the municipality projects in the Madibeng identified projects;that will assist projects municipal area.in the Madibeng • Commencedmunicipal area. geographic

information systemproject with themunicipality to assistwith project planning.

Empowering a flourishing local economy that supports the attraction and retention of local businesses and corporations

Local supplier To contribute Development of sixty US$212,994 • Business landscapedevelopment significantly to the locally owned supply assessment undertakenprogramme economic and social companies and the during which available

development of the awarding of contracts and potentialcommunities through by the Company worth businesses wereenhancing the over US$60 million; identified andknowledge, skills and assessed;entrepreneurial Extending services ofdevelopment of the these suppliers not only • 79 contracts with thecommunities. to other mining Company were

organisations in the awarded to 27 localregions, but also to suppliers in 2008 fornon-mine related ore transport, trainingcustomers. and catering.

Thusong Multipurpose To provide access to Completion of the US$361,269 • The MultipurposeCentre in the government services construction of the Centre was completedEastern Cape for communities in centre and functioning and opened on

the Engcobo of the Multipurpose 25 August 2008.municipal area. Centre.

North West water To improve basic Number of ablution US$265,537 • Feasibility studies,and sanitation project water and sanitation facilities upgraded. designs and tendering

in the communities processes wereof the North West Water-related undertaken for twoprovince. infrastructure refurbished. of water and

sanitation projects.Implementationwill be in a phased,commencing 2009.

Water and sanitation To improve basic Number of ablution US$601,672 • 157 toilets were(Eastern Cape) water and sanitation facilities upgraded; upgraded at ten

schools;infrastructure in theschools of the Alfred Number of water • Approximately 3800Nzo District related infrastructure learners benefited fromMunicipality of the refurbished; the infrastructureEastern Cape. refurbishment.

Number of learnersbenefiting from therefurbishments.

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Key community development projects in 2008 (continued)


Building an education system that inspires sustainable living, facilitates the fulfillment of dreams and supports ourfuture skill requirements

Post matric bridging To enable students Improved pass rates for US$90,369 • 43 students from thecourse with the opportunity grade twelve. GLC have attended

to improve their grade the course in 2008.twelve results onselected subjectsand to provide themwith the opportunityto enter into tertiaryeducation. Thisbridging course ispresented inpartnership with theLonmin Academyand Damelin.

Saturday School To provide learners Improvement in the US$138,506 • 472 learners from theprogramme with the opportunity number of pass rates for GLC attended Saturday

to improve their grade twelve and in school in 2008 of whichknowledge on the mathematics and science the final grade twelveschool curriculum, grades. results are stillfocusing primarily on outstanding.mathematics andscience. SaturdaySchool comprises ofa 32-week programmeper annum to selectedlearners from theGLC High Schools inconjunction withNorth West University

Personal computer To establish computer Number of educators US$146,922 • 258 educators werelaboratories centres at GLC trained and deemed trained and certified in

schools and to equip competent. the use of personalschool educators with computers.the necessary skills Number of schoolsto operate a personal equipped with personal • 21 schools in the GLCcomputer effectively computer laboratories. have been equippedand provide relevant with functionaltraining. computer laboratories.

Early childhood To build capacity of Number of educators US$3,467 • Seven educatorsdevelopment the educators in trained; completed the course

early childhood and assessmentdevelopment. Part Number of children successfully;of this project is to identified as part of theidentify gifted children early childhood • 25 children wereas well as children development model. identified as part of thewho have problems, programme for earlywhere early intervention to alleviateintervention will have possible futurethe potential to problems.alleviate possiblefuture problems.

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Building an education system that inspires sustainable living, facilitates the fulfillment of dreams and supports ourfuture skill requirements (continued)

School governing To provide skills to Number of school US$23,490 • 29 schools in the GLCbodies school governing development plans in have school

bodies and principals place. developmentat all GLC schools plans in place;to enable them tounderstand and • 145 delegates fromdevelop school 29 schools weredevelopment plans trained in developingfor the forthcoming school developmentthree years. plans and school

governance in threeworkshops.

School infrastructure To improve the Number of facilities US$750,873 • 58 toilet facilities wereupgrade infrastructure of refurbished; provided at three

schools in the GLC schools;based on requirements Number of learnersidentified through a per classroom. • Four schools receivedneeds assessment, eleven mobilein order to address classrooms, significantlyovercrowding and reducing the learner:lack of administration classroom ratio,facilities in the examples being:schools. Michael Modisakeng

(50:1 to 45:1)Majakaneng Primary(48:1 to 42:1)

• A multi-purpose mobileunit with sewagefacilities was providedto Thaba Moruls School;

• Upgrading of thekitchen and plumbing atSt Catherines PrimarySchool;

• Replacement of schoolhall ceiling atElandskraal School.

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Building an education system that inspires sustainable living, facilitates the fulfillment of dreams and supports ourfuture skill requirements (continued)

Language and To provide educators Number of schools US$51,490 • Ten schools werescience laboratories and learners with a equipped with language equipped with language

competency based and science laboratories; laboratories and 56computer English educators were trainedlanguage course, the Number of educators on the use of theobjective of which is trained in the use of the English laboratories;to enhance knowledge laboratories.and skill of the English • Four high schools inlanguage. the GLC received

science laboratoryTo provide GLC High facility upgrading,Schools with adequate training onscience laboratories curriculum andto enable enhanced equipment usage.learning of the subjectand to provide trainingfor educators in thisregard.

Annual career exhibition To facilitate and Number of learners US$122,527 • Successful facilitationmanage annual attending the of a career exhibitioncareer exhibitions for career exhibitions. in September 2008;grades eleven andtwelve learners from • An estimated 3,800the GLC in order to learners attended theprovide learners with career exhibition overthe opportunities to two days and 55obtain knowledge educators attendedand information on three-day educatorcareers. Learners are workshops;encouraged todiscuss future • 23 communityprospects of training, members of thejob opportunities and Career Exhibition Crewinternships offered by were trained oncompanies exhibiting. First Aid.

Improving the wellness of the community by developing safety, health and wellness systems that support communitywellness objectives

Mobile school To provide access to Number of schools US$103,928 • Two mobile clinics werehealth services every learner within visited by the mobile donated to the

GLC schools to health school health services. Department of Healthcare services through and have beenthe use of mobile operational sinceclinics. August 2008. 16

schools to datehave been visitedby the mobile schoolhealth services.

Rustenburg hospice To provide HIV/AIDS Number of US$110,159 • 18 additional caregivershome-based care caregivers trained; were trained;services and socialsupport in the towns Number of patients • 361 patients visitedof Segwaelane and visited regularly by the regularly as part ofWonderkop. caregivers. home based care.

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Improving the wellness of the community by developing safety, health and wellness systems that support communitywellness objectives (continued)

HIV/AIDS peer To reduce the spread Number of peer US$190,075 • 52 active peer educatorseducation and home of HIV/AIDS and to educators; have been trained;based care enhance treatment of

the disease through Number of home-based • 31 active caregiverspeer education and caregivers trained; have been trained;home-based carein the GLC. Number of participants • 1,235 participants

counselled and tested counselled and testedin VCT campaign; in the VCT campaign

in the Marikana andNumber of patients Brakpan GLC;receiving support throughthe home-based care • Approximately 40,815programme. community members

have been exposedto peer education;

• 601 patients are visitedregularly as part of thehome-based careprogramme.

School nutrition To provide each Number of schools US$594,231 • The programme wasprogramme learner in the GLC helped by the school implemented at 28

with a balanced meal nutrition programme; schools;on a daily basis.

• An approximate 11,442Number of learners who learners in Marikanareceive a balanced GLC and 3,711 learnersdaily meal. in Limpopo GLC received

a daily balanced meal.

Creating respect for the natural environment and cultural heritage of our communities, protecting unique areas andenabling the sustainable use and management of our natural resources

Eco-schools To facilitate the Number of schools who US$83,893 • 16 schools in theimplementation of the achieve the eco-school Marikana GLC and fiveeco-schools project milestones. in Brakpan GLC areprogramme at schools enrolled in the project.within the GLC, to Project milestones toimprove environmental be assessed in 2009;learning andenvironmental • Twelve schools havemanagement productive food gardenspractices of in place.the learners.





Alleviating hunger and poverty in the GLC by improving nutrition and creating economic incentives for thedisadvantaged

Agisanang farming To realise the Number of jobs created; US • Successful re-launch ofproject commercial potential $1,037,584 the farming project.

of the Agisanang Income.Farm, to createemploymentopportunities and tosupport small-scalefarming.

Itireleng Community To train and support Income. US$92,483 • 18 beneficiaries trainedCo-operative small-scale in project management

commercial farming and basic bookkeeping;to succeed in aco-operative farming • Installation ofenterprise in Bapong. infrastructure and

equipment at Itireleng.

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Maria Mokomele (Bapo Ba Mogale TribalOfficial), Thami Matshego, (Bojanala districtMunicipality) Colleen Mmutle and Annaline

Mashish (Local Government) at the RekopaneDevelopment Forum meeting.

Part of the Early Childhood Development project is toidentify gifted children.

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Implementing the International Councilon Mining and Metals Principles

As a member of the ICMM, we support their vision of a respected mining and metals industry that is recognised asessential for modern living and a key contributor to sustainable development. We have committed to implementing theten principles through our Sustainable Development Framework. The following table, although not exhaustive, outlinesthe ten principles of the ICMM and provides a summary of our approach and progress made in 2008 in terms ofimplementing the principles.

International Council onMining and Metals principle Key elements of our approach to the principles and progress made in 2008

General The following aspects of our approach and progress made in 2008 is applicable to allICMM principles:• Principles of Safety and Sustainable Development are important components of ourLonmin Charter;

• The SHEC Policy was reviewed in 2008 to the Safety and Sustainable DevelopmentPolicy, formalising the commitment to safety and sustainable development. The policyis aligned with all principles of the ICMM;

• In 2008, we completed the review our Safety and Sustainable DevelopmentManagement Standards to incorporate best practice, legal requirements andprinciples of the organisations to which we are affiliated, including the principles andposition statements of the ICMM;

• We have a number of corporate guidelines for the implementation of our minimumrequirements outlined in the Standards;

• We have management systems for communication, training, auditing and review. Thefollowing tables outline specific progress in these management systems during 2008;

• We have company objectives and targets in place, supported by discipline specificstrategies, objectives and targets that provide the framework for continualimprovement.

Implement and maintain • The Lonmin Charter outlines the Values of the Company, which include integrity,ethical business practices honesty, trust, transparency and respect and which we honour in our businessand sound systems of practices;corporate governance • We are led by a Board of ten Directors who are committed to the highest standards of

corporate governance. The Board and Committees of the Board create the basis ofbusiness integrity required to deliver robust and sustainable development results;

• The Lonmin Code of Business Ethics is founded on ethical business practices andprovides the framework within which we conduct our business practices. All ourbusiness partners, suppliers and contractors are required to adhere to the Code ofBusiness Ethics;

• In support of the Code of Ethics, we have a whistle-blowing policy in place with awhistle-blowing hotline whereby employees and other stakeholders may disclose anyconcerns relating to business practices. Additionally we have grievance procedures inplace at all operations;

• We have extensive internal and third party auditing of financial and non-financialelements of our business;

• In 2008, we reported payments made to government in line with the ExtractiveIndustries Transparency Initiative’s requirements;

• In 2008, we became a signatory to the United Nations Global Compact;• We are a signatory to the “Business Call for Action” and have committed tosupporting the Millennium Development Goals in our approach to SustainableDevelopment.

The ICMM is a CEO-led organisation representing leading international

mining and metals companies.

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Implementing the International Council on Miningand Metals Principles (continued)


Integrate sustainable • The Safety and Sustainability Committee of the Board provides advice to the Board ondevelopment considerations safety and sustainability matters particularly pertaining to risk and management thereofwithin the corporate for incorporation into strategic decision-making processes, including those of potentialdecision-making process investments;

• The minimum requirements within our Safety and Sustainable DevelopmentManagement Standards, supporting guidelines and management systems provide theframework for safety and sustainable development to be incorporated in decision-making at operational level throughout the Company;

• All our contractual agreements contain minimum standards for safety and sustainabledevelopment performance;

• We conduct social and environmental impact assessments prior to operationalcommencement and during all phases of our operations

• We are committed to applying the precautionary approach in our projects.

Uphold fundamental • In 2008, we have complied with the principles embodied in the United Nations Universalhuman rights and respect Declaration of Human Rights;cultures, customs and • We have revised our Human Rights Policy and standards to align with the principles ofvalues in dealings with the ICMM, the United Nation’s Universal Declaration of Human Rights and the Voluntaryemployees and others Principles on Security and Human Rights;who are affected by • In 2008, we have established a number of policies pertaining to gender and raceequity our activities in the Company;

• We support the principle of freedom of association and engage with all representativetrade unions amongst our workforce;

• In 2008, we have furthered our progress in employment equity and amongst otherachievements, we have met and exceeded our 2009 target to have 40% managementcomprising of HDSA employees;

• We have continued with awareness training with all our employees on the principles ofhuman rights;

• We have community engagement programmes in place, with the introduction in 2008of the GLC Development Forum.

Implement risk • The Lonmin Risk Management Policy and Risk Management Standard, based on bestmanagement strategies practice, provides the framework for integrated and dynamic risk management at thebased on valid data and Company, our subsidiaries and our partnerships;sound science • The precautionary approach is inherent in our risk management framework;

• The Audit and Risk Committee of the board monitors progress on the management ofrisks;

• We have a bottom up and bottom down risk management approach targetingstrategic risks and operational risks respectively;

• We have emergency response strategies and teams in place and periodic simulationexercises are undertaken;

Seek continual • We have a zero tolerance approach to any at risk safety behaviour and compromise toimprovement of our health safe practices is not tolerated;and safety performance • Although there has been no improvement from 2007 in terms of fatalities, we have

consistently over the past five years reduced the number of fatalities at our operations;• During the past year our LTIFR has shown a steady and consistent improvement, withthe 2008 LTIFR reduced by 42%, compared to our 2007 performance;

• We are revising our safety management systems to provide the basis for enhancedsafety performance and in 2008 we introduced the investigations of near missincidents;

• Stretch targets on key performance indicators are set on an annual basis, drivingperformance and continual improvement;

• We have reduced our newly diagnosed NIHL cases compensated by 62.2% to 229cases from our 2007 baseline;

• As at the end of 2008, we had 989 patients on anti-retroviral treatment, whichexceeded our target of 900 patients;

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Implementing the International Council on Miningand Metals Principles (continued)


Seek continual • In 2008, there has been a noticeable reduction in the number of in-service deaths andimprovement of our health disabilities related to HIV/AIDS in comparison to previous years. In terms of directand safety performance costs incurred by the Company as an employer, the treatment programme has shown(continued) a marginal cost benefit, with the reduction in HIV/AIDS-related costs being offset by

the costs of the treatment programme;• Our mining and processing operations have baseline risk assessments, occupationalhygiene monitoring and medical surveillance programs in place. Risk review ofsignificant occupational hygiene hazards will be conducted in 2009;

Seek continual improvement • We have achieved or maintained ISO 14001 certification at all our operations;of our environmental • We have improved our data and information monitoring systems, particularly in termsperformance of real time data in the fields of water, energy, waste and air quality management;

• Effective dust suppression systems are integral to the operational procedure of ourtailings facilities.

Contribute to conservation • In 2008, we have made progress with the review of our closure plans to align withof biodiversity and best practice, legislative requirements and to encompass all community andintegrated approaches to environmental aspects into closure planning;land use planning • We have a biodiversity and land management strategy in place, and have in 2008

commenced with the development of biodiversity action plans.

Facilitate and encourage • We take into consideration best practice and legislated requirements of safety, healthresponsible product design, and environmental aspects in the design of our processes and operations;use, re-use, recycling and • We have targets in place to improve the eco-efficiency of our operations in terms ofdisposal of our products fresh water and energy consumption and waste disposal;

• In 2008, we have reduced our energy use and fresh water consumption by 4.62%and 15.4% respectively per unit of production as compared to our 2007 performance;

• We have waste management programmes in place to reduce the generation of waste,increase re-use and recycling and minimise disposal to landfill;

• We influence our supply chain through inclusion of minimum requirements in contractualagreements as well as auditing where required of elements of their operations andprocesses that may have an impact on our cradle to grave responsibilities.

Contribute to the social, • We employ whenever possible, people from local communities;economic and institutional • We work in partnership with government, communities and other stakeholders on adevelopment of the number of initiatives and programmes that strengthen the social, human, economiccommunities in which and cultural capital of the communities where we operate. In 2008 US$6.55 millionwe operate has been spent on community development projects;

• Our local supplier development initiative in collaboration with the IFC has continued tobe a success in 2008, with contracts to the amount of US$30 million being awardedto suppliers living in the immediate vicinity of our mining operations;

• In 2008, 592 community members have attended our Lonmin transformationprogramme as well as 193 community members have received training through ourABET training programmes.

Implement effective and • We have stakeholder engagement and communication strategies in place as well astransparent engagement, mechanisms to obtain feedback from our stakeholders for consideration into ourcommunication and decision making process;independently verified • We are committed to implementing the ICMM Sustainable Development Framework,reporting arrangements as part of our auditing and assurance process;with our stakeholders • We are committed to using the guidance of the GRI for reporting purposes;

• In 2008, we have enhanced our stakeholder engagement on our sustainabledevelopment performance and reporting and have included this feedback into ourmanagement and reporting processes;

• Independent external assurance of our publicly reported sustainable developmentperformance is a key element of our sustainable development framework;

• External assurance supports the integrity of our report content and has been providedby KPMG over selected parameters, the application of the reporting principles asoutlined by GRI, as well as assurance relating to our progress towards the alignmentof our policies and business practices with the ten principles of ICMM.

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Key Performance Data

Marikana1 Marikana Marikana Group GroupMeasurement FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

ProductionPlatinum Group Metals produced Oz 1,679,871 1,704,249 1,809,744 1,477,529 1,366,307EconomicNet cash generatedCustomers, consumers and investment incomeCash received for products US$ million 1,057 1,107 1,611 2,016 2,270Cash return on investment US$ million 8 2 1 16 13Suppliers2

Cash payments for materialsand services purchased US$ million (352) (361) (429) (395) (445)Cost of borrowings US$ million (17) (29) (32) (41) (23)Net cash flows US$ million 696 719 1,151 1,596 1,815Cash distributedHuman capital (salariesand benefits) US$ million 284 313 406 492 557Social capital US$ million 7 7 3.1 3.9 7.3Government taxes US$ million 68 80 186 267 245Directors remuneration US$ million 9 10 9 7 9Shareholders distribution US$ million 102 102 124 171 186Cash retained forsustainable growth US$ million 226 207 426 655 811Net cash distributed US$ million 696 719 1151 1,596 1,815EmployeesEmployees and contractors Number 26,119 26,534 30,736 32,954 33,725HDSA managed employedon a permanent basis Percentage 20 25.8 36 37.9 42.3Woman employed on apermanent basis in miningoperations Percentage N.D.A. N.D.A. 4.1 4.9 6.1Woman employed ona permanentbasis at the mine Percentage N.D.A. N.D.A. 1.4 1.4 1.8Employee turnover rate Percentage 5.5 15.9 1.1 4.1 6.6Employees trained in ABET Number 1,200 N.D.A. 1,681 1,389 2,866Occupational Health and SafetyFatalities Number 8 6 6 3 3LTIFR Incidents/million

hours worked 21.10 18.103 12.50 10.80 6.27NIHL cases compensated Number 414 278 570 490 229Pulmonary tuberculosis cases Number 396 286 338 504 533HIV/AIDSEmployees for VCT Number N.D.A. 1,615 3,236 13,761 18,692Patients on ART(excludes PMR)4 Number N.D.A. 407 587 836 989Patients on the wellnessprogramme Number N.D.A. N.D.A. N.D.A. N.D.A. 1150

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Key Performance Data (continued)

Marikana1 Marikana Marikana Group GroupMeasurement FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

EnvironmentTotal freshwater intake m3 9,590,587 9,500,000 10,858,464 11,795,482 9,256,244Total freshwater intake m3/PGM ozefficiency 5.70 5.60 6.00 7.98 6.77Electricity MWHr 1,466,060.00 1,402,718.79 1,617,771.49 1,619,922.49 1,575,917.39Electricity efficiency MWhr/PGM oz 0.87 0.82 0.89 1.10 1.15Energy TJ 6,839 5,813 7,384 7,4345 6,555Energy efficiency GJ/PGM oz 4.10 3.50 4.10 5.035 4.80Greenhouse gas CO2 equivalent

kilotonnes 1,540 1,489 1,775 1,673 1,659Greenhouse CO2 equivalent/gas efficiency PGM oz 0.92 0.89 0.98 1.13 1.21Tailings disposed totailings facilities Kilotonnes 11,099.00 12,832.00 15,519.00 14,487.99 12,649.56Waste rock disposedto rock dumps Kilotonnes 1,539.00 1,415.00 1,376.00 1,203.46 1,128.26Hazardous waste disposedof to landfill and by incineration m3 6,976 4,325 8,973 7,038 N.A.Hazardous waste disposedof to landfill and incineration Tonnes N.A. N.A. N.A. N.A. 42,857.29General waste to landfill m3 34,984 28,821 52,559 53,110 N.A.General waste to landfill Tonnes N.A. N.A. N.A. N.A. 8,279.60Average tonnes of sulphur dioxideemitted per month fromSmelter stack Tonnes /day 3.4 3.4 7.4 11.3 9.1

N.D.A – No data available. Where it is indicated that no data is available, this is primarily as a result of low confidence in the accuracy of the data oran absence of measurement of the data.

N.A. – Not applicable

1 Marikana encompasses our operations located in the Marikana district and the PMR.

2 We have a 30 day payment policy on services and procurement.

3 The figure for LTIFR for financial year 2005 was identified during the 2005 assurance process to have the potential of being underestimated by10%.

4 PMR patients access ART through their private medical aid schemes.

5 The incorrect figures were published in 2007’s report. The re-instated figures are provided here.

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Reporting against Global ReportingInitiative IndicatorsThe following table references the information within this report against the GRI (2006) and the Mining and Metals SectorSupplement. Requirements highlighted in blue are “add” reporting requirements that are recommendations for reportingin addition to the core requirements. Relevant disclosure on our management approach for each category indicator isprovided within the text on the particular issue or risk.

GRI Indicators

No. Statement Reported Page

Profile

Strategy and Analysis

1.1 Statement from the most senior decision maker of the organisation(e.g., CEO, chair, or equivalent senior position) about the relevanceof sustainability to the organisation and its strategy. ! 01

1.2 Description of key impacts, risks, and opportunities. ! 01, 25

Organisational Profile

2.1 Name of the organisation. ! Front cover

2.2 Primary brands, products, and/or services. ! 09

2.3 Operational structure of the organisation, including main divisions,operating companies, subsidiaries, and joint ventures. ! 09, 10

2.4 Location of organisation’s headquarters. ! 09

2.5 Number of countries where the organisation operates, and names of countrieswith either major operations or that are specifically relevant to the sustainabilityissues covered in the report. ! 09

2.6 Nature of ownership and legal form. ! 10

2.7 Markets served (including geographic breakdown, sectors served, and typesof customers/beneficiaries). ! 37

2.8 Scale of the reporting organisation. ! 09

2.9 Significant changes during the reporting period regarding size, structure,or ownership. ! 05

2.10 Awards received in the reporting period. ! 01

Report Parameters

3.1 Reporting period (e.g., fiscal/calendar year) for information provided. ! 04

3.2 Date of most recent previous report (if any). ! 05

3.3 Reporting cycle (annual, biennial, etc.). ! 04

3.4 Contact point for questions regarding the report or its contents. ! Contents page

3.5 Process for defining report content. ! 04, 05

3.6 Boundary of the report (e.g., countries, divisions, subsidiaries,leased facilities, joint ventures, suppliers). ! 05

3.7 State any specific limitations on the scope or boundary of the report. ! 05

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities,outsourced operations, and other entities that can significantly affectcomparability from period to period and/or between organisations. ! 05

3.9 Data measurement techniques and the bases of calculations, includingassumptions and techniques underlying estimations applied to thecompilation of the indicators and other information in the report. ! 04

3.10 Explanation of the effect of any re-statements of information providedin earlier reports, and the reasons for such re-statement (e.g., mergers/acquisitions, change of base years/periods, nature of business,measurement methods). ! 04

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Reporting against Global ReportingInitiative Indicators (continued)

GRI Indicators (continued)


Report Parameters (continued)

3.11 Significant changes from previous reporting periods in the scope,boundary, or measurement methods applied in the report. ! 05

3.12 Table identifying the location of the standard disclosures in the report. ! 98-105

3.13 Policy and current practice with regard to seeking external assurance forthe report. If not included in the assurance report accompanying thesustainability report, explain the scope and basis of any external assuranceprovided. Also explain the relationship between the reporting organisationand the assurance provider(s). ! 05, 07

Governance , Commitments, and Engagement

4.1 Governance structure of the organisation, including committeesunder the highest governance body responsible for specific tasks, suchas setting strategy or organisational oversight. ! 15-17

4.2 Indicate whether the Chair of the highest governance body is also anexecutive officer (and, if so, their function within the organisation’s managementand the reasons for this arrangement). ! 15

4.3 For organisations that have a unitary board structure, state the numberof members of the highest governance body that are independentand/or non-executive members. ! 15

4.4 Mechanisms for shareholders and employees to provide recommendationsor direction to the highest governance body. ! 16

4.5 Linkage between compensation for members of the highest governancebody, senior managers, and executives (including departure arrangements),and the organisation’s performance (including social andenvironmental performance). ! 18

4.6 Processes in place for the highest governance body to ensure conflictsof interest are avoided. ! 16

4.7 Process for determining the qualifications and expertise of the membersof the highest governance body for guiding the organisation’s strategyon economic, environmental, and social topics. ! 15

4.8 Internally developed statements of mission or values, codes of conduct,and principles relevant to economic, environmental, and social performanceand the status of their implementation. ! 18

4.9 Procedures of the highest governance body for overseeing the organisation’sidentification and management of economic, environmental, and socialperformance, including relevant risks and opportunities, and adherenceor compliance with internationally agreed standards, codes of conduct,and principles. ! 16-18

4.10 Processes for evaluating the highest governance body’s own performance,particularly with respect to economic, environmental, and social performance. ! 15

4.11 Explanation of whether and how the precautionary approach or principleis addressed by the organisation. ! 25

4.12 Externally developed economic, environmental, and social charters,principles, or other initiatives to which the organisation subscribes or endorses. ! 19

4.13 Memberships in associations (such as industry associations) and/ornational/international advocacy organisations. ! 19

4.14 List of stakeholder groups engaged by the organisation. ! 21

4.15 Basis for identification and selection of stakeholders with whom to engage. ! 21

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Governance , Commitments, and Engagement (continued)

4.16 Approaches to stakeholder engagement, including frequency ofengagement by type and by stakeholder group. ! 22-24

4.17 Key topics and concerns that have been raised through stakeholderengagement, and how the organisation has responded to those key topicsand concerns, including through its reporting. ! 22-24

Economic Performance Indicators

EC1. Direct economic value generated and distributed, including revenues,operating costs, employee compensation, donations and othercommunity investments, retained earnings, and payments to capitalproviders and governments. Partial 36

EC2. Financial implications and other risks and opportunities for theorganisation’s activities due to climate change. #

EC3 Coverage of the organisation’s defined benefit plan obligations. Partial 36

EC4 Significant financial assistance received from governments. ! 36

EC5 Range of ratios of standard entry level wage compared to localminimum wage at significant locations of operation. #

EC6. Policy, practices, and proportion of spending on locally based suppliersat significant locations of operation. ! 37-38

EC7 Procedures for local hiring and proportion of senior management hiredfrom the local community at locations of significant operation. Partial 37

EC8. Development and impact of infrastructure investments and servicesprovided primarily for public benefit through commercial, in kind,or pro bono engagement. ! 39

EC9. Understanding and describing significant indirect economic impacts,including the extent of impacts. Partial 37-39

MM1 Sector supplementIdentify those sites where the local economic contribution and developmentimpact is of particular significance and interest to stakeholders(e.g., remote sites) and outline policies with respect to assessing thiscontribution. Relevant information includes: Percentage of goods, materials,and services purchased locally; percentage of workforce from localcommunities; investment in public infrastructure and its maintenance;and compensation payments. Partial 37-39

MM2 Sector supplementValue added disaggregated to country level. ! 36

Environmental Performance Indicators

EN1 Materials used by weight or volume. #

EN2 Percentage of materials used that are recycled input materials. #

EN3 Direct energy consumption by primary energy source. ! 71

EN4 Indirect energy consumption by primary source. ! 71

EN5 Energy saved due to conservation and efficiency improvements. #

EN6 Initiatives to provide energy-efficient or renewable energy basedproducts and services, and reductions in energy requirementsas a result of these initiatives. Partial 71

EN7 Initiatives to reduce indirect energy consumption and reductions achieved. Partial 71

EN8 Total water withdrawal by source. ! 72

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Environmental Performance Indicators (continued)

EN9 Water sources significantly affected by withdrawal of water. #

EN10 Percentage and total volume of water recycled and reused. #

EN11 Location and size of land owned, leased, managed in, or adjacent to,protected areas and areas of high biodiversity value outside protected areas. ! 81

Sector supplementTotal amount of land owned, leased, and managed for production activitiesor extractive use. Mining companies should report the following:1. Total land disturbed and not yet rehabilitated (opening balance).2. Total amount of land newly disturbed within the reporting period.3. Total amount of land newly rehabilitated within the reporting

period to the agreed upon end use.4. Total land disturbed and not yet rehabilitated (closing balance).5. Total amount of land owned, leased, and managed for production

activities or extractive use. Partial 82

EN12 Description of significant impacts of activities, products, and serviceson biodiversity in protected areas and areas of high biodiversityvalue outside protected areas. #

EN13 Habitats protected or restored. ! 82

EN14 Strategies, current actions, and future plans for managing impactson biodiversity. Partial 81-82

EN15 Number of IUCN Red List species and national conservation list specieswith habitats in areas affected by operations, by level of extinction risk. Partial 82

EN16 Total direct and indirect greenhouse gas emissions by weight. ! 71

EN17 Other relevant indirect greenhouse gas emissions by weight. #

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. #

EN19 Emissions of ozone-depleting substances by weight. #

EN20 NO, SO, and other significant air emissions by type and weight.Sector SupplementReporting should include emissions from both major mobile sourcesand on-site stationary sources; management of fugitive emissions suchas dust from mining and processing activities (i.e., monitoring activities,compliance with regulatory limits or number of dust-related complaintsand how they were addressed), case studies where significantlocal emissions occur. Partial 75

EN21 Total water discharge by quality and destination. Partial 69

EN22 Total weight of waste by type and disposal method.Sector SupplementFor the mining and metals sector this refers to site waste,e.g., waste oils, spent cell lining, office, canteen and camp waste,scrap steel, tyres and construction waste. The breakdown of “types”of waste (as requested in the indicator) should distinguish betweenhazardous and non-hazardous. Note: When collecting hazardouswaste data for reporting, the reporting organisation should use thedefinition contained in the regulations that apply to the site. Partial 79-80

EN23 Total number and volume of significant spills. ! 69

EN24 Weight of transported, imported, exported, or treated waste deemedhazardous under the terms of the Basel Convention Annex I, II, III, andVIII, and percentage of transported waste shipped internationally. ! 80

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Environmental Performance Indicators (continued)

EN25 Identity, size, protected status, and biodiversity value of water bodiesand related habitats significantly affected by the reporting organisation’sdischarges of water and runoff. #

EN26 Initiatives to mitigate environmental impacts of products and services,and extent of impact mitigation. #

EN27 Percentage of products sold and their packaging materials that arereclaimed by category. #

EN28 Monetary value of significant fines and total number of non-monetarysanctions for noncompliance with environmental laws and regulations. ! 68

EN29 Significant environmental impacts of transporting products and other goodsand materials used for the organisation’s operations, and transportingmembers of the workforce. #

EN30 Total environmental protection expenditures and investments by type. #

MM3 Sector supplementThe number/percentage of sites identified as requiring biodiversitymanagement plans, and the number/percentage of sites with plans in place.Also include criteria for deciding that a biodiversity management plan isrequired and the key components of a plan. ! 82

MM4 Sector supplementPercentage of products(s) derived from secondary materials This includesboth post-consumer recycled material and waste from industrial sources(e.g., new scrap from fabricators and old scrap from end of life equipment),but excludes internal recycling within the facility. #

MM5 Sector supplementDescribe policies for assessing the eco-efficiency and sustainability attributesof products (e.g., recyclability, material use, energy use, toxicity, etc.). #

MM6 Sector supplementDescribe approach to management of overburden, rock, tailings, andsludges/residues including:– assessment of risks;– structural stability of storage facilities;– metal leaching potential; and– hazardous properties.Quantities of waste that are hazardous should be reported. The relevanceof reporting other quantities of waste will be determined by the risk assessment. #

Labor Practices and Decent Work

Performance Indicators

LA1. Total workforce by employment type, employment contract, and region. Partial 62

LA2. Total number and rate of employee turnover by age group,gender, and region. Partial 62

LA3. Benefits provided to full-time employees that are not provided to temporaryor part-time employees, by major operations. ! 61

LA4 Percentage of employees covered by collective bargaining agreements. ! 46

LA5 Minimum notice period(s) regarding operational changes, including whetherit is specified in collective agreements. ! 46

LA6 Percentage of total workforce represented in formal jointmanagement–worker health and safety committees that help monitor andadvise on occupational health and safety programs. ! 47

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Labor Practices and Decent Work (continued)

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, 48, 50,and number of work related fatalities by region. ! 51, 63

LA8 Education, training, counseling, prevention, and risk-control programsin place to assist workforce members, their families, or communitymembers regarding serious diseases. ! 52

LA9 Health and safety topics covered in formal agreements with trade unions. ! 47

LA10 Average hours of training per year per employee, by employee category. #

LA11. Programs for skills management and lifelong learning that support thecontinued employability of employees and assist them in managingcareer endings. ! 61-62

LA12 Percentage of employees receiving regular performance and careerdevelopment reviews. ! 63

LA13 Composition of governance bodies and breakdown of employees percategory according to gender, age group, minority group membership,and other indicators of diversity. Partial 60

LA14 Ratio of basic salary of men to women by employee category. #

Human Rights Performance Indicators

HR1. Percentage and total number of significant investment agreements thatinclude human rights clauses or that have undergone humanrights screening. Partial 47

HR2. Percentage of significant suppliers and contractors that have undergonescreening on human rights and actions taken. #

HR3. Total hours of employee training on policies and procedures concerningaspects of human rights that are relevant to operations, including thepercentage of employees trained. #

HR4. Total number of incidents of discrimination and actions taken. ! 47

HR5. Operations identified in which the right to exercise freedom of associationand collective bargaining may be at significant risk, and actions taken tosupport these rights. ! 46

HR6. Operations identified as having significant risk for incidents of child labour,and measures taken to contribute to the elimination of child labour. ! 45

HR7 Operations identified as having significant risk for incidents of forced orcompulsory labour, and measures to contribute to the elimination of forcedor compulsory labour. ! 45

HR8. Percentage of security personnel trained in the organisation’s policies orprocedures concerning aspects of human rights that are relevant to operations. ! 45

HR9. Total number of incidents of violations involving rights of indigenous peopleand actions taken. ! 47

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Society Performance Indicators

SO1. Nature, scope, and effectiveness of any programs and practices thatassess and manage the impacts of operations on communities,including entering, operating, and exiting. Partial 84

SO2. Percentage and total number of business units analyzed for risksrelated to corruption. ! 41

SO3. Percentage of employees trained in organisation’s anti-corruptionpolicies and procedures. Partial 41

SO4. Actions taken in response to incidents of corruption. Partial 43

SO5. Public policy positions and participation in public policy developmentand lobbying. ! 19

SO6. Total value of financial and in-kind contributions to political parties,politicians, and related institutions by country. ! 43

SO7 Total number of legal actions for anticompetitive behaviour, anti-trust,and monopoly practices and their outcomes. ! 43

SO8. Monetary value of significant fines and total number of non-monetarysanctions for noncompliance with laws and regulations. ! 43

Product Responsibility Performance Indicators

PR1. Life cycle stages in which health and safety impacts of products andservices are assessed for improvement, and percentage of significantproducts and services categories subject to such procedures. ! 40

PR2. Total number of incidents of non-compliance with regulations and voluntarycodes concerning health and safety impacts of products and servicesduring their life cycle, by type of outcomes. ! 40

PR3. Type of product and service information required by procedures andpercentage of significant products and services subject to suchinformation requirements. ! 40

PR4. Total number of incidents of non-compliance with regulations and voluntarycodes concerning product and service information and labeling, by typeof outcomes. ! 40

PR5. Practices related to customer satisfaction, including results of surveysmeasuring customer satisfaction. ! 40

PR6. Programs for adherence to laws, standards, and voluntary codes relatedto marketing communications, including advertising, promotion,and sponsorship. ! 40

PR7. Total number of incidents of non-compliance with regulations and voluntarycodes concerning marketing communications, including advertising, promotion,and sponsorship by type of outcomes. ! 40

PR8. Total number of substantiated complaints regarding breaches of customerprivacy and losses of customer data. ! 40

PR9. Monetary value of significant fines for noncompliance with laws and regulationsconcerning the provision and use of products and services. ! 40

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Product Responsibility Performance Indicators (continued)

MM7 Sector supplementDescribe significant incidents affecting communities during the reportingperiod, and grievance mechanisms used to resolve the incidents andtheir outcomes. Note: The reporting organisation should describe thedefinition of “significant” used. ! 86

MM8 Sector supplementDescribe programmes in which the reporting organisation has been involvedthat addressed artisanal and small-scale mining (ASM) within company areasof operation. The reporting organisation should describe the definition of“significant” used. ! 86

MM9 Sector supplementDescribe resettlement policies and activities. ! 86

MM10 Sector supplementNumber or percentage of operations with closure plans, covering social(including labour transition), environmental and economic aspects. Describecompany policy, stakeholder engagement processes, frequency of plan review,and amount and type of financial provisions for closure. ! 83

MM11 Sector supplementDescribe process for identifying local communities’ land and customary rights,including those of indigenous peoples, and grievance mechanisms usedto resolve any disputes. ! 85

MM12 Sector supplementDescribe approach to identifying, preparing for, and responding to emergencysituations affecting employees, communities, or the environment. Include adescription of the nature of existing skills, teams who respond to emergencysituations, training, drills, review processes and community involvement.Note: Any significant incidents should be reported under EN13 or MM7. Partial 49

MM13 Sector supplementNumber of new cases of occupational disease by type. Describe programmesto prevent occupational disease. ! 51-57

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Acronyms

ABET Adult basic education and trainingART Anti-retroviral treatmentBMR Base metal refineryCEO Chief Executive OfficerCO2 Carbon dioxidedB DecibelsGJ GigajoulesGLC Greater Lonmin communityGRI Global Reporting InitiativeHDSA Historically disadvantaged South AfricanHIV/AIDS Human immuno-deficiency virus/acquired immune deficiency syndromeICMM International Council on Mining and MetalsIFC International Finance CorporationISO International Standards OrganisationLTIFR Lost time injury frequency rateNIHL Noise-induced hearing lossm3 Cubic metresOHSAS Occupational Health and Safety StandardOz OuncePAYE Pay As You EarnPGMs Platinum group metalsPMR Precious metal refineryREACH Registration, Evaluation, Authorisation and Restriction of Chemical substancesSANS South African National StandardsSHEC Safety, health, environment and communityTB TuberculosisTJ TetrajoulesUIF Unemployment Insurance FundVAT Value added taxVCT Voluntary counseling and testing

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Definitions

In terms of the definitions of terminology for reporting purposes, we have taken into consideration the definitions asstipulated by International Council on Mining and Metals, Global Reporting Initiative as well as national legislation.

Term Definition

ABET level one Level one encompasses basic english literacy and numeracy equivalent to Grade threeat school.

ABET level two Level two is equivalent to Grade five and is literacy and numeracy on a higher level aswell as basic life skills.

ABET level three Level three is the equivalent of Grade seven and is the functional literacy level.

ABET level four Entry level to the National Qualifications Framework. This is equivalent of Grade nine andtraining material covers mathematics, english and pre-rock breaking.

Absentee An employee absent from work because of incapacity of any kind, not just as the resultof work-related injury or disease. Permitted leave absences such as holidays, study,maternity/paternity, and compassionate leave are excluded as well as employees absentwithout permission

Absentee rate Measure of actual absentee days lost as defined above, expressed as a percentage oftotal days scheduled to be worked by the workforce for the same period.

Area protected Areas that are protected from any harm during operational activities, and theenvironment remains in its natural state with a healthy functioning ecosystem.

Area restored Areas that were used during or affected by operational activities, and where remediationmeasures have either restored the environment to its natural state or to a state where itis a healthy and functioning ecosystem.

Areas of high Areas not subject to legal protection but recognized for important biodiversity features bybiodiversity value a number of governmental and non-governmental organizations. These include habitats

that are a priority for conservation (often defined in National Biodiversity Strategies andAction Plans prepared under the Convention on Biological Diversity). In addition, severalinternational conservation organizations have identified particular areas of highbiodiversity value.

Basel Convention The ‘Basel Convention on the Control of Trans-boundary Movements of HazardousWastes and their Disposal’ was drafted and adopted in 1989 and came into effect in1992. The convention works to reduce the movement of hazardous wastes to ensurethat wastes are disposed of as closely as possible to where they were produced and tominimize the generation of hazardous wastes in terms of quantity and level of hazard.

CO2 equivalent Carbon dioxide equivalent is the measure used to compare the emissions from variousgreenhouse gases based on their global warming potential. The Carbon dioxideequivalent for a gas is derived by multiplying the tonnes of the gas by the associatedglobal warming potential. Conversions utilised in the reporting have been sourced fromthe following: Intergovernmental Panel on Climate Change, 2007: Climate Change 2007:The Physical Science Basis. Contribution of Working Group I to the Fourth AssessmentReport of the Intergovernmental Panel on Climate Change [Solomon,S., D.Qin,M.Manning, Z.Chen, M.Marquis, K.B.Averyt, M.Tignor and H.L.;Miller (eds.)]. CambridgeUniversity Press, Cambridge, United Kingdom and New York, NY,USE,996pp.

Coal consumption Total weight of coal used for heating or the generation of energy.

Collective bargaining Binding collective bargaining agreements include those signed by the Company itself oragreements by employer organizations of which it is a member. These agreements can be at the

sector, national, regional, organizational, or workplace level.

Contractor Any individual, company or other legal entity that carries out work, work-relatedactivities, or performs services pursuant to a contract for service. This includes sub-contractors, and personnel working both full time and part time.

Day Calendar day

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Definitions (continued)

Term Definition

Days lost reporting Days lost are counted as the number of calendar days after the day of the incident,during which the employee or contractor is unable to perform all of their routinefunctions or is temporarily assigned to a different job. This includes full days lost, as for alost time injury. Days lost counting ceases if the person ceases employment with thecompany, or the person is permanently reassigned to a new job. Days lost are countedduring the month in which the days lost occurred. Time spent travelling, or waiting fordiagnosis following an incident is not included in days lost, unless the injury becomesclassified as a lost time Injury or a restricted work injury. No lost days are recorded forfatalities.

Direct energy consumption Direct energy consumption is the total forms of energy that enter the Company’soperational boundaries and consumed within our boundaries. Direct energy can appearin either primary (e.g., natural gas for heating) or intermediate (e.g., electricity for lighting)forms. It can be purchased, extracted (e.g., coal, natural gas, oil), harvested (e.g.,biomass energy), collected (e.g., solar, wind), or brought into the Company’s boundariesby other means.

Direct GHG emissions Emissions from sources that are owned or controlled by the Company.(CO2 equivalent)

Disabled employee People who are employed by the Company who have a long-term or recurring physicalor mental impairment which substantially limits their prospects of entry into, oradvancement in, employment.

Disciplinary case A formal enquiry aimed at correcting any breach of the Company’s code for correctiveaction conducted in terms of Lonmin’s Corrective Action Policy and Procedure.

Discretionary spend Discretionary spend is the sum of all spend on capital, consumables and servicesexcluding inter company spend, spend on government, parastatals and municipalities,imported technology and imported material that is not available locally

Discrimination The act and the result of treating a person unequally by imposing unequal burdens ordenying benefits rather than treating the person fairly on the basis of individual merit.Discrimination can also include harassment, defined as a course of comments or actionsthat are unwelcome, or should reasonably be known to be unwelcome, to the persontowards whom they are addressed.

Disease Disease may be defined as a pathological process. The quality which identifies diseaseis some deviation from a biological norm. There is an objectivity about disease which canbe seen, touched, or measured by medical professionals

Disease rates Disease rates are expressed per 100,000 persons at work.

Dismissal The termination of service of an employee following a disciplinary process formisconduct and/or negligence.

Dust fallout rate Particulate matter with varying aerodynamic diameter and mass, deposited due to rapidgravimetric fallout and reported as fallout in mg/m2/day.

Electricity consumed The quantum of energy used on site or in an operation for own consumption, purchasedfrom external electricity suppliers. This excludes use of electricity by surrounding miningcommunities.

Employee An individual who is, according to national law or practices, recognized as an employeeof the Company.

Fatality Work-related injury resulting in death of an employee or contractor.

Forced or compulsory labour All work and service which is exacted from any person under the menace of any penaltyand for which the said person has not offered her/himself voluntarily. The most extremeexamples are slave labour, prison labour, and bond labour, but debts can also be usedas a means of maintaining workers in a state of forced labour. Withholding identitypapers, requiring compulsory deposits or compelling workers, under threat of firing towork extra hours to which they have not previously agreed, are all examples of forcedlabour.

Formal agreements Written documents signed by both parties declaring a mutual intention to abide by whatis contained in the documents. These can include, for example, local collectivebargaining agreements as well as national and international framework agreements.

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Term Definition

Formal committees Formal committees refers to committees whose existence and function are integrated inthe Company’s organizational and authority structure, and that operate according tocertain agreed, written rules.

Freedom of association Workers and employers may establish and join organizations of their own choosingwithout the need for prior authorization.

Fresh water intake Quantum of water obtained from government authorities that has been treated to astandard suitable for drinking and consumed by the operations as well as the quantumof water abstracted or collected by the operation itself from ground water sources andwhich is consumed by the operations. This excludes consumption of water bysurrounding mining communities.

Fuel consumption The quantum of fuel consumed on site derived from burning fuels or in an operation forown consumption.

Gas consumption The quantum of natural or synthetic gas consumed on site or in an operation for ownconsumption

General waste General waste as defined by the Minimum Requirements for Waste Disposal by Landfill(1998) as any waste that does not pose an immediate hazard or threat to health or tothe environment, and includes• domestic waste;• building and demolition waste;• business waste; and• inert waste;

General waste disposed Weight of general waste generated on site or by the operations that is disposed of atto landfill permitted general waste facilities on and off site.

Greater Lonmin Community Communities situated within fifteen kilometer radius of our operations.

Greenhouse gas emissions The emission of greenhouse gases, of which the six main greenhouse gas emissionsare:• Carbon dioxide• Methane• Nitrous oxide• Hydrofluorocarbons• Perfluorocarbons• Sulphur hexafluoride

Grievance Any dissatisfaction or feeling of injustice an employee may have in connection with hisemployment situation that is brought to the attention of management. Where anemployee lodges a grievance against another individual, group of employees, or thecompany, a formal hearing will be conducted and recorded in terms of the company’sCorrective Action Policy and Procedure in order to resolve that grievance.

Hazardous waste The Minimum Requirements for Waste Disposal by Landfill (1998) as any waste thatcontains organic or inorganic elements of compounds that may, owing to the inherentphysical, chemical or toxicological characteristics of that waste, have a detrimentalimpact on health and the environment.

Hazardous waste Weight of hazardous waste generated on site or by the operations that is disposed of atdisposed to landfill a permitted hazardous landfill site.

Hazardous waste Weight of hazardous waste generated on site or by the operations, incinerated off site orincinerated on site.

Historically disadvantaged Any person, category of persons or community, disadvantaged by unfair discriminationSouth African before the Constitution of the Republic of South Africa Act No 200 of 1993, came into

operation. The definition of HDSA includes employees who are disabled, woman oremployees classified as African, Asian or Coloured and who have South Africancitizenship status.

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Term Definition

Human rights Generally recognized human rights are defined by the following five conventions anddeclarations:• United Nations Universal Declaration of Human Rights, 1948• United Nations Convention: International Covenant on Civil and Political Rights, 1966.• United Nations Convention: International Covenant on Economic, social and cultural

rights, 1966.• International Labour Organisation’s declaration on Fundamental Principles and Rightsat Work, 1998

• Vienna declaration and programme of Action, 1993.

Independent A non-executive Director is a person who is not a full or part-time employee of thenon-executive Director Company or holder of an executive office. All non-executive Directors at Lonmin are

regarded as independent by the Board as per the requirements of provision A.3.1 of theCombined Code.

Indigenous people Indigenous people are those whose social, cultural, political, and economic conditionsdistinguish them from other sections of the dominant national community, or who areregarded as indigenous on account of their descent from the populations whichinhabited the country, or a geographical region to which the country belongs, at the timeof conquest or colonization or the establishment of present state boundaries and who,irrespective of their legal status, retain some or all of their own social, economic, cultural,and political institutions.

Indirect energy Indirect energy consumption is the total intermediate energy purchased and consumedconsumption from non-renewable and renewable energy sources including:

• Electricity;• Heating and Cooling;• Steam;• Nuclear energy;• Other forms of imported energy;• Solar;• Wind;• Geothermal;• Hydro energy;• Biomass based intermediate energy; and• Hydrogen based intermediate energy.

Indirect GHG emissions Emissions that are consequences of the activities of the Company but are generated at(CO2 equivalent) sources owned or controlled by another organization.

Red list species An inventory of the global conversation status of plant and animal species developed bythe International Union for the Conservation of Nature and Natural Resources.

Level five environmental Very high impact on environment during which natural processes are permanentlyincidents disrupted to the extent that these processes could permanently cease. Impact on a

scale within or beyond country boundaries.

Level four environmental High impact on environment during which natural process are totally disrupted for theincidents duration of the activity, but resume functioning after the operation has been terminated

with possible irreversible impacts-impact extends locally or regionally, beyond mineproperty.

Level three environmental Moderate impact on environment during which natural processes are notably altered butincidents continued in a modified way with impacts being reversible within lifetime of operation.

Impact confined to mine property

Local Local refers to individuals either born in or who have the legal right to reside indefinitelyin the same geographic market as the operation. Local in the context of the Companyrefers to the greater Lonmin community. This includes businesses and individualsrelocated to be based in the GLC.

Locally-based suppliers Providers of materials, products, and services that are based in the greater Lonmincommunity

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Term Definition

Lost time injuries A lost time injury is a work-related injury resulting in the employee or an contractor beingunable to attend work on the next calendar day after the day of the injury if a suitablyqualified medical professional advises that the injured person is unable to attend work onthe next rostered day after the injury.

LTIFR The total number of injuries resulting in calendar days lost per million hours worked andexcludes medical treatment cases or first aid cases.

Net turn over Total number of employees recruited by the Company, less the total number ofemployees who have exited the Company, including those relating to resignations,dismissals, death (not work related) and retirements in the reporting period.

NIHL Hearing loss obtained when the averaging of the results from pure tone audiogram inboth ears at 0.5,1,2,3 and 4 kilohertz is above 25 decibels.

Non-point sources Weight of sulphur dioxide emitted from the smelter operations due to non-point release.of sulphur dioxide

Number of employees Number of cases of confirmed NIHL accepted and compensated by Rand Mutualwith NIHL compensated insurance during the reporting period.

Number of employees Number of cases diagnosed by a medical practitioner as noise induced hearing loss anddiagnosed with NIHL submitted to Rand Mutual Insurance for assessment and compensation.

Occupational asthma Occupational asthma is asthma caused by workplace exposure and not by factorsoutside of the workplace. Occupational asthma can occur in employees with or withoutprior asthma.

Occupational dermatitis Non-infectious inflammation of the skin provoked by contact with an external chemicalor substance, accompanied by itching, cracking, blistering and ulcerations.

Percentage procurement Percentage of the procurement budget which has been spent (based on paymentsspend on HDSA suppliers made during the reporting period) on suppliers that are categorised as disadvantaged by

unfair discrimination before the Constitution of the Republic of South Africa, 1993 cameinto operation. This includes suppliers that are Black owned (more than 50% BEE equityholding and management), Black Empowerment (more than 25 % but not more than50% BEE equity holding and management) and Black Influenced (not more than 25 %BEE equity holding and management). Excludes white owned companies.

Percentage procurement Percentage of the procurement budget which has been spent (based on paymentsspend on local suppliers made during reporting period) on providers of materials, products, and services that are

based in the greater Lonmin community

Platinosis (Platinum Allergy to complex halogenated salts of platinum is an acquired hyper-sensitivity to theSalt Sensitivity) complex salts of platinum which becomes manifest after a variable period of

symptomless exposure. The clinical characteristics include one or more symptoms andsigns of dermal, ocular and nasal allergy and/or asthma.

PM10 Particulate matter with an aerodynamic diameter of less than 10µm.

PM2.5 Particulate matter with an aerodynamic diameter of less than 2.5µm.

Pneumoconioses A medical diagnosis of parenchymal lung disease with compatible radiological findingsrelated to exposures to any of the following substances:• Asbestos;• Cobalt;• Refractor Ceramic Fibres;• Silica;• Cristobalite;• Other substances known to cause pneumoconiosis.

Point sources of sulphur Weight of sulphur dioxide emitted from the main stack (point) at the Smelter.dioxide

Protected area A geographically defined area that is designated, regulated or managed in terms ofapplicable law to achieve specific conversation objectives.

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Term Definition

Pulmonary tuberculosis Pulmonary tuberculosis of the cardio-respiratory organs of individuals which is confirmedby positive sputa microscopy or culture for microbacterium tuberculosis.

Recycling/reuse of water The act of processing used water/wastewater through another cycle before discharge tofinal treatment and/or discharge to the environment. In general, there are three types ofwater recycling, re-use:• Wastewater recycled back in the same process or higher use of recycled water in the

process cycle;• Wastewater recycled/re-used in a different process, but within the same facility;• Wastewater re-used at another of the reporting organization’s facilities.

Regular performance Performance targets and review are based on criteria known to the employee andand career development his/her superior. This review is undertaken with the knowledge of the employee at leastreview once per year. It can include an evaluation by the employee’s direct superior, peers, or a

wider range of employees.

Security personnel Individuals employed for the purposes of guarding property of the organization, crowdcontrol, loss prevention, and escorting persons, goods, and valuables.

Severity rate The total number of days lost due to the lost time injuries per million hours worked.

Silicotuberculosis An X-Ray consistent with silicosis as well as positive sputa microscopy or culture forMycobacterium tuberculosis.

Total energy consumption Total direct energy consumption is equal to the total direct primary energy purchasedand the direct primary energy produced, excluding direct primary energy sold.

Total greenhouse gas Sum of direct and indirect emissions in tonnes of CO2 equivalent.emissions (CO2 equivalent)

Women in mining The total number of all women who are South African citizens and who work in thetechnical fields associated with mining (core operations), excluding all support functions.

Woman at the mine The total number of all women who are South African citizens and who work in thetechnical and non-technical fields, including all support functions.

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Feedback On 2008 SustainableDevelopment ReportsWe welcome your feedback on our 2008 Sustainable Development Reports, or on our sustainability performance. Itwould contribute to the sustainability of our operations and the quality of our reports. Please respond either bycompleting this form online (www.lonmin.com); faxing this completed form to +44 20 7201 6150;, providing generalcomments to Rob Gurner, Investor Relations Manager on [email protected]; or delivering this form to theSustainability Department in Marikana, South Africa. Please mark the applicable boxes with a !.

Have you read the Summary or Web-based Sustainable Development Reports?

Summary

Web-based

Both

None

The questions below apply to the reports that you have read.

How would you rate the quality of the reports?

Excellent

Good

Satisfactory

Poor

Do you believe that the information presented in the reports is credible?

Credible

Not credible

Sometimes credible

Do you believe that the information presented in the reports is sufficiently comprehensive and clear?

Very comprehensive and clear

Comprehensive and clear

Satisfactory

Hard to understand

Incomprehensible

Do the reports address issues of greatest importance to you?

Comprehensively

Partially

Not at all

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Feedback On 2008 SustainableDevelopment Reports (continued)

What issues do you feel have been left out of Lonmin’s 2008 reports? Why do you consider these issues to be

important?

Which stakeholder group do you belong to?

Employee

Shareholder

Customer

Supplier

Community

Public authority

NGO

Other

Would you like to be consulted when we prepare our next Sustainable Development Reports? If this is the case,

then please provide your details below.

Yes

No

Would you like to be included on our mailing list for our Sustainable Development Reports? If this is the case, then

please provide your details below.

Yes

No

Your personal details (voluntary):

Do you have any comments about our reports in general?

Lonmin Plc4 Grosvenor Place, London SW1X 7YL

www.lonmin.com

lonmin 2008 web-based sustainable development report

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