IDENTIFYING RISKS AND OPPORTUNITIES RELATING TO CLIMATE CHANGE

Sibanye recognises global warming and climate change as a reality, and is committed to contribute to a global solution. In 2014, a workshop was conducted to evaluate and reassess the risks and opportunities relating to climate change. The primary purpose of the workshop was to review the latest developments on climate change and carbon management with the intention of qualitatively assessing risks and opportunities for Sibanye.

Potential risks are:

• financial (such as carbon tax implementation and electricity price escalation);
• business (such as sector emission reduction goals and Group carbon budgets); and
• meteorological (such as changes in rainfall intensities and key commodities scarcity).

Opportunities identified include:

• revenue recycling (such as tax incentives and rebates for carbon emissions reduction activities);
• renewable energy (such as solar); and
• alternative energy (such as methane).

In order to minimise risks and to take further advantage of available opportunities, Sibanye consults the greenhouse gases management handbook developed in 2014 as an essential tool for companies operating in South Africa, especially in light of the dynamic regulatory environment. The handbook is useful in that it gives clear guidance on calculating and managing greenhouse gas emissions, advice on improving existing greenhouse gas management systems and recommendations for dealing with proposed regulatory requirements.

Sibanye has also partnered with the National Business Initiative and government’s Private Sector Energy Efficiency (PSEE) programme to explore further actions in terms of four work streams (scheduled to begin in 2015):

1. Carbon footprinting
2. Regional climate change survey update
3. Carbon management protocol development
4. Development of a five-year pollution prevention plan

We continue to participate in the climate change debate nationally and internationally. Through the Chamber of Mines, we have provided input and comment on climate change and climate change management.

South Africa is committed to contributing to greenhouse gas mitigation efforts in order to keep the rise in global mean temperature well below 2°C. In order to fulfil this obligation and in developing a comprehensive policy framework for responding to climate change, government has developed the National Climate Change Response Policy (NCCRP), and has indicated its intention to introduce a carbon tax from 2016. National Treasury released a carbon offsets paper for comment in 2014, and is considering these comments with a view to finalising the offsets allowances for the various sectors. Further to this, in March 2014, South Africa’s Minister of Environmental Affairs gave notice of two amendments to the Air Quality Act under sections 57(1) and 57(1) (a) respectively: Declaration of Greenhouse Gases as Priority Pollutants – Section 29(1) and publishing National Pollution Prevention Plans (PPP) regulations – Section 29(3), 53(o) and (p). These regulations require any company emitting greenhouse gases in excess of 100,000tCO₂e per annum to prepare, submit and implement a PPP every five years. As Sibanye emits more than 100,000tCO₂e per annum, the Group will be subject to these regulations.

The NCCRP states that it is a strategic priority to find cost-effective and beneficial mitigation policies, measures and interventions that lead to a reduction in emissions below the country’s business-as-usual trajectory as measured against a benchmark peak, plateau and decline greenhouse gas emission trajectory. One of the key elements in the overall approach to mitigation is identifying desired sectoral mitigation contributions. This involves defining desired emission reduction outcomes for each significant sector and sub-sector of the economy based on an in-depth assessment of the mitigation potential, best available mitigation options, science, evidence, and a full assessment of the costs and benefits. The mining industry, represented by the Chamber of Mines Environmental Policy Committee, is involved in these processes.

Greenhouse gas mitigation potential analysis has been conducted by South Africa’s Department of Environmental Affairs, and has identified and analysed mitigation options in key economic sectors. In the process, an updated projection of national greenhouse gas emissions into the future has been developed, along with marginal abatement cost curves for key sec tors and subsectors. The marginal abatement cost curves provide a set of options to the gold mining sector to reduce carbon emissions. They are valuable tools in understanding emissions trading, driving forecasts of carbon prices, prioritising investment opportunities, and shaping policy discussions. The marginal abatement cost curve summarises the estimate of the realistic volume and costs of opportunities to reduce greenhouse gas emissions.

A socio-economic and environmental assessment of the identified mitigation options has also been conducted, leading to the development of national abatement pathways and an assessment of the wider macroeconomic impacts of implementing a broad set of mitigation options.

We fully understand the financial implications of climate change, such as carbon tax, the introduction and switch over to renewable energy, among others. The effect on our profitability has been incorporated into budgeting and other planning processes. A levy of R0.035 per kWh is payable on the electricity we purchase from Eskom. Provision for this levy was made in our 2014 budget cycle.