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Centre for Environmental Rights

African Rainbow Minerals (ARM)Mining

ARM is one of South Africa’s largest mining groups. The company mines ferrous metals, iron ore, manganese, platinum, and coal.

Summary

ARM mentions climate risks as a material matter and outlines details of the impact of medium- to long-term climate risks on its business. Despite this, ARM does not sufficiently set out a strategy to address climate risks and does not disclose the scenarios it may have used to inform the strategy. This makes it difficult to assess the effectiveness of ARM’s strategy to address its transitional and physical risks.

ARM has no long-term target for reducing its greenhouse gas emissions and has not set an internal carbon price to encourage a reduction in emissions. The use of carbon pricing can help shareholders improve their investment decisions, and aid in planning for the imposition of a Carbon Tax.

Emissions Score Card

2.11 MtCO2e
Total Scope 1 and 2 Emissions (South Africa, 2018)
0.4%
Contribution to South Africa’s total emissions (estimated)
8
Ranking out of 10 emitters assessed (1 = highest)
2.11 MtCO2e
Total Scope 1 and 2 Emissions (Worldwide)

Findings

Governance

Is the company a supporter of the TCFD?
No

“We are expanding our assessments to include risks and opportunities across our value chain and to meet the increasing expectations of investors communicated, for example, through the recommendations of the Task Force on Climate Related Financial Disclosures (TCFD) and the Transitions Pathways Initiative (TPI).” – SR 2018, p 89

Who has oversight of climate-related risks and opportunities?
Board

Disclosure explicitly mentions that the board is responsible for overseeing climate risk. Board responsibility for “sustainability”, “environmental issues”, or “ESG” is not sufficient.

“The ARM Board is ultimately responsible for sustainable development in the company” – IAR2018, p 51. But CC is not explicitly disclosed.

“The Social and Ethics Committee monitored and reviewed the management of Climate change” – IR 2018, p 135

Does the remuneration policy include performance metrics used to measure and manage climate-related risks?
No

Remuneration policy does not include climate-related performance metrics.

Employees in the relevant functions at operations, such as engineers and production teams, are incentivised against energy targets and KPIs linked to climate change emissions reduction initiatives.” – SR 2018, p 25

Strategy

Does the company identify climate change as a material business risk?
Yes

Climate risks are explicitly mentioned as a material or principal risk in the annual or integrated report.

Material matters include “ensuring responsible stewardship of natural resources”, which has climate change as a component. – IAR2018, p 40

The most material environmental matters include climate change – IAR2018, p 133; SR2018, p 85

Has the company outlined the risks and opportunities from climate change?
Mainstream reports

Detailed disclosure, including timeframes and impacts, with timeframes in mainstream annual reporting

“Primary climate change risks” and “opportunities arising from climate change” are listed with some detail on impact but only “medium- to long-term” provided as timeframe. – SR 2018, p 89

Does the company describe how its strategy might change to address climate change risks and opportunities?
Limited

Some disclosure of how climate risks and/or opportunities are incorporated into strategy, but with insufficient detail.

“How we manage carbon emissions” includes some disclosure eg “ARM’s energy and climate change strategy identifies and develops opportunities for long-term achievable emission reduction with a focus on energy efficiency initiatives, investigating alternative energy sources, investigating new technology and diversification into less energy-intensive products.” – SR 2018, p 90

Does the company describe the climate change scenarios used to inform strategy and financial planning?
No

No disclose of scenarios in mainstream reports.

Risk Management

Does the company have a process to manage climate-related risks?
Yes

Climate-related risks form part of company-wide risk management programme or specific climate-related risk management process.

“ARM conducts annual climate change and water workshops at each operation to explore evolving climate change and water risks and opportunities…. This information feeds into ARM’s ERM process and informs our strategic planning processes.” – SR 2018, p 89

Metrics and Targets

Has the company set GHG emission reduction targets?
Absolute

The company has set an absolute emission reduction target.

“During F2018, we set a more ambitious target to F2020 of achieving a 5% absolute reduction of Scope 1 and 2 emissions against F2014 due to emission reduction initiatives (excluding divestments).” – SR2018, p 91

Is there a long-term GHG emission reduction target?
No

There is not an absolute or intensity reduction target over five years in duration.

Does the company disclose its GHG emissions?
Scope 1, 2 and 3

Companies report on their Scope 1, 2 and 3 emissions for the current year and at least the previous year.

Scope 3 emissions are only given for 2017, as “Upstream and downstream data for the calculation of F2018 Scope 3 emissions are currently in the process of being collected.” – SR2018, p 92

“Our most material sources of Scope 3 emissions arise from processing of our sold products (particularly iron ore), transport and distribution (both upstream and downstream)” – SR2018, p 92

Does the company provide their internal carbon price?
No

No internal carbon price is disclosed.

Additional Information

Does the company disclose the extent of liability under the carbon tax?
Partial

Liability is disclosed without additional information.

“The tax poses a low residual impact for ARM in the first phase up to 2020 but costs will increase once free allowances are removed beyond 2021.” – SR2018, p 88

Does the company disclose its participation in the DEA's voluntary carbon budget programme?
Yes

Participation is disclosed in mainstream reports.

“ARM’s carbon budget has been allocated for 2016 to 2020 under the policy and we are monitoring and reporting on our compliance with the budget.” – SR 2018, p 88

Disclosures Considered

  • Integrated Annual Report 2018
  • Sustainability Report 2018
  • Corporate Governance Report 2018
  • Annual Financial Statements 2018
  • Sustainability Data Tables 2018
  • Carbon Disclosure Project (CDP) 2018 Climate Change submission

This report is accurate as at 01 August 2019.

Company Profile

Locations

South Africa

Key Shareholders

  • Motsepe Family (40.2%)
  • Public Investment Corporation (6.12%)
  • African Rainbow Minerals Limited (5.73%)
  • Kagiso Asset Management Pty Ltd (4.92%)
  • Allan Grey (Pty) Ltd (4.37%)
  • Fairtree Capital (Pty) Ltd (3.7%)