Download Annual Report 2006 - Foskor

CHIEF EXECUTIVE OFFICER’S REVIEWWe enrich ourphosphate rockwith the additionof sulphur.The cause of the fire was attributed to friction andhigh dust content from the sulphur received fromthe Middle East. The structures were subsequentlyrepaired and put to use.Post the financial year closure, on 7 May 2006, atransformer at the old phosphoric acid plant caughtfire, causing substantial damage to electrical cables;and Business Interruption is estimated to be as muchas 50 days.It is clear that safety and environmental complianceand responsibility should remain the key focus areafor the Richards Bay operation for the year tocome.MINE CLOSURE COST PROVISIONThe Group is aware of the increasing emphasison environmental accounting and accountability.Management is continually assessing and monitoringthe various environmental issues facing the Group.Based on a Mine Rehabilitation and Closure CostAssessment done by African EPA during 2005,the contingent liability has been recognised for theissuing of guarantees to the Department of Mineralsand Energy in terms of Regulation 54(2) of theRegulations promulgated in terms of the Mineralsand Petroleum Resources Department Act, 2003(Act 28 of 2004). The recommended mine closurecost at this stage (ignoring salvage value) is R223m.A commitment has been made to the Department ofEnvironmental Affairs with respect to the phased indelivery of guarantees. The value of the Trust as at31 March 2006 amounts to R41.2m.PROCUREMENT AND LOGISTICSDuring the first quarter of the year the internationalsulphur market was high but during the latter period,sulphur prices softened, which had a positive impacton the final product costing. Due to high productionthe volume of usage in the Richards Bay divisionwas higher by 9% than for the previous 12 monthperiod.high production of phosphoric acid at the RichardsBay plant.Once again, the focus of procurement has beenon promotion of Black Economic Empowerment(BBBEE). During the year under review, directpurchases from BBBEE suppliers have reached40% of discretionary procurement for the wholeGroup (excluding reagents and strategic rawmaterials on total purchases). The total spend wasR677m and the BBBEE spend came to R270m. Thisachievement is attributable to clear dedication ofFoskor management to ensuring black participationin the main supply chain of Foskor.OUR HUMAN CAPITALEMPLOYMENT EQUITYIn line with the Employment Equity Act the FoskorGroup has adopted a formal Employment EquityPolicy. The policy recognises the importance ofchanging the company’s demographic profile,in line with the demographics of the areas inwhich it operates, to create a diverse and skilledemployee workforce. Employment Equity targetsset by Employment Equity and Skills DevelopmentCommittees consisting of Management, OrganisedLabour, Women and Disabled Employeesrepresentatives are approved by the Boardof Directors. These targets form part of theperformance management targets of top and seniormanagement. Although the planned employmentequity targets, for the Group as a whole, for theyear under review, were substantially met, it isproving a major challenge to attract HistoricallyDisadvantaged South Africans (HDSAs) toPhalaborwa and to retain them. The shortage ofartisans in the country is also having an impacton the Group’s ability to attract and retain skilledartisans and this is one area where the achievementof the set targets is proving extremely challenging.This was somewhat alleviated by the developmentof in-house talent in line with the Section 28 artisantraining programme.During the period under review ammonia marketswere stable and quite high. Procurement of ammoniawas carried out on annual contract from Sabic andat the time when rates were on a downward trend.During the period under review, 40 000 tons ofammonia were purchased, which is more or less thesame as that of the previous 12 month period.Total shipments of Rock to Richards Bay were 10%higher than for the previous financial year due toSKILLS DEVELOPMENTThe Workplace Skills Plan and annual trainingreports for the operations in Phalaborwa andthe plant in Richards Bay are set, monitored andapproved by the two Employment Equity and SkillsDevelopment Committees respectively and thensubmitted to the relevant Sector Education andTraining Authority (SETA) – which in this caseis the Mining Qualifications Authority (MQA) orthe Chemical Industries Education and Training8