Natural capital

Natural capital refers to our natural assets including water, land, air, renewable and non-renewable resources.

The natural capital components are interconnected and provide us with goods and services that are wide-ranging and diverse. The collective benefits provided by the resources and processes supplied by natural capital are essential for our survival and well-being and form the basis of all economic activity.

Our context

We comply with relevant environmental legislation and integrate environmental management into our business practices from the planning stage of our projects. This ultimately helps to minimise the influence of our activities on the environment in which we operate. We have environmental management programmes in place and our environmental impacts are monitored, audited and reviewed by management to evaluate the success of our interventions before mitigation measures are considered. Management also ensures that environmental risks are identified and managed through effective controls and procedures as identified in the risk register.

Detailed Environmental Management Programmes (EMPs) are prepared which address the management and mitigation of impacts at each of the operations. At Crown Gold Recoveries (CGR), base EMPs for the Crown, Knights and City operations are supplemented with detailed site-specific documents which are prepared for each reclamation site that is reclaimed according to the mining work programme. There is a detailed EMP for the Ergo operations, revised in 2012, which takes cognisance of the impacts associated with the reprocessing of the Benoni dumps as well as the Elsburg complex. The ERPM EMP addresses the impacts associated with mining activities at this operation and was also recently amended to reflect the current status at this operation. Additionally, for ERPM, detailed closure plans, aligned with the EMP have also been prepared and implemented. The closure plans address in detail the systematic closure of all mining areas and associated activities superfluous to the current – as well as possible future – mining activities at ERPM.

Our approach

Our environmental management systems comply with legislation and regulations and endorse the principle of integrated environmental management as contemplated by the National Environmental Management Act,1998, the principal suite of legislation regulating the environment in South Africa. Compliance at our operations is measured taking account of all applicable regulatory requirements. In addition, and to effectively manage outcomes, we use the following mechanisms:

• Internal audits and self-inspections are conducted;
• External audits are conducted;
• Following from the above, non-conformances are identified and recommended actions noted. Responsibilities and time frames for the completion of such actions are also prepared;
• The reports and recommendations are discussed at the regular production/management meetings held at each operation;
• Progress on action is measured and discussed at a formal environmental co-ordination meeting which is held on the last Tuesday of each month; and
• All of the above are integrated into a geographic information system database co-ordinated by the appointed DRDGOLD compliance manager.

The following management actions are actively applied to lessen the impact that our activities may have on the environment:

• A structured plan/programme is in place to progressively vegetate all exposed areas on currently dormant and operational tailings dams;
• Active de-silting of return water and pollution control dams associated with the tailings dams;
• Maintaining and, where required, establishing effective storm water control measures, specifically at the tailings dams and reclamation sites;
• Sealing redundant shafts, specifically at ERPM, and making them safe;
• Maintaining active dust control measures to minimise dust fall-out;
• Active liaison with all stakeholders and I&APs;
• Implementing and managing a structured programme aimed at progressively cleaning all historical slime spills; and
• Representation on the local dust forum which meets quarterly, and the Klip River and Blesbok Spruit water forums.

Stakeholder engagement on environmental issues

The proximity of our operations to local communities means they can be significantly affected or inconvenienced, mainly by dust. We have established relationships with the leaders of these communities and engage with them regularly.

Before we embark on any project which will affect our stakeholders, we engage in a public participation process with I&APs.

Improving land use and management rehabilitation and seeking closure

In FY2013, some 4 803 ha of land was disturbed by our mining and processing activities. Our extensive footprint includes historic mining sites extending as far back as the 19th century. Many of the environmental issues experienced by DRDGOLD are a legacy of past mining activities.

However, at DRDGOLD we take our environmental responsibilities seriously and aim to rehabilitate the land we have used or disturbed. In FY2013 we spent R67.9 million (FY2012: R68.1 million including Blyvoor until May 2012) on rehabilitation.

Today, our policy is to mitigate dust on dumps and deposition sites as we proceed. DRDGOLD has two nurseries in the Crown and Brakpan areas where indigenous plants, suitable for the prevailing conditions on mine dumps, are cultivated and cared for by members of the local communities. The combined cost of these projects is R3.1 million (FY2012: R2.7 million). A total of 75ha (FY2012: 20ha) of top surface has been vegetated and 46ha (FY2012: 8.6ha) of side slopes vegetated.

Under our guidance members of the local communities are also being employed to remove alien plant species and replace them with plants with root systems that bind the soil, preventing water run-off.

Land rehabilitated

Legislation dictates that mining companies must rehabilitate the land on which they work to an aesthetically acceptable standard, and environmental management plans must outline details of closure arrangements, including the financial provisions that have been made to implement the plans.

All DRDGOLD operations have EMPs detailing plans for closure. In addition, detailed and site-specific closure plans have been prepared as follows:

• A detailed base closure plan for the ERPM operation encompassing the "cradle to grave" closure of the operation;
• Pursuant to the above, three detailed closure plans addressing the three phases of the closure of ERPM, taking account of future opportunities;
• A detailed base closure plan for all plants and reclamation sites associated with CGR;
• Site-specific closure plans for historical sites at CGR where reclamation has been completed, as well as sites where reclamation and final rehabilitation will be completed in the near future;
• A detailed base closure plan for the plant and reclamation sites associated with the operations of Ergo; and
• Site-specific closure plans for historical sites at Ergo where reclamation has been completed.

During FY2013 there have been a few highlights in terms of the management of environmental issues. The following are worthy of note:

• The process for closure at a number of historical sites associated with CGR operations and Ergo was initiated. In addition to these historical sites, a number of more recently-worked sites are also currently being rehabilitated for final closure and "hand over" to the land owners. It is anticipated that by the end of FY2014 a total of 30 reclamation sites at CGR and Ergo will have been closed;
• At ERPM, a total of six redundant shafts were capped and sealed as required by the DMR;
• On the Rooikraal and Crown tailings complexes, long-term sustainable vegetation cover was established. A total of 75ha of the top surface of Rooikraal was vegetated and a total of 46.0 hectares on the side slopes of the Crown complex;
• 115ha of dust netting was installed on various tailings dams to reduce wind speed and minimise dust from any wind direction; and
• The dust control measures that were implemented and that have been maintained have resulted in a significant reduction in dust fall-out compared to FY2012.

1. ^* No longer part of the DRDGOLD group.

The following challenges, among others, were encountered during FY2013:

• Ensuring an adequate and consistent water supply to irrigate the areas on the tailings dams that were vegetated, as well as sufficient water for active dust suppression in operational areas;
• Effective pollution control and water management at the CGR tailings complex, in particular, due to the silting of the return water/pollution control dams;
• Theft of equipment and infrastructure used to manage rehabilitation activities;
• Damage on vegetated and rehabilitated areas due to fires;
• Storm damage to the access ramps at the various tailings dams which, on occasion, restricted access to the sites for rehabilitation work;
• Wet and inaccessible "basin areas" on the tops of the decommissioned tailings dams at the CGR tailings complex which delayed rehabilitation activities that were planned;
• Dust blown from active reclamation sites during windy periods;
• Closeness of local communities; and
• Spillage during commissioning of the new pipeline.

1. ^* FY2011 and FY2012 totals include Blyvoor until end May 2012.
2. ^LA Limited assurance.

Direct and indirect emissions

Direct emissions of CO₂ (scope 1 emissions) are those for which DRDGOLD is directly responsible: the means of combustion are owned by the company and include all the emissions from liquid and waxy fuel consumed on site. In FY2013 this figure comprises the diesel purchased and consumed by Ergo.

The total scope 1 emissions equal 4 227 tons of CO₂ and equivalents, representing a potential carbon tax liability of R635 050 at R150 per tonne. However, it is recognised that the specifics of the proposed carbon tax are still a long way from being finalised and will, in all likelihood, differ substantially from this figure. Thus, this number is for illustrative purposes only. A final decision on carbon taxation has not yet been made by the South African government.

Indirect CO₂ (scope 2 emissions) refers to emissions generated in the production of the electricity used by DRDGOLD.

Travel emissions (scope 3 emissions) are based on reported kilometres claimed by DRDGOLD employees. These are included in total CO₂ emissions. Air miles are unreported and are excluded from these calculations.

DRDGOLD showed a consistent reduction in total carbon emissions year-on-year from 2009 to 2011 and a marginal increase in FY2012, largely as a function of increased emissions from Eskom per unit electricity sold. As a result of restructuring, the size of DRDGOLD is significantly smaller, resulting in an almost 50% decrease in emissions across the board.

In South Africa, electricity is supplied by Eskom, which generates approximately 89% of its power at coal-fired power stations, resulting in significant indirect emissions for South African customers. The emission factors related to the use of Eskom power change subtly year-on-year, but since these all reflect the actual emissions expected for that year, data is not analysed for 2012 factors.

The emission factor for CO₂ of 1.2kg per kWh has been used as recommended by the United Nations Framework Convention on Climate Change.

1. ^LA Limited assurance.

DRDGOLD uses cyanide in the gold liberation process. In accordance with the requirements of Section 9 of the MHSA, mandatory Codes of Practice on cyanide management are in place at all DRDGOLD operations. The transport, offloading and use of cyanide, as well as training and safety requirements to ensure the safe handling of cyanide are managed according to the Code of Practice which is strictly adhered to.

1. ^* Figures include Blyvoor until end May 2012.
2. ^LA Limited assurance.

Nuisance dust prior to and during RECLAMATION

Modern-day retreated tailings are deposited according to stringent regulations when compared with deposits in the 1970s. However dust, especially during the winter months on the Witwatersrand, remains one of our most challenging issues. In December 2012 Government Notice 1007 was published on the Draft National Dust Control Regulations for South Africa. Our dust suppression measures are in line with this regulation. Dust monitoring is performed monthly by SGS Environmental Services and quarterly dust monitoring meetings are held at the Crown site to discuss the quarter's results.

Windblown dust fall-out is measured and monitored based on the American Society of Testing and Materials Standard Method for collection and analysis of dust fall (ASTM D 1739). A simple device, consisting of a cylindrical five-litre plastic container (bucket) half-filled with de-ionized water is used. This container, which is placed within a bucket stand on a 2.1 metre galvanized steel pole, is exposed to the elements for cycles of one calendar month (30.3 days). The buckets are collected monthly and the de-ionized water within the container treated with an inorganic biocide to prevent algae growth. At the laboratory the buckets are rinsed and de-ionized to remove all residue from the sides of the bucket. The bucket solids are processed through a coarse filter to remove insects and grit, and then filtered through a pre-weighed paper filter to remove the dust fraction. This dust fraction as well as the filter are both dried and gravimetrically weighed and analysed to determine the insoluble dust fraction which is then reported as dust fall-out in milligrams per square metre per day, averaged over a one-month period.

Dust complaint registers are kept at the operations. We log and register all complaints for attention.

During FY2013, a total of 115ha of high-risk areas were stabilised using netting which proved very effective. The re-vegetation programmes for the Crown and Ergo tailings dams were expedited and significant progress made. This programme will be further advanced during FY2014. On the Ergo complex, numerous trials using chemical dust suppressants were undertaken. We make use of water carts to wet roads in the areas where reclamation activities are being undertaken. The measures implemented have been effective when compared with the FY2012 dust fall-out results, as shown below.

Pollution caused by pipeline leakage

The length and route of our pipelines require that we dedicate significant resources and time to pipeline monitoring and maintenance. To mitigate the risks of leakage, new pipes were installed along the route from Crown to Ergo via City Deep as well along a number of the other pipeline routes. There is a programme in place to systematically replace any old and/or worn pipes. A 24/7 telemetric pressure, flow-monitoring system is in place to indicate leaks.

In addition, a pipeline and spill management programme has been implemented which includes daily patrols of all major pipeline routes, a reporting mechanism to immediately report any leaks encountered and a preventative maintenance team which immediately and pro-actively addresses leaks to prevent a minor problem escalating into a major incident.

AMD and water pollution

The central basin, created during decades of mining on the Witwatersrand, is currently flooding and water is expected to decant around ERPM Cinderella Shaft unless preventative measures are taken. This water, known as AMD, is contaminated with metal sulphides.

Government has rejected the proposal to contain the situation which was submitted by various mining companies, including DRDGOLD, opting instead to contain the situation itself and appointing the TCTA as the main contractor to implement its plan. DRDGOLD is collaborating with the TCTA and has placed both land and infrastructure at its disposal from where it can pump AMD and construct a treatment plant. The TCTA pump station and plant is expected to come into operation early in 2014. The plant will treat water to a "grey" standard before releasing it into the environment. DRDGOLD has negotiated an option to purchase up to 30Ml grey water per day from TCTA should it need to do so.

During FY2013 Crown and Ergo each had two spillage incidents. At Crown the return water dams overflowed at one of the main tailings complexes, commonly referred to as GMTS. The following action was immediately taken in order to prevent a recurrence of this incident:

• The return water dam at GMTS West was de-silted and this has significantly increased the retention capacity of the complex;
• The existing pollution control paddocks adjacent to the N12 were de-silted and additional paddocks established; and
• The spill into the water resource was cleaned, a close-out survey conducted and the results forwarded to the National Nuclear Regulator and DWA as required in terms of the Crown incident reporting protocol.

The return dams at another tailings complex associated with the Crown operations (Mooifontein) also overflowed and the pump station was subsequently upgraded to prevent future occurences. Two pollution incidents associated with pipe bursts and dam overflows at the Ergo operations were also addressed during the year and the affected areas were cleaned. We have also applied to have all Crown's existing water usage licences and permits consolidated into an Integrated Water Usage Licence (IWUL).

The status of the Ergo IWUL is as follows:

• The IWUL has been issued by DWA ;
• An internal audit of the IWUL was conducted during FY2013 as required;
• An external audit of the IWUL was also conducted during FY2013 as required.
• As a result of the above audits, an action plan has been compiled and implemented to ensure compliance with all IWUL conditions; and
• A compliance inspection was conducted by the DWA.

DRDGOLD has received authorisation from the DWA to utilise nearby waste water treatment works to replace potable water in its circuits and to irrigate the vegetation on its tailings dams. Once we have received the various authorisations we will begin construction of the pipelines that link our workings with the plants later this year. This source will bring about a significant saving in water costs and also reduce our usage of potable water.

1. ^* Figures include Blyvoor until end May 2012.
2. ^LA Limited assurance.

To address legitimate concerns of stakeholders and affected parties DRDGOLD will:

• Continue to engage with all stakeholders and I&APs within the existing, formalised mechanisms, as well as any others deemed appropriate and feasible;
• Note legitimate concerns raised by stakeholders and address them;
• Maintain accurate records of any and all engagements with stakeholders in an issues and response register;
• Strive to continually improve its environmental performance through appropriate resourcing and the application of "best practice" principles and technologies;
• Implement and expand the current compliance mechanism tool; and
• Close out completed sites and return land to the owners for development.

DRDGOLD did not receive any material fines in respect of non-compliance with laws and regulations during FY2013.

DRDGOLD believes that, commensurate with its formal Environmental Policy, it is pro-active in effectively managing environmental impacts at its operations. Mindful that careful monitoring of policies should result in continued improvements, DRDGOLD will, as part of its Environmental Management System, aim to remain pro-active and continue to develop measures over time.