Petra Diamonds Limited Sustainability Report 201242COMMUNITYCommunityEnhancing our communities continuedGroup social spend summary continuedA number of the Company's CSI projects are undertaken in partnership with local, Government and industry stakeholders. The success of these projects is dependent not just on ongoing support and funding from Petra, but also the continued commitment of these stakeholders.Projects - TanzaniaSince the mine's inception in 1940, Williamson has played a very important role in supporting its local communities. Funds are made available for community projects through three sub programmes: community development, community initiatives and community support.During FY 2012, projects supported by these three programmes included:$ numerous upgrades to local school facilities and buildings;$ technical support to the Tanzania Police (Shinyanga region) in improving their community policing; $ seed funding for various cultural heritage projects; $ continued contributions towards the Dar es Salaam University, Engineering Faculty graduate ceremonies; $ new equipment and upgrades to the Mwadui hospital, including the installation of a state-of-the-art X-ray machine and the purchase of a new ambulance;$ provision of infrastructure, logistics and manpower to run a mother and child health clinic as part of the Mwadui Reproductive Child Health project, a collaboration between the Mwadui hospital and Tanzanian Government;$ continued support for small businesses through the provision of free property within the Mwadui village; and $ a number of local road upgrades and agricultural improvement projects.In addition to these projects, one of the major community initiatives undertaken at the Williamson mine is the provision of water to the Mwadui township and neighbouring villages through the installation of controlled water access points. Williamson also owns and operates the Mwadui primary school which provides free English primary school education to 460 learners. The school is the only primary school in the region with formalised computer training and a computer centre.Generating economic benefitsTaxes and royalties make a significant contribution to the countries in which we operate. We support the principles of transparency and believe that publishing details of our tax payments to Governments can help improve community support for the activities of businesses such as ours. Although only one country where we operate is a member of the Extractive Industries Transparency Initiative (Tanzania), we are committed to complying with the initiative's requirements across all our operations. The Group paid a total of US$51.0 million in taxes and royalties in FY 2012.The multiplier effect of our mines means that whilst Petra directly employs 4,768 permanent employees and 807 contractors, a significantly larger number of people are dependent on our operations. In South Africa, it is estimated that the overall number of dependants on wages earned from the mine is more than 26,000 people. In Tanzania, it is estimated that the overall number of dependants on wages earned from the mine is more than 7,000 people. The Group spent US$110.4 million on wages in FY 2012.In addition to benefiting from stable employment, Petra's workforce enjoys relatively high standards of living. This is particularly the case at the Williamson mine in Tanzania, where conditions of employment include additional benefits such as the provision of housing and accommodation, free access to water, subsidised healthcare (extended to the families of employees), free primary school education for children, transport to the workplace and the provision of educational support through a dedicated fund. Value added statementFor the year ended 30 June 201230 June 2012US$ million30 June 2011US$ millionRevenue316.9220.6Paid to suppliers for material and services138.577.7Value added178.4142.9Income from investments8.84.9Wealth created187.2147.8Wealth distribution:Employees30 June 2012US$ million30 June 2011US$ millionGross salaries, wages and benefits 110.475.0Providers of capital7.84.5Finance cost7.84.5Dividends paid00GovernmentsTotal tax paid51.030.5Reinvested in the Group18.037.8Depreciation, amortisation and capital items178.8133.2Retained earnings(160.8)(95.4)187.2147.8Taxes and royalties:South AfricaFY 2012US$ millionFY 2011US$ millionPAYE18,302,480 9,424,475UIF1,042,440 779,938SDL1,018,117 638,155Diamond royalties1,437,915 858,995VAT23,766,014 16,765,954Total 45,566,966 28,467,517TanzaniaFY 2012US$ millionFY 2011US$ millionPAYE1,587,241 1,165,855SDL394,164 335,881Diamond royalties580,641 484,000VAT 2,889,272 2,867,167Total5,451,317 6,354,639BotswanaFY 2012US$ millionFY 2011US$ millionPAYE142,730 105,350Total 142,730 105,350The Company did make certain charitable donations during FY 2012, but not of a material financial size. The Company did not make any political donations during FY 2012.The Company received no financial assistance from Governments in FY 2012.
Petra Diamonds Limited Sustainability Report 201243COMMUNITYCommunityEnhancing our communities continuedLocal procurementIn line with our commitment to supporting local economic development, our operations aim to use local suppliers for goods and services where possible.In FY 2012, Petra's South African operations spent US$172 million (ZAR1.4 billion) on goods and services, of which 37% was spent with companies owned or operated by HDSAs. We help local HDSA/BEE businesses to develop their commercial offerings so that they can be added to the Company's future preferred suppliers list. The nature of our operations means that we need to ensure that all services and products are of a high standard, comply with the necessary health and safety requirements and are available with minimal lead times to avoid disruptions to production. Petra's target for FY 2013 HDSA procurement spending is 30% capital, 60% services and 40% consumables.In FY 2012, Williamson spent US$28.9 million on goods and services, of which 65% was spent with local and regional suppliers.In FY 2012, Petra Diamonds Botswana spent US$3.1 million (BWP22.3 million) on goods and services, of which 74% was spent with local and regional suppliers.Additionally, Petra has established its core marketing operation in Johannesburg. This supports the South African Government's aim to stimulate its local diamond industry, to create sustainable employment, attract international industry participants to the country and increase the value and commensurate taxes on diamond exports.Indigenous peopleWe come into contact with indigenous people at our exploration projects in Botswana. We respect their culture and rights and have maintained regular, proactive contact with them as appropriate, as well as local authorities, individuals and NGOs, since we began our exploration programme in 2005. Although Petra is not currently engaged in mining activities in Botswana, we are committed to further engaging with the indigenous Basarwa people in advance of any decision to develop commercial operations. Petra reported no violations involving rights of indigenous people during FY 2012.Human rights Petra is fully committed to upholding the human rights of all of its stakeholders, including its employees, contractors and partners, and as such has a policy of fair dealing and integrity in place in terms of the conduct of its business. This commitment is based on the belief that business should be conducted honestly, fairly and legally. We expect all employees to share our commitment to high moral, ethical and legal standards.The Company complies with and supports the UN Universal Declaration of Human Rights as well as all legislation pertaining to human rights in the countries where it operates. However, as all our operations are based in constitutional democracies, where human rights are formally recognised under such constitutions, there is not the same level of risk with regards to human rights as can be found in certain other emerging markets.The Company is in the process of revising its Group Code of Ethical Conduct and will formally state its commitment to human rights within this. This Code will be made public on the Company's website at www.petradiamonds.com once finalised.The Company's Employment Equity policy and its Disciplinary Code and Procedures forbid any kind of discrimination. There were no cases of discrimination involving the Company or its employees reported during FY 2012.Human rights issues are covered by Petra's operational policies and procedures. Any human rights grievances are either managed through the operational grievance procedures, or where they are seen as substantive in nature, by the collective bargaining processes that are in place with recognised labour unions.In South Africa we organise training in human rights for union representatives through the Commission for Conciliation, Mediation and Arbitration ("CCMA") and they, in turn, disseminate their knowledge to all employees.Petra has aligned its principles with the International Labour Organisation Declaration on fundamental Principles and Rights at Work. This means we have zero tolerance for child labour, forced labour, or discrimination, and we respect the right of our workers to form unions. We are pleased to report that there is no risk of child labour or forced labour taking place at any of Petra's operations.A public grievance procedure (i.e. for external stakeholders) is being developed as part of an integrated stakeholder management approach and will be included in the revised Group Code of Ethical Conduct.SecurityPetra places significant importance on the safety and security of its workforce.Within South Africa, Petra undertakes and regularly updates risk assessments relating to security at all our operations. In South Africa our security personnel only operate within our mandate and the borders of Company properties. Should any security operation impact on the local community, it is communicated with them. Petra provides no assistance or materials to public security forces in South Africa.In Tanzania, Williamson has developed a security and human rights policy in line with the Voluntary Principles on Security and Human Rights following a risk analysis. All employees of our private security service provider and over 90%, to date, of Petra's in-house security managers have been trained on the Voluntary Principles. Williamson's security and human rights policy has been communicated to stakeholders of the mine, including the local police force.Williamson has undertaken a full risk assessment and frequently conducts security meetings with the Regional Police Chief and Regional Crime Officer. The Company, as part of our Community Support Programme, assists the local police by offering fuel and maintenance to enhance community policing.At the Williamson mine in Tanzania, we have identified significant trespassing and illegal mining on the Special Mining Lease ("SML") as a potential, but unlikely, risk. Petra manages this through frequent consultation, patrols and relationship management. Williamson's SML is viewed as a diamond protection area but small scale, artisanal mining occasionally takes place. Control measures, early warnings and a well-established information system provide the mine with pre-emptive action plans should such instances occur.