About this report

This sustainability report presents a consolidated view of the Omnia Group’s economic, social and environmental performance for the year ended 31 March 2010. We aim to provide a balanced, understandable and comparable view of our business by giving a frank account of our sustainability achievements as well as challenges.

Through this report, the Omnia Group aligns itself with international sustainability best reporting practices, including the Global Reporting Initiative (GRI), recognised internationally as the benchmark for sustainability reporting. The Group subscribes to the vision of the GRI, in that disclosure on socio-economic and environmental performance should become as commonplace and comparable as financial reporting, and that such disclosure is inextricably linked to financial success.

We recognise that we still have some way to go in aligning our reporting processes to the GRI. However, in keeping with the GRI’s vision, we will continue to improve our non-financial reporting processes over time, based on the principles of accountability and transparency. We welcome feedback from our stakeholders to assist us to continually improve our sustainability reporting.

The Group also supports the principles of openness, integrity and accountability as advocated in the King Code of Governance for South Africa of 2009 (King III) and the Code of Corporate Practices and Conduct reflected in the 2002 King Report (King II). Moreover, we subscribe to the concept of the triple bottom line, which embraces economic, social and environmental relationships through an integrated sustainability approach that encompasses all the Group’s stakeholders – our shareholders, customers, employees and the communities in which we operate.

We continue to seek to improve our sustainability reporting, moving beyond compliance to focus on opportunities for, but also challenges to, our sustainability, which we believe should increasingly inform our strategy and enable us to enhance our relationships with stakeholders. Our aim is the long-term integration of economic development, environmental quality and social equity into our business practices to continually improve performance.

The reader is invited to access more detailed information on our website where this report is also available in an online version.

Informing the boundaries of this report

Broad-based black economic empowerment (BBBEE) is regarded as integral to our sustainability, and relates to both economic and social aspects. Therefore, although our BBBEE initiatives only concern our South African operations, they have been included as part of this report.

Report assurance

We have not obtained independent third-party assurance of this Sustainability Report for the 2010 reporting period. We assess our application of the GRI reporting framework to be at Level C.

Statement from the Group Managing Director

The year under review saw intense debates around two major world events – the global economic crisis and climate change – which once again demonstrate our global interdependency, but at the same time revealed a need for solutions to be crafted at local and national levels.

Although the outcome of the Copenhagen climate talks at the end of 2009 was disappointing, with developed countries’ targets to cut their greenhouse gas emissions remaining low, South Africa made a commitment to cut its carbon footprint by slowing emissions by 34% below projected levels by 2020.

Dependent on coal for almost 90% of its electricity needs, South Africa is the twelfth-biggest emitter of carbon dioxide in the world, producing more than 40% of Africa’s fossil fuelrelated carbon dioxide emissions. Despite this, local companies have not made much headway when it comes to carbon trading, which is part of the Clean Development Mechanism of the United Nations’ Kyoto Protocol.

And although the position on carbon credits beyond 2012 is still uncertain, the pressure on climate change abatement is not going to recede.

In an unevenly globalised world, Omnia realises the need for “bottom-up” alternatives to pursuing carbon reductions, and has already amassed about 825 000 carbon credits, generated through the nitrous oxide reduction project at our Sasolburg EnviNox® Clean Air plant. EnviNox® was commissioned in terms of the Kyoto Protocol’s Clean Development Mechanism and has reduced our nitrogen oxide emissions by more than 98%. 400?000 carbon credits were sold in November 2009.

And while we regret the fact that the world was unable to reach a solution at Copenhagen, we are hopeful that concerted efforts by companies, civil organisations and governments through international alliances would serve as a basis for further discussion towards a suitable agreement on developing a global framework for climate change.

We are fully aware that long-term opportunities for the Group exist in the renewable energy, water, mining and food sectors, and Omnia is well positioned to make a significant impact in these areas.

Omnia recognises in particular the potential in alternative energy over the next decade, with uranium demand expected to more than double by 2030 as increasing numbers of countries turn to nuclear energy for their power requirements. Although nuclear power is not considered renewable; since no combustion is involved, nuclear power generation produces no carbon emissions. We believe mining industries in southern Africa are set to benefit from escalating local and global demand for uranium, and although the tick-up in uranium processing has been slower than expected, Omnia is confident that we can exploit the opportunities available in this area, with our strong product basket in terms of supplying mining explosives and chemicals.

Expectations for growth in the mining sector are not only driven by the growth in alternative energy, but locally also by Eskom’s additional coal requirements.

The production of shocktube at Omnia’s Losberg facility, which started during 2009/10, signalled an entry for the group into the underground mining sector, while BME’s new generation electronic delay detonator has been successfully tested and is being introduced to the market. Both in terms of safety and operational efficiency, we expect these technologies to bring about significant cost savings for our clients.

We continue to invest in and implement best-of-class technologies which conform to the highest standards of sustainable environmental development. Our R1,4 billion investment in a second nitric acid complex – one of our biggest investments in South Africa to date – to provide raw materials which have been in short supply for a number of years, particularly in the mining and agriculture sectors where Omnia already has well-developed markets, is testament to this objective.

The plant, whose emissions will be significantly below legislation requirements, will be run in parallel to our existing plant, with demand growth projections showing that the full output will be absorbed by Omnia’s downstream explosives and fertilizer units within the near term, and would position Omnia in a production league similar to that of its main competitors.

Importantly, the project will be entirely energy self-sufficient and will produce enough electricity to service about one-half of the needs for the adjacent Omnia plant – a significant energy saving that is of vital importance in the context of South Africa’s power stresses.

During the period under review, the Group’s total energy consumption decreased from 8,69 million giga-joules in 2009 to 8,1 million giga-joules in 2010, while our total energy consumption per ton of product manufactured dropped by almost 17% over the period.

This reduction in energy use can mainly be attributed to optimisation efforts and the implementation of a new generator at our fertilizer plant in Sasolburg.

Predictions show that more than 1,5 million people in South Africa would be affected by severe water shortages in the next 15 years. Omnia’s joint venture during the year with water treatment company Nalco will assist industrial services clients in Africa, a market which is expected to grow significantly over the next 10 years, to reduce their environmental impact.

Using Nalco’s water and process treatment technologies, which since 2004 has saved more than 596 million cubic metres of water worldwide, will introduce savings both in energy and in industrial water use, and reduce total operating costs, particularly in the energy, mining, food and beverage, and paper and pulp sectors.

The associate with Nalco Africa complements Omnia’s existing chemicals business and demonstrates our continued commitment to growing our business through proactive management of South Africa’s scarce water resources.

During the first five years, 50% of research and development of the company’s investment in South Africa would be taken up by training spend for Nalco Africa, to assist in skills development through establishing world-class training facilities and the transfer of knowledge and expertise.

Against a backdrop of increasing mobility in an era of uneven globalisation and South Africa’s acute technical skills shortages, we achieved, during the year, Level 5 status in our BBBEE formal verification in terms of the Department of Trade and Industry’s BBBEE Codes of Good Practice. Our performance in this regard in terms of skills, enterprise and socio-economic development underpins our focus on developing employees and communities, and addressing the skills challenge faced by the Group.

Due to the financial crisis, the World Bank in early 2010 predicted that an estimated 64 million more people worldwide will fall into extreme poverty, defined as living on less than US$1,25 per day. Individuals and communities in developing countries such as those in Africa will be especially affected, and together with food insecurity, pose great challenges for sustainable development and improved livelihoods.

We believe that with appropriate assistance, Africa has the potential to become a significant contributor in addressing these growing concerns over a looming global food crisis. Fertilizer use in Africa, at around eight kilograms per hectare, is less than 10% of the world average. Clearly, increased use of fertilizer, together with Omnia’s applied agronomic expertise, could help to promote food security and alleviate hunger and rural poverty. With growing urbanisation throughout Africa, the amount of available arable land per capita by 2050 is predicted to be reduced to half of what is available today, and as fewer, highly productive lands are also more environmentally friendly than large tracts of less productive lands, our focus is on alleviating environmental degradation through improved soil management and better agricultural practices. Of course, improved soils also enhance plant health, which means less harmful chemicals are needed during the growth phase.

The debate around the food crisis is also influenced and informed by the growing need for biofuels as an alternative, renewable energy source. In terms of gaining and making available better information around biofuels production, our Agriculture Division has invested in research in Zambia around the nutritional requirements of biofuels feedstock, jatropha.

Where economic sustainability is concerned, although our performance during the year under review was weaker than during the previous period, it can be ascribed, in the main, to the weakening of commodity prices and the rand strengthening by almost 23%, as well as particularly high stock prices and inventory which had to be written down. Moreover, one should keep in mind that the previous financial year’s results were said to be extraordinary and not sustainable, which had introduced a stark difference between the reporting periods.

Commodity prices have started to settle back to a more steady pattern, increasing in the light of continued supply and demand dynamics. We remain strategically positioned to benefit from an upturn in the global and local economies, and have seen recovering demand across all three of our business units – chemicals, mining and agriculture.

Our framework for sustainability

Sustainable development approach

Omnia’s approach to managing sustainable development includes striving to continuously improve our management framework to provide our businesses with the policies, governance structures, targets and reporting systems needed to manage the risks and opportunities associated with sustainable development. Our commitment to sustainable development is co-ordinated at Group level and implemented at business level, with ultimate responsibility residing with our board of directors.

Omnia’s framework for sustainability is based on:

	The commonly accepted definition of sustainable development as “development which meets the needs of the current generation without compromising the ability of future generations to meet their own needs”.
	Maintaining the highest standards of integrity according to our Code of Conduct.
	Operating to the highest standards of financial and non-financial performance.
	Establishing sound stakeholder relationships based on honesty, integrity, professionalism and service.
	Improving the management of our environmental and social risks, and conducting our operations in a safe and responsible manner.
	Recognising and leveraging the link between people and business value.
	Establishing partnerships to address social issues such as poverty and lack of skills.
	Focusing on eco-efficiency, with particular emphasis on reducing energy and water consumption, as well as greenhouse gases and waste.

Code of Conduct

Fraud, corruption and bribery undermine the organisational integrity of companies and have negative consequences for the communities around them. They are invariably highly detrimental to a company’s reputation and licence to operate. The Group’s Code of Conduct, which helps mitigate this risk, stipulates that our people act with the utmost integrity at all times. The Code forms part of our employee induction training, and compliance is agreed to in writing on an annual basis. It also places responsibility on all employees to report breaches of the Code, for which purpose an anonymous reporting line is provided.

Omnia subscribes to an independent reporting service, Tip-Offs Anonymous, administered by Deloitte Consulting, which enables all stakeholders to report unethical behaviour with full anonymity. Callers are given three options when making a tip-off – making their identity known to Tip-Offs Anonymous only, providing their details to both Tip-Offs Anonymous and Omnia, or total anonymity. During the year under review, 21 calls and one email was received by the hotline. Of these, all complaints were reported to Omnia. Two incidents resulted in staff members being dismissed. The remaining incidents were investigated and the commensurate action was taken.

Stakeholder engagement

The Group interacts with a broad base of stakeholders, based on the principles of promptness, relevance and transparency. Omnia makes use of general communication channels such as the Omnia website (www.omnia.co.za), as well as print, radio and television media. Specific channels are set out below.

Employees

	Internal publications
	Managing director’s road show
	Intranet

Investors

	Results presentations
	SENS, the information dissemination service administered by the JSE Limited
	Annual report
	Website

Customers

	Newsletters
	–	Both BME and Omnia Fertilizer produce newsletters relevant to customers’ areas of business and interest. The Omnia Fertilizer magazine is a bi-annual publication mailed to each customer.
	–	The BME magazine is a bi-annual publication handed to specific customers.
	Customer surveys
	Trade shows
	–	BME attends a number of trade shows and conferences locally and globally to build brand awareness and help guide new customers to understand the basket of services and value propositions offered by the company. During the period under review, BME attended the Mining Indaba in Cape Town, the Institute of Quarrying Southern Africa’s Annual Conference in Durban and the West African Mining and Power Exhibition (WAMPEX) in Ghana.
	–	Omnia Fertilizer exhibits annually at the NAMPO Harvest Day and has sponsored the “boere patente” exhibition for 22 years. The aim of the “boere patente” is to showcase technologies designed on the farm by farmers in order to improve efficiencies.
	Conferences
	–	BME’s Annual Drilling and Blasting Conference takes place in November each year, and in 2009 was attended by about 350 local and international participants. The Conference functions as an information dissemination and learning event, with speakers presenting papers and case studies on market trends, technical information and blasting techniques.
	–	Omnia Fertilizer’s Agronomic and Marketing Conference is held annually as an internal training and information dissemination event.
	Farmers’ days: Omnia’s Agriculture division disseminates knowledge and provides practical, hands-on support to emerging and commercial farmers on plant nutrition management, fertilization and agronomic best practices at farmers’ days held at different project sites around the country. Contributing to the sustainability of enterprise development in the agricultural sector, these farmers’ days assist emerging and commercial farmers to build commercially viable ventures by gaining an understanding of all aspects of agricultural production, and business and financial management.

Communities

	Our various corporate social investment (CSI) initiatives as detailed in this document.
	Contributions to the Business Against Crime initiative.
	Trustee representation at and contribution to the World Wildlife Fund (WWF).

Environment

	Participation in the following environmental forums is ongoing:
	–	At industry level
	–	Sasolburg Inter-company Response Meeting
	–	North West Province Air Pollution Control Forum ( NapCof)
	–	Institute of Safety Management
	–	Vaal Triangle Priority Area Air Meeting
	–	Vaal Triangle Priority Area Air Technical Task Team
	–	Leeu-Taaibosch Forum and Technical Task Team
	–	Sasolburg Rejuvenation Committee
	–	Highveld Priority Area Air Quality Officer Forum and Multi-stakeholder Reference Group where we played an active role in the compilation of the Air Quality Management Plans for the North West Province and Highveld Priority Area.
	At community level
	–	Sasolburg Community Working Group

Industry

	As a signatory to Responsible Care®, a global chemical industry initiative that seeks to improve health and safety and reduce the environmental impact of the industry, we are committed to uphold the initiative’s ethics and standards, and participate in various workshops.
	Chemical Handling and Environmental Forum (CHEF) Meetings.
	Through the Chemical and Allied Industries’ Association (CAIA), of which Omnia’s chairman is a board member, and Business Unity South Africa (BUSA), we participated in various initiatives to assist with the formulation of new legislation. These include the National Waste Act, Environmental Impact Assessment (EIA) processes in terms of the Act and a new national waste minimisation strategy, the new Transport Act and air priority working groups.